Construction Industry in Brunei Faces Crisis: Professionals Call for Urgent Policy Review

By Malai Hassan Othman

 

BANDAR SERI BEGAWAN, July 24, 2024 - Brunei's construction industry, once a pillar of national development and economic growth, is now at a crossroads. 

Architects, engineers, and quantity surveyors in private practice are sounding the alarm over recent government policies they say are crippling their professions and undermining the sector's future.

 

A Shifting Landscape

For years, public construction projects in Brunei have relied on the expertise of private design consultants, selected through competitive bidding. 

These projects, although often barely covering costs, kept consultancy firms afloat and provided essential jobs. However, a seismic shift is now underway. 

Government institutions are moving projects in-house, sidelining private firms and threatening their very existence.

 

This policy shift has led to a sharp decline in opportunities for private sector professionals, who now face plummeting job prospects, reduced salaries, and a devaluation of their expertise. 

The fallout is severe: firms are downsizing and shuttering, and professionals are either leaving the field or seeking opportunities elsewhere.

 

Professional Outcry

"The years of dedication and hard work we've put into building this nation's infrastructure are being dismissed," lamented a local architect who wished to remain anonymous. 

"The government's policy is not only devaluing our profession but also jeopardizing the quality of the nation's infrastructure."

 
Economic Impact

The economic repercussions are extensive. 

The construction sector, one of Brunei's largest employers, is seeing a downturn. With 27,810 workers in 2015—many of them non-local—the sector's GDP contribution dropped from BND 109 million in the fourth quarter of 2023 to BND 86.70 million in the first quarter of 2024. 

The reduction in government projects is a major blow.

 

Irony and Accountability

In an ironic twist, Minister of Development Muhammad Juanda Abdul Rashid recently praised the sector's accomplishments, including the Sultan Haji Omar 'Ali Saifuddien Bridge and various petrochemical projects, while acknowledging the need for ongoing maintenance and upgrades. 

Yet, this stands in stark contrast to the current shift towards in-house project execution, raising concerns about compliance and standards.

 

Regressive Policy Changes

This policy change is reminiscent of the pre-independence era when all construction and building works were managed in-house or carried out by foreign companies and expatriates employed by the government through the Crown Agents. 

During those days, all works were executed through the Public Works Department (JKR). 

When qualified locals began returning from their studies abroad, they were directly recruited by the government, and projects were still managed in-house. 

However, as the volume of work grew, it became evident that in-house efforts could not maintain the standards required for a developing nation. 

This realization led to locals venturing into private practice, contributing significantly to the industry's progress.

 

By the 1990s, there was a push to empower ministries to manage their own projects.

However, this decentralization led to numerous mishaps and poor project management. 

Consequently, a decision was made to centralize project management back under the Ministry of Development. 

A notable example of a successful shift towards local outsourcing is Brunei Shell Petroleum. 

The company moved away from relying on The Hague for procurements, instead focusing on building local capacities and concentrating on its core business of production. 

Similarly, the government should focus on its core business of governing and supporting the local construction industry by outsourcing projects.

 

Competition and Compliance

The government's current practice of awarding projects based solely on price is under fire. 

Previously, local players benefited from a more balanced allocation. Now, with many in-house designers allegedly not registered under the APEQS Order 2011, there's a clear compliance issue. 

According to the Building Control Order 2014 (BCO), only qualified or licensed bodies should be appointed by instructing agents, including government agencies. 

This distinction is vital for upholding industry standards. Furthermore, industry professionals argue that competition should be based on quality, innovation, and capabilities rather than price alone. 

Setting minimum allowable fees, similar to minimum wages, could help level the playing field and ensure fair competition.

 
Retendering Controversy

Adding fuel to the fire is the recent decision to retender a major project as a Design and Build initiative. 

Parties who had already invested significant resources in preparatory work are now seeking compensation, highlighting the need for strict adherence to financial regulations in government contracts to prevent such disruptions.

 

Call for Urgent Policy Review

Industry experts are calling for an urgent review of these policies. 

They argue for a balanced approach between in-house project implementation and outsourcing to private consultants to ensure the industry's sustainability and maintain a skilled workforce. 

"Government projects must involve private consultants to foster a competitive and healthy construction industry. Transparent contract awarding and project implementation are key to allowing consultants to adapt and continue contributing to national development," urged an industry professional.

 

Future Outlook

Despite these challenges, there are glimmers of hope. 

The National Housing Scheme and the Construction Industry Framework 2022-2035 by the Authority for Building Control and Construction Industry (ABCi) aim to embrace innovative technologies and sustainable practices. 

For these initiatives to succeed, collaboration with private consultants and valuing their expertise is crucial. 

 

In conclusion, while the government aims to optimize resources through in-house project implementation, this mustn't come at the expense of private sector professionals. 

Ensuring compliance with the APEQS Order 2011 and the BCO 2014 is critical. 

A balanced approach that fosters collaboration and transparency, sets the minimum allowable fee and emphasizes quality and innovation will safeguard the future of Brunei's construction industry and contribute to sustainable national development. (MHO/07/2024)

Kneeling Woman's Plea Highlights Flaws in Welfare System

A viral video of a destitute woman begging His Majesty the Sultan for help during his Royal Birthday get-together in Tutong has ignited a nationwide outcry. This emotional plea has exposed deep flaws in Brunei's zakat distribution system, prompting calls for immediate reforms and highlighting the ongoing struggle to efficiently support the nation's needy. Read on to uncover the full story and public reactions.

The recent viral video of a destitute woman kneeling and begging for assistance from His Majesty the Sultan during the Royal Birthday get-together in Tutong has sparked a wave of public outrage. 

 

The emotional scene has drawn attention to ongoing issues with zakat distribution and the competence of authorities responsible for aiding the needy in Brunei.

 

In the video, the woman is seen crying as she hands over a letter of appeal to His Majesty Sultan Haji Hassanal Bolkiah, highlighting her desperate situation. 

 

This incident has intensified scrutiny of the management of Zakat and the National Welfare System (SKN), which is meant to streamline and ensure effective aid distribution.

 

His Majesty's Frustrations

During an unscheduled visit to the Ministry of Religious Affairs (MoRA) over a year ago, His Majesty voiced significant concerns about zakat collection and distribution efficiency. 

 

He noted that despite the Zakat Collection and Distribution Division being upgraded to the Department of Zakat, Waqaf, and Baitulmal Affairs last July, issues persist in how zakat is administered. 

 

His Majesty has repeatedly called for the relevant authorities to fulfil their duties with honesty, diligence, and empathy, yet the same problems continue to plague the system.

 

These concerns were not new. In September 2020, during another unscheduled visit to MoRA, His Majesty questioned the commitment of religious authorities to helping the underprivileged, noting that poor zakat management was still prevalent. 

 

He highlighted the issue of late payments to landlords who rent out homes to welfare recipients under MUIB's Baitulmal housing rental scheme, with reports indicating that some homeowners only received payments after two years. 

 

Additionally, this is not the first time the Sultan has raised concerns about poor zakat management. In 2018, His Majesty had called for zakat reforms, emphasising that the redistribution of wealth could lift people out of poverty.

 

Public Reaction

 

The incident has triggered a public outcry, with many citizens expressing their frustration on social media. 

 

Comments reflect a deep dissatisfaction with the current system, accusing authorities of incompetence and inefficiency in managing zakat and other forms of assistance. 

One public comment captured the sentiment: "Zakat management in Brunei needs a major overhaul and open-minded innovation. Hundreds of millions of zakat money is yet to be distributed, just sitting wherever it is kept. If you study what was done in Islamic history, leaders would try their best to deplete the zakat fund every year until poverty was abolished. When there were excess funds and no more poverty, they invested the funds for longer-term benefits and even distributed the money to other poorer countries such as those in Africa." 

 

Another concerned citizen added, "Zakat is a religious obligation. Muslims whose wealth sits above the minimum threshold are obliged to pay a 2.5 per cent 'tax' on their assets, known as zakat harta, which is then redistributed to the needy and new converts to Islam. Paying zakat is obligatory, and distributing it efficiently and effectively is a religious calling, not just a job. The people in the religious agencies should know better. The leader in this context ultimately would be accountable before Allah."

 

"Why must there be so much red tape? People are suffering while waiting for aid that should be promptly delivered," another user commented, reflecting a common sentiment.

 

Calls for Accountability and Action

 

The public is calling for immediate action and accountability from the authorities. 

 

The inefficiency and perceived lack of empathy from officials in handling such sensitive matters are seen as unacceptable, especially in a country that prides itself on its welfare systems and the principles of Malay Islamic Monarchy (MIB). 

 

Non-governmental organizations (NGOs) and other institutions like Yayasan Sultan Haji Hassanal Bolkiah and the Brunei Islamic Religious Council (MUIB) are also being urged to play a more active role in ensuring that aid reaches those in need promptly.

 

Moving Forward

 

In response to the public outcry, there are calls for a comprehensive review of the zakat distribution process and the implementation of more effective mechanisms to ensure timely assistance. 

 

There is also a need for better coordination among various agencies to eliminate bureaucratic delays and ensure that aid reaches the most vulnerable without unnecessary hurdles. 

 

His Majesty's recent titah and direct involvement in this matter underscore the importance of addressing these issues swiftly and efficiently. 

 

The hope is that the authorities will heed the public's concerns and take decisive actions to improve the zakat distribution system, ensuring that no one in Brunei has to endure such hardship and humiliation in the future.

 

Conclusion

 

As the nation waits for concrete steps to be taken, the incident in Tutong serves as a stark reminder of the gaps in the current welfare system and the urgent need for reform to uphold the values of compassion and support that the Zakat system is meant to embody. 

 

Despite His Majesty's repeated calls for action and improvement, the recurring issues suggest a pattern where authorities may temporarily improve but soon revert to their old ways, plagued by inefficiencies and 'little Napoleons'—bureaucrats who act like big bosses while failing to deliver their basic responsibilities. 

 

The incident has not only embarrassed the nation but has also deeply disappointed His Majesty. It is high time for the authorities to get their act together and uphold the dignity and welfare of the people they are meant to serve.

Brunei’s FDI Realities Behind the Viral Chart

The recent resurgence of a Foreign Direct Investment (FDI) report for Brunei Darussalam has sparked widespread public concern. 

 

The report, initially released in 2023, only highlighted Brunei's FDI position. However, a graphic illustration that has gone viral shows Brunei at the bottom of the FDI tier among ASEAN nations, with a net outflow of -51. 

 

This figure has understandably caused confusion and anxiety among the public. However, a closer look at the context and details of these statistics is essential to gain a balanced perspective.

In 2023, Brunei's FDI recorded a negative net inflow of BND68.6 million, a significant improvement from the BND403.2 million outflow in 2022. 

 

This negative flow was primarily due to substantial debt repayments by foreign companies to their parent and sister companies abroad, amounting to BND405.5 million. 

 

These repayments overshadowed the positive reinvestment of BND336.9 million by existing FDI companies, mainly in the Mining and Quarrying sector (BND161.2 million) and Financial and Insurance Activities (BND55.9 million).

 

Despite the negative flow, the overall FDI stock in Brunei saw only a slight decrease of 2.5%, from BND9.19 billion in 2022 to BND8.96 billion in 2023. 

 

This decrease was mainly due to the repayment of loans rather than a lack of investor interest or confidence in Brunei's economic potential. 

 

The Mining and Quarrying sector received the largest amount of FDI in 2023, with an inflow of BND161.2 million, signalling continued investor confidence in Brunei's natural resources. 

 

The Financial and Insurance sector also showed robust activity with an inflow of BND55.9 million, reflecting the sector's stability and growth prospects. 

 

However, some sectors experienced negative FDI flows, such as Manufacturing (-BND265.9 million) and Construction (-BND27.4 million), primarily due to higher debt repayments. 

 

These figures indicate a complex interplay of investment and financial management within these sectors, rather than a straightforward withdrawal of foreign capital.

 

The United Kingdom emerged as the largest investor in Brunei in 2023, with an inflow of BND234.5 million. This significant investment from the UK contrasts sharply with the negative flows from traditional ASEAN partners like Malaysia (-BND43.0 million) and Singapore (-BND4.4 million). 

 

The disparity highlights the dynamic and diverse nature of FDI sources, with European and other non-ASEAN countries playing a more prominent role in recent years.

 

Public Misinterpretation and Reality

The public's anxiety over the FDI report stems from a misunderstanding of the negative figures and their implications. 

 

The negative net inflow is primarily a result of debt repayments, a routine financial process, rather than a direct indicator of economic decline or reduced investor confidence. 

 

Moreover, the reinvestment figures demonstrate that foreign companies continue to see Brunei as a viable and attractive investment destination.

 

Moving forward, Brunei's economic policymakers need to address the public's concerns by providing clear and transparent explanations of FDI data. 

 

Highlighting the positive aspects, such as the significant reinvestments and the diversity of investment sources, can help counter the negative perceptions. 

 

Additionally, efforts to enhance the investment climate, streamline regulatory processes, and promote key sectors can further bolster FDI inflows and economic growth.

 

Conclusion

In conclusion, while the negative FDI figures have caused public concern, a comprehensive analysis reveals a more nuanced and optimistic picture. Brunei continues to attract substantial foreign investments, and with strategic economic policies, it can further enhance its FDI landscape and overall economic prosperity. (MHO/07/2024)

Progress and Public Sentiment on Wawasan Brunei 2035: Corollaries, Contradictions, and Economic Growth

Brunei Darussalam's ambitious national vision, Wawasan Brunei 2035, remains a central topic of national discourse as the nation approaches its target date. 

Launched in 2007 with the endorsement of His Majesty Sultan Haji Hassanal Bolkiah Mu'izzaddin Waddaulah, the vision aspires to elevate Brunei into the ranks of the top ten countries globally in terms of education, quality of life, and economic performance. 

However, as 2035 draws nearer, the contrast between the nation's aspirations and its current realities becomes more apparent.

Political and Economic Landscape

In a recent address at the 20th Meeting of the National Executive Council (MMN) for 1445H/2024M, His Majesty emphasized the critical importance of the 12th National Development Plan (NDP), set to commence in the Financial Year 2024/2025. 

This five-year plan aims to accelerate national development projects, attract foreign direct investments, and create new job opportunities for Bruneians. 

Despite these ambitious goals, public sentiment paints a different picture, with many expressing frustration over the slow pace of progress and lingering economic challenges.

Discrepancies in Human Development

Reflecting on the nation's accomplishments during the 40th National Day celebrations, His Majesty highlighted Brunei's commendable Human Development Index (HDI) ranking of 51st out of 191 countries. 

This ranking signifies progress in life expectancy, education, and quality of life, aligning with both the Sustainable Development Goals (SDGs) and Wawasan Brunei 2035. 

However, this progress is marred by a worrying trend: Brunei's HDI rank has fallen from 29th to 43rd over the past five years, surpassed by the UAE, Saudi Arabia, and Qatar. 

This decline suggests that despite advancements, the country is struggling to keep pace with its ambitious goals.

Educational and Economic Contradictions

The Minister at the Prime Minister's Office and Minister of Finance and Economy II, Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah, recently highlighted significant progress in education. 

The country's scores on the Programme for International Student Assessment (PISA) have improved, with Brunei now in the top three in ASEAN in all domains. 

However, public discourse reveals a different narrative. Concerns about declining education standards and a disconnect between higher education and job opportunities remain prevalent. 

In terms of economic performance, the non-oil-and-gas sector has grown by over four per cent for seven consecutive years, and unemployment has decreased from 9.3 per cent in 2011 to 5.2 per cent in 2022. 

Despite these achievements, Brunei's heavy dependence on the oil and gas sector continues to pose significant challenges, and the broader economic diversification efforts appear insufficient to foster a resilient economy.

Social Sentiment and Governance Issues

Public sentiment towards Wawasan Brunei 2035 is mixed, with optimism tempered by scepticism. 

Citizens, particularly the youth, express frustration over the pace of progress and existing obstacles. 

Discussions on social media reveal concerns about unemployment and declining education standards. 

There are widespread calls for greater discipline, determination, and hard work to achieve the vision's goals. 

Concerns about nepotism and the need for a meritocratic system are also prevalent, with many citizens advocating for opportunities based on talent and qualifications rather than connections. 

The disconnect between higher education and job opportunities remains a critical issue.

Infrastructure and Tourism Potential

Brunei boasts significant infrastructure for tourism, including the longest bridge in ASEAN, beautiful mosques, JPMC for medical tourism, Temburong for eco-tourism, Jerudong Park, and high-standard golf courses. 

However, the tourism agency has not effectively promoted Brunei as a tourist destination. 

A lack of coordination between public agencies and insufficient marketing efforts hinder tourism development. Enhancing public transportation and improving inter-agency coordination could boost the sector.

Technological and Environmental Initiatives

His Majesty's emphasis on digital transformation aligns with global trends, and investments in technology are crucial for enhancing productivity. However, the implementation of these initiatives often falls short. 

Environmental sustainability efforts, while commendable, face similar challenges. Initiatives focusing on renewable energy and conservation are essential, but their impact is limited without robust enforcement and public engagement.

Conclusion

Wawasan Brunei 2035 represents an ambitious national vision, but achieving its goals requires concerted efforts from all stakeholders. 

Addressing unemployment, making education more aligned with job readiness and productivity, and fostering a meritocratic system is essential. 

While significant progress has been made, much work remains to be done to ensure a prosperous and sustainable future for Brunei Darussalam. 

The nation's progress so far indicates a committed journey, but the path ahead requires greater transparency, accountability, and genuine reform to transform vision into reality. (MHO07/2024)

References

- Majlis Tertinggi Wawasan Brunei 2035 Report, 2023
- His Majesty the Sultan's Address during the Supreme Council Meeting, 2023
- His Majesty the Sultan's 40th National Day Titah
- Brunei Vision 2035 Report

 

Brunei's Fiscal Dilemma: Exploring Solutions for the Budget Deficit

Bandar Seri Begawan - As Brunei grapples with a persistent budget deficit, the government is considering various strategies to mitigate the financial shortfall caused by the sultanate's heavy reliance on oil and gas revenues and the absence of personal income taxes. Finding solutions to these fiscal challenges requires a thorough examination.

 

Current Fiscal Landscape

 

Dato Dr Hj Mohd Amin Liew Abdullah, Brunei's Second Minister of Finance and Economy, emphasised at the recent Legislative Council (LegCo) that prudent spending alone cannot rectify the budget shortfalls that have plagued the nation for over a decade. 

 

Brunei's fiscal policy differs from other countries that rely on personal income, corporate, property, sales, and tourist taxes to boost government revenues. 

 

"In Brunei, even when we have more tourists or when more people buy houses, it does not necessarily contribute to higher government earnings," he stated, highlighting the limitations of the current tax framework. 

 

Brunei's fiscal revenues remain constrained with corporate tax rates at only 18.5% and minimal other taxes. 

 

Over the past ten financial years, Brunei has recorded seven budget shortfalls, with a widening deficit of $2.99 billion expected in the fiscal year 2024/25. 

 

This situation primarily stems from lower energy prices and disruptions in domestic oil and gas production. Approximately 75% of government revenue is derived from oil and gas, accounting for roughly half of Brunei's GDP.

 

Exploring New Revenue Streams

 

To address these challenges, the government has adopted a fiscal consolidation program that aims to encourage private-public partnerships (PPP), corporatization, and commercialization. However, additional measures are necessary. One innovative solution under consideration is the establishment of a stock market exchange.

 

Introducing New Taxes

 

Another option being considered is the introduction of taxes on products with negative health or environmental impacts, such as tobacco and sugary drinks. 

 

These taxes could generate significant revenue and promote healthier lifestyles. 

 

However, implementing new taxes may face public resistance and require substantial administrative efforts to ensure compliance. Moreover, there could be short-term negative impacts on consumption patterns and business operations.

 

Raising Existing Taxes

 

Increasing the corporate income tax rate or implementing a moderate personal income tax could provide a substantial boost to government revenues without drastically altering the economic landscape. 

 

However, higher taxes could potentially discourage investment and economic activity, leading to slower growth. Businesses might pass on the increased costs to consumers, resulting in higher prices and reduced purchasing power.

 

Enhancing Private-Public Partnerships (PPP)

 

Enhancing private-public partnerships (PPP) can have several benefits, including attracting private investment, reducing public expenditure, and bringing expertise and efficiency to project implementation. 

 

However, developing and managing PPPs can be resource-intensive due to the need for robust legal and regulatory frameworks. Additionally, there is a risk of unequal partnerships where private entities may prioritize profit over public interest.

 

Economic Diversification

 

Investing in sectors other than oil and gas, such as tourism, agriculture, and technology, can create new revenue streams and stabilize the economy. 

 

Economic diversification also promotes innovation and resilience against global market fluctuations. 

 

However, diversification efforts require significant upfront investments in infrastructure, education, and technology. It may take several years for new industries to mature and contribute meaningfully to the economy.

 

Establishing a Stock Market

 

Establishing a stock market can provide businesses with an alternative way to raise capital, encourage investment, and foster economic growth. 

 

It can also attract foreign investment, increase financial literacy, and create job opportunities in the financial sector. 

 

However, establishing a stock market requires substantial regulatory, technological, and financial infrastructure. 

 

There are risks associated with market volatility, investor protection, and ensuring transparent and fair trading practices. Initial costs and efforts to develop the stock market may be significant before it starts contributing to government revenues.

 

Developing Islamic Finance

 

Developing Islamic finance is another strategy that can improve Brunei's fiscal position. By leveraging the principles of Islamic finance, Brunei can attract both local and international investors seeking Sharia-compliant financial products. 

 

This can diversify the financial sector and provide new revenue streams while aligning with Brunei's Islamic values.

 

Consolidating Social Welfare Funding

 

Consolidating social welfare funding and encouraging private sector participation can help alleviate fiscal pressures. By sharing the burden of funding welfare programs, the government can reduce its financial burden while ensuring essential services are maintained. This approach promotes a collective responsibility towards societal welfare.

 

Return on Benefits Approach

 

To guide fiscal policy decisions, the government could adopt a Return on Benefits (ROB) approach instead of solely focusing on Return on Investment (ROI), which is typically the private sector's approach. 

 

ROB emphasizes the social and economic benefits of government spending, such as improved health, education, and social cohesion, which contribute to long-term national development.

 

Utilizing Fiscal Reserves

 

Utilizing fiscal reserves to bridge budget deficits can provide immediate relief and ensure the continuity of essential public services and development projects. 

 

However, depleting fiscal reserves can reduce the government's ability to respond to future economic crises and may erode investor confidence in the country's fiscal stability.

 

Enabling Actions and Mechanisms

 

To implement these strategies, the government must take enabling actions and establish mechanisms. 

 

For instance, the creation of a stock market can facilitate privatization, corporatization, and commercialization efforts. 

 

It allows businesses to raise capital, promotes investment opportunities, and supports economic growth. 

 

Additionally, it opens up opportunities for public participation in the nation's economic development, boosts the economy, and creates new job prospects. 

 

Privatization involves transferring ownership of state enterprises to private entities, improving efficiency and fostering innovation.

 

A strong legal framework is essential to ensure transparency and safeguard public interests. 

 

Corporatization transforms state-owned enterprises into functioning private companies, enhancing management and operational efficiency.

 

Commercialization incentivizes these entities to operate in a profit-driven manner, making them more competitive and sustainable.

 

Recommendations for Sustainable Fiscal Management

 

To ensure sustainable fiscal management, a phased approach to tax reform is recommended. 

 

Starting with taxes on unhealthy and environmentally harmful products, followed by the gradual introduction of broader taxes like personal income tax, will balance revenue generation with public acceptance.

 

Developing clear and transparent regulations for Public-Private Partnerships (PPPs) can maximize their benefits in sectors such as infrastructure, healthcare, and education. 

 

Prioritizing investments in high-potential sectors through targeted incentives can speed up economic diversification and reduce reliance on oil and gas. 

 

Establishing a stock market as part of a broader financial sector development strategy will enhance Brunei's financial landscape and create new revenue streams. 

 

Creating a fiscal stabilization fund will help manage future economic downturns while effectively using reserves to support critical projects. Implementing a robust monitoring and evaluation system for fiscal policies will ensure their effectiveness and allow for timely adjustments.

 

Conclusion

 

In conclusion, by implementing these recommendations and taking appropriate actions, Brunei can achieve sustainable fiscal management, promote economic growth, and ensure long-term stability. 

 

Brunei faces a fiscal dilemma that requires a comprehensive approach. This approach should consider both immediate fiscal needs and long-term economic sustainability. 

 

To address this, Brunei can employ a range of strategies such as tax reforms, public-private partnerships (PPPs), economic diversification, the creation of a stock market, the development of Islamic finance, the consolidation of social welfare funding, and the responsible utilization of fiscal reserves. 

 

By doing so, Brunei can effectively address its fiscal challenges and ensure a prosperous future for its citizens. (MHO/07/2024)

His Majesty's Vision for Brunei: A Call for Progress, Innovation, and Participative Governance

By Malai Hassan Othman

 

July 16, 2024

 

Bandar Seri Begawan – His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah's recent titah, delivered in conjunction with his 78th birthday celebration, has sparked a wave of optimism and reflection among Bruneians. Highlighting the country's economic achievements and prospects, His Majesty's address underscores a vision for a brighter, more dynamic Brunei. The speech acknowledges the significant progress already made and calls for continued efforts to further harness Brunei's potential.

 

In his titah, His Majesty expressed gratitude for the positive growth in the non-oil and gas sector, which saw a 4.5 per cent increase last year. The overall domestic exports in this sector also surged by 59.8 per cent. These figures are encouraging, suggesting a diversifying economy that is gradually moving away from its heavy reliance on oil and gas.

 

“The prospects of the country’s economic growth are even more promising,” His Majesty noted, referencing projections from the ASEAN+3 Macroeconomic Research Office, the Asian Development Bank, and the International Monetary Fund, all forecasting GDP growth for Brunei in the range of 2.7 to 3.7 per cent for 2024.

 

The public's response to the titah has been optimistic, with the hope that these positive indicators signal a better future. There is also a growing recognition of the need to build on the current momentum through policy reforms that focus on progressive and constructive contributions to accelerate change and innovation.

 

The Importance of Policy Reform and Participative Governance

 

His Majesty's address highlights the need for robust two-way communication between the government and its citizens. Effective governance in the modern era requires constructive and progressive interactions, feedback, and response. Engaging citizens in policy-making can foster a more inclusive and dynamic governance system, ensuring that the voices of Bruneians are not only heard but actively involved in decision-making processes.

 

Critics argue that the current administrative climate sometimes discourages bold decision-making. Leaders may find themselves adopting a cautious approach to secure their positions, which can lead to stagnation in governance. The Majlis Mesyuarat Negara, established in 2005, has often been seen as a 'rubber stamp,' approving decisions without significant scrutiny. Addressing these concerns through participative public governance can enhance the effectiveness of the Majlis Mesyuarat Negara and ensure more meaningful engagement.

 

Learning from China: Policy Reform and Development Focus

 

China's development model offers valuable lessons for Brunei. China has shown that significant development can be achieved through focused policy reform and a commitment to economic growth and innovation. By empowering people's education and well-being, China has driven rapid development without necessarily undergoing political reform. Brunei can similarly focus on creating a conducive environment for economic growth and innovation through targeted policy reforms.

 

Implementing such focused reforms can ensure that Brunei's most competent and motivated individuals are in positions where they can contribute effectively. This approach would encourage innovation, improve governance, and help realize the full potential of the nation's workforce.

 

Administrative Reforms and Alignment

 

Administrative reforms are essential to align Brunei's governance with modern needs. Embracing a "Business Friendly," "Service Oriented," and "People Focus" model can ensure that the administration is proactive, efficient, and responsive to the needs of its citizens and businesses. Enhancing the administrative attitude, model, and style will be crucial in fostering a progressive and dynamic governance environment.

 

Unlocking the Potential of Youth

 

Investing in the education and skills development of Brunei's youth is a key precondition for realizing their potential. The youth are seen as the future drivers of change. Efforts to strengthen human capital through innovative education and training will enable the younger generation to rise to the challenge of shaping the nation's future.

 

His Majesty's vision includes significant investments in local entrepreneurs, the establishment of a digital payment hub, and commitments to climate change through the Paris Agreement. These initiatives demonstrate a willingness to adapt and innovate, ensuring that Brunei’s youth are equipped with the necessary tools and opportunities to lead the country forward.

 

Public Sentiment and Calls for Continued Progress

 

The public sentiment reflects a desire for continued progress and innovation. Many Bruneians feel that fostering a meritocratic system and engaging citizens in governance can enhance leadership and effectiveness. Addressing perceptions of cronyism and nepotism through participative governance will help build trust and ensure that the most capable individuals are in positions of responsibility.

 

Furthermore, enhancing technological advancements, applications, and adaptation will drive innovation and economic growth. Encouraging ownership and investments in the local economy, while creating an environment conducive to foreign investments, is crucial for Brunei's continued development.

 

Looking Ahead: Hope and Optimism

 

Despite the challenges, there is a sense of cautious optimism. His Majesty's vision for Brunei includes significant investments in local entrepreneurs, the establishment of a digital payment hub, and commitments to climate change through the Paris Agreement. These initiatives indicate a readiness to embrace change and innovation.

 

His Majesty's titah highlights the importance of solidarity and cooperation among citizens and residents. By working together, Bruneians can overcome the challenges they face and move towards realizing the objectives of Brunei Vision 2035.

 

In conclusion, while His Majesty's titah has instilled a sense of hope, it also underscores the importance of continued policy reforms, participative public governance, and progressive contributions. By building on the current initiatives and adopting a development-focused approach similar to China's, Brunei can unlock its full potential and secure a prosperous future for all its citizens.

Brunei Faces Fiscal Challenges Despite Economic Growth

Brunei continues to grapple with a significant budget deficit despite positive economic indicators. 

The Second Minister of Finance and Economy, Dato Dr Hj Mohd Amin Liew Abdullah, recently acknowledged that the country's financial situation remains challenging because it does not collect personal income taxes. Unlike other nations that rely on various taxes such as personal income tax, corporate tax, and sales tax to fund government operations, Brunei's unique tax policy has led to ongoing budget shortfalls.

 

Over the past decade, Brunei has experienced seven budget deficits, with the current fiscal year 2024/25 expecting a widening deficit of $2.99 billion. This deficit is primarily due to falling energy prices and disruptions in domestic oil and gas production, which together account for about 75% of government revenue and make up roughly half of Brunei's GDP.

 

Despite these fiscal challenges, Brunei's economy shows signs of growth. The Brunei Darussalam Central Bank (BDCB) recently released its first semi-annual policy statement for 2024, presenting a positive economic outlook. 

The International Monetary Fund (IMF) projects a stable global growth rate of 3.2% for both 2024 and 2025. In the first quarter of 2024, Brunei's economy grew by 6.8%, driven by an 8.9% increase in the Oil and Gas sector and a 5.0% rise in the Non-Oil and Gas sector.

 

BDCB expects continued economic growth throughout 2024 but warns of potential risks such as fluctuating commodity prices and reduced production of crude oil and liquefied natural gas (LNG). 

The central bank projects low inflation, between -0.5% and 0.5%, based on current Consumer Price Index (CPI) data. The financial sector has also seen growth, with total assets rising by 2.9% to BND24.6 billion in the first quarter of 2024, with significant contributions from the Islamic finance sector.

 

However, many Bruneians remain sceptical about these optimistic projections. Despite official reports, they feel that the reality on the ground is different, with issues like unemployment, rising living costs, and a sluggish economy dominating everyday life. 

Critics point out the increasing costs associated with oil and gas extraction and note that the relocation of major industry players like Total and Shell to Sarawak casts doubt on the health of Brunei's oil and gas sector. 

Local business owners and residents express frustration over the government's perceived inaction and missed opportunities for economic diversification. They argue that the heavy reliance on oil and gas is unsustainable and calls for investment in new industries such as biotechnology. 

Public forums and social media are filled with septical voices demanding more transparency and genuine reform. Frequent travellers and students voice concerns that Brunei's vision for 2035 may remain unfulfilled without substantial action and economic diversification.

 

Brunei's economic growth is a positive sign, but the country's ongoing fiscal challenges and public scepticism highlight the need for significant reforms and diversification strategies. 

To address these issues, the government must explore alternative revenue sources and implement policies that tackle the economic concerns of its citizens. Greater transparency, accountability, and meaningful reform are crucial to restoring public confidence and achieving sustainable economic development. (MHO/07?2024)