Melayu Mudah Lupa

Our Malaysian friends held a farewell dinner for us last night. After the delicious beriyani and rendang, as usual we talked and discussed about the current issues. Last night’s discussion was interesting as it revolved around the ‘malay dilemma’ topic. At the moment, as you and I know, the racial tension in Malaysia is quite pronounced.

There were two camps last night. One opinion was that it is the malays’ right to be given the privileges given the fact that it is the malay land and therefore, the non-malays should not have any right to demand what is not rightfully theirs. And the success of the non-malays is seen as the result of some ‘conspiracy’ against the malays which include the policies that seem to be in favour of the non-malays or rather disfavour the malays.

Another opinion however believes that it is actually the malays themselves who are not utilising the privileges and opportunities that are given to them to their great advantage. The fact is ‘Melayu Mudah Lupa’ (Malay Forget Easily – the title of Mahathir’s book). We forget why we are given those privileges. Believing that they are our rights, we don’t value them anymore. As a result, we don’t work as hard as the non-malays (who have to survive) and the non-malays have emerged to be more successful, cleverer and wealthier.

And for this reason, we believe that there should exist a healthy competitive environment for the malays to prove that they are as good as or in fact better than the non-malays.

In Brunei, Alhamdulillah, we still live harmoniously together. Partly I believe is due to our small population and partly due to our ideology of ‘Melayu Islam Beraja’ (Malay, Islamic, Monarchy). As a result, the competition between the malay and the non-malay in Brunei is less severe or almost non-existent. This however does not mean that the Brunei malay is immune from the symptom of forgetfulness. In fact, we even take many things for granted. Take the ‘Ali Baba’ syndrome in the business sector for example. We want to be rich easily and quickly. Instead of genuinely running a business, we sell or rent out our permits and licenses to foreigners. As a result, the number of Brunei malays who have become true entrepreneurs that we can be proud is less than the ten fingers in our hands as compared to the number of business establishments (especially ‘kedai runcit’, barbershops and tailor shops).

Another example relates to the work attitude of the Brunei malays. The five-tea-break-a-day routine becomes the culture in the government sector. The attitude of ‘karang tah’ has lost the government millions of dollars in terms of productivity and even revenue-generation. As a result, the government sector, which is the first employment choice of any Brunei malay, is slow, inefficient and backward so much so that it can take weeks to send a letter within one tiny district, and months for the results of a few applications. (Come on! What is our population again?)

I totally concur with Dr. Mahathir who said “it is not race or ethnicity but the culture which determines the performance (of the people)”. So, to succeed we must change our culture. It is difficult, of course. To hope that we Bruneians will realize and change ourselves is probably a big wishful thinking.

Therefore, we have to create an environment that can change our perception of our rights of being Brunei malays, our perception of running a business and our perception of work – ‘work to live’ versus ‘live to work’ for our family and our country. We must look towards work as the true reward and take pride in our work, for without pride there may not be progress. This kind of environment may involve monetary reward but the reward should not outweigh the satisfaction of the achievement being made.

We have been blessed with oil and gas. We forget that this will not last forever. While the current generation probably cannot change, the next generation needs to change. We have to ensure that the next generation understands their purpose in life (which sadly is not understood by the current one). It is not an easy task but it has to be done.

Salaam.

Liveable City

When I was reading this article, I can’t help thinking about Brunei’s Vision to be among the world’s top 10 countries in terms of GDP per capita and quality of life. So, I wonder whether Brunei (or any part of it) will one day ever make into the top 10 liveable cities in the world. According to Monocle, the ingredients to be a liveable city are:

“a mix of shops and services within walking distance, a good transport interchange within close proximity, green space as part of their residence, a good park with a body of water for a refreshing plunge nearby, independent businesses as a key feature of the community, a sense of security (police on the beat or a Japanese-style police box in their neighbourhood), excellent coffee (Melbourne's Fitzroy and St Kilda and Sydney's Potts Point frequently came up as neighbourhoods that had the ideal mix of restaurants, cafés and street life) and finally a little bit of grit and surprise.”

Judging from the latest result which saw many of the European cities topping the list, it looks like we still have a looonnnggg way to go.

Salaam.

Life After Oil

I was reading the post made by Brunei Resources on ‘Life Without Oil’. He suggested that Brunei should either decrease government spending and/or increase our tax base, which in economics term is what we call ‘contractionary fiscal policy’. This policy is usually applicable to an economy that has a budget surplus, which thanks to the soaring oil price, is actually the case for Brunei. But if you take the oil effect, Brunei’s budget will not be as handsome as it is today.

The effect of a contractionary fiscal policy will be a reduction in the aggregate demand which is not exactly the right prescription for a country that has little economic activities. Having said that however does not mean that the government should just spend all its income. It should be mindful of what it is it’s spending on. What we want is productive spending (and I agree with Mr. BR, this does not include subsidy). Spending that can stimulate the non-oil economy. And we want lots of this. Being a small economy (defined as having a small population) is not without its problem. And for that reason I personally think we need a strong government support (while it is still able) to help the economy as much as it can.

But the question of life after oil is still unanswered.

To answer this, we need Ricardian’s Theory of Comparative Advantage which says that we should produce and specialize in the production or services in which we have comparative advantage. What? You may ask. I say, look around us. We are so fortunate to have plenty of sun, land and sea, which I believe are extremely under-utilized. With a bit of hard work, I’m sure Brunei can develop its comparative advantage. If Singapore, an island that has an extremely limited natural resource can become one of the Asian’s dragons or Liechtenstein with a population of about 34,000 people and equally has a limited amount of natural resources can become one of the highly industrialising economies, then so can Brunei!

Life without oil will not be the end of the world as long as we do something about it. And we should start NOW. The current generation must help the future generation in the transition of oil to non-oil economy. Any ‘rentier’ habit has to be removed from the current system and the mindset of all Bruneians. With the right attitude, the right mind and the right policy Brunei could and should thrive. There must also be a strong will both from the government and the people and of course, some hard work too.

Salaam.

Reality Bites....in Miri

Somebody sent me a link to a blog post by one of our Sarawakian friends. For the benefit of those who do not have a Multiply account, here it is:

MONEY WITH A DIMINISHING VALUE by Zaidil

There is a sudden change in atmosphere in Miri city after the fuel price hike. There are less cars on the road. The shopping centres are less crammed and worst of all... there are not that many happy faces around. From what I sensed, it is just the beginning. The experts predicted that the trend is likely to continue that way for quite some time. So what do we do?

Nothing much I am afraid. If you are an optimist, you will say - work harder so that you can earn more to compensate for the diminishing value of the currency. At the rate the price of goods is increasing you have to earn at least 2 times what you earned a month ago in order to maintain the same level of lifestyle.By the end of this year, you have to earn 4 times what you earned in April. This week Abdullah has just announced that if you work in the govt, you are allowed to do a part time business. Wonder how will that affect the already inefficent govt agencies?

On the other hand, if you are a pessimist, you will start looking for scapegoats and punchbags to put the blame on.

The situation is however not all gloom and doom. The bright side of it all is that there is a lot less road accidents ever since the price hike was annunced and people started to use the public transport more. Actually last sunday was the first time that I went to Boulevard supermarket without anyone ramming my butt with the trolley. I had the entire supermarket for myself.

Another positive development is that people started to think of growing their own vegetables and rice which I think is not a bad idea at all. Myself, I am thinking of digging the document bag to search for that land title which my grand father left more than a decade ago. With a bit of luck the cockroaches have not been so hungry to savour the land title and I might be able to harvest my own Bario rice. Oh do I have to fly to Bario to grow Bario rice!!

We should be grateful that Brunei still maintains the fuel subsidy (I don't know when will that last though, and I'm not sure whether it is the most sensible and rational policy). Nevertheless, I'm sure Brunei is also affected by the policy change in Malaysia. Perhaps this effect will probably even bigger than an effect of a reduction in Brunei's fuel subsidy.

Too bad for a country that depends on too much import.
But that's reality. And reality bites.

Salaam

Boost Agricultural Production A.S.A.P

Today Malaysia announced the increase in fuel prices, lifting their price ceiling in the move to reduce government subsidy. It is quite shocking actually. I didn’t expect the price increase would be ‘that’ much. (Note: for a very interesting thought about this by Dr Mahathir, click here).

The effect of this will not only be felt in Malaysia, but Brunei too. Malaysia is one of Brunei’s main trading partners. 20 percent of Brunei’s total import comes from Malaysia. About 40 percent of Brunei’s total food import comes from Malaysia. Malaysia is Brunei’s main source of food supply. When Malaysia’s fuel prices rise, we should expect their prices of all other goods will also go up. Naturally, we will also import their inflation. And that is bad news to our consumers.

All of the events that take place around the world including the current world’s food crisis cannot and should not be taken lightly.

Therefore, I think it is high time Brunei seriously thinks about its food production. Enough talk (actually I don’t hear any talk at all since HM’s titah during the Leg Co), act. Fast. Make it Brunei’s ‘emergency’ priority agenda. Set up an ‘agricultural’ fund if we must. At times like this, what the government should do in fact is to attract people to develop the agricultural industry. Call it a fast-track strategy or whatever. Get as many Bruneians or even non-Bruneians to produce food in our country. The government cannot afford to be choosy. Cut down those red tapes! (I tell you, somebody I know tried applying for some land to be developed 2 years ago. Until today, he has not heard from the Agriculture Department). Somebody please do something!

We shouldn’t think that all the events happening around us will pass on any time soon. It could go on and on. We really should use it as a catalyst to achieve our (long overdue) national food security objective. Increasing agricultural production should be the long-term solution for Brunei. We really cannot afford to just sit and wait and do nothing. Because whether you like it or not, for a country that has a high dependence on food import, these events affect us. High food price will increase the cost of living. Well, I guess I’ll leave you to your imagination to picture the effects of that.

Salaam.

Rejuvenate Brunei's GLCs

What interests me the most, while browsing the World Trade Policy Review of Brunei, is this bit of information:

(Per cent of GDP, unless otherwise indicated)
Saving and investment 2002 2003 2004 2005 2006
Gross national savings 47.2 48.6 51.4 59.1 62.4
Gross domestic investment 21.3 15.1 13.5 11.4 10.4
Savings-investment gap 26.0 33.6 37.9 47.8 52.1

(sorry, I'm no good in pasting the Table. For the full set click here and I refer to Table 1.2)

The saving-investment gap is huge! And the gap is because there is too much saving and too little investment (which isn’t usually the case in many countries). Now, if you’re an economics student and using Year 1 Macroeconomics, you will know that this excessive saving means there is a capital account surplus which could lead to a glut in the economy which eventually could lead to a recession.

Now, my question is why oh why are we acting as if we do not have enough capital to move the economy? To be specific, we are acting as if we’re having a gap that is caused by too little saving and therefore needs an external financing i.e. the FDI. And I have the impression that we seem to be helpless without the FDI. Now, I’m not saying that FDI is not important and I’m sure I don’t have to enumerate the reasons why we need an FDI. What I’m trying to say is that, given the availability of excessive domestic capital, it is high time that Brunei should also place the importance of the domestic investment in the effort to diversify the economy.

Despite the excessive capital however, the private sector in Brunei is weak, both in terms of resources and expertise, to undertake any major domestic investment. Therefore it is imperative (and equally inevitable) for the government sector to assist the private sector development, in particular, to do the investing.

To tell you the truth, at the beginning I wanted to propose the establishments of government-linked companies (GLCs) the likes of Singapore, but then I remembered, we DO have GLCs! Unfortunately for some reasons our GLCs are very quiet (if not, I wouldn’t have forgotten hehe) and do not appear to be spearheading the investment efforts.

I’m sure by now, many of you will be saying that Brunei’s GLCs won’t work because their managers and Board of Directors are civil servants who lack business acumen, risk-averse, slow in decision-making and their investments mainly political as opposed to commercially motivated. TRUE! And for this precise reason, I believe we need to rejuvenate our GLCs by removing (or perhaps reducing) the number of civil servants in the companies. Let’s put true entrepreneurs and real managers. If we can’t find locals then for the love of Brunei, hire (the best money can buy) foreign experts! Because the lack of competent local human resource to drive the economy is our main problem in the first place (which is nothing to be ashamed of, given our small population and the current nature of our economy, however this does not mean that Brunei’s HR should forever be at the current state) and I don't see anything wrong in hiring foreign talents. Nevertheless, we should be using Singapore as an example. Singapore’s phenomenal economic growth is, after all, the result of its strategy of ‘state capitalism’.


Let’s face the fact, we are not exactly a foreign investment magnet and on its own, our private sector is too weak and too small to drive the economy. At the same time, our oil is depleting. Therefore, I believe the inevitable solution is for the government, through its GLCs, to assume a proactive role both in the entrepreneurial development and the economic diversification effort. For the GLCs to assume this role efficiently, they need to have adequate resources and most importantly become proper business entities which mean risk-taking and being competitive. It is time for the government to let go its domineering role in the GLCs’s decision-makings and to also take the risk. Because if it doesn’t, then the only alternative for Brunei is for us to pray (very hard) for oil to never runs dry.

Salaam.

The Dilemma of SME Part 2

Other issues faced by the SMEs in Brunei are the small market size and the lack of production incentives. With our population of about 380,000 really does not make Brunei an attractive place for any production or businesses. The small market size is further aggravated by cheap competition from import and high local cost.

Of course, somebody would reply that Brunei's SMEs should not limit themselves to the domestic demand and therefore should explore the regional and even the world market. True. But in truth that is easier said than done. Heeks (1998) in his paper (click here) pointed a number of related problems. First, he pointed that Brunei is an island of wealth in the sea of local poverty, at least in Borneo island itself. But it is also true in the context of ASEAN. Brunei is the second wealthiest country after Singapore (measured by the GDP per capita) which is followed by Malaysia and then Thailand. The remaining ASEAN countries are all earning less than US$1000 per capita – they hardly can become our potential markets! Second, where regional markets exist, someone has got there first, producing high quality products at low cost, thus presenting entry barriers to new-comers especially, one that lacks competitiveness.

Now, I’m not trying to be negative but sometimes we have to be realistic. I believe, in order for our local (and weak) SMEs to take their chance in the regional market, let alone the global market, they need assistance. For example, they need to know just what types of products to produce (for e.g. products that have high import growth rates in the global market) given their capabilities. And then of course they will also need (continuous) help in the area of capacity building to increase the products’ competitiveness especially in terms of the quality. Now, my question is, have we got these in place?

OK before we go further into the discussion of providing supports for export-production, let’s first look at the supports for local production. What incentives are we giving to the local producers? You would probably be thinking of the recently reduced corporate tax. Is that enough? The corporate tax, first of all, is not payable by sole proprietorships, which makes up a large chunk of our private sector. And then there is the ‘pioneer status’ scheme, but then again does it apply to a large number of our local SMEs? Correct me if I’m wrong but I think both the corporate tax and the pioneer status scheme are more directed towards the attraction of foreign investors (which I am in support of!). Now, my question again, what then are the incentives we are giving to the local small and medium enterprises? Our SMEs don’t even have complete access to crucial information such as market demand, input costs, availability of sources of production so on and so forth! And so how do we expect our local SMEs to go abroad and compete when they are not even developed domestically.

Now, back to the issue of the small domestic market. How do we then overcome this problem? At the top of my head, we can do this in 2 ways. One, through the natural population increase, which would take AGES! And two, through migration. OK, maybe in our case, not migration per se but we need to find ways to attract foreigners to come and spend in the country. How? One, we need to increase the number of tourists coming to Brunei. The tourism department, from the looks of it, is putting a lot of effort into this. [It’s ashamed really, that the apparent lack of policy co-ordination among other departments somehow weakens the effort (perhaps another post on this one)]. Two, we can attract foreigners who have high purchasing power to come and stay in Brunei. Brunei, being a tax haven has already 'the' appealing factor for anyone to come and live in the country :). However, there is a larger policy implication which is related to another policy taboo – land and property foreign ownership. Now, I’m no expert on this but personally I don’t really see the harm in allowing foreigners, who can make ‘economic contributions’ to purchase properties for the sole purpose of occupation (see for example how Singapore is doing it). Just imagine the spin-off effects of this policy! We can expect a boom in the housing sector and the construction industry, and then of course, the increase in the demand for ALL goods and services which will have the desired direct effect on our local SMEs. Oh I can picture a shift in the aggregate demand for Brunei! (And only then we can seriously talk about providing world-class services be it in education, health etc..)

Oh dear, there’s so much to think of! I do hope I am NOT the only one thinking about this. And while thinking is good, but please for the love of Brunei, DO something about it. I will probably write more on this topic.

Salaam.

Wish List

In light of the current Leg Co Session, below are my 'wish list' of topics that I hope the distinguished Yang Berhormats are debating:

1. Unemployment: This has been a main issue since 10 years ago which I feel has not been properly addressed with only some 'piecemeal' solutions thrown from different departments without any coordination. The demand as well as the supply sides of the issue have to be debated. The issues involving the unemployment include:
i)The conflict between local vs. foreign workers: which to a certain extent related to the attitude of local workers.
ii)The remuneration gap: And NO I don't want to hear the same proposal where the employer (the private sector) is asked to give higher wages. That, to me is NOT a solution. What can the government DO to reduce this gap?
iii)The attitude of local workers: A serious lack of commitment.
iv) The welfare and rights of workers: What more can I say?
v) The rights of employers: While employees can lodge their complaints to the Labour Department, where can employers go?
vi) The availability of jobs. Can the private sector provides 'enough' jobs?
vii) Working age: The merits/demerits of extending the pension age.
viii) Job trainings/ skills etc.

2. Social illnesses: Drugs, school-dropouts, teenage pregnancy etc. These are just at the top of my head.

3. Poverty: I cannot stress any further. His Majesty's vision of 0% poverty needs to be addressed properly. The issues related to poverty include:
i) Establishing a national poverty line - in order to measure the gap between the rich and the poor and just HOW poor are we?
ii)To go beyond the solution of providing just 'monetary assistance'.
iii) To combat social illnesses which are very much related with poverty.
iv) To review some fiscal measures i.e. tax and subsidy as the traditional means of redistributing income.

4. Last but certainly NOT the least, BRUNEI's Future:
i) After Oil....What?
ii) Oil Fund to provide for the future. If BIA is doing this, where DO we stand at the moment? How secure is our future? How long can the fund sustain Brunei in the event oil runs dry (This can happen, No?)
iii) Pension schemes: Is TAP enough? How can we eradicate poverty if there is not enough money to provide for the daily expenses, once out of work. What is the merit/demerit of re-introducing a (NOT SO LAVISH) pension scheme. What is the possibility for the 'employer' to increase its contribution. BUT bearing in mind the capability of the current 'weak' private sector. How can the government assist the local workers in the private sector in the provision of a secure future.
iv) What about some form of a National Insurance for every working Bruneian? What happens if accidents occur, death etc?

Oh the list goes on!
But then these are just a mommy's wish..and we'll see how the session goes.

Salaam.

Spoilt and Shameless

My blood boils when I read Mr BR's post on What Would Superman Do?. Not because I am angry at him but because I deeply share his sentiment. I still cannot fathom why our people can be so irresponsible, shameless and so selfish. It makes me so sad to think that after 24 years of independence, we are still unable to stand on our own 2 feet and still need the government to do basically everything for us! I call it the Third World Mentality. You know why? In the developed countries, people are so independent. Their self dignity and pride are strong. They don't ask for help easily because they take pride in what they do. Often you see people in wheel-chairs and people who are pysically less fortunate are doing what normal people do and as efficient. We have a lady - an undergraduate students' secretary- in our department who has lost 1 leg. One day, I was looking for a printer cartridge and it was in the last drawer of a file cabinet. Instead of telling me where it was, she went to the cabinet, with her crutches, and bended down to get the cartridge. I was surprise! I quickly went to her and obviously offered my help and you know what she said with her smiling face, "It's OK...Thank you...". Gosh!

Now, look at our people! God has given each one of us a brain, 2 arms and 2 legs, and WHY oh WHY are we acting like some helpless creatures in this world? Where is our self dignity ? Before I read Mr BR's post (I suggest you read it too!) I was discussing with my husband regarding the irresponsibility of our people. Someone we know who has been fortunate enough to get one of the houses in the Rimba Housing, apparently has not been paying the government. Both husband and wife are working with only 1 child to support. Furthermore, they have a rental house somewhere in Brunei which is being rented. I mean WHAT are they thinking?! What is worse, because of their irresponsibility and their selfish act (please see my previous post on this), the person who acts as their guarantor is now being burdened. The last we heard, the poor guarantor had received a few warning letters. AND these sad (good-for-nothing) couple just duh! I believe this is NOT an isolated case because a couple of years back, during a dinner at the Istana, I was fortunate or rather unfortunate to hear the gruesome tales of our people not paying their debt, have mountains of debt and on and on from officers from various government departments.

And we are not only talking about housing payments (which is a major issue) but also on things as mundane as paying the rent for wedding clothes (baju pengantin). Just a few days ago, my sister who is about to have her baby shower (Mandi Berlawat) told me that she was shocked that her i.c was being asked by the shop from which she is renting her baju. Simply because the shop assistant told her that there have been MANY cases where people just don't bother to pay and obviously never return the attires. GOD!

What is WRONG with us, people? I am really-really sad. For a Muslim and a wealthy country and not to mention a caring government, what MORE do we want? Honestly, I have a headache thinking about this..and I think I better stop here before I develop a migraine.

Mr BR was nice (presumably subtle) to title his post as 'What Would Superman Do' because I don't think we need a superman, as it will make matters even worse, what we need and deserve is for someone to give us a hard KICK in the b*tt.

Salaam.

What Others Think of Us

I found this article from the Wall Street Journal dated some time in 2005 (click HERE). Honestly, I have a lump in my throat reading it but I guess it's reality and reality often bites. It may not be entirely true but to me it just shows how others think of us *sigh*.

So, WHAT shall we do to prove them wrong?

Salaam.

How Poor is Poor?

A few weeks ago, my officemate and I had an interesting conversation. He comes from Guyana, a country in South America. We were discussing about our economies. And he asked me whether Brunei has any economic problems. Well of course I told him that we have had the problem of trying to diversify our economy and being a 'richly' oil-dependent country we also have our own unique set of problems which include unemployment and to a certain extent, poverty.

So he asked me how is 'poverty' in Brunei? Poverty in Guyana according to him means you are so poor that you probably can't even buy the basic food for the day. And about 40% of the population is poor.

Well to tell you the truth it is quite a difficult question to answer. Firstly, we don't have or rather we don't publish (if there is one, that is!) our poverty line. Poverty line is the minimum level of income that is required in order to achieve an adequate standard of living. Of course, different countries have different levels of poverty line. Richer countries would have higher rates. So I guess, if Brunei were to have its poverty line, ours would be higher than the Guyana's. It would also be VERY interesting to know what percentage of people falls below the poverty line (perhaps a post on this topic soon, ya?) Anyway, I told him, I have not yet seen or heard of extreme poverty in Brunei probably because we are quite blessed with a caring and a giving society. The moment we hear someone is in need, we quickly rush to give some help.

Anyway, our conversation continued. Guyana, being a poor agricultural country, imposes about 30% income tax and on top of that about 20% value added tax (i.e. tax on goods and services). I then asked him whether he was thinking of migrating to the US or even the UK. And interestingly he told me NO. Despite the fact that the economy and the politics are in sh*tty conditions, he said he would still want to go back and DO something for the country. He said, people accept their lives. High taxes and so on. As long as they are happy, then they are not complaining. They are grateful with what they have and with their beautiful country.

At that time I was thinking to myself, there we were debating whether or not Brunei should stop giving the fuel subsidy, when these people from poor countries are so content with their lives! How pathetic can we be? Who are poorer? They may be poor in monetary terms but their spirits and strengths are definitely richer than us. In that sense also, we are poorer in terms of our inability to become less dependent from the help of the government. I actually wonder how many people or graduates have actually thought that they want to work for the government to help build the nation rather than thinking of getting all those perks?

What I'm trying to say is that we should be grateful with what Allah s.w.t has blessed us with and to a large extent, our caring government. We have no political havoc to deal with and apart from the road tax, we have never had to pay any other taxes. Perhaps, for a great many of us, don't even know what 'tax' is?

Anyway, in light of our coming 24th National Day, let us all together be strong in spirit and strength, independent in minds and together help build our nation.

Salaam.

Fuel Subsidy, Again.

I'm quite disappointed with the comments made by the acting Chairman of BEDB. As an economist and an entrepreneur, it is actually the least I expected from him. A few days ago he did mention that Brunei should stand up and face the economic challenges and be prepared to changes and be more adaptable to changes. Well, this is a challenge! If Bruneians can face this challenge, then let's bring the others...

First of all, he didn't seem to acknowledge that car fuel, at times when global prices are rising, is not a necessity. True, people's lives will be affected as the cost of driving a car will go up due to a reduction in subsidy and it will also affect the prices of goods. But I believe people will react by economising not only the use of their cars but also their day to day purchases down to the level of necessity. It would certainly be a different matter, if the government were to reduce the level of subsidy on electricity (but again Bruneians DO NOT economise their electricity usage).

Now, if the government were to decide to go ahead with the slashing of the fuel subsidy, the relavant government agencies should come forward to alleviate the effects on the lives of Bruneians. Firstly, this is when Price Control should be THE active policy in regulating the prices of necessities. Price ceilings of goods which are deemed staple MUST be worked out NOW so that sellers do not take advantage of the increasing fuel price.

Secondly, the Ministry of Education and/or the Ministry of Communication for instance, should come forward in helping parents transporting their children to school. School buses have to be provided and preferably privatised. This will not only directly help the people but also can help boost the transportation industry.

According to the Minister of Energy, about B$500 million was spent on the fuel subsidy in 2005. Again, that's A LOT! The money could be spent on other productive activities including in providing the resources for the above-mentioned activities. But the one use that can directly help the weak private sector and perhaps nurture new entrepreneurial ideas is to use it as SEED MONEY. Instead of spending millions making Bruneians lazy, why not use a fraction of the money making lots of Brunei entrepreneurs. Now BEDB could play a big role here as the agency responsible in giving seed money to the potential entrepreneurs.

Anyway, what I'm trying to say is that in 'every challenge there lies an opportunity' as there must always be 'a blessing in disguise'. This should be the slogan to any good entrepreneur. And I also wonder why should Bruneians be insulated from the effects of the global forces as I think it is unhealthy to the development of a resilient economy and a nation as a whole. It is high time, Bruneians learn to think rationally and start prioritising their lives. Not only that, I also think that a shock is probably what this sleepy country needs to revitalise its weak economy.

Salaam.

"The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary man takes everything either as a blessing or a curse." (Carlos Casteneda)

P.S. If you read the news, the US economy is heading more and more towards a recession. A gloomy sign to the global economy. Now, that's a BIG challenge!

YES To Realistic Fuel Prices

Many people may disagree with me, but I think after so many years, finally someone is thinking with a right mind!

If you read my previous post on car fuel, you would know that the prices of car fuel in Brunei are perhaps the cheapest in the world. It is not without its cost. And the cost is obviously borned by the government in terms of subsidy (for 1 litre of diesel, the government is paying about 80cents and 60cents for a litre of Premium 97). That is A LOT!

Many of you would, by now are probably thinking, 'So What? Oil Price is soaring high now, surely the government's coffer is filling and why not share with the people?' . Well, first of all, oil and fuel are 2 different things. The car fuel's prices depends on the oil prices. When oil price goes up, the fuel price also goes up or the cost of producing fuel goes up. The price that we pay however is way below the cost of production. That means the government has to spend more on subsidy to ensure the fuel prices we pay in Brunei stay the same.

Secondly, yes it is true that the increase in oil price would definitely increase the government's revenue, but the money could be spent on other productive things which would have positive economic long-term impact on the country. Life is, after all, not all about cars! And, I believe it is also the time that the government increases its saving (and investment) for Brunei's future generation. in order to maintain our standard of living.

Thirdly, I honestly think that it is high time that the Bruneians live in a real world. By having realistic fuel prices will definitely awaken many people. The last previous posts, I wrote about 'rentier mentality'. As a result, many Bruneians take things for granted. Ever since Brunei started to export oil, Brunei has become a 'welfare state' up to the point that the people do not seem even know how to stand on their own feet! The government becomes the soul provider and this causes Brunei economy to stand still. Worse, people endlessly complain that the government is not doing enough. People want MORE, but never GIVE back!

Look at Norway, the third largest oil producer in the world. Do you know how much their fuel costs? The last I check, it was about US$7 per gallon. With the current US rate, that's about B$2.40 per litre! The government imposes higher tax, at times when oil price goes up, to reduce consumption. And their population of about 4.5 million use cheap hydro energy power! Well, where they have 'hydro power', I think Brunei should seriously be looking at solar energy as an alternative. And, now is a GOOD time for Brunei to seriously invest in some solar power.

OK. If you are still not convinced that a reduction in fuel subsidy (an increase in the fuel price) will do Brunei a greater good, I also believe that other positive impacts will also result.

First, I think the transportation industry may stand a good chance to benefit from such policy. People may start using buses and taxis. If you are still asking whether or not Bruneians are ready to take such dramatic actions (dramatic only in Brunei as it is perfectly normal for people to use public transportation abroad) well of course the answer would be NO. No one is ready to change their comfortable lifestyle. But an improved transportation industry will create more employments, improve services and most of all, can help reduce pollution.

Second, the price of cars will go down. The rule of demand and supply will apply. As demand for cars go down, price will follow.

Third, people will (hopefully) think twice of buying luxurious cars for the sake of showing-off and instead will spend the money on other important matters in life :)

Finally, I also think that it will help foster a stronger family relationship and communication. People, especially family will economise the use of cars. Gone will be foreign drivers. Parents will collect their own children. Husbands and wives will probably share the same car. As a result, communication improves and LOVE grows.....hehehe.

Anyway, these all are just my thoughts. I will probably change my mind when I'm back in Brunei haha. But I still strongly feel that more positive effects will come out of a policy change in the fuel subsidy. Proper research on the impacts obviously are called for. I do however hope it WILL be implemented.

Salaam.

P.S I am still sure that many of you are saying that 'Other prices have gone up too!'. Well, I say 'Welcome to the Real World.....'.

Aren't We a Flashing Nation?

It was quite amusing to find the news in Brudirect today. The first main news was about the raid in the hotel, the second was about religious school adopting a system of something, the third was about another irresponsible Bruneian and look! the fourth main news was the announcement of the open tender for 2-digit license plate..Wow! LOL

This, to me just shows how 'flashing' the Bruneians are. The shorter and the smaller your car plate numbers, the more 'VIP' you are. So, people (hoping to be VIPs) are willing to pay loads just to get their so called 'favourite or lucky' numbers. Baah!

I'm actually quite sad that this is the lifestyle adopted by a great number of Bruneians. Big (and expensive) flashy cars. The latest mobile phones. The last time they played golf (which would always be the last weekend). The biggest flat screen tvs. The most beads (manik) on the baju kurung (haha). And the list goes on. It is like people seem to think that they are judged by what they use or wear. (Maybe some people do actually judge by those criteria. What a pity!).

To tell you the truth, it is really quite uncomfortable to be around these types of people (who are almost everywhere in Brunei). Especially if your mobile phone is about 2 years old, you wear just a baju kurung, your car is just another Toyota and you don't play golf!. At the same time however it is also very irritating when all they talk about are the latest mobile phones or their handicap (what?! handicap?! are they 'special' or something?) or the latest car they just bought. Wow! The world must be perfect for these people despite the fact that their latest credit card bills would probably be almost reaching the limit, the headmasters of their children's schools are scratching their heads waiting for the school fee payments (which I can tell you LOADS!) and their disposable income is probably less than 30% of their gross income. Worse, there is no saving for their children's future!

And sadly, it is not only me who is pitying our fellow Bruneians, the foreigners too. When we went back to Brunei sometime last year, we (my hubby and I) decided that it was time to replace our ageing mobile phones (the girl gave me a sly smile when I asked if I could use 3G with that phone. Haha THAT old!). So while the Filipino lady was preparing our phones I asked her how many people buy phones each day. And she said 'quite many'. And I asked her, 'paid by cash or using one of those installments offered by the banks i.e. hutang lah?'. And she gave me this smile (that translates 'are you kidding? cash?). And I asked how many? She said 'quite many'. Then she said she didn't understand why people wanted to put themselves into debt just for a mobile phone. I said, don't let your boss hear you saying that..hahaha.

A couple of times, I must admit my husband and I were thinking of buying one of those luxurious cars. Why not? We can afford it, can't we?

Well..after 1 night sleep we scratched off that thought. Why? First, a car is NOT an asset, it is a LIABILITY..the first 2 years of driving..wow..fantastic...but then...after that...I'm sure many of you would love to share the cost of maintaining such cars. Second, we haven't got a house of our own. Until we do..then we say FORGET it!. Finally, there's our children's education funds. If our children are brilliant then, perhaps some scholarships would be granted. But you never know what will happen in the future.

I'm actually quite worried that this kind of 'rich and flashy' lifestyle is adopted not only by the middle-income earners but also the lower-income earners. The desire to have luxurious items is probably the main culprit why many Bruneians have become 'poor'. If you were to measure the level of poverty based on the disposable income, I am sure it will be staggering. How to amend this? A simple answer from an economist would probably through the good old tax. But I'm sure nobody wants that (and I am also risking my neck suggesting it hahaha!). But I think some kind of awareness campaign against debt should be introduced where the message has to be strong and the campaign done rigorously.

Oh well..it's a beautiful Sunday morning here in England and we need to do some grocery shopping. My only hope (more of a wishful thinking) is that Bruneians will change. I'd honestly hate to come back to the same 'flashy' nation.

Salaam.

Ghost town

Reading today's BB headline, reminds me of a blog page by a foreign blogger I read a few years ago. It said Bandar Seri Begawan was a ghost town. Nothing exciting to see. It looked like a 70s town. And the author couldn't believe that it was the city of one of the richest countries in the world. Of course when I read it, I was quite p***-off. How dare he!

But it is true. Nobody goes there anymore. There's nothing to see. Yayasan is no longer exciting. The last time we were there, half of the lights weren't even on. The place looked gloomy. There was no life, boring. Worse, had to pay for car-parking (a big NO to Bruneians!).

So HOW?

I really think the Bandar needs a new breath of life. First, the rentals have to go down. And somebody has to lead the way. I don't know what's the rental in Yayasan, but IT has to be the leader. If the rent in the yayasan building goes down, others will follow suit as competition or price war will set in. Second, the authority has to enforce the law (the piawaian PBD12 Min of Development, or whatever the name is). Owners MUST upkeep their building and properties. Any 'eyesore' has to be punished in a form of monetary fine. Third, make the Bandar HIP and HAPPENING. Make use of what we have! Everytime my husband and I go to the Yayasan building, we cannot help but discuss the potential of the building and its location. For instance, why keep the central open plaza void? You know, the space in between the 2 buildings. My husband keeps on saying it's a WASTED space. Sayang! Come on, get example from Singapore's Bugis junction. Get some traditional performances every week or every night even. Imagine, gulingtangan performances at night. With the view of the mosque. Fantastic! Get some small moving vendors to sell unique stuff and make it a rule that no two vendors can sell the same products.

I remember there was a talk about developing a 'water front'. What happened? Don't tell me the thingy that they built at the old custom was IT! Goodness! Please get private architects to design (with due respect, PLEASE!!! NOT the government architects!). Better still, set up a design competition among the local architect firms. Get the public to vote. No direct cash price, but the winning design will be used and the architect will be appointed (based on a government set-up fee). That way, the government would save some money and less headache.

I am sure there are ways to revive the Bandar. Don't let the development of other areas to be the reason why the Bandar is falling apart. We need to think outside the box. Be more creative. Don't be too conventional. I'm ON if anyone needs some ideas - will put my bestest thinking hat hehe.

Anyway, if there is a will there must be a way. But of course, you also have to put the money where the mouth is.

Salaam.

Small state, BIG problems.

I used to think just how difficult can it be to manage a small state of roughly 360,000 people. Plus we have oil!

2 years ago, when I started my economics course, I researched on the problems of small states. Here, the definition of small state is a country with a population of less than 1 million. And, guess what, apparently small states have BIG problems. These are some of the findings (see for example papers by Armstrong and Read, 2003; Commonwealth/World Bank paper, 2002):

1. Small domestic market: Nothing new here. This has implications for the development of large-scale industries, no critical mass to absorb costs of productions etc. etc. As a result, there will exist some oligipolistic/monopolistic organisations. [True, right?]
2. Limited Diversification: Small state has limited natural resources. Even if we have rich resources, small states may not have the financial ability to exploit those resources and therefore need capital inflow i.e. foreign investment [I am not sure if this argument still applies and also if it also applies to Brunei! Will talk about this later.]
3. Economic Vulnerability: Because of the lack of diversified domestic products, we tend to resort and be highly dependent on imports. This means we are quite vulnerable to external shocks. [Just imagine if anything happens to Thailand, I guess we all have to resort to eating 'ambulung' and 'ubi kayu'..but Hey! have we got that??]
4. Limited Labour Capacity: There are 2 implications. Firstly, research shows that Brunei is dependent on foreign workers particularly in both ends of the skill spectrum i.e. manual workers on one end and professionals on the other hand (see Tan and Hashim, 1999) i.e. to put it bluntly there are so many 'qualified' keranis (clerks) but lack of brick-layers and chartered accountants/architects/engineers etc. Secondly, it poses the problems of selecting experienced and efficient administrators i.e. high quality leaders are SCARCE. (Hmm, no comment!)
5. Poor administrative characteristics: Small staff, multiply portfolio (hey! there's so much 1 person can do.. However, this only applies to few good people :)), lack of training which result in low levels of innovation, lack of alternative opportunities outside the public sector and so on.

Now, you might be wondering why I'm enumerating all these problems. Some of you might think, OK if these are the natures of small states then, so be it..accept the fate!

The reason why I've digged my almost-long- forgotten file just to extract this piece of information is actually to change the perceptions of some people (like me a few years ago) who think that managing a small state can't be THAT difficult!. AND, now that we know our weaknesses, we all SHOULD work on improving them. Let's do something different from the others. Let's prove the reasearchers wrong. What??! How??!! You ask. I say....we all should start from EDUCATION and the change of MIND-SET.

To me, education is super very important. Will talk about this in another post.

The change of Mind-Set (this is not quite the same mind-set I referred to in my previous post) on the other hand, is easier said then done! To begin with, we must remove the N.A.T.O (No Action Talk Only) trait that seems to exist in a number of many Bruneians (including me, sometimes!) ASAP and let's instill in ourselves that 'Nothing is impossible, except matters related to God'. If Brunei was once-upon-a-time a Malaysia-cup champion, why isn't it now?? If Brunei was a-very-long-once-upon-a-time an Empire, why aren't we now?(well...maybe not becoming a large empire, but an equally kick-ass country..y'know what I mean!). Being SMALL does not mean that we can't think BIG!

We should be thankful that Brunei is endowed with oil and gas (mind you, there is a problem of a 'Resource-Curse thesis' which is related to oil-producing country and no, I don't think Brunei suffers from Dutch Disease! I think I'll blog on this some time later), we could afford to shrug our shoulders and sing 'Que Sera Sera'. But oil and gas are depletable and non-renewable, which are predicted to run out within 20-40 years from now. Hey! that's NOT a very long time. Plus we have the urgent need to have some viable economic substitutes in place before that happens. It is now high time for us to pinch ourselves and think real hard. To me, this is not something that can be taken lightly and it shouldn't be the problem to think of for just economists and a small number of people. It involves the whole nation and as we are a SMALL nation, EVERYONE should contribute.

Well, enough of my rambling for today.

Salaam!

ps. if anyone is interested in any of the research papers, let me know and I'll give you the full reference.