BRUNEI is honing institutional strengths and improving business competitiveness as it seeks to diversify its oil-dependent economy.
The establishment of the Asean Economic Community (AEC) will sustain the growth of Bruneian businesses, helping the sultanate attain its goal of diversifying its oil-dependent economy.
Analysts and business leaders interviewed by The Brunei Times said regional integration would allow most local businesses to access a wider market. This, in turn, will develop the private sector and provide more job opportunities to Bruneians.
According to Mohammad Parvez Imdad, senior economist at the Asian Development Bank, the AEC is predicted to boost the annual income growth of the region by 0.5 to 1 percent, and increase the FDI (foreign direct investments) stock by 28 to 60 percent.
Brunei stands to benefit from this, he said noting that the sultanate had been active in working toward increased liberalization of trade and travel restrictions in the region.
But the AEC’s gains will only be realized if Brunei implements policy reforms that will make its businesses competitive.
“I’m sure the Brunei government will ensure that its institutional strengths are increased, skills and capacities are further enhanced and overall economic competitiveness is expanded,” he said.
According to Lisa DP Hj Ibrahim, member of the Asean Business Advisory Council (Asean BAC) for Brunei, “a lot” of local business standards are being raised as companies gear up to become more competitive under AEC.
“That is good for the country in the long term because it improves other aspects in business such as corporate governance,” she said.
Asean BAC Member Fauziah DSP Hj Talib said Bruneian businesses were capable of competing “head on” with their peers in the region.
“We’re optimistic that Brunei businesses can compete but they will also need an environment that allows them to compete on a level playing field with other companies,” she said.
Asean BAC members have proposed several business-friendly reforms that could sustain growth of local businesses, especially small and medium enterprises (SMEs) which account for more than 90 percent of the country’s private sector.
Fauziah said Brunei needed to reduce its processing time for labor quotas so to enable them to expand their workforce without affecting their daily operations.
“It takes about a month or more [to process labor quotas] which is not good for business. Businesses need assurances that they will get it so that they can compete,” she said.
Lisa DP Hj Ibrahim said companies should be given a buffer that would allow them to increase the number of positions when they bid for larger projects. For example, if a company has seven staff members, it can be given a quota of 10 which will allow the company to have some headroom to scale quicker.
“SMEs may lose on a tender [for a project] or may not get it done on time if they have to reapply for quotas to create new positions each time,” she said.
A dedicated agency for SMEs is also needed to address the specific concerns of entrepreneurs. Lisa said this agency can serve as a one stop administrative center, keeping SMEs from going through different government agencies just to process papers or work on their concerns.
Lisa said such an agency would also make it easier for the government to identify problems that affect SMEs and be able to respond with programs that were tailored to meet their needs.
Such an agency is yet to be established but this has been proposed during the 11th Legislative Council in March 2015.
Yang Berhormat Pehin Orang Kaya Seri Utama Dato Seri Setia Hj Yahya Begawan Mudim Dato Paduka Hj Bakar, who was then Minister of Industry and Primary Resources, said a law creating a body that oversees the development of micro-enterprises was being drafted.
The SME body will have authority to handle legislation, finance and be able to hire its own staff. It will also enter into joint ventures or agreements with institutions and organizations that will foster the growth of micro-businesses in the country.
But whatever these plans are, Fauziah said it was important to consult SMEs prior to their implementation.
“Having a plan on the side without involving the business people will only lead to a plan that does not meet the needs of the business community,” she said.