Brunei’s Construction Industry: Challenges and Accountability Under Scrutiny"
Delayed payments, regulatory hurdles, material shortages, and the use of immunity clauses are straining Brunei’s construction sector. In this follow-up report, we explore the systemic issues undermining progress and the growing calls for accountability and reform. Can the sector recover in time to support Brunei’s Wawasan 2035 goals? Read on to learn more.
By Malai Hassan Othman
BANDAR SERI BEGAWAN, DECEMBER 2024 – In our previous report, we revealed the underlying issues plaguing Brunei's construction industry—delayed payments, regulatory bottlenecks, legal complications, and material shortages.
As stakeholders continue to navigate these systemic challenges, this follow-up offers an in-depth examination of the critical issues that hinder progress and erode public trust.
Through new insights and verified examples, we illuminate the sector's struggles and amplify the call for urgent reform.
Once envisioned as a catalyst for national development, Brunei’s construction sector now faces a pivotal test of resilience.
Can it overcome bureaucracy, inefficiency, and governance gaps to fulfil the aspirations of Wawasan 2035?
The Foundations of Dysfunction: A Legal Case Study
A recent court case has highlighted the significant challenges contractors and suppliers encounter when dealing with government agencies.
The claimant alleged that a government-linked agency exceeded its authority in a dispute over procurement contracts.
Despite presenting certified documentation indicating that the agency’s directors acted ultra vires (beyond their legal authority), the agency used constitutional immunity to evade accountability.
The claimant stated: “They delayed proceedings, increased litigation costs, and used immunity to escape responsibility. This isn’t just about one case—it’s about a system that allows institutions to avoid accountability.”
This case also exposes troubling practices within Brunei's legal system.
The claimant’s former lawyer withdrew representation at a crucial moment, leaving them without legal support during pivotal stages of the process.
Allegations of collusion between legal professionals and powerful entities have further undermined public confidence in the justice system.
Immunity Clauses: A Double-Edged Sword
At the core of many grievances is Article 84B of Brunei’s Constitution, which grants absolute immunity to the Sultan and extends to officials acting on his behalf.
While this clause was meant to safeguard governance, critics argue it is often misapplied by government agencies to shield themselves from claims of negligence or bad faith.
A supplier recounted: “We delivered materials for a project, only to be told later that the agency didn’t authorise the purchase. When we pursued legal action, immunity was invoked. How is this fair?”
Such cases highlight the power imbalance created by immunity clauses, which stakeholders argue have fostered a culture of impunity within public institutions.
Delayed Payments: Financial Strain on Contractors
For years, contractors and suppliers in Brunei have faced prolonged payment delays from government agencies.
The introduction of TAFIS 2.0 in 2024 was intended to streamline financial processes and ensure prompt payments, but stakeholders report that the system has only worsened delays.
Contractors have shared experiences of waiting months—or even years—for payments to be processed. One contractor stated: “We fulfilled our end of the contract, but payments are still pending. This isn’t just about our business—it’s about paying our workers and sustaining livelihoods.”
Efforts by the Ministry of Finance and Economy (MOFE), such as User Clinics and training programs, have yet to address the root causes of the delays, leaving many contractors in financial limbo.
Material Shortages and Delays: A Critical Bottleneck
Another major challenge is the approval process for construction materials, which contractors argue has become a significant bottleneck.
Suppliers encounter long delays in obtaining permits to import or distribute materials, with shipments often stranded at ports for months.
These delays ripple through the industry, causing project timelines to slip and expenses to rise for all stakeholders.
A supplier explained: “We’ve had materials sitting idle because permits haven’t been processed. These delays increase costs, stall projects, and harm everyone involved.”
Additionally, stringent requirements for certified materials and unresolved industrial land lease applications exacerbate the issue.
Contractors have expressed frustration, pointing out that these bureaucratic hurdles obstruct their ability to meet deadlines.
One contractor lamented: “How can we build when the materials we need are delayed for months? These bottlenecks are destroying the industry.”
ABCi: Regulatory Bottlenecks and Local Talent Sidelined
The Authority for Building Control and Construction Industry (ABCi) has faced criticism for its protracted approval processes and inconsistent enforcement.
Developers report that obtaining building permits can take months, leading to delays that substantially inflate project costs.
One developer described their predicament: “By the time approvals come through, costs have doubled, and timelines are no longer realistic. It feels like the system is designed to slow us down, not assist us.”
Furthermore, ABCi has been scrutinised for not prioritising local talent.
Despite Brunei's pool of skilled professionals, expatriates continue to dominate the sector, sidelining locals and raising concerns about the agency's commitment to fostering self-reliance.
Banking Challenges: Reluctance to Invest in Construction
Financial institutions, vital for the health of the construction ecosystem, are becoming increasingly hesitant to lend to contractors due to the high risks associated with delayed payments and systemic inefficiencies.
One senior banker observed: “Credit is the greatest equaliser in any capitalistic system, allowing those with good ideas but little capital to realise their potential.
However, in Brunei, we’ve grown much more risk-averse following the 2013-15 oil bust.
Even the biggest players in construction felt the strain, and now banks are only lending to the most secure credits.
This prevents smaller firms from rising to challenge the status quo.”
The banker added: “While the government has initiated programs like DARe, BEDB, and Bank Usahawan to support businesses, their impact has been limited.
DARe focuses on FDI but struggles with implementation, while Bank Usahawan has been overly cautious, lending very little and boasting about low losses instead of fostering meaningful innovation.”
This hesitance has left smaller firms struggling to secure the credit necessary to remain viable, exacerbating delays and financial instability across the industry.
Without meaningful risk-sharing mechanisms or government guarantees, financial institutions remain reluctant to support the sector.
Public Outcry: A Call for Reform
Public frustration with Brunei’s construction industry is mounting.
Letters to the editor in publications like the Borneo Bulletin frequently express grievances concerning delayed payments, material shortages, and regulatory inefficiencies.
One letter criticised the lack of accountability: “Contractors, suppliers, and homebuyers are suffering because of a broken system.
How can we move forward when delays and excuses are the norm?”
Another letter questioned the sidelining of local professionals: “Bruneians are more than capable, yet they’re being ignored in favour of foreign workers. Isn’t it time we prioritise our people?”
A Roadmap for Reform
To address these systemic challenges, Brunei must implement comprehensive reforms aimed at restoring trust, accountability, and efficiency in the construction sector. Key recommendations include:
Resolve Payment - Delays:
Expedite payments through TAFIS 2.0 by addressing technical glitches and simplifying processes.
Streamline Material - Approvals:
Establish a fast-track process for permit applications to prevent supply chain disruptions.
Enhance ABCi - Efficiency:
Simplify regulatory processes and standardise enforcement to eliminate delays and perceptions of favouritism.
Refine Immunity - Clauses:
Limit the scope of immunity to prevent misuse and ensure accountability for actions beyond authority or with ill intent.
Support Financial - Viability:
Collaborate with banks to provide risk-sharing mechanisms and government-backed guarantees for contractors.
Strengthen Legal - Advocacy:
Encourage robust representation for claimants and enforce ethical standards to prevent legal collusion.
Promote Local - Talent:
Introduce policies that empower Bruneian professionals and reduce reliance on expatriates.
Conclusion: Building Trust Alongside Infrastructure
Brunei’s construction industry is at a critical crossroads.
Delays in payments, material bottlenecks, regulatory inefficiencies, and governance gaps threaten not only the sector but also the nation’s broader ambitions for Wawasan 2035.
Yet, the opportunity for reform remains. As one contractor articulated: “We need a system that works for everyone, not just those in power. Accountability and efficiency must be the foundation of our future.”
Brunei must act now to restore trust, streamline processes, and ensure its construction industry becomes a pillar of progress rather than a symbol of dysfunction. (MHO/12/2024)
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