Brunei Darussalam: Investing in Innovation

The Oxford Business Group reported on 13 August 2014 the following update on Brunei:


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Economic Update
Investing in innovation in Brunei Darussalam 
Brunei Darussalam | 13 Aug 2014

Brunei Darussalam has lost ground in its efforts to promote innovation as a cornerstone for future economic and social development, slipping down the ladder of a comparative survey of innovative practices for the second year running, but the sultanate is positioning itself to rebound strongly in the years to come.

In its latest Global Innovation Index (GII), released in mid July, the Institut Européen d’Administration des Affaires (INSEAD) ranked Brunei Darussalam 88th out of 143 countries assessed, a drop of 14 places on its 2013 performance. Much of this retreat was due to sharp falls in the Innovation Output Sub-Index – the measure of innovative activities within the economy – and the Innovation Efficiency Ratio, which measures input against output, or how much value a country gets from the effort and investment it makes.

In the 2014 GII, the sultanate saw its standing on the output sub-index fall 35 places to 124 compared to the previous year, while its efficiency ratio dropped from 119 to 139. This was despite the fact that its Innovation Input Sub-Index remained steady, easing just one rung to 55 on the ladder.

The 2014 result is a turnaround from just two years ago. In its 2012 report, INSEAD found that Brunei Darussalam had made exceptional progress, climbing 24 rungs up the innovation ladder to 53rd place, a result it said could be attributed to the fact that, “marginal improvements in one or two domains or strengths revealed by data recently made available or by adjustments to the GII framework can have a significant impact on rankings”.

Since then, the country has fallen 35 places, although at least some of this decline has to do with the increased momentum many other countries have found in their drive to promote innovation.

The study said that, relative to its GDP and as a high-income country, Brunei Darussalam was an underperformer and was not living up to its true potential as an innovative nation. The wide gap in the efficiency ratio suggests that, while the country is continuing to make investments in innovation, it has yet to reap the full advantage of this financial and intellectual commitment.

Readying to rebound

It is likely that Brunei Darussalam will see its global innovation rating rebound in the next few years as it will soon have institutions and support services in place that will lay the groundwork for improvements that will be more than just marginal.

Brunei Darussalam has long identified research and development, along with investment in technology and training, as a means to support innovation, a policy underscored in late April by Dato Ali Apong, the deputy minister at the Prime Minister’s Office. Addressing a conference on innovation and commercialisation, the minister said a climate conducive to developing a knowledge-based society had to be fostered.

“It is our collective responsibility to promote innovation and a productive innovation ecosystem for Brunei,” he said. “Once a critical success level has been achieved, investment will attract further investments, talent will attract further talent, and innovation will ultimately generate more innovation.”

That ecosystem will be bolstered later this year with the opening of the $20m Anggerek Desa Technology Park, the third pillar of a project led by the Brunei Economic Development Board (BEDB) to build avenues for creativity, innovation and entrepreneurship. The technology park will complement the already operational iCentre and Knowledge Hub, which are dedicated ICT incubation and technology-based research and development centres and which will expand research capacity, including in fields such as multi-media, climate, simulation and defence modelling.

Other examples include the MiSC, the Ministry of Education’s Media and In-Service Centre, a digital learning hub, and the Bio-Innovation Corridor, formerly known as the Brunei Agro-Technology Park, both of which are aimed at attracting investment.

Finding a niche

While Brunei Darussalam is stepping up investments to support innovation, it is by no means in the top league of innovative countries in the region. Singapore consistently rates in the top 10 globally in the GII survey, and has a strong tradition of research and development, while other economies such as Japan, China, Hong Kong, Thailand and Malaysia all placed above the sultanate. This suggests the country will face stiff competition for innovative investment, although it is seeking to parlay certain cultural and natural strengths to its advantage.

One arm of innovation policy is to focus on projects that support halal industries and bio-industry, a logical move given the country’s Islamic heritage and the huge diversity of its natural resources. Adopting a targeted approach is likely to pay dividends, potentially making the country a leader in niche markets.

While it may take time for the full impact of new innovation hubs and investments to be felt, they will help lay a solid base from which Brunei Darussalam can better achieve its innovative potential.

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