In a region buzzing with economic dynamism, Brunei risks falling behind. What’s holding the nation back, and how can it regain momentum?
By Malai Hassan Othman
BRUNEI DARUSSALAM, JANUARY 2025: The "ASEAN Insider" report by CNBC has stirred intense debate across Brunei.
Retired senior officials, intellectuals, and self-styled economists—armed with coffee cups and WhatsApp forwards—are dissecting the report's implications for Brunei.
Social media platforms have become battlegrounds for commentary, ranging from cautious optimism to outright despair.
The critical question looms: Can Brunei keep up with its ASEAN peers, or is it destined to remain an economic laggard?
ASEAN’s Thriving Economic Landscape
ASEAN collectively ranks as the world’s fifth-largest economy and continues to flourish due to its youthful workforce, diverse economies, and strategic location for global trade.
In 2023, the region's GDP grew by an average of 4.5%, fueled by advancements in renewable energy, digital transformation, and regional agreements such as the Regional Comprehensive Economic Partnership (RCEP).
Malaysia’s digital economy initiatives under its 12th Malaysia Plan prioritise innovation and infrastructure to stimulate growth.
Indonesia’s ambitious infrastructure projects, including the development of the Nusantara capital city, leverage its vast natural resources to expand renewable energy and digital markets.
Singapore, renowned for its strong regulatory frameworks and cutting-edge financial innovations, consistently attracts high-value investments.
Meanwhile, the Philippines is enhancing its outsourcing capabilities through infrastructure improvements, and Vietnam is emerging as a leader in electronics and renewable energy exports.
ASEAN’s commitment to sustainable development and the adoption of green technologies further solidifies its position as a global economic player, offering robust trade networks and a vibrant digital economy.
In contrast, Brunei’s trajectory appears worryingly stagnant.
The persistent concerns—overreliance on oil and gas, sluggish diversification, and youth unemployment - dominate discussions.
Critics argue that the nation’s slow adaptation to changing global trends has left it trailing behind its ASEAN counterparts.
Brunei’s Economic Reality
The harsh realities facing Brunei are difficult to ignore:
Dependence on Oil and Gas: Decades of discussions about diversification have yielded little progress. Over 60% of Brunei’s GDP and 95% of its exports still rely on hydrocarbons. What happens when the oil runs out or prices drop significantly?
This is no longer a distant hypothetical scenario but a stark reality. Recent reports indicate that Brunei's oil production has fallen below 100,000 barrels a day—a dramatic decline from its previous output.
Coupled with sluggish global oil prices, the nation’s revenue has suffered greatly, exacerbating the budget deficit and raising urgent questions about economic sustainability.
Policymakers must acknowledge this troubling trend.
Sluggish FDI Attraction: While ASEAN peers welcome investors with open arms, Brunei's bureaucracy and limited market size have left it on the sidelines.
"Why should investors choose Brunei?" one retired official questioned. "We’re not exactly rolling out the red carpet."
Budget Deficits: For over a decade, Brunei has faced budget deficits, relying on its sovereign wealth fund to bridge the gap.
“How long can we keep depleting our reserves?” asked another intellectual.
The situation emphasises the need for innovative public-private partnerships to diversify income sources and reduce reliance on state funds.
These collaborations could involve inviting regional tech firms to establish hubs in Brunei or incentivising local startups to fill economic gaps.
Unemployment and Underemployment: Youth unemployment presents a looming crisis.
"We’re graduating students who can’t find jobs," lamented a self-styled economist.
"Isn’t this a systemic issue reflecting our misalignment of education and job market needs?"
This mismatch highlights the shortcomings of the Wawasan Brunei 2035 framework.
Governance and Policy Gaps: Bureaucratic inertia and a culture of risk aversion hinder meaningful reform. "We’re too focused on being cautious to be bold," quipped a retired technocrat.
Public sentiment underscores the urgent need for meritocracy, with many advocating for transparency and inclusivity in governance.
Neighbouring Success Stories
The comparisons are not flattering:
Malaysia: With a diversified economy and thriving digital sector, Malaysia continues to attract high-value FDI. Its bold initiatives, like the 12th Malaysia Plan, are paving the way for sustained growth.
Indonesia: As ASEAN’s largest economy, Indonesia is leveraging its vast natural resources and committing to renewable energy transitions while focusing on digital transformation and infrastructure.
Singapore: Known for its ease of doing business, Singapore attracts high-value investments by offering a strong regulatory framework and leading in financial innovation.
The Philippines: Recent efforts to enhance infrastructure and reduce bureaucracy are paying off, helping the nation secure its place as a global outsourcing leader.
Vietnam: Emerging as a global manufacturing hub, Vietnam is rapidly industrializing with strong policies supporting electronics and renewable energy exports.
Cambodia: Despite being one of ASEAN’s smaller economies, Cambodia has shown remarkable progress in garment manufacturing and tourism, supported by foreign investments and trade agreements.
Laos: With a focus on hydropower exports, Laos is positioning itself as the "Battery of Southeast Asia," contributing to regional energy demands and improving its connectivity through the Laos-China Railway.
Sarawak and Sabah: Sarawak is capitalizing on renewable energy as the "Battery of ASEAN," while Sabah leverages its natural beauty and agricultural strengths.
"Even Sarawak and Sabah are leaving us behind," one intellectual remarked. "We need to wake up."
Brunei’s Path Forward
Critics aren't just pointing fingers; they're also suggesting specific actions for policymakers. Their perspectives, though informal, reflect the broader concerns and aspirations of Brunei’s society. Here’s what they propose:
Accelerate Diversification: Opportunities exist in Islamic finance, ecotourism, and halal markets.
"Why aren’t we capitalising on our natural assets?" asked a retired official.
Well-structured plans for investment in these areas, along with private sector involvement, could open new revenue streams.
Initiatives like the Economic Blueprint could effectively prioritise these sectors.
Attract High-End FDI: Streamlining regulations and creating investor-friendly policies is essential.
"Political will and strong leadership can make a difference," emphasised another retired official.
"We need to market Brunei as a niche market rather than a large one," suggested a self-styled economist.
Efforts to attract industries in renewable energy and technology sectors could distinguish Brunei.
Invest in Human Capital: Align educationEducating young people in alignment with market demands is crucial.
Reforms in curriculum and the introduction of vocational training in high-demand sectors like digital technology and green energy are needed.
"Our youth represent our future, but we’re failing them," lamented an intellectual, highlighting the necessity for a significant overhaul of education and training systems.
Adopt Smart Investments: MoveThe nation should shift from cautious spending to strategic investments.
"Prudence is acceptable, but boldness wins the race," argued a former policymaker.
Targeted investments in renewable energy — especially solar farms—could position Brunei as a regional green energy hub.
Strengthen Regional Collaboration: By leveraging ASEAN partnerships, Brunei can integrate into regional supply chains and align with global trade standards.
Potential initiatives could include Brunei leading in halal certification across ASEAN or developing solar farms to power local and regional energy grids.
Foster Participatory Governance: Establishing Citizen Councils and e-governance platforms can engage the public in decision-making processes.
Grounded in Brunei’s Malay Islamic Monarchy framework, participatory governance can promote inclusivity, transparency, and accountability while reflecting cultural and religious values.
A National Wake-Up Call
The attention surrounding the "ASEAN Insider" report should serve as a wake-up call for Brunei.
Imagine a future in which Brunei leads the region in renewable energy, providing clean power to its ASEAN neighbours via interconnected grids.
Envision a vibrant Islamic finance hub that attracts global investors or a flourishing ecotourism sector showcasing Temburong’s pristine rainforests.
As one retired official aptly stated, "The nation must become conducive to development—socio-economic and political—as a means of escaping what appears to be stagnation."
Bold reforms and strategic leadership are critical to realising this vision. The opportunity to act is now; it requires courage, unity, and a willingness to embrace change. (MHO/01/2025)
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