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.
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.
