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Southeast Asia

Southeast Asia

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Published by: chan_jit on Mar 27, 2010
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Southeast Asia
Brunei DarussalamCambodiaIndonesiaLao People’s Democratic RepublicMalaysiaMyanmarPhilippinesSingapore ThailandViet Nam
Brunei Darussalam
GDP is estimated to have contracted in  as a result of a decline in oil and gas production, whichdominates this economy. Lower external demand for energy and the fall in global energy prices are likelyto suppress growth again this year. Hefty surpluses in the fiscal and external current account provide adeep cushion against external shocks. Efforts to diversify the economy have made some advances, butif the private nonenergy sector is to expand more rapidly, progress is required to streamline businessregulation, foster innovation, and develop the financial market.
Economic performance
Te economy depends heavily on oil and natural gas: production o hydrocarbons, including liquefed natural gas, accounted or abouthal real GDP in 2007 (Figure 3.22.1). Te nonenergy sector comprisesmainly services (42% o GDP), o which government services accountor a signifcant share (19% o GDP). Manuacturing and agriculture aresmall at less than 2% o GDP each. Private sector activity, other than inoil and gas, grew modestly rom 28.3% o GDP in 2003 to 31.0% in 2007.Tis consists predominantly o wholesale and retail trade, transport andcommunications, fnance, construction, real estate, and other services.GDP ell by 3.9% in the frst hal o 2008 (the latest period or whichdata are available). For the ull year, GDP is estimated to have contractedby 2.7% (Figure 3.22.2). Aging oil and gas felds and consequent stoppagesin production or maintenance and upgrading o wells and pipelines werethe primary reasons or the lower economic output. Te Government’sdesire to extend the lie o energy production, in view o limited provenreserves and until a vibrant nonenergy sector develops, also meansthat the long-term trend o energy output has been broadly stable(Figure 3.22.3).Government services also likely contributed less to GDP in 2008 thanin 2007. A government decision to bring orward bonuses paid to civilservants had the eect o increasing the measured value o governmentservices late in 2007. Tis eect started to dissipate in the second quartero 2008.Large current account surpluses, equivalent to close to 50% o GDPin recent years, are mainly attributable to merchandise trade surpluses.Higher global oil and gas prices lied export receipts, osetting thedecline in production. Exports o oil and gas were equivalent to morethan 96% o total export revenue in the frst hal o 2008. Majorcustomers in order o importance are Japan, Indonesia, Republic o Korea,and Australia. Clothing shipments, which make up the bulk o othermerchandise exports, have declined since the expiry o global quotas atend-2004.
 This chapter was written by Sharad Bhandari and Mohammed Parvez Imdad of theSoutheast Asia Department, ADB, Manila.
3.22.1 Composition of real GDP, 2007
Nonenergy:private sectorNonenergy:government servicesEnergy: manufacture of liquefied natural gasEnergy:oil/gas mining
Department of Economic Planning andDevelopment,
Brunei Darussalam Statistical Yearbook 2007
;staff estimates.
3.22.2 Contributions to growth (supply)
QQQQQQQQQQPercentage points--ServicesIndustryAgricultureGDP--Percentage points
CEIC Data Company Ltd., downloaded 16 March2009; staff estimates.
224 Asian Development Outlook 2009
Import values are much lower than those o energy-oriented exports,reecting the small population (390,000 in 2007) and economy (GDP o 
o imports. Brunei also imports most o its ood.Ination averaged 2.7% last year, well above the 0.6% average o theprevious 5 years (Figure 3.22.4). Food (29% o the consumer price basket)was the primary contributor, reecting higher international prices.A currency board arrangement, which links the Brunei dollar to theSingapore dollar one to one, has contained ination expectations and,historically, contributed to low ination. Te ination rate in Brunei isalso suppressed by an extensive system o government subsidies, coveringrice, sugar, and uel, as well as housing, education, and health services.Prices o motor vehicles, inant milk powder, cigarettes, and cooking oilare controlled. Te absence o taxes on personal income and on sales o goods and services also helps keep ination low. Te only signifcant taxesare levied on corporate profts. Import duties are also low, equivalent to2.4% o total tax receipts in FY2007 (ended 31 March 2008)
axes, dividends, and royalties rom oil and gas companies accountor about 90% o fscal revenue (Figure 3.22.5). Fiscal expenditurehas allen in the past couple o years, mainly reecting a decline indevelopment spending. Implementation o projects under the nationaldevelopment plan, Rancangan Kemajuan Negara 2007–2012 (RKN),has lagged signifcantly behind allocations. Higher revenue and lowerexpenditure have contributed to a sharp increase in the fscal surplus inrecent years.In order to speed up RKN project implementation, the Governmentlast year devolved the appointments o project consultants to eachministry responsible or the projects. It also moved toward a design–buildmethod or projects so that one provider (contractor or designer) isaccountable or both the design and construction.Some advances were made in diversiying the economy in 2008.
scheduled to be completed by the end o this year. It is the frst majorinvestment at the Sungai Liang Industrial Park, which is being developedas a petrochemical hub. iCenter, the country’s frst business incubator todevelop local small and medium-sized enterprises in inormation andcommunications technology, was launched in 2008. About 16 companieshave started providing business services in Internet and relatedapplications in the iCenter.
Economic prospects
Te global economic downturn is transmitted to Brunei’s economy primarily through lower world demand or energy and the all ininternational energy prices. Te country has ample fnancial resourceso its own and no external debt, so transmission through the fnancialchannel is limited. Income rom investment in oreign assets may moderate, but is unlikely to have a signifcant impact near term giventhe country’s large resources. Foreign direct investment and tourism may slow somewhat, though.Te lack o timely and comprehensive economic data or recent
3.22.3 Hydrocarbon indicators
ProductionAverage priceHHHHHHHHHThousand barrels/day$/barrel
Crude oil
,ProductionAverage priceHHHHHHHHHThousand barrels/day$/MMBTU
Liquefied natural gas
MMBTU = million British thermal units.
Department of Economic Planning andDevelopment,
Brunei Economic Bulletin
, December 2008.
3.22.4 Monthly inflation
--Miscellaneous goodsand servicesRecreation andentertainmentTransportationFood and beverageOverallOctJulAprJan OctJulAprJan %
CEIC Data Company Ltd., downloaded 16 March2009.
3.22.5 Fiscal indicators
-Fiscal balanceExpenditure growthRevenue growth % of GDPEstimate
Data are for fiscal years running from April to March.
Ministry of Finance, Brunei Darussalam; staff estimates.

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