Still Overly Dependent on Oil and Gas

My foreign affairs colleagues on the trade side had been having a tpr (trade policy review) with the WTO sometime end of February. Both IMF and WTO hold some kind of, if I can use the word, annual interrogations, IMF calls it Article IV Consultations and WTO calls it Trade Policy Review. Of course, it has its usefulness and being a citizen of the world that needs to trade and may one day need financial assistance, Brunei cannot ignore either one.

The WTO report summarised that Brunei is a prosperous, relatively open economy still overly dependent on oil and gas.

Brunei Darussalam is a small, relatively open economy that has intensified its participation in regional trade agreements and has reduced tariffs to low levels although there is still a large gap between applied and bound MFN rates. In several trade-related areas — notably TRIPs, customs procedures, telecommunications and standards — Brunei has made significant improvements to its regulatory framework since the previous review, according to a WTO Secretariat report on the trade policies and practices of Brunei Darussalam.

The country owes its prosperity to its abundant petroleum (oil and gas) resources whose share of GDP stood at 69% in 2006 accounting for 96% of exports and 94% of Government revenue. This leaves Brunei vulnerable to external shocks, particularly given the prospect of an eventual depletion of these resources probably over the next couple of decades.

The Government has faced the challenge and has been encouraging economic diversification, mainly into manufacturing and services, especially financial services, tourism and transport, but despite the provision of investment incentives for the private sector success in achieving this goal has been slow so far.

The report also notes that lack of transparency and public accountability in government policies might adversely affect the aim of encouraging foreign investment. The report are divided into several parts, all are in pdf format but the most important one is the one on the economy.