Will you buy a $20 pack of cigarettes?

Thank you for NOT smoking

Recently Bruneians have had a significant policy issue to deal with in their daily lives. First and foremost, the Tobacco Order has unleashed a flurry of exchanges between citizens and government, through media portals such as brudirect.com, and Borneo Bulletin. The issue isn't just confined to us only too. In today's article in Borneo Bulletin titled Yudhoyono sued over tobacco treaty, the article reported that 4 NGOs are suing the Indonesian president for failing to protect the welfare of Indonesians - amidst the increasing cost of food and fuel, cigarettes remain the cheapest around the region and its net effect is increasing tobacco related health issues, further pushing millions of Indonesians into poverty.

While Bruneians aren't exactly in the same situation, we nonetheless should take heed from this scenario - Bruneians will continue to spend on relatively cheap cigarettes while destroying their health, amidst potentially increasing prices in food, and other material goods - in fact today's Borneo Bulletin already highlighted the increased in CPI in the past 3 months. The Brunei authorities have done everything they can to make the Tobacco Order work, setting up task forces and putting up signs. But 2 very critical component of any effort to reduce tobacco consumption alludes the authorities political will to enforce: 1) pricing, and 2) placing disturbing pictures of the effects of smoking on packaging of cigarettes to discourage smokers. As most develop nations progress in their anti-tobacco drive, these measures have been taken up.

So why did the authorities not introduce higher pricing for tobacco as part of the Tobacco Order? Given that we can safely assume that increasing the price of cigarettes will, with almost 100% certainty, affect the sale and consumption of cigarettes, we can only guess as to why pricing hasn't been adjusted upwards. Perhaps it is to placate the smokers in our society, or perhaps adjusting the pricing of cigarettes is more politically sensitive and therefore requires a more measured approach and intervention. Note: yes we do hear the counter argument that increasing the price may just encourage smuggling and the black market for cigarettes, but regardless of this occurring, increasing price will have the net effect of reducing ease of consumption of tobacco for younger Bruneians as they are less likely to take up smoking if they cost alot and approaching the black market for a pack of cigarette may just be too inconvenient for any youth to contemplate.

The second step in which Bruneian authorities can introduce into the Tobacco Order is to require importers to include 'gory' pictures of health effects of smoking (we need to confirm whether this is already in the Order). Most countries have these graphic warning labels, and personally we can attest to its successful effect of stopping you right in your tracks when you reach to buy a box of cigars, you also get a picture of someone's cancerous lungs on display, or a picture of an aborted foetus - not a pretty sight, yes we know, but neither is dying from lung cancer due to smoking. WARNING: click here, here and here to see sample of these pictures but you have been warned, they are EXTREMELY disturbing.

So will the authorities make the tough call and take the more paternalistic and more committed approach and introduce more effective policies to control the spread of smoking? And if so, when? What we don't want is to see all the song and dance of anti-smoking by various government ministries, but at the end of the day in practical terms, smoking remains unabated and allowed to continue to grab a hold of Brunei's next generation.

Teenage Mutant Ninja Turtle - Eggs poached

Not sure what the appeal is, as most of us have never tried a turtle egg before, but as this stories show, it seems Bruneians still have an acquired taste for turtle eggs - a protected species (i.e. the turtle).

The news release mentioned that the eggs were brought into the country for sale, at a value of over $4k. Question is, where are these eggs being stolen from? If we're to protect the species, not only do we have to stop the demand of them in Brunei but also work closely with our neighbours to stop the theft of these eggs and manage sanctuaries for turtles.

I wonder what punishment will be dished out to the local that was apprehended. Will it be strong enough to act as a future deterrence to him and others?

Economics Glut

Sad fact...

According to today's Brunei Times article, economics isn't likely going to be a popular subject any time soon. Given our earlier call to promote economics amongst our local student populace in order to equip them for our economic diversification efforts, this is very discouraging. Hope people like Rogue Economist will provide a few comments to this issue and how perhaps we can boost interest in Economics.

Time permitting, we'll come up with our own commentary of this issue in the next few days.

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.