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Components of China’s Special Economic Zone in Relation to Brunei’s Economic Development


(Xi Jinping Meets Sultan Haji Hassanal Bolkiah of Brunei at the Great Hall of the People in 2014. Picture courtesy of http://www.news.cn)

The Brunei government has undertaken yet another bold step in intensifying economic development and growth with the signing of MOU to introduce a 40 square kilometres Special Economic Zone located in the Jerudong waterfront and Tungku region. China’s CFLD (China Fortune Land Development International), the government of Brunei, and Darussalam Assets (DA) will be the principle partners in carrying out the policy. As Brunei undertakes the path of development, it would serve us well to learn some of the concepts needed to enhance and build up the SEZ policy.

Special Economic Zones (henceforth SEZ) could be defined as government-owned lands that are zoned and leased to the private sectors or SOEs for the purposes of industrial and commercial activity for a given time period. SEZ is modelled after China’s SEZ policy, one of the bedrock economic policies that enabled China to take-off during their period of recovery under the leadership of China’s highly respected premier, the late Deng Xiaoping. The SEZ was first introduced in Shenzen in 1980 and subsequently expanded to other coastal cities such as Zuhai, Xiamen, Dalian, Guangzhou, Fuzhou, and Shanghai years later. SEZ was considered as an integral component of Deng’s Open Door Policy (1978). It also represents a core component of the Beijing model of development (or “Beijing Consensus”).

Deng Xiaoping’s main task was to revive China after decades of economic slowdown and recession. Knowing that focusing on developing China in its entirety would be a monumental task, he has chosen the said policy whereby he and his team would primarily identify, zone, build and incorporate a market-based economic system along the eastern coastal cities of China. Four areas were focused, namely agricultural, industrial, national defence, and scientific and technological sectors – this as conceptualised by Zhou Enlai in his Four Modernisation (1963) programme. Deng Xiaoping’s intent was that these coastal cities would become the economic dynamos that will fuel China’s rise, and will someday serve as models for inland city provinces to emulate.

At the heart of the approach was Deng Xiaoping’s “experimental point method” or the “experimentation-based” approach. The experimentation approach is a method whereby when you are about to undertake a nation-wide project, do it at a small scale first. If it fails, it fails, discard it before it causes any further damage; If it succeeds, it succeeds and it should be magnified. It did not take long before the coastal cities to succeed under the Policy. He quickly expanded the SEZ programmes to other Chinese coastal cities and eventually inland cities followed suit, strengthening the existing national market-based frameworks and accomplishing the Open Door Policy and Four Modernisation programme along the way. The process also contributed to immense global technological, management, knowledge, and capital inward transfer that were crucial in contributing to the rapid rise of China in the changing global order.

In regards to Brunei’s SEZ, there are a lot of factors that have to be considered. In SEZ the government-owned lands are leased shall be utilised for the purpose of targeted industrial and commercial activity. Brunei’s main economic composition of Oil & Gas would mean that there is a higher chance that China will continue on focusing on developing chemical-based downstream industries at the SEZ strip, to complement China’s US$ 4bn Hengyi plant project in Pulau Muara Besar. Such industries could subsequently produce additional economic demand for other inter- and intra-linked services, such as legal, insurance, banking, human resource, cleaning, and logistic services – in which Bruneians and Brunei-based businesses have to capitalise on. According to the Borneo Bulletin news article, CFLD will also be developing a “flagship new industry city model” in the designated area, which could be good news in capitalising economic development for the lands that have for so long been under-utilised.

SEZs may necessarily be given freer reign to extend its economic activities with more flexibility and with less imposition of government bureaucracy and regulation. In today’s climate, companies need to quickly capitalise on change and being set up in a market-based environment would potentially serve them well in scaling their growth within that zone. At the same time, Brunei must learn to regulate lightly how the companies in order that best practises could be implemented and potential mistakes mitigated from the policy. On this note, continuous learning is a must because the SEZ-like regulation could then be incorporated into the country’s economic legislation in order to make it more conducive for Brunei-based MSMEs and MNEs to be ever more competitive in the changing economic order.

Who knows through the access of knowledge and skill-sets in managing SEZs, perhaps the government could “repackage” the existing economic programmes (such as the Land Department’s former TOL policy) and offer them to local MPKs, Mukims, and Districts to apply them for local economic development purposes. This gives the people the opportunity to lease lands from the government with the purpose of promoting economic activities on behalf of the government with a more up-to-date system to ensure that economic returns can be maximised and potential abuses of the system minimised. For instance, a Kampong in Temburong could apply for a SEZ to host an eco-tourism zone or Mukim Mentiri could do a SEZ for fisheries zones quickly and efficiently. Then there is the question on whether what would happen to the land when it is leased. On this question, SEZ only leases government-owned land for a definite period of time. The land is owned by the Government of Brunei and will continue to remains so.

Concentrating the economic activity of inter-linked or inter-related businesses and industries within the SEZ zone will necessarily produce what development geographers would call the ‘agglomeration effect’. When people and businesses are concentrated within one or few locations, there is a higher chance of generating increased interactions and transactions among the parties operating in the area. Doing so will also enhance global-local links, knowledge transfer, economic transactions, and ideas generation needed to scale up growth and development. Urbanisation (people moving into BSB) and increased migration (expats moving to Brunei) may result from the process so we may expect an additional population increase if the project is successful and sustained in the next few years.

To unlock the fruits of the Brunei-based SEZ, it would also be good for the governments involved to strengthen their commitments to inclusive growth. Inclusive growth occurs when the vast majority of those directly or indirectly involved in the project gets a slice of the growth, particularly for the host country. In simple terms, that means it should create sustainable jobs for locals, particularly PMET/PTEM (Professional, Managerial, Executive, and Technical) jobs. Next, the SEZ could become another fundamental source of revenue for the government by means of taxation imposed on each hectare of lands that are utilised by our counterparts involved in the project. Next, local entrepreneurs or MSMEs have to be given continual assurance that they too could partake in the economic process through contract opportunities offered to supply inter- and intra-industry demands.

The SEZ also brings another opportunity for the people from Brunei and China to host additional dialogues with the public for the purpose of knowledge exchange. The key to succeeding in this regard from the Brunei government’s part is the need to involve the youths and private sectors in the discussion. Host a forum so they could get the chance to contribute ideas for change. Involving them would be a great initiative to empower the youth and local business community. Such engagement among the people from Brunei and China should be highly encouraged and intensified in Brunei in regards to SEZ and other areas of economic policy-making.

To conclude, SEZ is a bold step undertaken by His Majesty’s government that should deserve high praise. Such a policy modelled after China’s reflects a high degree of commitment in shaping our country for the better. Admittedly, SEZs is a complex policy that has no fixed formula; indeed it has its own list of inherent disadvantages, but with China’s help we could learn the essence of how it works and reap the merits of such policy effectively and efficiently, and potentially utilise it as an experiment that can be introduced to local communities at the Kampong-, Mukim-, and District-level. Ultimately, however, it is our people who shall be responsible for its success, and success could only happen as long as we, as a people, abide by the timeless advice of Sultan Bolkiah the 5th that Bruneians should always be hungry for knowledge and adapt ourselves to the changing times. Such advise are true then, they are true today.

Economic Charter of Kampong Junjongan: From Village to Small Town in Five Years?


The economic charter of MPK Junjongan has been published. Study the village council’s proposals in enhancing the social, economic, and security aspects of its two thousand-plus villagers within the next five years. For more information, you may contact us through mpk.junjongan@gmail.com. The pdf can be downloaded through this link: MPK Junjongan. Thank you for the interest.

Preparing for a Post-Oil Bruneian Economy


Picture courtesy of BruneiHotel.com

The future of the post-oil Bruneian economy is mixed with a streak of optimism and pessimism in the general Bruneian psyche today. Such future brims with optimism because the current younger generation is being equipped in paving Brunei in the tricky waters of the 21st century; pessimism because there are no concrete plans on how to capitalise Brunei towards achieving the maximum amount of effort to sustain itself economically in the post-oil economy. Otherwise Brunei would have been diversified by now, but instead, the economy is still 95% dependent on Oil. It is, therefore, the aim of this article to drive home the message to decision makers today the need to introduce policies to help soften the blow once the Oil runs out. These policies are not necessarily popular nor will it help political score points in the short-run, but it is nonetheless policies that require immediate careful attention if we are ever to prepare Brunei in the post-oil era.n

The first policy that needs to be revived is the re-introduction and re-imposition of income taxes. Reflecting on a society that has been cushioned from hard work and has been spoon fed with welfare their entire lives, such a change may cause an immediate outcry. Nonetheless, it is still a vital policy needed to modernise our national system. To soften the blow, we should consider introducing a flat tax of 1% per year for everyone who is subscribed to TAP and SCP. The reason why 1% must be set is so that we can acclimatise and normalise the mindsets of the Bruneian public to pay their “due share in society”. Such amount can be progressively increased within the next few years once they are used to the system. In addition, it can serve as a starting ground for policy-makers to get a hold on the system. This means building the basic competence for our taxman and tax-related agencies the means to reform, carry out, and enforce the policy through this experimentation-based process. We do not need to look any further for expertise. We can always import professionals from UK, Qatar and Singapore to assist in drawing up the legislation and financial systems in place for the re-introduction and re-imposition of income taxes.

The second policy is to switch mass private motor usage to public transport. The government spent a whopping $400m in 2014 for oil subsidy alone, almost 15% of the national budget of 2016. This notwithstanding the carbon emissions being produced year on year – Brunei was the highest carbon emitter in ASEAN in 2012. The capital invested in the oil subsidy must be channelled towards building the public transport system instead. While the bus transport system is not to London standards or in high demand today, it would be unrealistic to say that Bruneians will continue to use their own cars one day when most of them no longer rely on government hand-outs and support. By then the Bruneian public would be using buses (or tuk tuks), much like its counterparts in this region such as Malaysia, Singapore, and Phillippines. At the same time, Brunei should strive to increase car duties and taxes, as well as to increase the complexities and fees of applying for a driving license so we can achieve the overall policy of switching mass private motor usage to public transport in the country. Such process must be intensified over the course of the next few years.

The final policy for Brunei to succeed is to opt for an ‘open-border’ immigration policy. It is a contentious issue that I know are discussed with hushed voices behind closed doors, but we must face the reality that this is the path forward if Brunei intends to succeed. An open economy that would embrace immigration in the region or the island should be the aim. We can start off by opening our borders to Malaysia and then Indonesia in Borneo, and then gradually in the ASEAN region. A passport-less entry into Brunei may evoke traditional racism by conservatives or the Trumps of our society, but the advantages of immigration tend to outweigh the negatives as it would generally lead to more trade and competition. These factors then contribute towards the improvement of our national productivity and development. Dubai has done the same. Out of its 5 million population, only 300,000 are locals. The other 95% are made up of foreigners. If Dubai can do it, Brunei can too. To those Bruneian Trumps who may be against open immigration, we have to realise that the Puak Kedayan were formerly Javanese skilled rice plantation workers who migrated to Brunei by Sultan Bolkiah the 5th’s orders. These people then integrated into our society and consequently enhanced the performance of our polity.

To conclude, Brunei should take precautions to prepare for a post-oil economy in order for our nation to capitalise on the changing global order. Three policy recommendations include the gradual re-introduction and re-imposition of income taxes, the switching of private motor usage to public transport, and to produce an open-border, passport-less immigration policy to drive up the population and market base in order to prepare the nation for a post-oil era. Either we take these hard steps to carry out these policies with all the resources that has been bestowed by providence today, or we can squander everything that may seem so sweet (i.e subsidy and welfare) in the short-run but would be most damaging to everyone in the long-run.

Make a Charter on the Future of the Bruneian Economy


An ariel view of BSB. Pic credits to Lowyat.net

In the efforts of building a resilient economy, the state of Brunei should consider producing and publishing an economic charter that outlines the strategic improvements and recommendations that could be made in charting Brunei’s next phase of economic growth over the course of the next decade. The idea of making this report is inspired by the publication of the Singapore’s economic reports entitled “Report of the economic committee: The Singapore Economy: New Directions” (1986) and “Committee on the Future Economy Report” (2017) which seek to accomplish the goals mentioned in regards to the Singaporean economy. These reports make good reading for those who wish to understand the successful past and future developments that have and will take place for the Singaporean economy. To this, it will not hurt Brunei to borrow this idea from our Singaporean friends in producing a Brunei-centric economic charter as a step in helping Brunei make the grade in the current and future global economic conditions. This article shall outline some of the key components of that potential report.

The first component is to secure the right executive members who make up the committee in creating this charter. The individuals who made the aforementioned Singaporean reports are highly educated and have extensive professional experience with deep connections with international organisations such as the World Bank, International Monetary Fund, United Nations and many others. Brunei should draw inspiration by recruiting its thick dynamic local talent pool – and we have many – in establishing the charter. The committee thus should preferably be made up of qualified and educated professionals with extensive international exposure in the field of academia, government, and the private sector. To add up to the dynamism, top civil servants from different ministries of government and executives from government-linked corporations and private sectors should also be engaged in making the charter. They must then sit down together for a one- or two months time frame to conceptualise the existing and future strengths, weaknesses, opportunities and improvements that could be made to the Brunei economy. The chair of the executive committee who heads this project must be an extremely seasoned person.

The second component is to carrying out a mixed top-down and bottom-up form of research which must draw ideas, recommendations, and feedbacks from the key parties that affect or are being affected the economic policy changes brought about by the report. In the latest Committee on the Future Economy 2017 report, the Singaporean government consulted and benefited from a contribution from more than nine thousand individuals, ranging from employers and workers, academics, professionals, students, private companies, public agencies, unionists, trade associations and chambers, as well as Singaporeans abroad. Having a top-down and bottom-up approach to securing ideas and feedbacks from the Bruneian public would be most vital in engaging and sparking our people’s interest in steering the direction of the Bruneian economy. Brunei did this approach of securing ideas and feedbacks successfully in the past with its BSB Masterplan back in 2005. The same approach should be replicated again for the publication of this report. And if there is one thing that the report can do, it is to intensify the people’s participation in the development of the Bruneian economy.

The third component of the report must involve an honest study as well as the specific recommendations to be made of the existing state of the Bruneian economy. The Brunei economy has been resilient over the years thanks to the strength of our country’s Oil and Gas resources, but it does not escape the fact that our country was negatively affected by the plunge in global commodity prices. We still have time. Our economy can be made more resilient to the changing external conditions facing the global economy by tapping into the strengths of the local talent pool to secure recommendations for the Brunei government in regards to diversifying the economy forward. We have a thick layer of talent, we have the brains, and we have the people to accomplish this goal. If the committee is able to secure an honest study to understanding the economic position of the Brunei economy and communicate the need to engage and integrate lessons gained from the citizens, then it will be a most productive report indeed. For it must be remembered that Brunei’s greatest resource is not its Oil or Gas, but its citizens. Our citizens have the ideas. Let them come up with the solutions and work with the government lock-step and in tandem in building the Bruneian story forward. In doing so the recommendations put forward must be an honest account to solve the solutions facing the nation today.

The report must be different from the five-year national development plans (NDP) published by the government or other think tanks by how it shall involve a top-down and bottom-up approach in securing ideas from the key influencers of the Bruneian economy as well as its peoples. The recommended name of the report could be “The Charter on the Future of the Bruneian Economy” or CFBE for short. Upon completion, the charter should be published both online (to be made publicly available for free) and offline, in English, Malay, and Mandarin. This to ensure our key partners namely the US, UK, China and our local populace have direct access and debate in regards on how the report has been formulated. The report does not have to be long. A hundred to a hundred fifty pages should suffice. May it be added that with the production and publication of the document, the constellation of government agencies will be steered towards the agreed direction. Compromises will arise, and that is okay. As the saying goes, there is strength in the diversity of opinions and ideas. And if there is a theme that would suit the report, it is that Brunei has to constantly work at plugging itself to the international cord of globalisation and work pragmatically in diversifying its economic base away from Oil and Gas, through fields such as entrepreneurship, finance, and logistics. These measures are key to solving our unemployment and deficit problems. Additionally, Brunei has to continue to inspire confidence in the changing order, and this report shall be one of the many steps to being about that confidence.

To conclude, Brunei should produce and publish an economic charter outlining the strengths and strategic improvements that could be made to chart the next phase of economic growth over the course of the next decade. It requires the right executive committee to spearhead the charter’s development, the infusion of a mixed top-down and bottom-up approach in securing ideas from the people of Brunei, and finally a charter that is honest and contains specific recommendations to be made on how the Bruneian economy should be shaped in the years to come. It must be different from the existing publications we currently have today in such that it will secure ideas and feedbacks from the key influencers of our society. The combination of the ideas set out in this charter may not guarantee automatic growth and development to the national economy, but it is a positive step towards creating the right conditions in the socio-economic fabric of the Brunei, that the people and to the extent the youths too can involve themselves in the success of their nation through the ideas they suggest in the production and publication of this charter document. If we are successful at this, we can continue to working together in charting the next course of our economic future and to carry on the Bruneian story forward.

Suggestions to Fix the Allowance System in Tertiary Education in Brunei


(picture credits to: dreamstimes.com)

The essence of effective governance is how well an organisation is able to fulfil its role in carrying out its duties and tasks entrusted by higher authorities. Only by then an organisation will be able to progress ahead in enhancing its rank in the changing order of things. Our national educational bodies, as an organisation, is important in this context. With pronouncements by authorities having been made to ensure that our educational system progress in the world’s educational ranking, it requires the educational bodies itself to look and fix the problems that currently exist in order to fulfil such goals.

One problem that needs improvement is the continued and sustained inefficiency in the distribution of allowance money to students on a timely basis in the national territory bodies of Brunei Darussalam. The problem has persisted over the years and has peeved a lot of students, who either have already long graduated or is currently studying. Some took to social media and even the media outlets under anonymous names to publish their concern over delayed allowance distribution. It is high time that relevant authorities study and fix this matter, as such measures would not bode well in achieving its goals to rise up the global ranks of education. Here are some suggestions that can be made in order for us to take that step to make the grade.

First, the relevant authorities should study how the Brunei-UK system works in dispensing allowance. Never once, as a scholar who has studied in the UK for four years, have I ever received my allowance late. The only time is when there is public holidays (which is understandable). Myself and, I am sure, the 2000-plus students commend the past and current UPP team for the effective streamlining of allowance distribution. What is more the authorities who handled the allowance were only a handful of people (numbering less than ten) in charge of two thousand students spread out across the United Kingdom.

Ideas that can be secured here is that would it be possible for the Minister of Education to set up a specific department or agency to handle and dispense all the allowance of all territory students in Brunei who are eligible for the allowance? Not only would it potentially remove layers of bureaucracy – which often is the reason of the delayed payments – but it will make it extremely efficient and cost-effective, as only one agency is responsible that could be referred to whenever problems may arise and would help save cost in terms of auditing, staff salaries, and much more with the limited number of people stationed there.

Secondly, the relevant authorities must recruit and expand the number of qualified accountants, administrators, and managers responsible for managing and dispensing the money. None is more vital however to have more qualified accountants who have their ACCA, CCAs and much more. Yes, they may cost more, but given that they have achieved the progressional qualifications ensure that they are aware of the standards their progressional bodies demand them to fulfil, and that may result in a higher standard of efficiency and effectiveness in distributing the money on a timely basis.

Third, the government or the territory educational system must work with the banks to effectively produce and carry out strategies to dispense allowance like that in the UK. One of the reasons why I believe that my allowance was never late was because of the existence of the right system of Standing Orders from the banks that ensures that effective and efficient measures are taken place. The bank must follow suit in helping to consult the government in managing its own allowance financing, as a way to guiding and improving the system forward.

I would imagine this letter may result in responses saying that students already have privileges and that they “should not ask for more”. To which I reply, that this is not about privilege per se, but rather working ethics and effective governance. If I am tasked to do something, I must do it well and on time. If I do not then I may get into trouble and I should, because all my seniors and juniors are looking at my performance too, and unless I fix myself it will set a very negative precedent on how they should act in the future. So too that the educational bodies must ensure the allowance system gets fixed, as it can set a precedent of the level of quality of how our people (especially among the eyes of students) work and how we get things done.

On an extra note, students must in turn work hard to do well in their studies. The Brunei Government has given our people the basic foundation that would enable every Bruneian students to progress in achieving a Degree, Masters, and PhD. But such rewards do not come easy or automatically. It requires effort from the part of the student, and the only way we can pay back the privilege is to do well in our studies. 

To close, I would like to suggest that government to set up an agency responsible for all payments under the management of a number of qualified, professional accountants and managers, and to finally work with the banks to ensure the right system are in place. Doing so would contribute at enhancing the national territory educational system in the educational global ranking, as we need it to be in order that we succeed together as a nation and a people. Together we shall and must work at fulfilling the aims of Vision 2035 in building a better Brunei.

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