What's in the News today?

Interesting News

Some interesting news pieces today from The Brunei Times and Borneo Bulletin. Both papers reported on the issue of excessive personal lending in our country, and most of us already know that if we continue on our credit spending habit, ALOT of people will end up in financial difficulties. The only saving grace for us is that our society provides alot of safety nets when it comes to financial difficulties: His Majesty's Government, family & friends, and religious institutions. But I hope we don't overwhelm whatever assistance that is provided and redirect attention from more positive projects that these agencies can do for our country.

In other news, looks like another bank has decided to 'maybe' hop on the Islamic Banking bandwagon, another positive sign showing our country's push to make Brunei a central hub for Islamic Banking and Finance. Islamic Banking and Finance has the biggest potential to grow and there are alot of potential investors who would like to invest in Islamic funds but have difficulty doing so due to its limited reach at the moment - a friend of mine have been thinking of investing but cannot find any Islamic funds where he lives and if there is a fund, it is still too new for him to judge whether the fund is doing well (yes, historical past performance DOES NOT necessarily mean or promise good future performance, but it still helps to know). So let's hope this one continues to grow and show progress.

And lastly, price capping and control is on the agenda again, this time for the construction industry. Brunei currently already have price caps and/or subsidies: caps for cars, and subsidies for essentials such as petrol, rice etc. But normally caps and subsidies are only introduced for 'essential items' (cars are listed as essential items by our government by the way). Normally price caps aren't favoured by economists as they distort free market mechanisms and can actually harm the industry in the long term, even for essentials such as food - and in economics, rent (see here and here). And here's another explanation why price controls aren't a good thing in construction, courtesy from the Massachusetts Institute of Technology:

Remove price controls. Experience shows that price and distribution controls on conventional building materials, such as cement and roof sheets, reduce the incentive for new producers of alternatives to become established in areas remote from the point of manufacture. Removal of price controls would put up materials prices in some areas initially, but may help stabilize them in the long term by bringing forward new small-scale locally produced alternatives.

(Source: Here)

Let's hope the government agencies looking into this consult our local and international economists (which I'm sure they will) to avoid any unintended consequences of actually harming the industry in the long term.

P.S. By the way, I firmly believe that Economics should become a core subject for ALL Secondary level students for Brunei in the near future. We need more economists and we need them badly.

Votes for Donations...

Misguided good intentions?

All good intentions aside, at the end of the day though, this is still vote selling. Of course the VERY positive outcome of such a move is the benefit reaped by a worthy institution doing a lot of good for Brunei. But then again, if we're not careful, this may become a common practice which really would not be desirable.

The other bloggers up for the award may probably also have a few thoughts of their own over this issue.

So, is this ok then as long as the consequences of the action outweigh the negative, or do you think that the act itself is wrong and therefore should not be encouraged?

Food for Thought

Dissent or Concerned Patriotism?

As a Bruneian, we're all acutely aware that sometimes criticism is hard to swallow, especially when such critique is sent in your general direction, attacking your ability, competence or sincerity. On the other hand, as an educated citizen who feel strongly about the future of our country, it also seems fair that we would start to assume a more proactive and vocal role when it comes to matters that concern our social and economic welfare. But, disconcertingly, somehow it seems extremely hard to escape the fact that, if as an individual I question the government or the lackadaisical attitude of some of our fellow Bruneians, that it would be labeled as dissent, that that I would be personally labeled as an ingrate and not appreciative of the gifts of our country and our government. Worst of all, will they label me, as they say in Bahasa Melayu, derhaka?

So, is dissent and being patriotic mutually exclusive? If concern citizens like myself let rip on some issue about our government and criticize a fellow Bruneian or Bruneians in general, who in our honest opinion is simply not doing enough for society, would you consider me disloyal and unworthy of being a Bruneian?

Food for thought.....

Where art thou, 777s?

Will they or won't they bring in those planes?

I have no idea what happened to those 777s. It is alleged that Royal Brunei Airlines were, through some extremely complicated leasing agreement, about to embark on a new chapter with the 'new ' old planes. They would be looking to capitalise on the long haul service which has been a redeeming trait of the national carrier, catering to the smattering of tourists that were keen to fly from the Southern Hemisphere to the North.

Months have gone by and no sign of it yet. Traversing through cyberspace, you can only pick up bits and pieces of information, nothing really mindblowing now after the series of articles that The Brunei Times had touched on last year lifting the lid on the whereabouts of the planes. Delve further and further into the murkiness of it all and I was surprised to find out the age of the planes, formerly of United Airlines and Vareg in the Americas, North and South respectively.

Whilst one of the aircraft has been painted, and my does it look good, it seems after a few emails to plane spotters at Fort Worth in Texas, that the plane still sits at a hangar there as recently as a few weeks ago.

A close friend was disappointed to hear that he would not be able to make the trip to London at the tail end of last year, after having specifically drawn up plans to travel on the 777 and visit family in the UK, via Brunei. His plans were meticulously planned out so that he could see what Bruneians get up to on the weekends and jump, hop and skip to play golf in Bangkok... or was it the other way around? Regardless its the type of visitor that would probably have spent in Brunei, and those are which would benefit the nation's tourism receipts. He changed his plans and flew to Bangkok, skipping Brunei entirely, because he had more to gain by travelling Qantas. The fairly innocuous reason behind the loss of this customer? A rewarding frequent flyer programme.

I have spoken to friends and acquaintances about travellers who would be more inclined to hop onto what would have become Brunei's halo aircraft, and spend some time in Brunei before they feel the urge to carry on with the next segment of their trip. The opinion has been unanimous in that the delays would serve to hurt the national carrier and Brunei's tourism other than anything else.

While there are a number of stops to contend with on the current service, being fairly non-plussed about these things budget travellers enjoy a fair inflight service, sans alcohol of course, with options to spend some time in Brunei and traverse through to other parts of South East Asia is still a big drawcard. Yet the expectations for these visitors to spend much, or plan an extended stay at the Empire Hotel, would seem to be somewhat misplaced because the majority of a different variety.

They remind me of another acquaintance, Sullivan, that came through Brunei on his way from countless other countries and cities in Europe, that included Scandanavia, the Emirates in the Middle East, East Asia and N. America. They love going out to see the world, them Aussies... He stayed at some kind of rest house, a backpackers' inn of sorts here in Brunei, he couldn't explain where it was really and from my brief chat it was in the vicinity of Gadong. Sullivan walked everywhere, and he spent a grand total of 80 Brunei dollars during his 4 days and 3 nights. Of course touring the world on a budget and visiting 120 locales throughout the globe, extravagance could result in being stranded in a foreign country, and most are better of for being frugal.

So I guess we'll have to just contend with feeding our tourism industry with more Sullivans. Except RBA have just suspended flights to Bali, and Shanghai, potentially making it less attractive to the Sullivans in this world. Infact whilst Ray Sayer has come out to say that it is a strengthening of the core network, it underlines the fact that RBA have their work cut out for them. It would seem that the 777s are the least of their worries... as for the arrival of the Dreamliner, not wanting to sound harsh, but I think it would be best to take it with a pinch of salt and for now, at least, to dream on.

Where are you?????

A Nation of Bad Debtors?

Are we really that bad at paying our debts?

Ali (not his real name) is pacing up and down his small office. He’s facing a financial crisis, not because his business isn’t brimming. By all accounts, he should be making a fair amount of money from his construction projects, but not a cent has gone into his bank accounts and late payments for projects he has completed is squeezing his cash flow. ‘If this continues, I won’t be able to pay my suppliers. Some of the outstanding payments due to me is way past the 60 days credit period, and as a result I have had to extend my own repayments to suppliers’, Ali confides. Meanwhile, Ahmad (again, of course, not his real name), one of many end customers of construction projects, in this case, a renovation project for his parent’s home, is proudly announcing to his friends that he hasn’t bothered approaching the contractor to pay for the window frames put up on his house. 'They (the contractors) have called me once or twice asking for the payments but I was busy then so I couldn’t meet up. Since then they have stopped calling, so why hassle myself to pay. Maybe when they chase again…' Ahmad confides.

It seems, we Bruneians can be rather bad debtors. In a March 13^th 2008 report by The Brunei Times (here), Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim, the Second Minister of Finance, announced that collectively, we Bruneians owe the government a staggering $226 million in unpaid utility bills, $106 million from unpaid electricity bills and $44 from water (the remaining $78 million was not alluded so it would be great if MOF could tell us where the rest of that $78 million we Bruneians owe is). Yes, folks, that’s $226 million. And just to drive home the point how much $226 million is at the national level (because at the personal level we KNOW how much $226 million is!), let’s look at how this money can be used to fund our national development. Based on the national budget that was presented in the recently concluded Legislative Council meeting, $226 million is sufficient to run:

1. The Prime Ministers Office ($49.8 million – approximated figures), the lead government agency in the country.
2. Narcotics Bureau Department ($9.6 million)
3. Anti-Corruption Bureau ($7.1 million)
4. Royal Brunei Police Force ($121.8 million)
5. Law Section ($0.8 million)
6. Attorney General ($10.1 million)
7. State Judiciary Department ($8 million)
8. Labour Department ($5.9 million)
9. Royal Customs and Excise Department ($13.5 million)

Source: Here

Total the figures up and you’ll get about $226.6 million. Yes, we think perhaps it's time for all of us responsible Bruneians to wake up and smell the roses (although we doubt this bad debtor situation will smell as pleasant) – we owe the government enough money to run 9 government agencies, 8 of which, as you may have noticed, are agencies linked to some form of law enforcement (Prisons Department cost $14 million, which is not included above but we’ll tap that from the amount owed by Bruneians who prefer not to pay for their mortgages – see here). Note: there's no particular reason why I focused on the law enforcement agencies in particular, but simply to make a statement that the amount we owe is enough to cover one aspect of our country's government.

Yet despite all the rhetoric from government agencies, pleading the good will of the people to pay, citing hospitals and schools that can be built with that money, has the calls of our leaders, both government and religious been heeded? Or has it fallen on deaf ears, losing out to the thunderous inner self centeredness to hold out on paying as long as we can? We do acknowledge that there are fellow citizens out there who may be living under the poverty line and therefore cannot afford to repay and in fact need help through Zakat funds for their daily commitments. But there is also a proportion who end up in financial difficulty out of financial naivety, and if that is the case, shirking their financial responsibility when religious leaders have alluded to us this simple advice is simply not acceptable. And if you thought that being bad debtors is a behaviour restricted to individual citizens of Brunei, then you would have thought wrong. Even government agencies owe money and find it difficult to repay that debt, going past the 30 days credit period normally afforded by suppliers and their contractors.

Some of you may ask, what about using legal avenues to recoup the bad debts? Well, of course that is an avenue to explore, but legal avenues are costly, time consuming and doesn't guarantee Ali we spoke about earlier any financial compensation - the debtor can file for bankruptcy, or choose to pay $50 a month on, say a $10,000 debt (yes I've seen it happen) because that's all he can afford, a situation that hardly helps the cash flow problem facing Ali. And there is no legal recourse if your debtor is the government itself because as far as we know from our rudimentary knowledge of Bruneian law you can't sue the government. And let us also not forget the incidences where debtors actually shout and scream at the business owners for trying to collect debts!

So, after all that's said and done, we feel that it is our moral obligation to ask a rather soul searching question for us Bruneians:

Are we, as a nation, seriously a bunch of bad debtors? What perpetuates our behaviour to the extent that almost a quarter of a billion dollars is owed in utility bills? More worryingly what perpetuates this behaviour to be seen at government level as well?

The problem exists and we have acknowledged it, so now what can we do to solve this problem? If pleading to good will and a sense of personal responsibility does not work, is it time for government agencies to crack the whips and show a, shall we say a more direct approach at collecting debt (we're not suggesting the Dominic Mick Gatto style of debt collection so don't worry)? We've already noticed a few years ago when the Department of Electrical Services cut the power to hundreds of businesses for failure to pay their bills on time, and we saw how quickly they ran to pay them off - a tactic that is know being explored for households as well, recently brought up at the LegCo (here). I guess, sometimes, even as adults, a little smack on the 'bottom' (or wrist if you prefer), might get the intended results - (note: the humanitarian side of us also suggests that the relevant government agencies identify true cases of the needy who really cannot afford to pay to be provided some form of financial assistance).

At the end of the day though, we must all acknowledge this is a problem that must be solved, sooner rather than later, either by gentle coaxing or a more direct KITA (Kick in the A) approach. And it should be time that the relevant policymakers decide which is the best way to address this issue and set a plan out to solve it once and for all, taking into account social and economic repercussions (to a large extent, political too). But whatever is decided and eventually done (and we stress that it should be done soon) we hope the bills are paid up to the government, and Bruneians develop a better sense of financial responsibility (we can hope, but we're also pretty sure a few bad consequences dished to bad debtors will work wonders too). Ali, and many like him, will continue to pace up and down his office, worrying about his business cash flow, if this situation continues as it is. The last thing we want is the bad debtor syndrome become a disease to our entrepreneurship drive, claiming more legitimate and honest businesses, who are striving to survive in Brunei's already challenging economic conditions.

And let us not forget too that Ahmad's contractor will be calling about that outstanding bill soon ....

B and D, stands for Brain Drain.

This has been a long time coming, first and foremost, I'd like to say hello to the readers who have come across this spot in cyberspace and please hang in there with us as we try and emulate other local contemporaries who have succeeded in composing material which is not just relevant but also interesting to read.

Personally I hope that it a challenge that we can overcome in due time, speaking of which, I will have to limit my contributions to an entry per week. Prior engagements dictate it to be so, and without further adieu, let me begin with my first topic of "debate".

The Trade Policy Review has rattled a few cages, but the intention from our end, as well as that of the WTO, I am sure is not to offer scathing criticism. If anything please view it as the constructive kind.

One thing I would like to point out is an article written by Izam Said Ya'akub, from The Brunei Times in November last year. It came about from Asia Inc's Small Can Be Beautiful and I think it highlights the situation currently being faced by our private sector. There are of course other aspects which arise when we reflect on our attempts to inject some verve into the non oil and gas sector, however I feel that this is best left to the experts to determine which demands greater attention.

What is not in question is that Brunei is faced with "Brain Drain". While the forum talks about the private sector, the fact of the matter is that even the public sector is being jilted by trained professionals who despite being born and bred in the Abode of Peace, choose to live and practice their skills abroad.

Doctors, Lawyers, Engineers and Architects are amongst those who have taken the opportunity to hone their skills outside of Brunei Darussalam. There are also Graphic Designers, ICT professionals, Media and Communications graduates who are seeking to gain the relevant experience abroad before, at least that is what they say, returning to Brunei Darussalam to contribute and give back to home.

I spoke to our family doctor about the situation last month, who has found difficulty in finding a medical practitioner that is willing to leave the Government service and take over his practice. He appealed to me, asked me to look for potential GPs that could continue something he started around 30 years ago.

The working hours are reasonable, they can earn almost four times more than what they would see working within the Government, plus a customer base that he confided was around 200,000 people. That's right, half our population has been through his doors and I can't ever remember seeing the premises being empty.

Calling up an old high school friend treating patients in England, he said it was appealing, but he feels that after specialising in a particular field, it would only be something he'd only consider doing much later in his career.

There have also been family members of my own, who have elected to stay abroad, years now after completing their academic studies in order to fulfill ambitions, career goals and find their fortunes. Infact I'm anxious for the return of one, because I've explicitly requested him to help me with the design of my future house.

So not only is Brunei robbed of a great architect, but others, in their plentiful. However I do not have the answer to this conundrum, and it will probably be a long drawn affair, as with most 'Chicken and Egg' situations. If we can figure it out though, our economy may still continue to be somewhat small, but it could possibly cease to be a weak one thus providing the platform and opportunity for it grow.

Signing off, because time is rarely on my side.

E-Government comments - what say you?

Technology: Enabler or a solution in and of itself?

A couple of days ago, we received a comment in our posting on e-government, from ole. Ole suggested that one factor contributing to the failings of Brunei's e-government initiatives lies with the selection of the change agents or project leaders, i.e. they are all from an IT background. In the worlds of ole:

".... it is a big disaster to let the IT community leading the e-government initiatives in Brunei (such as ITSSD and the EGSPEC). Not only it is a bottom-up approach; IT people don't normally focus on national policy objectives but more on the 'hardware' side of e-government. They always miss the human side of IT innovation. This explains why we have no G2C or G2B after 8 years of e-government".

We're glad that ole has posed this question on Debating Brunei. After all, this site was set up with this goal in mind: to spark discussion and debate about issues that arise from our country's economic, political and social development. We also firmly believe that our maturity as a country is measured by our ability (especially our government) to allow open discussion and debate without devolving into finger-pointing & shouting matches that are more akin to territorial marking behaviour than civilised discourse between intelligent and informed stakeholders of this country's future (off on a tangent,we know, but we wanted to emphasise the goal of Debating Brunei).

Now back to ole's question. We believe that ole's brought up an important issue that we should discuss and analyse. Has the government, in their zeal to push the e-government initiative forward, somehow forgotten about the human element in IT and e-government? To a degree, we believe that ole is right to suggest that sometimes IT professionals may not be able to look at the e-government issue from a national policy perspective - in reality, however, we must also accept that most IT professionals aren't exactly trained to think in national policy terms.

Sometimes, technology is somehow given so much attention that instead of technology being seen as a means to an end - an enabler of change, so to speak - it is seen as an end in itself. That is, technology somehow is adopted for the sake of technology without allowing it to enable the human element to push for development and improvements in our system. A perfect example of this is our national identity smart card. Designed with a smart chip that is suppose to carry all our personal details (we'll research into this in more detail in due course), Brunei's national identity card has become nothing more than an expensive, glorified and somewhat misguided exercise. Adoption of technology in this instance, have done nothing to contribute to any improvements in our government systems and processes, because the human element in the e-government equation have not been followed through with sufficient commitment and resources to enable the technology to push for real change.

Perhaps there are IT professionals out there who disagree with ole's and our assessment. Or perhaps the solution to the question posed is not as simple as we think. Whatever differences in opinion there may be on this issue, perhaps we could spark up a discourse on this issue, and through Debating Brunei, come up with some meaningful answers to the issue at hand.

Well, the floor's all yours......

WTO: Trade Policy Review on Brunei Darussalam 2008

Diversifying from Oil and Gas.....again...and again......

Today The Brunei Times published an article highlighting a report by the WTO Trade Policy body (hat tip to The Brunei Times for bringing this report to our attention). In The Brunei Times report, Izam Said Ya'akub highlighted key points in the report: that Brunei is still too heavily dependent on the oil and gas industry as observed from its share of the country's GDP, and despite Brunei's continuous effort and rhetoric to diversify from oil and gas, Brunei's non oil and gas sector seems to have shrunk instead, from 3% of GDP in 2002 to only 1% at the end of the policy review. Suffice to say, Mr. Red and Mr. White decided to trudge through the internet to find this report, and within a few minutes, managed to find the report that The Brunei Times was dissecting - see here - (on a side note, Mr. Black will be joining our team soon, but he's caught up with work at the moment).

The report itself is over 100 pages, and it took us a while to digest the material. Certainly the The Brunei Times article has summarised key important points in the WTO report, but there were alot more details in there that, as we mentioned, newspapers either cannot or would not be able to cover. We're here to provide that information.

What's Inside the WTO Policy Review?

WTO's assessment and review of Brunei Darussalam, which it calls 'a prosperous, relatively open economy still overly dependent on oil and gas', was conducted within the backdrop of our country's 8th National Development, and while Brunei has achieved some success in some sectors (more later), overall achievement as highlighted by The Brunei Times, has not been very encouraging. Bruneians as a whole has enjoyed the windfall from historically high oil prices, and that benefit has translated to a healthy increase in our per capita GDP (we cannot tell if the graph included in www.bt.com.bn has data reflecting this as the table provided is too small, and we didn't have time to find a hard copy of the paper - edited: note: figure shown below from brudirect.com). From 2002 to 2006, Bruneians have enjoyed an almost 100% increase in our per capita GDP (in US$), from B$30,398.0 (US$16,976.5) in 2002 to B$47,964.0 (US$30,185.4) in 2006. The figures are presented below in chart and table below:

Brunei' s GDP per capita is almost on par with Singapore's and in fact we have enjoyed faster growth rates each year than Singapore in the period 2002-2006 (Singapore recorded an average growth rate of 6.88% per year, while Brunei enjoyed almost double the growth rate, calculated at 12.12%). Data for Singapore is shown below (Singapore provides their data online and can be accessed through here, something the Bruneian e-government initiative that we mentioned in our earlier post should take note).

Singapore GDP per capita 2002-2006

However, in interpreting and comparing our GDP per capita to Singapore's, we must not forget that Singapore has no natural resource and all of its GDP per capita increases over the last 40 years since its independence on the 9th August 1965 has been driven by human resource and their capacity to successfully build one of the cleanest, most transparent and efficient economies. While 94% of Brunei's total revenue comes from oil and gas, vulnerable to oil and gas fluctuations, as the WTO has observed, Singapore's revenue comes from a diversified pool of sectors such as banking and finance, services, tourism, manufacturing, etc, reducing their risks to external shocks.

Share of Main Sectors in GDP for Brunei

Oil and Gas: Brunei Yakin?

The importance of the oil and gas sector's contribution to Brunei's economy during the 2002-2006 period simply cannot be emphasised enough. The WTO report stated that Brunei:

'continues to owe its economic prosperity overwhelmingly to its abundant petroleum and natural gas resources, whose share of current GDP grew from 53% in 2002 to 69% in 2006' (emphasis added).

Oil and gas export's share of total exports from 86% to 96%. The report also highlights that:

'Petroleum ... continues to be the main source of revenue for the Government. Corporate taxes and royalties paid by oil and natural gas companies now account for some 94% of all government revenue, up from 86% at the start of the review period in 2002. By contrast, Brunei levies virtually no tax on personal incomes or on goods and services. Tax revenue therefore fluctuates with oil and gas production, changing petroleum prices, and the profitability of the oil and gas industry. For most of the period under review, the saving of windfall revenues associated with high energy prices has placed the Government in a strong fiscal position and thus helped stabilize the economic cycle'.

As such, only 6% of what we earn as a country comes from sources other than oil and gas, which as the WTO highlighted, puts Brunei in a position where it can suffer great external shock, at the mercy of international market forces dictating oil and gas prices.

Another worrying issue is also that while oil and gas continues to propel Brunei's economy forward, the same period 2002-2006 saw the non oil and gas sector shrink, despite our government's effort to diversify our economy. Brunei's economy therefore, as a matter of fact, is in such a precarious position that no one in Brunei or anyone in the world for that matter, can predictably control if we continue to expose ourselves to the risk of being totally dependent on one source of revenue. We are TRULY at the mercy of global political and economic forces, and with a large proportion of our population that we argue are still wet behind the ears when it comes to our country's (and to a large extent, their personal) economic and financial situation, it is a worrying situation.

How much more do we have?

One of THE most important question for Brunei apart from 'when can we truly successfully diversify from oil and gas' is 'how much more of that black gold and gas do we still have?'. In our earlier posting, we suggested that Brunei's economic diversification policy started in the 1970s, but further research has revealed that Brunei was well aware of the need to diversify by the mid 1950s - almost 60 years ago. In a report by E.R. Bevington titled ' A Report on the Economic Development of the State of Brunei, published 30 June 1955, Bevington writes:

'The dependence of the State on oil this becomes apparent. And oil is a wasting asset. So long there is only one known reservoir (Seria) oil revenues will progressively decrease to a point where the oil field is eventually closed down.

Contrarily annual expenditure is increasing rapidly, and with the fulfilment of the development programme a substantial additional burden of annually recurent expenditure will be imposed on the State of the fabric now being built is to be maintained as oil revenues decrease...

In short then, the problem is to save sufficient against the years to come when oil diminishes, while at the same time making a second string to the State's bow in the form of genuine economic development. Expenditure should be governed by these two overriding considerations'.

So as far back as the 1950s, we were already aware that oil and gas is, as Bevington calls it a 'wasting asset', and according to the WTO, based on current extraction rates, Brunei have around 10-25 years of oil left with upwards of 40 years for natural gas, all these figures are widely quoted from various sources reporting on the economy of Brunei.

Our own team here at DebatingBrunei also did a modest calculation based on figures that we can find, and have come up with almost similar figures: based on CIA Factbook's figures for Brunei's proven reserves at 1.35 billion barrels (as at 2006) and the estimated extraction rate of oil at 200,000 barrels per day (although sources from insiders suggest that BSP will drop their extraction targets for the next 5 years to approximately 190,000 barrels per day due to their emphasis on contract fulfillment for their natural gas operations), not withstanding that Brunei manage to find new oilfields, oil will run out around 18 years. Natural gas proven reserves are at an estimated 374.8 billion cu m (2006) with production of 11.03 cu m (we assume per year as it isn't stated) then we have approximately 30 years of natural gas left. However insiders in the oil and gas industry suggest there are still oil and gas reservoirs to be found, but they are located in deep sea and the cost of extraction and deep sea exploration may be prohibitively expensive. So basically, barring that we find new oil and gas reserve, we have around 15-20 years to ensure that we, as a country can achieve what we have not been able to do for the past 50 years. A tall order, but one we think can succed if we as a country TRULY want to (perhaps only when we feel the pinch of a post oil and gas economy - a scenario which no Bruneian would want to see come true).


Why didn't we save enough as what Bevington suggested way back in 1955?

The fact of the matter is, we, as a country DID save sufficient and invested our sovereign wealth funds to ensure we have enough to generate income outside of oil and gas. According to a report by the Economic Intelligence Unit (as reported within the WTO report), Brunei had approximately US$80 billion worth of foreign assets in the early 1990s, which according to the WTO report:

"generated considerable investment income, which in many years seems to have exceeded the combined revenue from oil and gas'.

With income from our sovereign wealth fund investments higher than that generated by oil and gas, it would have meant Brunei would not have been exposed to 'oil and gas' shocks. Sadly, with all the fiasco of mid to late 90s, (see here and here), Brunei's wealth has dwindled to an estimated US$30 billion worth of foreign assets, which anyone with rudimentary mathematical abilities would be able to conclude that income generated from current foreign assets level is far from what Brunei was earning in the 90s. A very sad fact indeed.

On the plus side, the high oil prices over the past few years would have generated a huge surplus (although tempered by the devaluation of the US dollar), would help the country's effort to rebuild of our foreign assets and sovereign wealth funds. The biggest challenge however, according to the WTO report is our lack of transparency to these investments and the activities related to Brunei's sovereign funds, which as they suggested, is one of the bigger red marks on Brunei's Trade Policy Review 'report card'.


More to come.......

The WTO report is as meaty as you can get from an international report. With over 100 pages worth of data to sift through, the team will do its best to highlight other issues brought up by the WTO such as: a lack of transparency in government investment activities, disparity in public-private sector income which renders the private sector development agenda difficult, and the fact that Brunei's slow economic growth over the 2002-2006 period estimated at 2.5% cannot keep pace with Brunei's growing population (rate of 3%) , which means Brunei's unable to generate sufficient jobs for our labour market (hence our team suggests, will likely lead to a steady increase in unemployment if this trend continues).....


We'll get back to the report again soon.....

Alcohol *hic*hic* or $$Money Laundering$$?

We here at Debating Brunei have been contemplating on the next issue of discussion. There's a ton of material or issues to dissect and discuss, and we not only draw inspiration from our local media (BB, BT, RTB), but also from the international media (BBC, CNN, AL Jazeera, New York Times, you name it.....). We thought though perhaps it might be fun to look into something that our local media would never contemplate touching (too hot a potato) and provide as objective an analysis on the topic of choice as possible.

We thought long and hard and Mr. Red proposed that there were two particular issues that were of great interest: 1) the issue of alcohol sales (not in Brunei per se, but our neighbours) and how much of our money actually flows out of our country as a result of a thriving legal alcohol trade in Kuala Lurah; and 2) how money laundering in Brunei can affect our local business scene and economy in general. This of course is based on our opinion that money laundering does exist, and that many insiders and businessmen privy to such information has said so in many a coffee shop talk.

Two rather big and interesting topics, and we hope we can pull it off tastefully to spark an intelligent conversation about these two issues. You can help us decide by voting in the online poll in the sidebar. Whichever gets the highest vote will get our analytical treatment (or a pseudo-intelligent attempt to do so)...

E-government in Brunei - Where do we stand?

Back on the E-Bandwagon!

From a report by Narissa Noor from the Borneo Bulletin, it seems like e-Government is back on the agenda again. The setting up of the E-government National Centre which began operations today (1st April 2008) marks the fulfillment of only one of many criteria that will be used by the UN when it assesses its member countries' e-government readiness.

Of course there are various other important features that will be used (see below) which the Brunei government will undoubtedly try hard to meet, but one important question still remain - How are we actually doing in comparison to our neighbours and also importantly have we been improving in our readiness for e-government? Narissa's report that 'In a study conducted by Brown University in the United States, Brunei was ranked 104 out of 198 in the 2006 global e-government study, putting the Sultanate well on its way in the implementation of a successful e-government', is certainly optimistic sounding to say the least but unfortunately a fundamentally flawed conclusion (does being ranked 104 out of 198 suggest that we are truly on our way to successful e-government? Perhaps not when we see the figures discussed below)

Figure above: criteria for assessing e-government
readiness by the UN for their 2008 upcoming report

Slipping and Sliding

Data published by the UN from 2003 shows that despite being ranked relatively high in 2003, Brunei Darussalam have consistently slipped down the readiness scale since then. In 2003, Brunei was ranked 55th out of 173 countries that were assessed and indexed by the UN. By 2004, we have dropped 8 places to rank 63rd out of a total of 178 countries. And by 2005, Brunei Darussalam had slipped a further 10 places to rank 73rd out of a total of 191 countries. Amongst our Asean neighbours, Brunei came in ranked 5th, with Singapore (global rank 7th), Philippines (41st), Malaysia (43rd) and Thailand (46th) grabbing the 1st-4th spots (see table below), and Indonesia, Vietnam, Cambodia, Myanmar and Laos ranked 6th-10th respectively. In 2005, Brunei has indexed below the global average of 0.4922, scoring only 0.4475.

Does the slide constitute a worrying trend? Perhaps it is when you consider that Thailand was ranked 56th in 2003, one spot lower than Brunei, but by 2005, have leapfrogged over Brunei while Brunei was sliding down the scale! It seems some of our neighbours have been more proactive in climbing the scale and ensuring their e-government agenda is right on track. And since data for 2006 and 2007 is somehow unavailable from the UN site (2008 is on its way), we will have to wait for later this year when the 2008 report comes out to see if we have improved since 2005.


So what's the problem?
It is difficult to say why Brunei Darussalam slipped almost 20 places from 2003 to 2005. Criteria and features for review can change from year to year, but these changes are likely to reflect the increased expectations of the UN for more inclusive and sophisticated e-government structures to meet increasing demands for ICT services, to achieve what they call e-inclusion. The current situation in Brunei is such that while the Prime Minister's Office have taken the leadership role in e-government initiatives, such as today's launch of the new centre, it still has a long way to go to meet global benchmarks of an inclusive e-government. Trawl the various existing government websites and you will have difficulty finding some features mandated by the UN such as online services and transaction, and the citizen participation criteria set out by the UN for this year's assessment is probably one that Brunei will likely to fall short on. But go visit websites of governments listed high on the readiness scale by the UN such as the US, Canada and Australia, and you will find that anything and everything is possible through their respective government agencies websites. For example, in all these countries e-government initiative, their citizens invariably enjoy the ability to:

• Apply and complete transactions for anything, from driving license to passports, or file in your tax returns ( from anywhere in the world),
• Purchase government publications as easily as it is to order books from online stores.
  
• Download all documentations on procedures, policies and restrictions on all government processes.
  

In fact, you can pretty much do EVERYTHING online in these countries if it is government related.

So what IS the actual problem in Brunei? Let's explore some possibliities that we came up with (and certainly NOT limited to):

1. Bruneians do not actually see the benefit of e-government - how true is this? The only way to do so is to actually survey or poll a sample of our fellow Bruneians to see if they truly understand what e-government means. E-government is created for the people to serve the people at the grassroots level better. It is not only a government agency to government agency transaction per se, but government agency to the people of Brunei. If the people in Brunei (sometimes this unfortunately includes those who work for the e-government initiative) do not truly see the benefits, then no amount of push by the PMO and their agencies will help. This as such is a problem of mindset, of realising the true benefits of e-government.

2. Brunei's telecommunications infrastructure is still relatively poor: Industry insiders would probably be able to give a much more objective and informed decision, but anecdotal evidence suggest that we are lacking behind in our infrastructure. As of today, there are places in Brunei which Telbru still cannot provide broadband services to. Even in existing broadband areas, the service is far from stable. Reports from various economies have time and time again shown that access to broadband services can in fact reduce transaction costs for businesses and government in general. Unless Telbru is given assistance in raising its infrastructure to international standards, we may always be a few steps behind (this is further compounded by our rather small population size, and as such insufficient to support the high fixed costs of introducing and maintaining infrastructure. The introduction of 3.5 G services from DST and b.mobile may fill in the gaps, but pricing remain high and will do no help to the still relatively low penetration for broadband services in the country.

3. Internet penetration, or rather broadband penetration remains low. In order for e-government to be fully realised, broadband services need to penetrate a large proportion of the population. Dial-ups are the dinosaurs of telecommunication and doesn't add any value to the e-government agenda. But while our internet penetration as a whole is relatively high (estimated at 43%, almost there with Singapore - see here for details), broadband penetration remains dismally low, at an estimated 3%. Here's a report on South East Asian internet penetration:

'Of Asias estimated 450 million Internet users in early 2007, only about 65 million were to be found in South East Asia. In other words, South East Asia had around 14% of the Internet user population of the region at the time. Despite highly penetrated Internet markets to be found in Singapore, Brunei and Malaysia, South East Asian economies are more generally in the developing phase when it comes to Internet, with user penetrations typically at the lower end of the scale. At the lowest level we find Laos, Cambodia and Myanmar, all with user penetrations of less than 1%. In terms of broadband access, only Singapore rates as a highly penetrated market (65% of households by early 2007). Despite a flurry of activity in markets like Malaysia and Thailand, South Asia continues to lag well behind the more developed markets of the region in the application and penetration of broadband Internet access. South East Asian - Internet markets - user penetration and subscribers - 2006 Country Internet user penetration Internet subscribers (million) Brunei Darussalam 43% 0.17 Cambodia 0.4% 0.06 Indonesia 8% 18.5 Laos 0.7% 0.04 Malaysia 44% 11.3 Myanmar 0.2% 0.1 Philippines 7% 6.0 Singapore 62% 2.7 Thailand 18% 11.4 Vietnam 17% 14.7

And if you look at Singapore, whom if you remember is ranked 7th in the world in terms of e-government readiness, broadband penetration is estimate at 65% of total households, and 18% of total population (see here). That's 6 times more than Brunei's broadband penetration.

Statistics are provided below:


The e-government initiative's successful implementation does not solely depend on one or two key factors but a whole host of factors that are very much at the macro level. We will have mindsets to deal with, as well as real infrastructure issues to contend with. While Brunei is certainly moving in the right direction, much still needs to be done. At the end of the day however, the government's push for e-government can only truly be successful when all the pieces fall together (some more difficult than others such as the Mount-Everest-of-commercial barriers such as Brunei's small market size). And if they do eventually fall in place, succesfully tied by a vision strong enough to push through those physical and 'metaphysical' barriers, we might just find ourselves rubbing shoulders with our Singaporean neighbours on that UN readiness ranking list. We'll just have to wait and see.