A Growing Industry in Brunei

The Oxford Business Group on 3rd November 2009 published the following article:

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Brunei Darussalam: A Growing Industry

3 November 2009

Ensuring domestic food security and developing a viable export sector are at the heart of Brunei's efforts to establish a strong commercial food processing industry, though the country has to balance its staunch commitment to environmental protection with the need to achieve self-sufficiency in basic staples.

At present, Brunei Darussalam's agriculture only partially meets the country's food needs, with a small contribution to both employment and the economy, something that may well change in the near future.

Last year, the total output of Brunei Darussalam's domestic food sector was just $158m, though under a new strategy developed by the Department of Agriculture this is to increase to $430m in 2013 and $1.9bn by 2023. While the strategy aims to improve yields from farms, the emphasis is on growing the agri-industry.

Speaking at the launch of the new strategy on October 10, the industry and primary resources minister, Pehin Yahya Bakar, said the challenge was to develop sustainability.

"I wish to stress that the basis of agricultural development for the next two decades will be directed at efforts to strengthen the capacity in the agricultural sector, not only in increasing primary agricultural commodity production sustainably, but more so in the development of the capacity of the secondary sector, food processing, which will invite more agri-business opportunities, locally and internationally," he said.

One of the cornerstones of Brunei Darussalam's ambitions is the Agro Technology Park to be located near the capital, a project being developed on a 260-ha site to cater to the needs of the industry. When operational in 2011, the park is expected to create up to 8000 jobs and combine research and logistics hubs alongside a processing cluster. With the state contributing $140m and private investors expected to match that, the project is one of the largest industrial developments outside of the energy and petrochemicals sectors.

The other building block on which the Sultanate's food processing sector is to be constructed is the state policy of supporting the halal food industry, promoting the production of fresh and processed foods that comply with the requirements of sharia laws.

Brunei Darussalam officials have identified the growing demand for halal products, a market that already represents around 12% of global food sales and which is expected to increase to 30% by 2025, as an industrial niche the Sultanate can help fill, both through testing and certifying products from overseas through the Brunei Halal Brand and by expanding domestic production.

Though Brunei Darussalam wants to boost its agri-industrial base, along with the primary industries needed to support it through the growing of raw materials, there are a number of constraints that may restrict the scope of development. One of these is a shortage of land.

Though the Agro Technology Park and other smaller-scale projects are being developed to serve the food industry, there is only a limited amount of land available for extending agricultural production.

According to figures released by the minister of development, Pehin Abdullah Bakar, on October 17, just 5% of Brunei Darussalam's land is listed as accessible for housing or industrial purposes, with housing having the priority.

There are only some 28,825 ha of the country's total landmass of 576,500 ha that has not been marked for preservation or that is already being utilised, the minister said.

With some 17,000 applicants on waiting lists for state housing, a figure that is expected to rise to 30,000 by 2012, the minister said care had to be taken to manage land resources.

"So far, the nation's housing scheme requires 5000 ha of land, which is 17% of the land available," Pehin Abdullah said. "This shows the need for us to use land more wisely."

To combat the lack of wide open spaces, Brunei Darussalam officials are promoting the better use of what land is available, both through utilising improved technology and techniques, and by focusing on crop strains that are best suited to local conditions. One example of this is the introduction of a specially developed high yield rice variety, Bera Laila, part of the campaign to meet 20% of domestic rice demand by 2010, up from the current single-digit levels.

Another way that Brunei Darussalam is looking at overcoming its deficit of primary produce for processing is through imports, a strategy outlined by Abdul Latif Sani, a senior official with the Department of Agriculture's Halal Development Division.

Brunei Darussalam was considering forming partnerships with foreign firms to provide bulk raw materials to be exported to the Sultanate where they could be processed so as to meet halal standards, Abdul Latif told the Borneo Bulletin while attending the sixth China-ASEAN Expo in late October.

"Basically the objective is, as a Muslim nation, to provide halal food to Muslims worldwide," he said. "The second objective is that we are tapping into the lucrative halal global market, which is believed to be worth billions of US dollars. The third is that we want to take the small and medium-sized enterprises' products to explore the global halal market."

While it will take time for Brunei Darussalam's agri-industry to fully get off the ground, having identified a potential growth market, the government is putting in place the necessary capital and infrastructure to sustain the sector's development.

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Comments

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It is great that this industry is growing because it means that they know how to make businesses. It is clear they are applying excellent marketing strategies

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