Brunei opportunities seen amid Asia growth

BRUNEI should take advantage of opportunities as Asia's economic growth is expected to defy a global slowdown due to the mortgage crisis in the United States, speakers at an HSBC-sponsored roundtable yesterday said.

Stephen Green, HSBC's group chairman, highlighted that the economic outlook in Asia and in other emerging markets is more positive and set to outlive current instability and ripple effects from uncertainties in the US, the world's largest economy.

"The opportunities are there in several sectors; from service providers such as Hong Kong, to energy suppliers like Brunei itself," he said, while noting the encouraging intra-regional trading prospects in Asia.

At present, 55 per cent of Asian trade stays within Asia. Over the next 20 years, trade could be as high as between US$3 trillion and US$10 trillion, he said.

Dato Timothy Ong, the Acting Chairman of the Brunei Economic Development Board, concurred Asia's strength presents Brunei with many opportunities. "We should reap the benefits of our position amongst growing Asian economies," he told The Brunei Times at the sidelines of the forum.

"Asia's growth is one of the major drivers of the global economy and we are in the right region. There are so many opportunities that we can avail ourselves of, but only if we pull ourselves into the global market. We cannot just look inwards to just our own market," he said, highlighting that the board is identifying initiatives to connect Bruneian businesses with global demand.

"We are making progress but it needs to move with more brisk pace, but I also understand that when oil is US$100 per barrel, the urgency is lesser about grabbing some of these opportunities," he added.

Green is bullish about the coming year. "It is HSBC's view that emerging markets are set for a positive 12 months."

He noted that The Economist also has a rosy forecast this year, predicting growth of 7.6 per cent in the developing world against 1.8 per cent in developed countries.

Also, he said, global trade is forecast to move at a faster pace than world economic growth. He cited technological innovations, such as the Internet, have reduced trading costs while making it easier for buyers and sellers to network.

"Asia's economic development was until recently driven by external demand, rising domestic consumption and investment meaning that, in the future, Asian trade will grow faster than global trade," he said.



Still, he said, Asian countries face significant challenges such as controlling inflation, tackling skills shortages, addressing environmental degradation, and in some cases, improving political stability.

He also pointed to the possible fallout from the mortgage crisis in the US. "The fallout from the US subprime housing market and the current liquidity problems are obviously on everyone's minds and it is unclear how these issues will pay out. The housing downturn will certainly deepen this year and with the seasoning of mortgages, tighter credit conditions and reduced demand. This will affect consumer spending, job creation, and the appetite for investment."

Still, he said, "an American recession is by no means guaranteed."

Green also said the potential of other Asian countries should not be overshadowed by fast-growing emerging economies, such as China and India.

"We should not allow the 'Chindia narrative' to obscure progress in other countries including Malaysia, Indonesia and Vietnam, which can expect growth of eight per cent in 2008," he said.

Green's visit coincides with the bank's celebration of 60 years in the sultanate.

The Brunei Times

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