DIVERSIFICATION BE-1401

Introduction High dependency on oil and gas High dependency on oil and gas  Non-renewable resource  Changing world oil prices  Volatile US Dollar

Plans & Efforts National Development Plan(s) have always emphasized on the need to diversify away from oil and gas, beginning with its First National Development Plan ( ) and emphasized in Wawasan 2035 as well National Development Plan(s) have always emphasized on the need to diversify away from oil and gas, beginning with its First National Development Plan ( ) and emphasized in Wawasan 2035 as well Five-year National Development Plan towards diversification via industrialization, industrialization via privatization and privatization via Bruneization (Ali, 1992: 196). Five-year National Development Plan towards diversification via industrialization, industrialization via privatization and privatization via Bruneization (Ali, 1992: 196). The development of the agricultural sector to lessen the country's reliance on imported foods The development of the agricultural sector to lessen the country's reliance on imported foods Industrial development projects focused on light industries Industrial development projects focused on light industries Service industries were encouraged, especially banking and finance, in the hope of developing Brunei into an international financial center Service industries were encouraged, especially banking and finance, in the hope of developing Brunei into an international financial center The sixth national development plan (1991–95) gave special emphases to stimulating growth of the private sector, to promoting human resources and industrial development The sixth national development plan (1991–95) gave special emphases to stimulating growth of the private sector, to promoting human resources and industrial development

Why diversify? minimize the risk of an economic downfall minimize the risk of an economic downfall

Potential sectors Tourism Sector Tourism Sector –Traditional attractions –Strategic location –Ecotourism –becoming a service hub for trade tourism (SHuTT) by the year ICT Sector ICT Sector Service Sector Service Sector

Problems and Challenges The ambitious programs of the seventh national development plan for 1996 to 2000 to achieve diversification through increased privatization, and domestic and foreign investment were shattered due to Asian financial crisis in 1997 and the collapse of the Amedeo Corporation in 1998 The ambitious programs of the seventh national development plan for 1996 to 2000 to achieve diversification through increased privatization, and domestic and foreign investment were shattered due to Asian financial crisis in 1997 and the collapse of the Amedeo Corporation in 1998 Attractive fringe benefits and relatively attractive salary in the public sector hampers the growth of private commercial industry by reducing the supply of local labour and talent to private industry. Attractive fringe benefits and relatively attractive salary in the public sector hampers the growth of private commercial industry by reducing the supply of local labour and talent to private industry. Private industry may be crowded out by investment in the public sector Private industry may be crowded out by investment in the public sector Development efforts have been limited by Development efforts have been limited by  the small domestic market  a shortage of skilled manpower  relatively high labor and transport costs  Strong economic competition from neighbouring countries e.g. Singapore and Malaysia.  Limited natural resources, apart from hydrocarbons  Lack of strong independent work ethic and lack of high managerial motivation amongst Bruneians.

Strategies to diversify Reform human resource Reform human resource The expansion of the local university and the availability of other type of educational institutions with offerings such as young entrepreneur programmes. The expansion of the local university and the availability of other type of educational institutions with offerings such as young entrepreneur programmes. Make investment in Brunei attractive Make investment in Brunei attractive Availability of information as a core factor towards decisionmaking Availability of information as a core factor towards decisionmaking

Main Players Brunei Economic Development Board (BEDB) Brunei Economic Development Board (BEDB) –Stimulate growth, expansion and diversification of the economy –Sungai Liang Development; as a world-class site for industrial development associated with processing of hydrocarbons –Pulau Muara Besar Development; transshipment port and container terminal with a an export processing zone –SME(s) funding –Actively marketing Brunei and negotiating with potential investors in the areas of ecotourism, aquaculture, islamic finance and halal processing hub.