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BRUNEI YEAR END REVIEW 2015

While 2015 saw some progress in Brunei Darussalams ongoing diversification


efforts, the challenging external climate, together with an increasingly competitive
regional environment, further underscored the importance of pursuing non-oil
revenue sources.
Lower global energy prices, on top of weaker commodity earnings, sparked a
significant drop in government revenues in 2015, prompting both the public and
private sectors to sharpen their focus on other areas of the economy, including
financial services, the halal industry and tech start-ups.
However, a relatively strong Bruneian dollar and lower commodity prices also
served to curb inflation over the year, with the consumer price index up by a
marginal 0.1% year-on-year (y-o-y) in November, according to the Autoriti Monetari
Brunei Darussalam (AMBD).
The year ahead looks set to bring new opportunities from regional initiatives,
notably the newly launched ASEAN Economic Community (AEC). Progress in the
Trans-Pacific Partnership also bodes well for the Sultanate, although both initiatives
are likely to increase competition amongst signatories looking to position
themselves as investment destinations.
According to the IMF, the economy is expected to rebound in the coming years, with
GDP growth forecast to reach 3.2% and 3.8% in 2016 and 2017, respectively, before
scaling up to 11.2% by 2019.
Industry advances
The year also brought some positive news in the energy sector, as the Sultanate
moved ahead with counter-cyclical spending measures.
The majority state-owned Brunei Gas Carriers took delivery of another LNG tanker in
July as part of its plans to upgrade its fleet. The Amadi, constructed by South
Koreas Hyundai Heavy Industries, should help the country deliver larger cargoes
more efficiently, providing a welcome boost in an increasingly competitive market.
Meanwhile, work continued on the new oil refinery and aromatics cracker complex
on the Pulau Muara Besar (PMB) industrial island, with ground broken in May for a
bridge linking PMB to the mainland.
According to estimates from economists at the Asian Development Bank, the plant
is expected to inject around $2bn per year into the Bruneian economy, boosting
GDP by 2% once fully operational, with completion forecast for 2018.
Regional opportunities
Expanding regional and international trade remains a key strategic focus of the
Sultanate, with a series of regulatory changes and liberalisation measures enacted
in 2015.

In March Brunei Darussalam outlined plans to change its tariff structures, improve
foreign direct investment rules and enact a National Competition Law ahead of the
year-end launch of the AEC. According to regional press reports from early January,
the Sultanate has achieved nearly all the tariff cuts envisaged in the AECs
Blueprint 2015 master plan.
The year also saw reforms aimed at easing the process of doing business in Brunei
Darussalam, led by improvements to the licensing process for start-ups.
A single business licence has been introduced, replacing the variety of licences
issued by multiple authorities that were previously required. Additionally, a new
authority was established to oversee licensing procedures, and an online portal to
the Registrar of Companies and Business Names was created, allowing users to pay
fees remotely.
According to media reports, the countrys streamlining efforts have reduced the wait
time for licensing from three months to just a few days.

Market makers
In addition, the Sultanates financial sector is expected to undergo significant
development in the next two years.
In May the AMBD announced plans to launch a securities exchange as early as
2017, following the introduction of new capital market rules in February. The new
securities exchange will enable Brunei Darussalam to ramp up its role in the
increasingly integrated ASEAN capital markets, allowing businesses to access
funding via listings and other available instruments.
In another landmark move, the AMBD said in mid-June that it plans to issue longterm sukuk (Islamic bond) for the first time. Expected to take place in 2016, the
issue will broaden and deepen the countrys Islamic bond market, marking the end
of an era dominated by maturities of one year or less.
Such reforms should help Brunei Darussalam prepare for a year that looks set to
bring a mix of new opportunities and familiar challenges
BRUNEI ISSUES
Energy earnings down
News at the end of 2015 that oil prices had fallen to their lowest level since the
height of the global financial crisis in 2008 reaffirmed the extent of the challenge
facing Brunei Darussalam. The hydrocarbons sector traditionally accounts for
roughly 60% of GDP and more than 90% of government revenue.
Brent crude futures dipped close to $30 per barrel in mid-January, while liquefied
natural gas (LNG) prices were down 26.5% on the year, according to Platts
Japan/Korea Marker, with the average spot price of LNG cargoes arriving in northeast Asia dropping to $7.40 per million British thermal units in January.

Lower energy receipts triggered a third consecutive year of recession in the


Sultanate, with the economy expected to contract by around 1.5% in 2015,
according to IMF estimates.
However, this marks an improvement over the 2.3% decline registered in 2014 and
the 2.6% y-o-y contraction recorded in the first six months of the year, according to
the AMBD. The first-half decline was a function of negative growth in both the
hydrocarbons and non-hydrocarbons sectors, which shrank by 3.5% and 1.5% y-o-y,
respectively.
Although the government trimmed the FY 2015/16 budget by $250m, the country is
expected to post a fiscal deficit of 16% of GDP for the year, in contrast to the 28%
surplus recorded in 2011.
While further spending cuts are widely expected, Brunei Darussalam is moving
ahead with several key infrastructure developments, including the BN$1.6bn
($1.1bn) Temburong Bridge project.
http://www.oxfordbusinessgroup.com/news/brunei-darussalam-year-review-2015

Bruneis economy slips 2.3%


FITRI SHAHMINAN
BANDAR SERI BEGAWAN
Tuesday, March 31, 2015

BRUNEIs economy continued to decline year on year, this time by 2.3 per cent in
2014, owing to a slowdown in the oil and gas sector, the Department of Economic
Planning and Development Board (JPKE) reported yesterday.
This is a furher decline from the 1.8 per cent year-on-year contraction recorded in
2013.
The JPKE said the oil and gas sector, which accounted for more than half of the
Sultanates gross domestic product (GDP), fell by 3.7 per cent in 2014.
The non-oil and gas sector declined by 0.4 per cent.
By expenditure approach, the JPKE attributed GDPs decline to a 34.6 per cent
decrease in gross capital formation, imports of goods and services by 19.7 per cent
and domestic consumption by three per cent.
Bruneis exports rose by 4.3 per cent in 2014, while government spending increased
by 2.9 per cent.
In the fourth quarter of 2014 alone, Bruneis GDP grew by 0.2 per cent on year. The
2.7 per cent growth in the non-oil and gas sector offset the 1.6 per cent decline in
the oil and gas industry.

The gains in the agriculture and services sectors supported the non-oil and gas
sector in the fourth quarter.
Agriculture, forestry and fishery sectors rose by 3.1 per cent thanks to a 25.7 per
cent rise in the production of vegetables and fruits as well as an 8.6 per cent growth
in forestry production.
The services sector increased by 2.2 per cent on the back of higher growth posted
by finance, transport and education service sectors.
The industrial sector decreased by 1.1 per cent pressured by a poor performance in
oil and gas mining.
Bruneis GDP at current prices in the fourth quarter of 2014 was estimated at
$5.245 billion compared to the $5.209 billion in the previous quarter.
JPKE said the fourth quarter national income accounts is the first quarterly report to
be released that used 2010 as the base year in calculating the countrys gross
domestic product.
JPKE previously used 2000 as the base year in calculating GDP.
The Brunei Times
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