Brunei Darussalam: Steady Ahead

Summary

Diversification of the economy from dependency on the oil and gas sector was a preoccupation during 2003. Several major government measures were announced to instil confidence among foreign investors and the local population that the economy was being well managed. There was also emphasis on promoting efficiency and productivity in the Civil Service. There was little development in the political and social arenas and the country remained peaceful and stable. The claim by Malaysia to Brunei's exclusive economic zone (EEZ) was becoming an irritant in the otherwise warm bilateral ties between the two countries.

Economy

The overall economic performance for the year 2003 was positive. The estimated growth rate of the gross domestic product (GDP) for the year was between 3 and 4 per cent. However, this was mainly due to the 7.9 per cent growth in the oil and gas sector in the first half the year compared with the same period in 2002. The non-oil and gas sector grew only by 1.4 per cent in the second quarter of 2003 compared with the same period last year. Sectors such as transport and communications, banking and finance, fisheries, agriculture, and construction all experienced contraction. Because of the SARS epidemic in the region the hospitality and travel industries were hard hit and registered negative growth.

The policy to diversify the economy from over-dependence on oil and gas has been pursued since the 1980s. However, after the Asian Financial Crisis diversification became more urgent. The Brunei Darussalam Economic Council (BDEC) was established in September 1998 to recommend short- and longterm measures to revitalize the economy that had been affected by the crisis, the fall of the oil price, as well as the collapse of the Amedeo conglomerate. One of the recommendations of the Council was that an investment promotion drive be launched to attract foreign direct investment (FDI) to Brunei in order to develop industries and create jobs.