INTRODUCTION The sultanate is pressing ahead with moves to open up and diversify the economy
Finding a niche at the heart of a dynamic region

For a small country of just 350,000 people, Brunei is starting to think big. Still heavily dependent on revenues from oil and gas, the sultanate is pressing ahead with moves to open up new areas of the economy to foreign investment, including tourism, financial services, hi-tech and telecommunications.
Politicians and leading executives talk confidently of a country that could one day serve as a regional hub for businesses throughout the Asean bloc and beyond.
There are plans to turn Brunei into a regional centre for information technology, with the recently formed Brunei IT (BIT) Council mapping out a development strategy, introduce the concept of e-government, expand internet usage and to set up an eco-cyber park.

The government is also looking to develop a container terminal at Muara Port, which would pave the way for the country to become a hub for the Brunei-Indonesia-Malaysia-Philippines East Asia Growth Area (BIMP-EAGA).
The government is enacting new legislation to attract investment, and addressing accountability and transparency with the establishment of an audit committee to monitor the public purse. The Brunei International Financial Centre, a ministry department, has already reported interest from 30 firms in areas such as insurance, banking and asset management.
Competition is strong though, with Hong Kong, Singapore and other Asia-Pacific nations chasing the same investment opportunities.
A proven track record of stability, a strategic position and a well-educated workforce
However, Brunei can offer a proven track record of political and social stability, a well-educated workforce and a strategic position in the heart of one of the world’s most dynamic regions.

For Dato Seri Paduka Haji Selamat Bin Haji Munap, deputy minister of finance, the positioning of Brunei as a hub for international services requires careful management and planning, based on a sound, balanced budget.
Dato Selamat points out that this is “part and parcel of the diversification of the main economy”, which includes increasing the value of the services sector as well as that of manufacturing and agriculture.
He believes that, as an offshore financial centre, Brunei should model itself “somewhere between Singapore and Bahrain”, two of the world’s most favoured banking centres. Like Bahrain, Brunei aims to be a centre for Islamic finance, but with a difference.

“We have our own unique heritage here,” says Dato Selamat, highlighting the country’s long-standing reputation for affluence, built on hydrocarbons, and its well-developed commercial and business centres.
Certainly, buoyant oil prices during the last year have done nothing to dent the country’s prospects, giving the government some slack as it masterminds the transition to a new, more robust economy. But the transition will take some time, according to experts, and more legislative changes are needed.
The need to strengthen the services sector and diversify the economy is echoed at the revamped Brunei investment Agency (BIA). Managing director Hj Muhammad Syaippudin Hj Abdullah says Brunei is seeking “more commitment” from foreign companies and the BIA is ready to assist them.

“We have told them that our operations are very transparent,” he says. “We do not hide anything. When they deal with the BIA, they are dealing with a professional agency and we will commit ourselves 100 per cent.”
The response of the international oil and gas community to the opening of three exploration blocks later this year will be another key step in opening up the economy. Dominating the business is Royal Dutch/Shell, but the government is keen to introduce competition.

Pehin Lim Jock Seng, permanent secretary at the Ministry of Foreign Affairs, sees a potential market of 1.5 billion people

The move could also have implications for the expansion of the gas sector. Pehin Dato Haji Yahya, permanent secretary at the prime minister’s office, expects to see greater activity in the downstream sector and related industries over the next few years. “Brunei will still be dependent on oil, although more industries will be linked to oil,” he says.

Other industries are also being targeted such as agricultural processing, fishing, and the manufacture of furniture, pottery, tiles, cement, chemicals and glass. The local construction sector is expected to remain dependent on government-funded infrastructure projects, although an upturn in private sector activity could ease this.
There is also considerable excitement over the tourism sector, which is currently undeveloped but shows potential.
Pehin Dato Lim Jock Seng, permanent secretary at the Ministry of Foreign Affairs, suggests that Brunei could serve as a political role model within Asean.
He says the government must examine the sultanate’s position in the region – a market of more than 1.5 billion people, including the Chinese market – and identify a niche role to play.
“Suppose that after 25 years we don’t find any more oil or gas resources, what will we do? That is the biggest challenge for us. We need new people with a new way of thinking, and we must also take advantage of our position.”