Brunei Darussalam: Oil Prices Buoyant As Other Challenges Remain

2002

Dr AVM Horton

The price of oil, which is the mainstay of the Negara Brunei Darussalam (NBD) economy, was comparatively buoyant during the third quarter 2002, with the benchmark price per barrel of Brent crude on the London market remaining within the US$24-29 band. Underlining oil's importance, on 14 September HM Sultan Hassanal Bolkiah officially opened an 'Oil and Gas Discovery Centre' (OGDC) at Seria. Constructed at a cost of five million NBD dollars*, the complex includes seven galleries designed 'to educate the public on the various roles of the oil and gas sector'.

In late July and early August, Bandar Seri Begawan hosted the thirty-fifth ASEAN Ministerial Meeting and the ninth ASEAN Regional Forum and in September it provided the venue for an ASEAN Economic Ministers conference. Meanwhile, government leaders have been working on diplomatic measures to help shore up the local economy. Negara Brunei Darussalam and the Syrian Arab Republic established diplomatic relations on 31 August 2002. HM Sultan Hassanal Bolkiah arrived in Damascus on 16 September for a three-day working visit designed to boost economic ties between the two countries and to foster cooperation in the fields of education, culture, and religion. On 26-28 August His Majesty paid a state visit to Thailand, an important market for NBD petroleum. Thai exports to NBD were a comparatively insignificant NBD$81.32m in January-November 2001; but the mainland kingdom remains a source of foodstuffs, some manufactured goods, and labour for the sultanate. As a further measure, it was reported that the government was allocating NBD$1000 million under the eighth National Development Plan (2001-05) for the implementation of 'e-government'.

Amidst such moves there were some important government changes. Dato Abidin Abdul Rashid, Deputy Minister of Home Affairs since October 1986, retired in August 2002, to be succeeded by Dato Adanan Mohd Yusof, previously one of the Permanent Secretaries in the Prime Minister's Office. Dato Suyoi Osman became Deputy Minister of Education, and was succeeded by Pengiran Dato Osman Patra as one of the two permanent secretaries in the Foreign Office. Two women were promoted to Deputy Permanent Secretary status at the Ministry of Education.

On the commercial front, Avesta Printing & Trading Limited, publishers of the three-year-old News Express, was wound up in September after ten creditors claiming NBD$6.5 million put in a petition before the High Court. A foreign-owned chain store also closed its branches; but the hotel sector reported a more optimistic outlook.

There has been one area, though, which continues to require government attention. On Saturday 17 August 2002 separate fires fanned by strong winds destroyed two of the thirty wards of Kampong Ayer (the 'river village' section of the capital). Eighty to ninety dwellings (reports vary) in Kampong Lurong Sikuna and Kampong Ujung Klinik were reduced to ashes, leaving 700-800 people homeless; no lives were lost. 'Electrical short circuit', 'public negligence', and 'carelessness using electrical appliances' were blamed for the conflagrations, which razed one of the most prestigious primary schools in the sultanate and a government guest house. Determined action really must now be taken. Such infernos are hardly a rarity: on the government's own showing nearly one thousand buildings have been burnt in the Water Village since 1980, involving property loss of more than forty-one million NBD dollars and three deaths (Pelita Brunei, 4.9.2002:14). Meanwhile donations in aid of the latest victims flooded in, as local Muslims fulfilled the second pillar of the faith (alms-giving).

*The NBD dollar is at par with the Singapore dollar.

WATCHPOINT: Will the government introduce effective measures to prevent any recurrence of conflagration in Kampong Ayer and will it be able to make substantive progress towards diversifying the economy so as to (in the long term) reduce Negara Brunei Darussalam's dependency on oil?

 

About our company:

AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

Go to top