Brunei must speed up RKN projects

BRUNEI needs to speed up implementation of development projects already in the pipeline to able to post higher growth, which is not solely reliant on the oil and gas sector, the head of a think tank said.

Dato Paduka Dr Hj Ismail Hj Duraman (pic), executive director of the Centre for Strategic and Policy Studies (CSPS), said the government should thresh out more details about National Development Plan (RKN) projects to stoke growth, warning Brunei is in a "comfort zone" because of its oil and gas resources.

He noted that Brunei's economy, which is heavily reliant on oil and gas, has been running in a "straight line" of growth for a few years now, referring to the trend in Brunei's gross domestic product (GDP).

This is "worrying", he said.

Government data showed Brunei's GDP posted a 4.4 per cent growth in 2006, but weakened to 0.2 per cent the following year. The data further showed GDP contracting 1.9 per cent and 1.8 in 2008 and 2009.

The International Monetary Fund though estimates growth last year was at 4.1 per cent and 3.1 per cent this year.

From looking at the nature of Brunei's economy, which is still government driven especially in the non-oil sector, the private sector, for example, small-to-medium enterprises (SMEs), are largely relying on RKN projects, Dato Dr Hj Ismail said.

"So to stimulate and encourage economic growth we need to increase their productivity to expand, and hence future employment. It sounds simple and theoretical but this would be the growth path Brunei may pursue. To speed up the implementation of the projects that have already (been) approved," he told The Brunei Times.

So there needs to be more detail coming from the government on the status of RKN projects, particularly on which agency is championing each particular project, he said.

Aside from non-oil and gas government projects, Dato Dr Hj Ismail said that there are three main points to think about in terms of the Sultanate's oil and gas sector, which is the country's sole export.

"Now, we have to think about constant price fluctuations. Also, our over-reliance (on oil and gas), and an alternative source for it. Coming up with a different form of export than oil, will affect the country's GDP growth. But theoretically, it's easier said than done and implementation will be even harder," he said.

In a report on Brunei in June, the International Monetary Fund said its economic outlook for Brunei was "highly positive", noting that economic diversification while "becoming a matter of necessity" was "picking up momentum".

The IMF executive board which reviewed the Brunei economy commended the government for monetary and economic policies deemed to be effective in growing the economy.

"Over the medium term, under the baseline scenario, annual GDP growth is projected to be about three per cent," the report said, adding that growth will be sustained by new investments in oil and gas explorations and extractions, as well as the implementation of economic diversification projects.

Dato Dr Hj Ismail agreed with the report on Brunei's future, saying that oil and gas will always play its role as Brunei's backbone, but SMEs must also take advantage of developments and spin-offs in the downstream industry.

"However the oil sector is moving, if it's flourishing, the non-oil sectors should be part of it, moving with it, supporting it," he stressed.

"With new oil companies coming in, it will add to Brunei's oil production. Blocks CA1 and CA2 will definitely help us in the long run," he said.

He said the political unrest in the Middle East and the US dollar exchange rate also need to be watched as they have impact on global oil prices.

"We are a player in the sector as exporters. So if (price) is going upwards, we may get something out of it, but if it drops, that will affect us as well. Looking at both ends, fluctuation of price will indirectly or directly affect our GDP," he added.

Dato Dr Hj Ismail said Brunei has to be ready with an education system more focused on vocation or technical curriculums and programmes as His Majesty had pushed for in his 65th birthday titah.

"With a better vocational education and industrial developments like PMB (Pulau Muara Besar) the future expectation of our economy is going to be much much better," he said.

Dato Dr Hj Ismail said studies on alternative energy and energy efficiency conservation, are part of CSPS' efforts to assist the Sultanate.

"We are also looking into manpower, population studies and so on. It's important to see what sector we are headed into next. Is it IT, agriculture? Those are all important, but we need to know which sector the government is looking into," he said.

As of March, almost 30 per cent of the 1,040 projects under the RKN9 (2007-2012) have been completed, the Second Minister of Finance Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim said. Some 48 per cent of these projects are in the process of implementation or under construction, he said.

Six per cent are in the tender stage, nine per cent are in the design phase while the remaining eight per cent are in the planning stages.

A budget of $1.05 billion for fiscal year 2011/2012 has been prepared under RKN9, similar to last year's. The Brunei Times