'Little Napoleons' in Brunei: A Threat to Business and Efficiency

Power in the Wrong Hands? Brunei's public sector faces a growing challenge from so-called "Little Napoleons"—mid-level bureaucrats who misuse their authority, causing delays and frustrations for businesses and citizens alike. As Brunei strives to become a key player in the East Asian region, can it overcome this hidden obstacle that threatens its reputation for efficiency? Discover how these power plays are quietly undermining progress in our latest report.

 

BANDAR SERI BEGAWAN 2 SEPTEMBER 2024: A recent incident allegedly involving an immigration officer in Brunei has sparked new concerns about a troubling issue within the public sector, often called the "Little Napoleon" syndrome. This term refers to mid-level bureaucrats who misuse their power, causing unnecessary delays and frustrations for the public.

 

The incident occurred at one of Brunei's ports, where a ship crew, despite following all immigration rules, was forced by an officer to report to the immigration office over supposed passport issues. 

 

This situation could have been easily resolved on the spot, but the crew was delayed instead, leading to costly downtime for the ship. 

 

This unnecessary action frustrated the crew and hurt Brunei's reputation as a place where doing business is supposed to be smooth and efficient. 

 

This is particularly important as Brunei aims to become a competitive service hub for trade and transhipment in the East Asian region.

 

This case isn't unique. In 2020, His Majesty Sultan Haji Hassanal Bolkiah expressed concerns about similar abuses of power during an unannounced visit to the Ministry of Transport and Infocommunications. 

 

The Sultan highlighted issues like cronyism, improper issuance of vehicle licenses, and lax customs inspections at Brunei International Airport. 

 

He also pointed out that some people were reportedly bypassing official channels to get vehicle licenses, with reports of fake renewals avoiding proper checks. 

 

These issues show that "Little Napoleon" behaviour is widespread, damaging the credibility of government institutions.

 

Back in 2017, His Majesty made it clear that those given power should not misuse it for personal gain or to mistreat others. 

 

He emphasized that good public servants should serve honestly and sincerely, noting that efficiency is meaningless if it's used to harm people.

 

Brunei's public sector is known for its strict hierarchy, where authority is highly respected, and decisions are rarely questioned. 

 

While this system keeps order, it also allows "Little Napoleons" to thrive. These officials often create unnecessary rules and procedures, causing delays and frustration for those needing government services. 

The problem is not unique to Brunei, but it is particularly strong here due to the country's cultural and structural dynamics. 

 

The emphasis on hierarchy and the reluctance to challenge superiors create an environment where these behaviours can go unchecked.

 

The impact of "Little Napoleons" is significant. What might seem like a small act of power can lead to costly delays and a decline in service quality. 

 

More importantly, it damages Brunei's reputation as a place where business can be conducted smoothly, which is crucial for attracting international investment and promoting economic growth. 

 

Understanding why "Little Napoleon" behaviour persists in Brunei requires looking at the broader cultural and structural factors. 

 

The public sector is heavily influenced by values that place high importance on respecting authority and following tradition. 

 

Combined with a strong hierarchical structure, this often means power is concentrated in the hands of a few, with little room for questioning or reform. 

 

The lack of effective accountability measures makes the problem worse. While performance evaluations exist, they often aren't enough to stop those who misuse their power. 

 

Without clear feedback channels and opportunities for public complaints, "Little Napoleons" can continue their behaviour with little fear of consequences.

 

Fixing the "Little Napoleon" problem will require a strong commitment to accountability and service. 

 

The government has a system called TPOR (Tekad Pemedulian Orang Ramai), or the Client's Charter, which was introduced in 1995 to help improve service delivery in ministries and departments. 

 

To make TPOR effective, public servants need better training on how to serve the public while using their authority wisely. 

 

They must not misuse rules and regulations to complicate service delivery. Additionally, stronger accountability mechanisms, like regular performance reviews and accessible feedback channels, could help curb the excesses of these mid-level officials.

 

As Brunei modernises its public services, tackling the "Little Napoleon" syndrome is crucial to ensuring that the public sector serves the people effectively. 

 

By doing so, Brunei can strengthen its reputation as a country where doing business is possible, efficient, and straightforward, supporting its ambition to become a leading service hub in the region. (MHO/09/24)

In a nutshell...

In Brunei, there is a worrying trend in the public sector involving mid-level bureaucrats, often referred to as "Little Napoleons," who abuse their power. This leads to unnecessary delays and frustrations, disrupting public services and jeopardizing Brunei's aspirations to become a competitive service hub in the region. Despite efforts to improve accountability, the persistent existence of these power struggles among bureaucrats raises concerns about the efficiency and reputation of the country's public sector.

Vision 2035 in Focus: Where is Brunei's Workforce Heading?

As Brunei races toward Vision 2035, are we equipping our workforce with the right tools, or are we missing the mark? Despite our ambitions, underemployment, and a preference for foreign talent tell a different story. How can we bridge the gap between education and the realities of our job market? It’s time to rethink our strategies—because a vision without action is just a dream.

 

Vision 2035 in Focus: Where is Brunei's Workforce Heading?

 

Brunei's Vision 2035 aims to cultivate a highly educated and skilled workforce, serving as a cornerstone for the nation's long-term development strategy. 

 

However, achieving this vision presents challenges that underline the need for a deeper focus on organizational development, cultural adaptation, and people-centric reform.

 

An important challenge facing Brunei's workforce is the mismatch between educational outcomes and job market needs. 

 

Despite substantial investments in education, many graduates, including those with advanced degrees, find themselves in underemployed roles that fail to utilize their skills effectively. 

 

This trend emphasizes the importance of aligning educational programs with market demands and fostering a culture of continuous learning and adaptability within organizations.

 

The Manpower Planning and Employment Council (MPEC), established in 2020 under the Prime Minister's Office, plays a central role in addressing these challenges. 

 

MPEC's mission is to create a productive, sustainable, and competitive workforce by aligning workforce skills with the needs of the economy. 

 

However, this mission needs broader support through organizational development initiatives that promote continuous learning, knowledge enrichment (personally and organizationally), and the cultivation of organizational wisdom. Unfortunately, these elements have yet to be fully realized.

 

Continuous Learning and Knowledge Enrichment

 

Continuous learning is essential for developing a workforce that can adapt to the ever-changing demands of the global economy. 

 

Organizations, both public and private, must foster environments that encourage ongoing professional development. 

 

This includes providing access to training programs, offering opportunities for skill enhancement and upgrading, and integrating new technologies and methodologies. 

 

Knowledge enrichment, which involves systematically capturing, sharing, and applying knowledge, should be a priority. 

 

By promoting a culture of learning, continuous improvement, and adaptability, Brunei's organizations can enhance their capacity for innovation and adaptability. 

 

The Challenge of Achieving Organizational Wisdom and Maturity

 

In conclusion, achieving organizational wisdom and maturity poses a significant challenge for many institutions in Brunei. 

 

To address this, a focus on continuous learning, knowledge enrichment, and the ability to make informed decisions based on experience, knowledge, and insight is crucial. 

 

Additionally, organizational maturity involves sustaining effective operations over time while remaining adaptable to environmental changes. 

 

Unfortunately, many of Brunei's institutions have not fully integrated these elements. 

 

Cultivating a wise and mature organizational culture requires time, commitment, and a willingness to embrace change. 

 

Without these factors, the potential for Brunei's workforce to reach its full potential is limited. 

 

Furthermore, in addition to internal organizational development, the government's administrative reforms, such as privatization, corporatization, and commercialization of government activities and services, play an important role in Brunei's overall economic strategy. 

 

Privatization, like PPP, can increase efficiency, stimulate competition, and improve service delivery. 

 

However, it is essential to carefully manage these reforms to ensure they contribute to job opportunities and positively impact workforce development. 

 

Privatization and corporatization of government-run utilities and services should be accompanied by efforts to enhance organizational knowledge and wisdom, including providing opportunities for local talent to grow within private entities and fostering a culture of continuous improvement and adaptability. 

 

At the heart of these efforts should be a people-centred approach to development. By prioritizing human capital, Brunei can create a more resilient and dynamic workforce. 

 

This approach emphasizes employee engagement, professional growth, and aligning individual aspirations with organizational goals. 

 

Investing in people not only enhances an organization's capacity for success but also contributes to the nation's vision of a prosperous and competitive economy. 

 

As Brunei progresses towards Vision 2035, incorporating organizational development principles will be crucial for overcoming future challenges. 

Key elements such as continuous learning, knowledge enrichment, organizational wisdom, maturity, and adaptability need to be implemented. 

 

However, it is essential to recognize that achieving these ideals will require significant progress. 

 

Without a focused effort to cultivate these qualities within organizations, Brunei's workforce may not fully contribute to the nation's development. 

 

Therefore, the government's administrative reforms, including the privatization of corporations, need to align with these goals to ensure the development of a capable workforce that can drive Brunei's economic future. 

 

This balanced approach of lessening the government burden and increasing revenue profitability must go hand in hand with employment opportunities and human resources development. 

 

By adopting a people-centred approach to development, Brunei can come closer to achieving the ambitious goals outlined in Vision 2035. 

 

This will create a future where people are empowered, the economy is dynamic, and organizations are wise and adaptable. 

 

Although these qualities are crucial, they have not yet been fully embraced.

 

In a Nutshell:

 

·        Brunei's Vision 2035 aims to create a highly educated and skilled workforce, but challenges persist.

 

·        Despite investments in education, many graduates are underemployed, and there's a gap between academic qualifications and job market needs.

 

·        Organizational wisdom, maturity, and adaptability have yet to take root, hindering progress. The government should ensure that its administrative reforms, such as privatization, are in line with workforce development goals.

 

·        To achieve Vision 2035, Brunei needs to prioritize continuous learning, knowledge enrichment, and a people-centred approach within organizations, while also addressing slow economic growth and over-reliance on foreign talent.

Balancing Act: Will Closing Tax Loopholes Boost or Burden Brunei’s Economy?

Bandar Seri Begawan, August 26, 2024 – Following a recent exposé on businesses in Brunei allegedly exploiting loopholes in the tax system, experts from various fields have offered their insights, sparking a broader discussion about the implications of closing these gaps. 

 

The original article revealed how some businesses, particularly sole proprietorships and partnerships, avoid significant tax liabilities despite generating substantial revenue. While many agree that reform is necessary, there are diverging views on the best path forward.

 

A French Perspective on the Government's Role

One expert highlighted a French-centered approach to governance, noting how some believe in a highly interventionist government that collects nearly all the nation's GDP through taxes and redistributes it according to political agendas to ensure equity. 

 

However, this view was criticized for its potential to expand government activities at the cost of altering consumption patterns among the population. 

 

The expert cautioned that closing these "loopholes," which they argue are not truly loopholes, might lead to higher prices and an increased cost of living for Bruneians, rather than addressing the root issues.

 

The Productivity and Diversification Challenge

The debate deepened when the focus shifted to productivity. "My main concern is always, 'what do we do to raise productivity, raise the rate of productivity growth? What do we do to accelerate domestic diversification?'" remarked one expert. 

 

They emphasized that while closing tax gaps might free up resources for government spending, it could come at the expense of economic stability, particularly since Brunei already allocates a significant portion of its GDP to government expenditures.

 

The Metaphor of the Whirlpool

Another expert offered a vivid metaphor to underscore the risks of taxation in a system lacking transparency and accountability. "Would you throw money into a whirlpool? Because that's what it is with taxation without transparency and accountability," they remarked. 

 

The whirlpool symbolizes a situation where money is lost or wasted without clear oversight or understanding of its usage. 

 

In the context of taxation, the expert argued that without proper management, tax revenues risk being misused or squandered, ultimately failing to benefit the public. 

 

 

The Path Forward: Positive Incentives Over Punitive Measures

Several experts echoed the sentiment that Brunei should prioritize fostering a more productive economy through positive incentives rather than closing tax gaps that may lead to unintended consequences. 

 

They pointed out that Brunei already has successful models of productivity-driven growth that need to be scaled up and popularized. "Rather than expanding government functions, we should be looking at how to create an environment where businesses are encouraged to grow and diversify domestically," noted one expert, advocating for a strategy that balances tax reform with economic resilience.

 

Conclusion

The responses to the original article highlight a complex and nuanced debate over how to handle tax loopholes in Brunei's corporate sector. As policymakers consider their next steps, they must navigate the fine line between ensuring fairness in taxation and fostering an environment conducive to growth. The need for transparency, accountability, and a balanced approach is critical as Brunei moves forward in its economic development. (MHO/08/24)

Businesses in Brunei Exploiting Tax Loopholes

BANDAR SERI BEGAWAN — Brunei's business landscape may appear thriving, but a closer look reveals a critical issue: many of the country's most lucrative businesses are legally avoiding paying taxes, depriving the nation of millions in potential revenue. As Brunei grapples with an ongoing budget deficit, the question arises—are these businesses exploiting loopholes in the tax system, and what can be done to close them?

 

As of July 31, 2024, Brunei boasts 136,437 registered business names, mostly sole proprietorships and partnerships, alongside 14,485 registered companies (Sendirian Berhad and Berhad) and 959 foreign company branches. 

 

Yet, insiders estimate that roughly half of the registered companies are inactive. Meanwhile, many of the active businesses, particularly those operating as sole proprietorships and partnerships, are running multimillion-dollar enterprises—completely tax-free.

 

Legal Loopholes or Strategic Tax Avoidance?

Unlike registered companies that face a corporate income tax rate of 18.5%—with some sectors like oil and gas tax as high as 55%—sole proprietorships and partnerships in Brunei are exempt from paying corporate tax altogether. 

 

This legal gap allows many businesses, including those in retail, trading, wholesale, supermarkets, and services, to legally sidestep taxes while earning substantial profits.

 

For these businesses, the decision to remain unincorporated is not just about simplicity—it’s about shielding themselves from the corporate tax net. 

 

Additionally, some Sendirian Berhad companies may be active but generate meagre revenue, contributing insignificantly to the nation’s tax revenue. 

 

Others may employ smart accounting strategies, such as categorizing personal property—like cars and houses—as company assets, effectively reducing their taxable income.

 

The Cost to the Nation 

The impact on government revenue is significant. With such a large number of high-earning businesses legally avoiding taxes, the government is losing out on millions of dollars that could be used to fund critical public services, infrastructure projects, and economic diversification efforts. 

 

In a country that does not levy personal income tax, sales tax, or VAT, corporate tax is a crucial revenue stream. But when so many businesses contribute nothing, the burden falls heavily on those that do.

 

This loss of potential revenue is particularly troubling as Brunei continues to face a budget deficit, compounded by its reliance on oil and gas. 

 

The government has made economic diversification a priority, but with tax revenues falling short, these ambitions could be stifled.

 
Calls for Reform 

Experts argue that Brunei’s tax structure is overdue for reform. One proposed solution is introducing a minimum tax for high-earning sole proprietorships and partnerships. 

 

By setting a revenue threshold, the government could ensure that even unincorporated businesses contribute their fair share to the nation’s coffers.

 

Others suggest incentivizing incorporation through tax breaks or simplified compliance for small businesses, thereby expanding the corporate tax base. Strengthening tax enforcement and closing loopholes could also play a critical role in ensuring that all businesses pay their dues.

 

Public Debate: What’s Fair? 

As Brunei confronts these challenges, the public is left to ponder—should businesses be allowed to profit while contributing nothing to the nation’s tax revenue? Is it fair for some to bear the tax burden while others, often more profitable, escape it?

 

The debate is not just about numbers; it’s about fairness, equity, and the long-term health of Brunei’s economy. If these loopholes remain unaddressed, the nation could continue losing revenue at a time when every dollar counts.

 

With the budget deficit looming large, the question now is whether the government will take decisive action or allow this trend to continue. The answer could shape Brunei’s financial future for years to come. (MHO/08/24)

 

As Budget Grows, So Do Concerns: Public Calls for More Focus on Development

Bandar Seri Begawan 23rd August: Public concern has emerged regarding Brunei's 2024/2025 national budget, part of the 12th National Development Plan (RKN 12).

Critics argue that the current budget may not sufficiently address the need for economic diversification and infrastructure development, potentially impacting the nation's long-term sustainability.

The proposed budget for the 2024/2025 financial year, themed 'Building a Prosperous Future Together,' is set at BND6.25 billion, an increase from the previous year's BND5.96 billion.

This increase was announced by 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, during the 20th session of the Legislative Council (LegCo) meeting.

The minister outlined that the budget includes BND2.29 billion for emoluments, BND2.40 billion for recurring expenditures, BND500 million for projects under the 12th National Development Plan (RKN 12), and BND1.06 billion for acknowledged expenditure. 

Concerns remain about whether the budget prioritizes sectors that can drive sustainable growth.

Observers have pointed out that neighbouring regions, such as Sarawak, have seen rapid development, including mass transit systems, new highways, and expanded infrastructure.

In contrast, several districts in Brunei, including Tutong and Belait, are perceived to be lagging in visible development.

Economic analysts have highlighted that while BND17.5 million has been allocated for vegetable production, BND18 million for livestock development, and BND18.5 million for aquaculture sites, these figures may not be sufficient to significantly reduce Brunei's reliance on the oil and gas sector.

The minister forecasted that 75 per cent of the projected BND3.26 billion in revenue for the 2024/2025 financial year will still come from oil and gas, underscoring the continued dependence on this sector.

Further scrutiny has been directed at the lack of significant investment in infrastructure. While BND60 million has been allocated for airport runway upgrades and BND36.4 million for tourism infrastructure, critics argue that more comprehensive development is needed for long-term economic stability.

Another area of concern is the expected budget deficit, forecasted at BND2.99 billion. This figure will be updated periodically based on factors such as oil and gas production levels, global oil prices, and the performance of the non-oil and gas sector.

The government recorded a budget surplus of BND260.46 million in the 2022/2023 financial year, attributed to higher global oil prices, but the current outlook remains cautious.

Calls for greater transparency and public involvement in budget decisions have also surfaced.

Some citizens have suggested that a more participatory approach to budget allocation could help ensure that funds are directed toward areas with the greatest impact on national development.

"We need to ensure that budget decisions are made with input from a broad cross-section of society. This would help align spending with the needs and aspirations of the people," said a community leader from Belait District.

As Brunei navigates an uncertain global economic landscape, the debate over budget allocation is likely to continue, with many urging a renewed focus on diversification and infrastructure development.

The government's ability to manage its resources effectively will be crucial in addressing public concerns and securing a prosperous future for the nation. (MHO/08/2024)