Economic growth of some ASEAN countries seems to have hit a speed bump lately. A combination of Indonesia’s record current account gap, Thailand’s economic contraction, Malaysia’s growing economic woes, a sell-off at the Philippine stock exchange and speculation that the US Federal Reserve will pare stimulus are adding to problems of fiscal volatility and are dampening growth throughout Southeast Asia. Currencies are weakening, and investors pull out funds from the region as if there was no tomorrow.
Throughout Southeast Asia? Not entirely. While bad news are currently pouring in on most emerging economies in ASEAN, small Brunei seems to stand like a tower of strength. The Sultanate enjoys a favourable fiscal balance due to solid income from oil and gas exports, the currency is stable, unemployment low and investment, albeit modest, hasn’t seen any backdrops so far.
The sentiment is positive, and the government has just committed to spend around $156 million into new research and development initiatives in areas such as energy, environment, food security, healthcare and health services, as well as information and communication technology to ensure the nation’s long-term competitiveness.
Furthermore, expatriates and foreign professionals have rated Brunei as the best country in Southeast Asia to work, a survey by the American Malaysian Chamber of Commerce of 475 senior executives working for US companies operating in ASEAN has shown. Malaysia came second, on par with Singapore. Brunei was the only country in the region to score the full 100 marks for expat satisfaction. Malaysia scored 94 per cent satisfaction marks as did Singapore.
However, Brunei can certainly not rest on its laurels. The ASEAN Economic Community, whether it kicks off as planned in end-2015 or later, will expose the country in much greater intensity to the economies of its regional peers, and thus, strategies will have to be put in place to balance this exposure.
As other ASEAN nations, Brunei will have to further encourage and invest in new and innovative technologies and economic sectors to sharpen its competitive advantage, with the inevitable knowledge that its oil and gas reservoirs are finite. In this context, education and skills training for fields such as value-adding manufacturing, technology and services will have to be in the central focus. Innovation and an entrepreneurial culture will further support a new “economic readiness” under altered competitive conditions in the future.
Singapore has shown with its recent policy rethink that change is manageable. The city state will kick off huge infrastructure projects, revamp its social security policy and embark on highly specialised technology fields such as nanotechnology, 3D-printing and biotech in an effort to offset shrinking demand for its traditional economic sectors. This push is highly motivating for a population that was starting to become discontent with the economic direction the small nation took. And it’s a role model for many ASEAN states.
Can Brunei afford to rest on its laurels? What changes should the country initiate first? Let us know through Twitter: @insideinvestor using hashtag #bruneitimes.
This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.