SMEs keen on bulk-buying consortium proposal

SEVERAL small and medium enterprises (SMEs) have expressed interest in the idea of setting up a consortium to collectively purchase large quantities of production materials at lower prices.

The Minister of Industry and Primary Resources, Yang Berhormat Pehin Orang Kaya Seri Utama Dato Seri Setia Hj Yahya Begawan Mudim Dato Paduka Hj Bakar, recently suggested the formation of a consortium or "a single purchasing agency" to address cost issues when buying goods in bulk.

Hj Jali Damit, the manager of local bakery Nurul Hikmah, welcomed the idea, saying "I think it is a great idea, if it works for the purpose of addressing cost problems, I would be more than happy to join."

The cost of buying materials from abroad can be "troublesome", especially in low volumes, said Hj Jali.

"If we buy locally, a container would cost us 95 cents here, but if we buy abroad, we can get 60 cents for the same thing," he said. This is the reason why local SMEs often have to buy from overseas suppliers, he added.

"But if we only buy in small amounts, it is expensive, so sometimes we have to go there to buy on our own, and then we can only buy so much due to cargo policies."

A dialogue session should be held by the relevant authority in clarifying the idea to the SMEs and obtain feedback prior to the formation of the consortium or cooperation, he said.

Aizam Ahmad, the marketing manager of i-Run Enterprise, a convenience store, said that rising costs of raw materials is a global issue and continues to challenge local businesses.

i-Run enterprise imports plastic containers from China and supplies them to local SMEs in Brunei.

"All the raw materials definitely come from overseas because we don't have much of them here. So because of this, we have to increase our price to balance out the costs," she said.

Aizam said she would consider joining the proposed consortium if it would help address the issues faced by local businesses in Brunei.

"We have to see what privileges this consortium has to offer, if it can help us in so many ways, why not? We need to know more about this consortium," she said.

The general manager of Noraini Bakery, Hj Ahmad Metassan, said a consortium would enable businesses to compete with foreign companies and also minimise travelling costs.

"We normally would have to go to the neighbouring countries to buy our raw materials mainly because the materials are cheaper there," he said.

However, Brunei's small market restricts the company from buying larger quantities, said Hj Ahmad.

"Due to high costs (of buying raw materials), we would have to sell at higher prices. This is what is driving customers away. Another challenge is competing against foreign products, which are much cheaper."

He said the availability of raw materials in other countries allows foreign companies to sell their products at lower prices in Brunei. SMEs in Brunei "will never be able to do that", he said.

"If that body can also become a marketing agency, then all the better. We need the government's support in marketing," he said.

Hj Ahmad said that the agency should be manned or overlooked by the government as "they are the better negotiator in terms of policies".The Brunei Times