Regional Outlook: Southeast Asia 2010-2011

The ASEAN-10

97 THE ASEAN-10 Brunei Darussalam By Lee Poh Onn Brunei฀Darussalam’s฀economic฀growth฀prospects฀in฀2010฀and฀2011฀will฀ be฀slightly฀better฀than฀that฀in฀2009.฀In฀2009,฀real฀GDP฀is฀expected฀to฀ grow฀ by฀ only฀ 0.2฀ per฀ cent.฀ This฀ is฀ because฀ of฀ the฀ global฀ slowdown฀ and฀lower฀energy฀prices. Brunei’s฀major฀trading฀partners,฀the฀United฀States฀and฀Japan,฀are฀ expected฀ to฀ recover฀ from฀ 2010฀ onwards,฀ albeit฀ only฀ moderately฀ after฀ the฀ global฀ economic฀ crisis,฀ with฀ the฀ Bruneian฀ economy฀ is฀ likely฀ to฀ follow฀ suit฀ also฀ in฀ achieving฀ a฀ modest฀ economic฀ pick฀ up฀ because฀ of฀ better฀export฀prospects.฀ BRUNEI DARUSSALAM • The outlook looks challenging for Brunei Darussalam for 2010 to 2011, because of the global economic crisis in 2009 with only very gradual recovery in the U.S., Japanese, EU, and ASEAN economies the next two years ahead. • Oil prices have fallen in the first three quarters 2009 because of the global downturn. Moderately increasing energy prices from 2010 are however expected to improve Brunei Darussalam’s growth prospects in 2010 and 2011. • Economic diversification is continuing and would help to safeguard the country’s growth prospects in the years ahead. • The China-ASEAN Free Trade Area would also help to bolster Brunei’s trade prospects and economic development. 02 EcoOutlk p97-170.indd 97 12/22/09 3:30:39 PM 98 ECONOMIC OUTLOOK Latest฀Available฀Demographic฀and฀Economic฀Data Brunei฀ had฀ a฀ recorded฀ population฀ of฀ about฀ 401,000฀ as฀ at฀ mid-2009.฀ Inflation฀ stood฀ at฀ 1.2฀ per฀ cent.฀ Per฀ capita฀ constant฀ GDP฀ based฀ on฀ purchasing฀power฀parity฀(international฀dollars)฀was฀50,102฀in฀2009.1 ฀ Brunei’s฀ literacy฀ rates฀ are฀ among฀ the฀ highest฀ in฀ ASEAN฀ with฀ an฀ adult฀ literacy฀ rate฀ of฀ 96.5฀ per฀ cent฀ for฀ males฀ and฀ 93.1฀ per฀ cent฀ for฀ females฀ in฀ 2007.฀ Brunei฀ is฀ ranked฀ twenty-sixth฀ best฀ in฀ terms฀ of฀ the฀ Human฀Development฀Index,฀the฀highest฀in฀Southeast฀Asia.2 ฀ Growth฀Forecast฀for฀2010฀and฀2011 During฀ the฀ forecast฀ period฀ of฀ 2010฀ and฀ 2011,฀ real฀ GDP฀ is฀ expected฀ to฀increase฀by฀0.595฀and฀1.257฀per฀cent฀respectively.฀This฀is฀based฀on฀ the฀ IMF,฀ World฀ Economic฀ Outlook฀ Database฀ in฀ October฀ 2009.3 ฀ Higher฀ growth฀rates฀follow฀because฀of฀the฀continuing฀development฀of฀Brunei’s฀ ecotourism฀industry,฀exports฀from฀the฀completed฀methanol฀plant฀project,฀ and฀the฀continuing฀development฀of฀Sungai฀Liang฀Industrial฀Park฀(SPark)฀ project฀which฀has฀positive฀impacts฀on฀the฀construction฀sector. SPark,฀ located฀ on฀ a฀ 271-hectare฀ site฀ at฀ Sungei฀ Liang,฀ is฀ being฀ developed฀ as฀ a฀ world-class฀ petrochemical฀ hub.฀ A฀ US$450฀ million฀ methanol฀ plant฀ by฀ the฀ Brunei฀ Methanol฀ Company,฀ a฀ joint฀ venture฀ between฀ Petroleum฀ Brunei฀ and฀ two฀ Japanese฀ companies,฀ Mitsubishi฀ Gas฀Chemical฀and฀Itochu,฀will฀be฀completed฀by฀end฀2009.฀The฀plant฀ is฀ also฀ expected฀ to฀ be฀ commissioned฀ in฀ April฀ 2010,฀ with฀ most฀ of฀ its฀ output฀exported฀to฀Japan.฀The฀construction฀of฀the฀Single฀Point฀Mooring฀ System฀required฀to฀transport฀methanol฀to฀export฀vessels฀at฀sea฀is฀also฀ scheduled฀to฀be฀completed฀by฀end฀2009.฀ Higher฀ petroleum฀ prices,฀ which฀ are฀ expected฀ to฀ prevail฀ in฀ 2010฀ and฀ 2011,฀ are฀ expected฀ to฀ shore฀ up฀ Brunei’s฀ growth฀ in฀ the฀ next฀ few฀ years,฀ even฀ if฀ Brunei฀ does฀ not฀ increase฀ its฀ production฀ in฀ line฀ with฀ increasing฀ demand.฀ The฀ oil฀ and฀ gas฀ sector฀ made฀ up฀ 70.1฀ per฀ cent฀ of฀ GDP฀in฀2008,4 ฀with฀this฀proportion฀expected฀to฀continue฀in฀the฀years฀ to฀come.฀Brunei’s฀oil฀and฀gas฀fields฀are,฀however,฀expected฀to฀continue฀ to฀ underperform฀ because฀ of฀ ageing฀ oilfields฀ and฀ the฀ government’s฀ policy฀of฀managing฀its฀oil฀supplies฀to฀conserve฀energy฀reserves฀and฀to฀ develop฀non-energy฀alternatives.5 02 EcoOutlk p97-170.indd 98 12/22/09 3:30:39 PM 99 THE ASEAN-10 The฀current฀slowdown฀in฀the฀United฀States฀and฀Japan฀has฀been฀a฀ major฀reason฀for฀the฀fall฀in฀energy฀prices฀in฀2009.฀However฀with฀the฀ expected฀ pick-up฀ in฀ these฀ economies฀ and฀ also฀ economies฀ in฀ ASEAN,฀ energy฀ prices฀ would฀ at฀ least฀ increase,฀ if฀ only฀ moderately,฀ during฀ the฀ forecast฀period฀of฀2010฀and฀2011,฀thus฀impacting฀positively฀on฀Brunei’s฀ growth฀prospects.฀Many฀of฀Brunei’s฀trading฀partners฀have฀also฀reported฀ slowdowns฀in฀their฀economies฀in฀the฀first฀three฀quarters฀of฀2009,฀but฀ recovery฀has฀begun฀in฀the฀last฀quarter.฀Brunei’s฀major฀export฀markets6 ฀ include฀Japan฀(33.5฀per฀cent),฀ASEAN฀(28.1฀per฀cent),฀South฀Korea฀(13.7฀ per฀ cent),฀ and฀ Australia฀ (12.1฀ per...