Brunei’s Retail Slump Boosts Malaysia’s Economy

BANDAR SERI BEGAWAN, SEPTEMBER 2024: While Brunei’s retailers are left counting their losses, businesses in neighbouring Sarawak and Sabah are laughing all the way to the bank, thanks to a surge in spending from Bruneians crossing the border. 

 

The latest report from Brunei’s Department of Economic Planning and Statistics (DEPS) paints a sobering picture of falling retail sales, but there’s an elephant in the room that wasn’t addressed: the billion-dollar leak as Bruneians flock to Malaysia for better deals.

 

In the second quarter of 2024, Brunei’s retail sector experienced a 6.1% drop in sales, with revenue shrinking from BND 446.1 million in Q2 2023 to BND 418.9 million. 

 

Sales volume also fell by 5.9%, signalling a widespread reduction in domestic consumer spending. 

 

Key categories like furniture, household equipment, and electrical appliances were hit hardest, with furniture sales dropping by a staggering 19%. 

 

The DEPS report attributes these declines to reduced consumer demand, but many on the ground believe the real issue goes unmentioned — Brunei’s billion-dollar cross-border shopping habit.

 

For years, Bruneians have crossed into Miri and Kota Kinabalu in search of better prices and wider product variety. 

 

The favourable exchange rate and lower costs for everything from groceries to clothes have made Malaysia an irresistible shopping destination. 

 

Before the pandemic, Bruneians made over two million trips to Malaysia in 2019, and as restrictions eased, the trend returned in full force. In 2023 alone, 1.57 million trips were made across the border. 

 

Though the DEPS report doesn’t address this directly, the economic impact is undeniable. 

 

Sarawak has been one of the biggest beneficiaries. In January 2024 alone, Sarawak received 350,000 tourists, bringing in RM 900 million in revenue, a large chunk of which came from Bruneians. 

 

As businesses in Miri thrive, Bruneian retailers are struggling to compete. Supermarkets saw a 6.9% drop in sales, while department stores faced a 6.0% decline. For many local shop owners, the cross-border drain is impossible to ignore. 

 

“We just can’t compete with Miri’s prices,” lamented one shopkeeper. “Why would people spend here when they can get the same products for much less in Malaysia?”

 

The problem isn’t limited to retail alone. Brunei’s food and beverage sector is also feeling the pinch. Revenue fell by 1.0% in Q2 2024 compared to the previous year, with fast food outlets seeing a 3.2% drop and restaurants experiencing a 1.5% decline. 

 

While the DEPS report attributes this to reduced local demand, many Bruneians are opting to dine out in Malaysia, where food is often cheaper and the variety more appealing.

 

For many Bruneians, cross-border shopping and dining aren’t just about saving money — it’s about access to better quality goods and services. 

 

“The price difference is huge,” says a regular shopper from Brunei. 

 

“I can get everything I need in Miri for a fraction of what I’d pay back home. Why wouldn’t I go?” 

 

This sentiment reflects a broader issue facing Brunei’s retail landscape: the inability to compete with Malaysia on price, variety, and experience.

 

This cross-border drain is not just an annoyance for local businesses; it poses a serious threat to Brunei’s long-term economic ambitions. 

 

The country’s Wawasan 2035 vision aims to diversify the economy and reduce reliance on oil and gas, but the outflow of billions in consumer spending to Malaysia is undermining these efforts. 

 

A recent policy brief by Associate Professor Dr Khalid Ahmed from the Institute of Policy Studies at Universiti Brunei Darussalam, titled "Cross-Border Cash Drain," estimates that Brunei is losing over BND 1 billion annually due to cross-border shopping. 

 

That’s BND 1 billion that could be circulating within Brunei’s economy, supporting local businesses and creating jobs. Instead, it’s filling the pockets of retailers in Sarawak and Sabah, leaving Brunei to wonder how it can stem the tide.

 

As Sarawak’s economy booms — with its tourism industry employing nearly 20% of its population — Brunei’s businesses are left asking how they can keep their customers at home. 

 

Without intervention, the cross-border leak will continue to threaten the country’s economic stability, particularly as it strives to diversify and grow beyond its reliance on oil and gas.

 

So what can be done? 

 

Some experts believe that lowering shop rents and introducing incentives for local businesses could help make Brunei more competitive. 

 

Others suggest that expanding the variety of goods and services available locally is key to keeping Bruneians from crossing the border. 

“It’s not just about price,” says one economic analyst. “Bruneians want options. If we can’t offer them that, we’ll keep losing customers to Malaysia.”

 

At the heart of the issue is the question of national pride and economic self-reliance. 

 

As Brunei pushes towards Wawasan 2035, supporting local businesses has never been more important. Yet, the allure of cheaper prices and more choices across the border remains strong, pulling Bruneians away from their markets. 

 

In the end, the billion-dollar question is this: can Brunei plug the leak? 

 

As retailers struggle and cross-border spending continues to rise, the future of the country’s economy could depend on how quickly and effectively this issue is addressed. 

 

The next few quarters will be crucial in determining whether Brunei can find a way to reinvigorate its retail sector and keep its wealth at home or whether its neighbours will continue to prosper at its expense. (MHO/09/2024)

Economic Growth or Social Harmony: What Will Define Brunei’s Future?

As Brunei races toward its Wawasan 2035 vision, are we too focused on economic growth while ignoring deeper challenges that threaten our future? Beneath the surface of progress lies a hidden iceberg of social issues—poverty, corruption, and rising crime—that could derail the nation’s ambitions. Can the spiritual and ethical foundations of *Melayu Islam Beraja* and *Negara Zikir* guide Brunei toward a more balanced and just society, or will we miss the mark on genuine development? Explore the complexities of Brunei's future in this analysis. MHO

 

 

BANDAR SERI BEGAWAN, SEPTEMBER 2024: As Brunei forges ahead with its Wawasan 2035 vision, the nation’s path to sustainable progress rests on two fundamental concepts: Melayu Islam Beraja (MIB) and Negara Zikir. 

 

These guiding philosophies aim to balance the country’s spiritual and material development. 

 

However, the journey toward achieving this ambitious vision is fraught with challenges. From rising crime, unemployment, and mental health issues to deep-seated problems like poverty and corruption, Brunei faces a reality that necessitates more than just economic growth to achieve national success. 

 

A recent analysis from the Fakulti Usuluddin at Universiti Islam Sultan Sharif Ali, led by Rasinah Ahim, emphasises the importance of Negara Zikir as a philosophy that not only strengthens national stability but also reinforces the principles of MIB in governance. 

 

Yet, challenges in translating these ideals into practical policies become apparent as Brunei confronts social, economic, and administrative hurdles. 

 

The central question emerges: how effectively have MIB and Negara Zikir been integrated into governance and policy to address Brunei's pressing social issues?

 

An Iceberg of Challenges: Beyond Economic Metrics

 

In a decade-old video recording from a workshop on Wawasan 2035, a Bruneian government official offered a striking analogy, comparing the vision to an iceberg. 

 

The visible tip represents Brunei's economic ambitions—GDP growth and infrastructure development—but beneath the surface lie the more profound challenges of governance, societal well-being, and spiritual alignment with Islamic values. 

 

The official, who had only recently learned about these concepts despite not being Muslim, questioned whether Brunei's focus on economic metrics overshadowed the deeper values of Maqasid Syariah. 

 

This Islamic governance framework emphasises the protection of five essential elements: faith (din), life (nafs), intellect (aql), lineage (nasl), and wealth (mal). 

 

His reflections remain relevant today, as these core elements are critical to ensuring the holistic development of a nation beyond mere financial prosperity. 

 

For example, Brunei’s growing social issues—such as rising divorce rates, poverty, school dropouts, and unemployment—signal that the balance between material progress and societal well-being remains off-kilter. 

Divorce rates alone surged from 588 in 2022 to 735 in 2023, underscoring the stress on families and raising questions about the protection of lineage (nasl), a key goal of Maqasid Syariah.

 

Meanwhile, school dropouts and mental health issues among youth suggest gaps in safeguarding intellect (aql).

 

Measuring Progress: Is GDP the Right Metric? 

 

One of the key insights from the video and other reflections on Brunei’s development is the question of whether GDP is an adequate measure of national progress. 

 

The official noted that Bhutan, a small Himalayan nation, has adopted a different approach: using a Happiness Index to measure success rather than GDP alone. 

 

This index focuses on the well-being and happiness of its citizens, ensuring that economic growth does not come at the cost of social and spiritual fulfilment. 

 

Bhutan’s Gross National Happiness (GNH) index measures nine domains: psychological well-being, health, education, time use, cultural diversity, good governance, community vitality, ecological diversity, and living standards. 

 

This holistic approach ensures that national policies serve not only economic needs but also cultural, environmental, and social objectives. 

 

Similarly, Brunei’s guiding principles, particularly those embedded in Negara Zikir and MIB, offer an opportunity to rethink how the country measures its success. 

 

As Rasinah Ahim’s paper suggests, Brunei’s focus should be on developing a “Zikir Nation” where spiritual and material well-being is balanced. 

 

This philosophy calls for a holistic view of progress—one that goes beyond the surface of economic development and delves deeper into the nation's core values of Islamic ethics, environmental stewardship, and social harmony.

 

Corruption and Governance: A Tarnished Administration

 

Compounding Brunei’s challenges is the issue of corruption within its administration. 

 

Despite ranking second in the ASEAN region in corruption indices—behind only Singapore—Brunei has not escaped the negative impact of corruption. 

 

Since the Anti-Corruption Bureau (ACB) was established in 1982, 2,469 cases of alleged corruption have been investigated, leading to 284 individuals being brought to court and 231 convicted of offences such as bribery, criminal breach of trust, and submitting false financial claims. 

Beyond criminal charges, 260 public servants have faced administrative punishments for abusing their positions for personal gain or favouritism. 

 

These instances of corruption undermine public trust and stall the very policies that aim to build a prosperous and ethical nation. 

 

Tackling corruption and the abuse of power is critical to realising the full potential of Wawasan 2035 and ensuring that it aligns with the country's spiritual aspirations.

 

Poverty: The Hidden Struggle in a Wealthy Nation

 

While Brunei is often perceived as a wealthy nation, the reality of poverty in the country presents a different picture. Brunei ranks 11th out of 78 countries in terms of the percentage of its population living in poverty, with a staggering 43.7% living below the poverty line. 

 

In 2012, over 20,790 individuals, or more than 5% of the population, were reported to be living in poverty. 

 

This stark reality highlights the gaps in Brunei's wealth distribution systems and raises questions about whether the nation’s policies, rooted in the principles of Negara Zikir and MIB, are being implemented effectively to address economic inequality. 

 

Poverty, along with rising crime and unemployment, threatens the nation’s stability and contradicts the Maqasid goal of protecting wealth (mal). 

 

Crime, Poverty, and Social Stability: An Emerging Concern 

 

In addition to poverty, crime remains an issue that tests the resilience of Brunei's social fabric. 

 

Data from the Royal Brunei Police Force and the Narcotics Control Bureau show fluctuating crime rates across categories. For instance, offences against persons—such as those harming individuals' physical or emotional well-being—reached 511 cases in 2023. 

 

Meanwhile, property crimes, although reduced from a peak of 3,854 in 2014 to 1,105 in 2022, continue to present challenges. 

 

More concerning is the rise in penal code offences, including cybercrime and fraud, which surged from 669 cases in 2012 to over 1,700 by 2023. 

 

This reflects not only local challenges but also global trends in technology-driven crimes. 

 

Drug-related offences have also seen a resurgence, with 2,161 cases reported in 2023, underscoring the need for stronger enforcement and rehabilitation efforts. 

 

These crime trends, coupled with issues such as poverty, school dropouts, unemployment, and mental health challenges, test the stability that MIB and Negara Zikir aim to protect. They highlight the need for governance that not only addresses economic progress but also tackles the root causes of crime, corruption, and social instability.

 

Bridging the Gap: Policy and Implementation 

 

The heart of the issue is not that Brunei lacks the values or philosophies to guide it forward. 

 

MIB and Negara Zikir are well-established as cornerstones of the nation's governance framework. 

 

However, the challenge lies in translating these ideals into actionable policies and implementing them effectively. 

 

Inefficiencies in Brunei’s zakat management and welfare systems are key examples. 

 

Zakat, designed to redistribute wealth and promote social equity, often fails to reach those most in need due to administrative delays. 

 

Similarly, the welfare system, while well-structured, struggles to provide timely assistance to the vulnerable. 

 

These systemic issues have persisted over the years, as highlighted in a 2020 workshop led by Professor Amin Abdul Aziz at Universiti Brunei Darussalam, where it was emphasised that execution, not philosophy, remains the primary challenge. 

 

Additionally, strengthening oversight and improving transparency in these systems could help ensure that the principles of Maqasid Syariah—particularly the protection of wealth (*mal*) and the well-being of society—are fully realised.

 

Moving Forward: A Balanced Approach for Wawasan 2035 

 

As Brunei continues its march toward Wawasan 2035, the nation must recalibrate its approach to balance spiritual well-being with material advancement. 

 

The reflections of officials, captured on video a decade ago, remind us that the real mission lies not just in economic growth but in creating a just and equitable society that aligns with Brunei’s Islamic values. 

 

Corruption must be rooted out, poverty alleviated, and social services strengthened to ensure that all citizens benefit from the nation’s development. 

 

Only then can Brunei fulfil the true aspirations of Wawasan 2035, building a nation that is both prosperous and blessed with spiritual harmony. 

 

Brunei’s future rests on its ability to bridge the gap between policy and practice, between tradition and modernity. To fully realise its vision, the nation must commit to strengthening its governance frameworks, prioritising the well-being of its people, and upholding the values that form the very foundation of its identity. (MHO/09/2024)

  

In a nutshell:

• Wawasan 2035 is Brunei’s goal for national prosperity, focusing on economic growth and development.

• The vision is built on Melayu Islam Beraja (MIB) and Negara Zikir, aiming to balance spiritual well-being, social harmony, and material advancement.

• However, Brunei faces challenges: rising crime, poverty, unemployment, school dropouts, and mental health issues.

• Corruption remains a critical issue, with over 2,469 cases investigated since 1982, undermining governance and public trust. 

• The article questions whether GDP is the right measure for progress, suggesting that Brunei could benefit from adopting Bhutan’s Happiness Index to prioritise well-being and social equity.

• Maqasid Syariah offers a holistic framework for governance, focusing on the protection of faith, life, intellect, lineage, and wealth—essential for true progress.

• Zakat and welfare systems face inefficiencies, with delays and mismanagement preventing wealth redistribution from reaching those in need.

• To fulfil Wawasan 2035, Brunei must address corruption, improve governance, and ensure social harmony while balancing material and spiritual progress.

Brunei’s SMEs Fuel Economic Revival: 2023 Census Shows Growth in Jobs and Revenue

BANDAR SERI BEGAWAN, SEPTEMBER 2024: Brunei’s economy is showing encouraging signs of recovery, according to the latest findings from the Annual Census of Enterprises (ACE) 2023. 

 

Conducted by the Department of Economic Planning and Statistics (DEPS), the census reveals growth in the number of active businesses, particularly among small and medium enterprises (SMEs), which continue to be the backbone of the private sector. 

 

This expansion offers an optimistic outlook for the nation's economic future, especially for business owners and the workforce. 

 

In 2022, the number of active enterprises in Brunei increased by 1.8%, rising from 6,454 in 2021 to 6,570 in 2022. 

 

While this growth may seem modest at first glance, nearly 98% of these businesses are micro, small, and medium enterprises (MSMEs), a clear indication of their dominant role in the country's economy. 

Medium-sized businesses saw the most significant growth, with a 4.7% increase, suggesting that many smaller enterprises are expanding their operations. 

 

Micro-enterprises, those with fewer than five employees, also grew by 3.4%, further demonstrating resilience during challenging times. 

 

The Wholesale and Retail Trade sector remains the largest sector in terms of the number of enterprises, representing 35.9% of all active businesses, with 2,359 enterprises. 

 

This continued dominance points to a stable foundation for local commerce and consumer activities. 

 

Furthermore, the Accommodation and Food Service sector saw the highest growth rate of any industry, increasing by 5.8%—a sign of recovery in the hospitality and tourism industries, which were severely impacted during the pandemic. 

 

Meanwhile, the manufacturing sector, accounting for 10% of total enterprises, also experienced steady growth, reflecting its importance in driving economic recovery. 

 

One of the most promising findings of the census is the increase in local employment within the private sector. 

 

In 2022, the sector employed a total of 117,591 people, with Bruneians making up 57.5% of this workforce. 

 

This marks a 2.8% increase from 2021, as more local workers found jobs, contributing to the country’s long-term goal of reducing its reliance on foreign labour. 

 

At the same time, the number of non-local workers declined by 1.7%, highlighting a shift toward a more locally driven workforce. 

 

This increase in local employment is particularly notable in sectors like wholesale and retail trade, professional services, and education, where Bruneians are increasingly playing a key role. 

 

While employment numbers are on the rise, wages across different sectors present a varied picture. On average, private sector workers earned BND 2,096 per month in 2022. 

 

However, certain sectors, such as Mining and Quarrying, provided much higher wages, with employees earning up to BND 8,130 per month. 

 

In contrast, workers in agriculture, forestry, and fisheries earned the lowest average monthly salary of BND 770. 

 

Despite these wage differences, the private sector’s total revenue reached an impressive BND 40.84 billion in 2022, a sharp increase of 28% from 2021. 

 

This surge in revenue is led by the manufacturing sector, which contributed BND 18.05 billion, followed by Mining and Quarrying with BND 9.86 billion. 

 

The Wholesale and Retail Trade sector also reported a revenue increase of 8.8%, underscoring the recovery in consumer spending. 

 

For business owners, these findings reflect a positive trend. The continued growth in local employment and the rise in revenues indicate that Brunei’s private sector is on a solid path to recovery, with SMEs leading the way. 

 

Government policies aimed at supporting SMEs and encouraging local employment are evidently paying off, as seen in the steady increase in the number of enterprises and the reduction in foreign labour dependency. 

 

The growing revenues across key industries also suggest that businesses are generating higher returns, which could translate into more opportunities for reinvestment, expansion, and job creation. 

 

At the same time, challenges remain for certain sectors. Construction and education, for example, saw a decline in employment and revenue, signalling the need for targeted interventions to stabilise these industries. 

 

Nevertheless, the overall message from the census is clear: Brunei’s private sector is rebounding, with local businesses and workers playing a crucial role in the nation’s economic future. 

 

For business owners, the time is ripe for seizing new opportunities, whether through expansion, innovation, or exploring new markets.

For the government, the report serves as a validation of efforts to strengthen local enterprises and employment, though continuous support and adjustments will be needed to ensure sustained growth. 

 

As Brunei looks ahead, the findings from the ACE 2023 present a picture of hope and resilience. 

 

The growth in SMEs, coupled with rising local employment and increasing revenues, points to a stronger, more diverse economy. 

 

While challenges remain, the foundations for a more self-reliant and robust economic future are being laid, driven by the ingenuity and determination of Brunei’s businesses and workforce. (MHO/09/2024)