How to reduce crime and make poverty history in Brunei?

If someone were to ask me the above question, my answer would be EDUCATION. Specifically, by providing education to ALL.

I am sure that you and I agree that crime and education are related. People who have more education are generally less inclined to commit any crime and/or become really poor. Now, I am not addressing those who commit crime while they are still at school (although they can come later once they realize the mistake they make), rather those who are deprived of formal schooling due to other circumstances, such as teenage pregnancy, teenage marriage and early school-leavers. And what I mean by education (for now) is the chance for everyone to complete their PMBs, O levels and A levels.

It is really really sad that there are many out there who did not even finish their PMBs because of early pregnancy and/or early marriage (generally because of the former). I mean, what can they do with just Secondary 2 qualification? At Secondary 2, they were like 14 or 15 years old. Children. And these children are having children. How can they support their family? Yes, I know some people would say WHY got pregnant in the first place? But I also ask Can you UnDO it? Why dwell on the kids' mistakes? What good will it have? Nevermind that their teenagehood have been wiped out, let's not wipe out their future too.

It is in fact disturbing, as the trend of teenage pregnancy is rising over the years (refer Borneo Bulletin 19 April 2007). And what about those who did not get pregnant (or whose pregnancies were terminated i.e. miscarriages) but nevertheless were married at their teenage lives (I can assure you, it does happen to many).

I know this is a dilemma. By giving these teenage moms and dads free formal education can be interpreted as acceptance of pre-marriage pregnancy. But I also say by NOT giving them the education may negatively affect the lives of MANY future Bruneians. It will be a vicious circle: Teenage pregnancy leads to teenage marriage leads to being poor (no job/means to support the family) leads to crime leads to poor parenting quality leads to poor children upbringing and ON and ON and ON.

I think, whether we like it or not somebody has to address this issue seriously. For a rich and a small country like us, where high quality of human resources are scarce, we should give these teenage moms and dads the chance to finish their high school education either by allowing them to continue their studies in their former schools or a special school (special I mean a school that caters to their circumstances). I know that there are evening classes for the PMB and O levels but if I am not mistaken, the students still have to pay for the exams fees, which to me is a big disincentive. In fact, I believe what Brunei should do is to give some incentives for these teenage parents to complete their education.

No matter how Brunei wants to do it, I strongly believe it will be worthwhile. But I implore, please do something, for the sake of the unborn babies, who are our future generation. They deserve better lives.

Salaam.

ps. When's the next session of the state legislative council? Hope to see issues such as this and unemployment be thrashed out.

China vs the World: What chance have we got then?

Read an article from FT about China making it hard for other developing countries:

"Being a developing country used to be easy. You followed leaders - Japan, Hong Kong, Taiwan, South Korea - up a well-trodden ladder from agriculture through manufacturing to services. Starting with tilling the soil, you moved on to turning out T-shirts, then toys, then tractors, then television sets, and ended up trading Treasuries.
The rise of China has made that less straightforward. Not only is the first rung harder to reach, thanks to the hundreds of millions of rural migrants to Chinese cities still willing to work for low wages stitching garments, but also exports of goods from China's coastal industrial fringe are rapidly becoming more sophisticated, threatening those halfway or more up the ladder. While the shoemakers of Italy and the steelmakers of Pennsylvania may complain loudly about Chinese competition, those with more to worry about are middle-income Asian countries geographically and econ-omically close to the Middle Kingdom."

It makes me wonder, have we got a chance?
Well, according to Dani Rodrik, Yes we do. All we need is an Industrial Policy for the Twenty First Century, if we want to stand a chance in the global competition:

"The right model for industrial policy is not that of an autonamous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuing lie and what type of interventions are most likely to remove them. Correspondingly, the analysis of industrial policy needs to focus not on the policy outcomes (which are unknowable ex ante) but on getting the policy process right."

It's a good paper (Rodrik's). Please read.

Salaam.

Cartoon: Slate magazine

Service with a Smile

This morning we had to fax the ‘mileage claim’ form to the RBA office in Brunei. It was actually my husband’s. We just found out that his airmiles from BWN to LHR, a trip he made in early April, had not been credited to his Royal Skies account. Actually I don’t really understand how this could have happened. When we checked his boarding pass, his Royal Skies numbers were clearly written and they surely must have also been in the RBA computer system. I just wonder, if the staffs handling the Royal Skies mileage award have to do their work manually i.e. checking for each name. Otherwise, I don’t understand how their computer system could possibly miss anyone…hmmm.

Anyway, speaking of our beloved national carrier, I hope they are currently improving their customer services (now with the new CEO). Not only their in cabin service (actually those flight stewards/stewardess are not bad) but also their ground service. You see, I have had quite a few unpleasant incidences with their ground staff (particularly those at the check-in counters). I don’t know for some reason, they look quite stressful and very rarely I get a ‘service with a smile’, be it in Brunei or in my current case, London. My husband always told me to make proper complaints, but then I brushed off the idea. I didn’t want anyone to get into trouble simply because they probably had a PMS or bad-hair day or a quarrel with their other-halves.

Anyway, we economists believe that Economics, to a large extent, is a study of incentives. So I would say the main reason why we don’t often get good customer services from some of the ground RBA staff is mainly because there is very little (monetary) incentive for them to do it (even though I notice that there is a form for customers to fill in to vote who his/her STAR staff or something. Now, has anyone actually filled those up?)

So I guess, it is up to the employer then in this case to give some incentives so that their staff will always give a ‘Service with a Smile’ to everyone and anyone (everytime) because hey! words of mouth can give greater rewards especially when there is competition.

Just to share you our story, many years ago, my husband and I made a trip to Singapore using SIA. On the way, it was raining heavily. When we landed and made our way to the baggage isle, our names were held up on a card. Then a lady, a SIA staff approached us (sorry lady, I don't remember your name). She explained that because it was raining and wet, our baggage could be damaged. Then somebody actually extracted our luggage for us! Then this lady gave us a phone number to call in case any of our stuff in the luggage was affected. When we checked, there was no damage, not even the exterior of our luggage! Now, THAT’s what I called ‘first class’ service! Oh, and we flew economy. And honestly, after what happened, we actually loved and flew many times with SIA.

Anyway, I hope one day I would be able to share you a similar ‘first class’ service from RBA….Who knows, we may probably experience it this coming July, from the London and/or Dubai ground staff hehehe…

Salaam.

Brunei-Singapore currency interchangeability: What have we got to lose?

It will be the 40th anniversary of the currency interchangeability. Now I know there are different views out there. Unfortunately, we don't have many evidence (in terms of research) to either strongly support or contest the agreement.

OK, let me try to enumerate the pros and cons of the current arrangement:

PROS:
1. Stable currency: Speculators would think twice to attack the currency as they have to contend with the combined reserves of 2 countries.
2. Minimal transaction cost between the 2 countries: Arguably this should lead to positive effect on the bilateral trade and investment (however, see CONS no.3)
3. The 'dutch disease' effect of 'oil' on Brunei economy is eliminated: The 'dutch disease' effect is working through the exchange rate where the inflow of oil money results in currency appreciation. Now, because Brunei does not manage the exchange rate (see CONS no. 1) then there is no 'dutch disease' effect.
4. Price stability (low inflation): Credit to Singapore, as they have been doing a very good job in maintaining low inflation.

CONS (for Brunei):
1. Loss of monetary power i.e. we can't use exchange rate as a policy instrument.
2. Some argued that because of 1, Brunei is not able to depreciate its currency in order to achieve price competitiveness. And this has a negative effect on the diversification effort. [But I say, what about the supply-side?i.e. would this ensure that there will be an increase domestic output for exports?]
3. Because of the differences in the structure of the 2 economies, (i.e. Singapore is a more advanced with a higher productivity economy) the minimal transaction cost resulted in making Singapore as the more attractive destination for investment flow from brunei (and not the other way around).

I guess an interesting research question is now: How big is then the benefit to Brunei?

Anyway if you're asking my opinion, I would say let's just maintain the union. But I also think that it's time that there are some Bruneians who are also involved in managing the currency. (Perhaps some Brunei representatives or seconded officers in MAS for hands-on experience, if we are not already doing that).

Oh well, this is just what I thought.

Salaam.

Ps. If anyone is interested, there is a paper by Chan and Ngiam (1992) in The Singapore Economic Review that talks about the currency interchangeability.

MBA vs PhD

For those of you who are contemplating to do a PhD in economics, think twice! This is what Grew Mankiw wrote in his blog regarding MBA vs PhD:

I believe that from a purely financial standpoint, an MBA is a better
investment than a PhD. An MBA is only a two-year program, whereas a PhD is
typically four to six years. The extra time for a PhD probably not yield the
extra income needed to make it a good investment of your time. A typical Harvard MBA gets a starting
salary a bit over $100K; the typical econ
PhD does not start much higher than that.

But the issue is not entirely pecuniary. The question you should be asking
yourself is what kind of job you want to have when you conclude your education.
A PhD makes sense if you want to consider the possibility of being an academic.
You may pursue a PhD and then decide along the way to pursue a different path
than being a professor. That is okay: Many PhD students leave for the private
sector when they are done with their degrees, and they get very good jobs there.
But if you are sure from the beginning that you want some kind of private-sector
job, then the MBA is probably the better route.

Ooppss! What have I got myself into?
But they also say "PhDs rule, MBAs manage" hehehe.

Salaam.

Ps. No matter what, I hope I'll get out of here, alive!

Asians vs Non-Asians

I remember a couple of months ago, my colleagues (a Thai and a Mexican) and I had a conversation about the difference between Asians and Non-Asians. It all started when I asked a question related to my research. Since none of us knew the 'real' answer, my Mexican friend told me to ask my supervisor. Then I said I would try my best to find out myself before I bring it to my supervisor. It struck me then and there the difference between Asians and non-Asians. And that is Asians seldom want to ask questions straightaway, call it shy or whatever, but that's what I usually notice (including myself, that is!). And my Thai friend agreed with me. He said there was something about our culture and the way we were taught that didn't encourage question askings.

Well I don't know about you, but I agree with my friend. I remember when I was young (during primary school) we were always told to KEEP QUIET and were never encouraged to ask questions. There was one time when I was in Primary 2 (government school) and it was Maths class. I noticed my teacher was making a mistake in his calculation. So I put up my hand and told him his mistake. I think I remember vividly that my teacher was quite embarassed and he did't even thank me for pointing the mistake! I was 8 at that time. Since then, I just kept quiet whenever I noticed any teacher made a mistake (which were quiet A LOT! including the calculation of exam marks in the report card).

Furthermore, at home, my late mom who was a very traditional malay mom, would remind us not to ask any question or interrupt any conversation, whenever our aunties and uncles came to visit us. We were also not encouraged to give our view as the idea was adults-know-better-so-children-don't-try-to-be-smart.

I guess it all boils down to our education (formal and informal). We were not trained to explore. In terms of informal education (at home), I guess there has been some improvement. Nowadays, children asking parents are no longer a taboo (well at least in my family). However, I slightly worry about our formal education (I hope I'm wrong) because I seldom got a lot of questions from my students (during my time as a lecturer at UBD a couple of years back).

For the sake of the current and certainly, the future Brunei generation, please please please improve our school teachings particularly at the primary level. Let the children ask, ponder and think for themselves!

Salaam.

Time for Brunei Oil Fund A.S.A.P

Ok. I read this article from Slate which is about Norway oil fund (for the full article please click here) which I believe that Brunei SHOULD follow suit (if Brunei hasn't, that is).

"Less than 20 years after they started producing oil, the Norwegians realized
their geological good luck would only be temporary. In 1990, the nation's
parliament set up the Petroleum Fund of Norway to function as a fiscal shock
absorber. Run under the auspices of the country's central bank, the
fund, like the Alaska Fund, converts petrodollars into stocks and bonds. But
instead of paying dividends, it uses revenues and appreciation to ensure the
equitable distribution of wealth across generations."

Now, their fund is worth "about $311 billion—or about $67,000 per Norwegian. With a 40 percent allocation in stocks, the fund owns more than $120 billion in shares around the globe".


Let's learn from the mistake made by the Saudis:

"the richest oil nation on earth still resembles a garden-variety poor
country: a 25 percent unemployment rate, tremendous inequality of wealth and
assets, a massive public debt, and an undiversified economy dependent on
commodity exports."

And let's pray that Brunei oil NEVER runs dry....

Salaam.

Work Abroad vs Brain Drain

The other day a friend was asking me what I thought about Bruneians working abroad. From our conversation it appears that many Bruneians oppose the very idea of people leaving their families back home (note the reason!) and of course there is also an issue of brain drain.

Well, it is complicated. And I have 2 sets of answers:

If you are asking me as a worker, my answer to that would be Why Not? If it (working abroad) can increase my welfare and that of my family's then I would not hesitate to work abroad.

[And my view is that if you answer NO to working abroad because you don't want to leave your family, despite no job back home while an opportunity abroad is available, then it is another example of mind-set problem of Bruneians]

If you are asking me as a policymaker, my answer would be 'it depends on WHO are working abroad'. There is obviously an issue of brain drain, defined as the emigration of trained and talented individuals to other nations. It is an economic issue because the (large) investment a nation puts in higher education is lost and it drains resources (human capital) from the home country. Countries such as China, India and even the UK are facing the economic consequences of brain drain of the educated and skilled workers.

Herein also lies the dilemma of being a small country where opportunities are also small.
I would say Brunei being a small country should keep its 'best and brightest' at home and at the same time facilitate others who want to work abroad with a ready policy that will ensure the return of these workers. You see, brain drain aside, returning emigrant workers can have positive effect on the development of a country. Research (see Kapur and McHale, 2005) shows that returnees generally have higher entrepreneurship skill, higher saving, better ideas and so on than those who are at home of the same skill. And I would like to stress again that Brunei SHOULD have a policy or an effective 'entice return' policy if it must encourage Bruneians to go abroad, in order to reap the benefits of their 'foreign skills'.

And then there is also a role of the 'Diasporas' which according to an article from Science and Development Network:

With rapid improvements in communications technologies, highly skilled
migrants can help their countries even when remaining abroad, by maintaining
links with industry and research at home. Known as scientific diasporas,
this is
a relatively new trend – and hints at a reversal, or transformation,
that many
believe smacks more of 'gain' than 'drain'.

To conclude, there is actually no easy answer to this. While working abroad may perhaps alleviate the problem of unemployment, it comes with a great cost to the nation itself because fundamentally, a country needs (local) talents to ensure innovations, build institutions and implement programmes. Of course someone would argue that talents can be imported but then would it be the same? No matter what, good policies must be at hands in order to ensure the gains would be greater than the cost.

I recommend the book "Give us Your Best and Brightest: The Global Hunt for Talent and Its Impact on the Developing World" by Devesh Kapur and John McHale, for those who are interested in the issue of brain drain and those involve in the policymaking:



Salaam.

Jerudong Park, revive please....

As this week is the school mid-term break, we brought our girls to Legoland a few days ago. The weather was miserable (as usual) and we stayed overnight in one of the nearby hotels. All in all we spent like 350pounds (hotel+tickets+souvenirs+food+car fuel). And...my husband and I agree that Jerudong Park was a LOT better than Legoland.

I think a lot of people ask the same question, what happened to JP?? We had some really good rides both for adults and children. And the garden was fantastic! Personally, I think if we really want our tourism industry to grow fast, somebody has to revive the JP. Perhaps a new management and serious re-branding (actually I'm not even sure if we had a brand last time!). If JP gets its fame and glory back, just imagine the spin-off effect that it can create. The hotel occupancy, the food business, transportation and most of all the employment that it will create. I don't really know the mechanics of the amusement park industry but according to Forbes, it is big business, with a worldwide revenue of $US19 billion in 2001:

"One reason parks are multiplying so quickly is because
they're big business. The average price of a one-day ticket is around $25.
Multiply that by a family of four and add Grandma and Grandpa, overpriced
food, plush-toy souvenirs, mouse ears and perhaps a night or two in a
hotel...and you're looking at some serious dough."

I guess it is not a cheap business and perhaps in our case, in might be a complicated business. But then I am also thinking what a waste .... of time , effort and money spent. It's not as if we have to build it from scratch (I mean I would probably think the possibility of building it if we didn't have it!) we probably need help from people who are in this business and obviously need to spend (lots of) money to give JP some very effective CPR.

Some people would probably argue, why built it in the first place? But it is built! There's nothing you can do to un-build it. (Even if it wasn't built, Why NOT?) So, why not take the advantage and try make some money out of it? I don't know, why not privatise it? Everywhere people talk about niche, well...THIS is our NICHE. Tell me, where can you find another amusement park in the region that can rival our old JP? Even Legoland cannot compete with the old JP. If old JP is back, I am also sure that the attractiveness of Brunei as the next family vacation destination in the south east asian region will definitely be the envy of other competing destinations. Surely, family vacation makes up a large chunk of leisure travel. In the US, for example, family vacation makes up about 70% of total leisure travel. Otherwise, let's just pray that there are lots (millions please) of backpackers, nature-lovers and foreign pensioners who pick up Brunei brochure...*hehe*

If Brunei were to spend money to restore and perhaps even improve JP, I have a strong believe that it will be money well spent! However, I would like to stress the importance of a serious re-branding (not merely having some people wear some animal costumes that actually look scary and some clowns who don't play any trick, that walk around and make children cry...sorry, I don't mean to be patronizing but that was the scene the last time we visited JP, a year ago). With an exciting image, fantastic rides, yummy food, good entertainment both for me and my children and beautiful musical fountain garden, hey! I wouldn't mind spending a few hundred dollars staying in a nearby hotel and get 2-day family pass, in the next Brunei school holidays! And I'm sure a few hundred parents (in Brunei alone) wouldn't mind doing the same thing too!

Brunei Yakin!

Salaam.