The Economic Diversification Roundtable organised recently delved on the problems hampering Brunei's economic diversification progress.
It highlighted the problem of mindsets, bureaucracy and public sector reform, which include red tape, expertise proportion in the public sector, salaries and benefit reduction.
Two consultants, Manu Bhaskaran from Centennial Asia Advisors Pte Ltd, Singapore and Dr Mark Crosby, Melbourne Business School, Australia, had a consensus on their findings.
Both researches called for more aggressive efforts to develop human capital to ensure a high percentage of the workforce entering tertiary or professional fields and a developed entrepreneurship education to support diversification efforts.
They also emphasised the importance of finding the balance between providing the necessary level of government service provision, while allowing for an enlarged private sector, both in terms of output produced and employment provided.
The roundtable was jointly organised by the Centre for Strategic and Policy Studies and Asia Inc Forum, and partnered by HSBC, Total and Alcoa.
Mr Bhaskaran believes the failure of the Brunei in economic diversification is not because of a lack of effort or poor governance. The key problem is the enabling environment. He found that the environment is such that it does not allow full and effective implementation of policy.
The contributing elements, he said, include lack of clarity of purpose, bureaucratic hindrances at the middle/lower layers of bureaucracy, less developed corporate sector, lack of scale and weak human capital development; absence of adequate FDI outside the energy sector; unexploited potential growth areas in the economy and high cost structure.
If economic diversification is to improve, the state should be a pro-active enabler, he said. Reforms in government should involve change of mind set through application of appropriate incentive structure and cultivation of a pro-economic growth attitude.
The corporate sector should be strengthened through enhanced accountability such as thorough audit of rules and regulations as well as tax reforms, he said.
There is a need to develop a wealth of human capital that is capable, competent and committed in order to support Brunei's economic diversification in the long term and the need to build strategies to call for more foreign direct investment in diversified industries, he said.
He suggested areas for further study in the development of human capital and SME sector.
Dr Crosby said the issue is not a lack of diversification, but rather a lack of market orientation and private initiatives of which the solutions lie on a mindset change. The public sector is too large and it is affecting the growth of the private sector.
He believes that Brunei's wealth should be used to encourage entrepreneurship and risk-taking, while providing a strong safety net.
Dr Crosby suggested various policy recommendations ie the need to reform bureaucracy and public sector, which include red tape, expertise and experience proportion in the public sector, as well as salaries and benefit reduction. He also emphasised the importance of the human resource reform which includes university expansion in both seats and the type of school as well as young entrepreneur programmes, the development of the private sector particularly SMEs and the development of infrastructure for diversification.
