Addressing Barriers to the Integration of Brunei Darussalam's Business Services Sectors into Global Value Chains - December 2019

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Addressing Barriers
to the Integration of
Brunei Darussalam’s
Business Services
Sectors into Global
Value Chains
December 2019
Addressing Barriers to
 the Integration of Brunei
  Darussalam’s Business
Services Sectors into Global
       Value Chains

         December 2019
Addressing Barriers to the Integration of Brunei
Darussalam’s Business Services Sectors into Global
Value Chains

© Commonwealth Secretariat 2020
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Acknowledgements \ iii

This report was commissioned through technical assistance provided by the
Commonwealth Secretariat at the behest of the Government of Brunei Darussalam,
under a project to diversify the economy and improve export competitiveness.
The Asian Trade Centre, Singapore led by Dr Deborah Elms, Executive Director and
her team, conducted the research analysis and wrote the report. Olayinka Bandele,
Interim Head of Trade Competitiveness Section at the Commonwealth Secretariat,
edited the final report.
Sincere thanks is extended to all individuals, agencies and private sector firms who
provided information and insights leading to the preparation of this Services Report
for Brunei Darussalam.
The views expressed in this publication are those of the authors and do not
necessarily reflect the official position or policy of the Commonwealth Secretariat or
any other agency or government identified.
Contents \ v

Acknowledgements                                             iii
Acronyms and Abbreviations                                   vii
Executive summary                                            ix
1. Introduction                                               1
2. Global Value Chains                                        3
2.1 What are global value chains?                             3

2.2	Changing patterns of global value chains                 3

2.3	Key drivers of global value chains                       4

3. Services Activities in Global Value Chains                 6
3.1 What are services?                                        6

3.2 Services in global value chains                           6

3.3	Managing services in trade agreements                    7

3.4	Services activities in the Asia Pacific region           8

4. Brunei’s Economy and Diversification                       9
4.1 Overview of Brunei’s economy                              9

4.2	Strategic goals and planned outcomes                    11

5. Logistics                                                 14
5.1 What are logistics services?                             14

5.2	Logistic services and global value chains               15

5.3	Market overview of Brunei’s logistics services sector   15

5.4	Logistics: promise and opportunity                      17

5.5	Assessment of Brunei’s logistics services sector        18

6. Financial Services                                        21
6.1 What are financial services?                             21

6.2	Financial services and global value chains              22

6.3	Market overview of Brunei’s financial services sector   23

6.4	Government initiatives in Brunei                        24

6.5	Financial services: promise and opportunity             25

6.6	Assessment of Brunei’s financial services sector        26
vi \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

                      7. A Framework for Reforming Brunei’s Services Sectors                                            30
                      7.1.	Ratify the Comprehensive and Progressive Trans-Pacific Partnership                          30

                      7.2.	Implement ASEAN commitments                                                                 31

                      7.3.	Drive investment to increase trade and financial flows                                      32

                      7.4. Closing the circle                                                                           34

                      References                                                                                        35
Acronyms and Abbreviations \ vii

Acronyms and Abbreviations

2PL          2nd Party Logistics
3PL          3rd Party Logistics
4PL          4th Party Logistics
ACTS         ASEAN Customs Transit System
ADB          Asian Development Bank
AEC          ASEAN Economic Community
AEC Center   ASEAN Economic Community Strategy Center
AFAFGIT	ASEAN Framework Agreement on the Facilitation of
         Goods in Transit
AFAFIST	ASEAN Framework Agreement on the Facilitation of
         Inter-State Transport
AFAMT        ASEAN Framework Agreement on Multimodal Transport
AMBD	Autoriti Monetari Brunei Darussalam
      (Brunei Monetary Authority)
APEC         Asia-Pacific Economic Cooperation
ASEAN        Association of Southeast Asian Nations
BEDB         Brunei Economic Development Board
BIBD         Bank Islam Brunei Darussalam Berhad
CBTP	ASEAN Framework Agreement on Facilitation of Cross-
      Border Transport Passengers by Road Vehicles
CIBFM        Centre for Islamic Banking, Finance and Management
CIS	ASEAN Framework for Cross-Border Offerings of
     Collective Investment Schemes
CPTPP	Comprehensive and Progressive Trans-
       Pacific Partnership
CSCMP        Council of Supply Chain Management Professionals
DARe         Darussalam Enterprise
EDB          Economic Development Board of Singapore
ERIA         Economic Research Institute for ASEAN and East Asia
FAPAA        Federation of Asia Pacific Air Cargo Associations
FDI          Foreign Direct Investment
viii \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

                          FTA               Free Trade Agreement
                          FTZ               Free Trade Zone
                          GATS              General Agreement on Trade in Services
                          GDP               Gross Domestic Product
                          GPS               Global Positioning System
                          GVC               Global Value Chain
                          IFSB              Islamic Financial Services Board
                          IL                Inbound Logistics
                          IIMM              Islamic Inter-Bank Money Market
                          IoT               Internet of Things
                          IPO               Initial Public Offering
                          IT                Information Technology
                          JICA              Japan International Cooperation Agency
                          LSP               Logistics Service Provider
                          M&A               Mergers and Acquisitions
                          MCT               Muara Container Terminal
                          MFS               Micro Financing Scheme
                          MNC               Multinational Corporation
                          MPC               Muara Port Company Sdn. Bhd.
                          MSMEs             Micro, Small and Medium-Sized Enterprises
                          NSW               National Single Window
                          OEC               Observatory of Economic Complexity
                          OECD              Organisation for Economic Co-operation and Development
                          OL                Outbound Logistics
                          PC                Personal Computer
                          RBA               Royal Brunei Airlines
                          RCEP              Regional Comprehensive Economic Partnership
                          RKN               Rancangan Kemajuan Negara (National Development Plan)
                          TEU               20-Foot Equivalent Unit
                          UK                United Kingdom
                          USA               United States of America
                          WEF               World Economic Forum
                          WTO               World Trade Organization
Executive Summary \ ix

Executive Summary
Brunei Darussalam’s government has identified           The single biggest challenge is the chicken-and-
some critical challenges for the future. The            egg problem of the economy. These backbone
oil and gas revenues that have sustained the            services require sufficient demand to develop,
country’s growth for decades are winding down.          but the current state of the domestic economy
Diversification of the economy is therefore more        is too small to drive much demand for better
critical than ever.                                     services. This has left these important services
                                                        too expensive and inefficient, in many cases
The issue of diversification has been placed
                                                        rendering domestic firms more uncompetitive
squarely at the heart of various government plans,
                                                        in a GVC world than they would otherwise have
including its Vision, Wawasan Brunei 2035. The
                                                        been. A GVC world requires firms to deliver goods
desire to integrate more deeply into the regional
                                                        and services quickly and seamlessly at globally
and wider economy has also driven engagement
                                                        (or at least regionally) competitive prices. At the
efforts at the Association of Southeast Asian
                                                        moment, Brunei companies struggle to deliver on
Nations (ASEAN) level and with Asia Pacific
                                                        this promise.
partners through important initiatives like the
Comprehensive and Progressive Trans-Pacific             What is to be done? The domestic economy in
Partnership (CPTPP) and Regional Comprehensive          Brunei is unlikely to suddenly grow significantly
Economic Partnership trade negotiations.                larger in the near term. Demand will not come from
                                                        this source. Instead, Brunei must work much harder
Despite significant planning, however, Brunei’s
                                                        to harness regional demand and build up capacity
economy still remains heavily centred on oil and gas
                                                        and infrastructure to deliver the required backbone
and dominated by a large pool of micro, small and
                                                        services on the back of wider regional companies.
medium-sized enterprises. These smaller firms
                                                        Fortunately, Brunei has at least two immediately
continue to underperform, with limited contributions
                                                        available opportunities that must be seized for
to overall economic growth and fewer connections
                                                        creating regional demand.
to global value chains (GVCs) than other economies
in the region (e.g. OECD, 2018, p. 209).Foreign         Brunei is a member of ASEAN. One of the primary
inbound investment figures remain low and export        purposes of this bloc is to create a seamless
figures in the non-oil and gas sector are limited.      regional integration platform. Brunei must better
                                                        harness ASEAN’s infrastructure at the domestic
This situation represents a puzzle. It may be that
                                                        level to get Brunei-based firms to ‘think ASEAN’.
Brunei’s inability to plug into GVCs is a function of
                                                        Rather than a market of 400,000, Brunei companies
missing, inefficient or uncompetitive ‘backbone’
                                                        should be working with visions of the sixth largest
services. If so, then addressing these services may
                                                        economy in the world.
go a long way towards powering the overall growth
of the economy and driving the diversification          Second, Brunei is an original signatory to the
agenda the government seeks.                            CPTPP. This high-quality trade agreement gives
                                                        Brunei a unique opportunity to access important
Two backbone services have been identified as
                                                        markets across the Pacific. Quick ratification and
particularly important and potential areas for
                                                        implementation do not just help firms trade within
growth: logistics and financial services. Each
                                                        the CPTPP but also provides a signal of Brunei’s
is relevant for firms seeking to plug into GVCs
                                                        intention to foster trade and investment more
and both are needed for greater domestic
                                                        intensely than in the past. Firms should latch onto
firm opportunities.
                                                        the CPTPP and, as with ASEAN, consider the wider
This report highlights multiple challenges in both      market from the very beginning.
sectors. Brunei is neither efficient nor effective
                                                        Finally, Brunei should take important steps to
in delivering logistics or financial services to its
                                                        drive demand in a few key sectors, like halal food,
own companies and cannot currently compete
                                                        aquaculture and downstream oil and gas industries,
with regional players in delivering such services
                                                        to help spur the domestic economy directly. Brunei
more broadly.
x \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        should also work to develop online digital services,                fully into GVCs. It is only with greater demand
        as these can be delivered seamlessly directly from                  from outside the domestic economy that more
        Brunei and will allow smaller firms to plug directly                efficient backbone services in logistics and financial
        into GVCs.                                                          services can be built. In addition, it is only with more
                                                                            productivity in such services that Brunei companies
        Taken together, Brunei has the resources to deliver
                                                                            can become more competitive. Peicing together
        many of the outcomes it wants to achieve. The
                                                                            the puzzle shows that Brunei has to work on both
        plans are largely in place. It is time for the country
                                                                            ends at once: demand and supply have to be
        to seize the opportunities presented by the wider
                                                                            delivered in tandem.
        regional and Pacific economy to integrate more
Introduction \ 1

1. Introduction
Over the past two decades, international                      foreign direct investment (FDI). Most of Brunei’s
competition, globalisation and economic                       domestic investment has been limited to resource
liberalisation have encouraged the development                extraction, with downstream industries related to
of global value chains (GVCs). Value chains used to           oil and gas processing, petrochemicals and the like
be called ‘supply chains’, but the GVC label more             done elsewhere in the region.
accurately captures the range of activities included
                                                              Over the past decade, however, Brunei’s growth
in the production of goods, the delivery of services
                                                              rate has been relatively stagnant, particularly in the
and the intermingling of the two.1
                                                              private sector. Heavy reliance on the oil and gas
Technological advancements, preferential trade                sector has made the country vulnerable to volatile
treatments and free trade more broadly have                   changes in the prices of these commodities. The
enabled firms to diversify their production and               inevitable decline in natural resources available for
manufacturing processes. Firms have increasingly              extraction has added additional urgency to the need
opted to fragment their production stages into                to rethink existing policies.
different countries and industries in the drive for
                                                              The Brunei government is interested in seeking
higher competitiveness in dynamic global markets.
                                                              opportunities to diversify its economy in a bid to
Today, GVCs are deeply embedded in conversations
                                                              reduce its dependency on its extractive oil and
of the global economy and cross-border flows of
                                                              gas industries and to improve productivity in its
goods, services and investment.
                                                              economy. To realise this goal, Brunei has released
Production networks, like supply chains and                   its long-term development vision, Wawasan Brunei
value chains, are becoming predominant in both                2035, which sets out the country’s core principles
developing and developed economies, as firms                  and frameworks to increase economic growth and
seek creative ways to reduce costs and tap into               enhance diversification.
new technologies in the market. While multinational
                                                              As one of the five priority clusters for economic
corporations (MNCs) have been leading the way by
                                                              diversification, the business services sector can
participating in GVCs as suppliers, recipients and
                                                              help Brunei better integrate into the global economy
partners in strategic ventures, the development of
                                                              and achieve Wawasan Brunei 2035. Brunei’s
new information and communication technologies
                                                              definition of business services includes logistics and
has enabled micro, small and medium-sized
                                                              transportation, as well as innovative financial services
enterprises (MSMEs) to increasingly integrate into
                                                              products. Having these services exist on their own is
GVCs. Brunei Darussalam is one of the countries
                                                              not an especially useful end goal, however. Instead,
taking the initiative to anchor new pathways to
                                                              these services should be seen as complementary
economic growth and development in GVCs.
                                                              to the broader objectives of integration of Brunei
With a population of approximately 400,000, Brunei            firms into the global and regional economy. Both
is the smallest country in Southeast Asia. The                transport/logistics and financial services are enabling
domestic economy will never be substantial since              services for other sectors of the economy.
the total number of potential consumers is likely to
                                                              To help jumpstart improved productivity in the
remain modest, although an abundance of natural
                                                              economy, it makes sense to focus on improved
resources like oil and gas has given Brunei one of
                                                              connectivity between Brunei and other firms
the highest gross domestic product (GDP) per
                                                              through GVCs. These chains can include both
capita rates in the world, with a skilled workforce.
                                                              traditional chains for the oil and gas sector and new
Unlike many neighbouring countries, the presence
                                                              GVCs in a wide range of goods.
of these resources has meant that Brunei has not
actively sought or intensively promoted inbound               The Brunei government has been active in a
                                                              range of trade agreements that have been
                                                              specifically crafted with the goal of encouraging
                                                              the development of GVCs, including the
1 Value chains can be regional or global, but the shorthand
  is typically GVC rather than RVC, to avoid confusion with   Comprehensive and Progressive Trans-Pacific
  Regional Value Content used in Rules of Origin.             Partnership (CPTPP), the Regional Comprehensive
2 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        Economic Partnership (RCEP) and the Association                     The sections outline domestic and international
        of Southeast Asian Nations’ (ASEAN’s) ASEAN+1                       barriers and opportunities for the integration of
        agreements, which provide new or renewed                            Brunei into GVCs.
        incentives for firms to choose Brunei as a GVC
                                                                            For both sectors, the competitiveness of the
        location. The timing is therefore particularly ideal
                                                                            existing businesses is extremely low. While logistics,
        to explore how the development of supporting
                                                                            for example, has improved, with additional port
        services can facilitate the diversification of the
                                                                            and air cargo capacity coming on stream, the
        Brunei economy.
                                                                            volumes remain very modest. As long as volumes
        To encourage GVCs to locate in Brunei and thrive,                   stay so small, costs are extremely high, particularly
        or to spur the improved integration of existing                     compared with regional competitors. High costs and
        Brunei firms into regional and global value chains,                 low productivity limit integration into GVCs for goods
        effective and efficient business services such as                   and services companies of all types. These factors,
        transportation, logistics and financial services are                in turn, make it harder for backbone services like
        critical. The development and growth of business                    logistics and financial services to flourish and grow.
        services are directly linked to the development
                                                                            Section 7 offers a roadmap and framework
        of a highly skilled labour force, innovation,
                                                                            that Bruneian businesses and authorities can
        technology, higher levels of economic dynamics and
                                                                            use to overcome some of these domestic and
        sustainability. This is a good opportunity for Brunei’s
                                                                            international challenges and take advantage of
        business services sector to expand and integrate
                                                                            opportunities to better enable the creation of local
        while contributing to Wawasan Brunei 2035 goals.
                                                                            GVCs and the integration of firms into regional and
        This project aims to contribute to Wawasan Brunei                   global value chains.
        2035 by supporting the integration of Brunei’s
                                                                            The path ahead is complicated. While the roadmap
        business services sector into GVCs. This report
                                                                            identifies opportunities, the challenges should not
        provides a diagnostic assessment of current
                                                                            be underestimated. Both logistics and financial
        domestic and international barriers as well as
                                                                            services are underdeveloped in Brunei at the
        opportunities for Brunei’s business services. In
                                                                            moment, meaning there is significant potential
        addition, it provides a framework and roadmap that
                                                                            room for growth. Both should be viewed as
        will allow Brunei to overcome challenges and take
                                                                            backbone services. Neither is likely to thrive in the
        advantage of new opportunities.
                                                                            absence of a wider growing domestic economy.
        Section 2 introduces the concept of GVCs and                        Logistics services, for example, are of limited utility
        identifies important trends and drivers within the                  if there are few goods to move. Financial services
        development of GVCs.                                                matter little if firms have few demands for new
                                                                            capital. Hence, the key challenge for Brunei is
        Section 3 highlights the increasing role that services
                                                                            less how to make logistics and financial services
        activities play in the growth and diversification of
                                                                            competitive and more about how to drive the
        GVCs. It maps services activities across different
                                                                            overall economy forward.
        stages of a GVC and outlines the impact of service
        activities in the Asia Pacific region.                              Until Brunei is more successfully integrated into the
                                                                            wider economy, with goods and services of value
        Section 4 provides an overview of Brunei’s
                                                                            and interest to GVC firms, backbone services will
        economy and outlines the country’s economic
                                                                            similarly struggle to grow and become competitive.
        development and diversification plans.
                                                                            Brunei must focus on growing its own economy,
        Sections 5 and 6 define logistics and financial                     including building investments in halal food and
        services, outline their relationship to GVCS and                    aquaculture as well as creating additional GVC
        provide a market overview of Brunei’s logistics                     opportunities in oil and gas. These should be ‘low
        and financial services sectors. In addition, both                   hanging fruit’ that can be exploited to help build
        sections provide an assessment of Brunei’s                          demand for local services. In addition, Brunei needs
        logistics and financial services sectors based                      to better tap the potential of helping MSMEs,
        on (i) the country’s development goals, (ii) a                      including through financial services, by getting
        regional analysis of market opportunities and (iii)                 smaller firms to ‘think regional’ from birth, and
        stakeholder interviews with relevant private and                    creating platforms to help them grow and develop
        public financial services stakeholders in Brunei.                   outside the local market.
Global Value Chains \ 3

2. Global Value Chains
This section defines GVCs and introduces                  delivery of services from anywhere. Brunei’s highly
key trends characterising and driving their               skilled workforce should provide opportunities for
development. In light of these trends, the section        engagement with services GVCs.
establishes the rising relevance and significance of
                                                          Brunei is very involved in GVCs but the economy
services input to GVCs.
                                                          has been largely stuck at the start of the process –
                                                          with the extraction of oil and gas. These products
2.1 What are global value chains?                         are then shipped to other countries to be converted
A value chain refers to a full range of activities        into higher-value items. Brunei needs to think
that a firm may undergo during its production             about not just diversification away from oil and
process. This starts from the conception stage and        gas but also how to leverage the sector to move
continues to the end stage, when final consumers          up the value chain in what has been a key element
use a product or service (OECD, 2012, p. 4). GVCs         of its economy for decades. Oil and gas can be
typically include the following activities: design,       further processed in Brunei rather than allowing
production, marketing, distribution and support to        value to be added in other markets. This has been
the final consumer (ibid, p. 9).1                         a perennial item on the ‘to do’ list, but the urgency
                                                          in creating domestic demand is growing since
A good example of a GVC is presented by a
                                                          ancillary activities are also dependent on improved
complex product like the iPhone. This is designed
                                                          local competitiveness.
by Apple in the USA, created through the inclusion
of thousands of parts and components drawn from
across the world, assembled in China, then shipped        2.2 Changing patterns of global
and sold globally in merchant shops. The iPhone
includes goods like semiconductors, screens and                value chains
screws, services like research and design or retail       In recent years, various developments like
sales and intellectual property like patents.             technological advancements have enabled the
                                                          expansion and evolution of GVCs. Therefore, in
A GVC need not be such a complicated product.
                                                          studying GVCs, it is crucial to understand the trends
Even a bar of soap made by a small firm in Brunei
                                                          shaping their development.
can be viewed as part of a GVC if it involves an idea
hatched in Brunei, contains ingredients sourced           The GVC phenomenon can be best represented by
regionally and from overseas, is manufactured             two main trends. First, value chains are becoming
in Brunei and is sold to customers regionally or          increasingly regional and less global. Since 2013,
globally through online digital platforms. Given the      the intraregional share of global goods trade has
dominance of smaller firms in Brunei, it is important     increased by 2.7 percentage points. Before 2012,
to encourage MSMEs to see themselves as                   the intraregional share of global goods trade had
‘mini-MNCs’ able to engage with the wider world as        declined for more than a decade – from 51 per cent
part of GVCs.                                             in 2000 to 45 per cent in 2012 (Lund et al., 2019,
                                                          p. 9). This is a shift from before, when value chains
While the primary focus of GVC work has been
                                                          revolved around long-haul trade across oceans and
on trade in goods, it should be noted that GVCs
                                                          countries. In regions like Asia, regionalisation and
that are entirely made up of services could be
                                                          lower communication and transportation costs
created. For example, large consultant firms can
                                                          have led to increased regional trade.
bundle together a wide variety of services sourced
from individuals and other firms from across the          Second, developing countries have increased their
globe and deliver them to clients located in MNCs.        participation in GVCs. MNCs appear to be shifting
The growth of the internet allows for the digital         their development and production to emerging and
                                                          developing markets. According to the McKinsey
                                                          Global Institute, developing countries receive the
1 Organisation of Economic Co-operation and
  Development. 2012. “Mapping Global Value Chains.” (7)   most benefit from value chains and are projected to
  Accessed July 12, 2019.                                 account for more than half of all global consumption
4 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        (Lund et al., 2019, p. 11). Overall, these trading                  costs and consequently have the greatest GVC
        patterns have led to the increased role of services in              participation when compared to other regions
        the development of GVCs. In the past decade, trade                  (OECD and WTO, 2015). As trade costs decrease,
        in services has grown more than 60 per cent faster                  firms are encouraged to relocate their facilities to
        than trade in good (ibid., p. 5).                                   countries that will reduce business costs. This can in
                                                                            turn drive regional and global value chains.
        However, traditional trade statistics do not fully
        represent the impact of increased flows of services.                One key premise driving the development of ASEAN
        For instance, they do not track increasing cross-                   over the past decades has been precisely the
        border flows of digital services. The McKinsey                      development of an integrated regional production
        Global institute reports that YouTube, Facebook and                 base. This has led member states to drop all tariffs
        WeChat may have created an estimated US$8.3                         to zero across the region, a focus on cutting barriers
        trillion in value annually. Overall, gross services trade,          in services and investment and improved trade
        services embedded in goods trade and free cross-                    facilitation, particularly through the creation of the
        border digital service account for more than half of                ASEAN Single Windows. The path culminated in the
        value added in overall trade (Lund et al., 2019, p. 7).             launch of the ASEAN Economic Community (AEC)
                                                                            in 2015 and renewed progress towards additional
        It is therefore relevant to consider the relationship
                                                                            integration in the AEC Blueprint 2025.
        between services inputs and value chains, so that
        emerging markets like Brunei can capture the                        2.3.2 New products and stakeholders
        benefits of GVCs. In order to better understand
        how to leverage GVCs, it is crucial to recognise                    Today, advancements in digital platforms like
        the forces that shape them. The next subsection                     blockchain and the Internet of Things (IoT) are
        outlines some of the main factors driving the                       reducing transaction and logistics costs ‘either by
        development of value chains.                                        changing the economics and location of production
                                                                            or by changing the actual goods and services
        2.3 Key drivers of global value                                    demanded’ (Lund et al., 2019, p. 14).

             chains                                                         New technologies encourage the creation of
                                                                            new products, which promote trade and further
        Three important forces drive the development
                                                                            participation in GVCs. The World Bank reports
        of GVCs: decreasing trade costs, technological
                                                                            that 45 per cent of the world is online; this gives
        advancements and preferential trade agreements.
                                                                            developing nations access to communications
        Although not exhaustive, these three factors
                                                                            and interactions. New technologies like big data,
        have encouraged more firms to fragment their
                                                                            GPS and drones have ‘enabled improved extension
        production and manufacturing processes across
                                                                            services’ and more efficient logistics and supply
        multiple localities.
                                                                            chain management (Rodrik, 2018, p. 2).
        2.3.1 Decreasing costs                                              In addition, new features of production
                                                                            technology have caused disruptions to traditional
        When trading, firms incur land transport costs, port
                                                                            configurations of value chains, further introducing
        costs, freight and insurance costs, tariffs and duties
                                                                            new players into the development of industries. For
        and costs associated with non-tariff measures, as
                                                                            instance, developments in technology allowed PC
        well as mark-ups from importers, wholesalers and
                                                                            manufacturers from Taiwan to enter the PC industry,
        retailers. These trade costs vary by country and
                                                                            once heavily dominated by Japanese companies
        sector and will affect a firm’s direct participation in
                                                                            (Satoshi, 2017). This created healthy competition
        value chains.
                                                                            among firms and spurred firms to find innovative
        The United Nations Economic and Social                              ways to reduce their production costs by engaging
        Commission for Asia and the Pacific/World Bank                      in GVCs.
        Trade Cost Database estimates that 0-10 per cent
        of trade costs are tariffs, 10–30 per cent arise as a               2.3.3 Role of free trade agreements
        result of natural geographical and cultural factors
        and, lastly, 60–80 per cent come from non-tariff                    FTAs, especially comprehensive FTAs that include
        policy measures. For instance, it is suggested                      wider and broader commitments across a range
        that Southeast Asian countries face the lowest                      of areas, including goods, services, investment,
Global Value Chains \ 5

intellectual property rights and standards, boost     Brunei’s participation in the CPTPP will be discussed
participation in GVCs by both improving existing      further later in the report but note for now two
linkages between GVCs and creating new linkages       important elements in the agreement. First is
(Laget et al., 2018). These deeper agreements         the principle of ‘full accumulation’, which allows
encourage GVC development because they                goods produced with content from more than one
foster the placement of investment and delivery       CPTPP member to qualify as originating products,
of goods and services in exactly the right            and therefore access preferential tariff treatment.
geographic location for optimum efficiency with       Second is the CPTPP’s self-certification system.
minimum friction.                                     which allows firms to self-certify the origin of their
                                                      goods, to reduce cost and clearance times at
Current data from the World Bank shows that FTAs
                                                      customs (Chang and Phuong, 2019).
are becoming deeper and more comprehensive,
allowing countries to take advantage of               Understanding the significance of trade agreements,
provisions and tariff reductions that significantly   technological advancements and lowering trade
reduce their trade costs (Ruta, 2017). The            costs can provide a foundation to analyse barriers
CPTPP is an example of a deep FTA that aims           that prevent the growth of GVCs. This fundamental
to integrate diverse economies from different         information also provides governments a snapshot
continents by promoting the fragmentation of          of a myriad of factors that they can leverage to
manufacturing processes.                              increase their involvement in GVCs.
6 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        3. Services Activities in Global
           Value Chains
        Services activities are becoming a key contributor                  Trade Report highlights at length the types of
        to GVCs. In order to increase their participation in                key contributions services make to domestic
        such chains, some governments have pushed for                       economies (WTO, 2019). In most developed
        the development of an internationally competitive                   economies, services now account for up to 75 per
        services sector.                                                    cent of GDP, with international trade in services
                                                                            growing much faster than global trade in goods.
        This section discusses the role of services in GVCs
        and highlights the importance and relevance of                      Service activities also account for a significant
        services inputs for the development of GVCs today.                  proportion of the development of GVC activities.
        First, it provides a definition of services. Second,                Lanz and Maurer (2015) have shown that services
        it identifies relevant services across the different                trade accounts for 70 per cent in GDP accounts
        stages of a value chain. The last subsection                        even though it comprises only 20 per cent of global
        provides an overview of the development of                          balance of payments.
        services and GVCs within the Asia Pacific region.
                                                                            The accelerating share of services inputs in
                                                                            GVCs can be understood through their role as
        3.1 What are services?                                              intermediaries in manufacturing value chains. The
        According to the World Trade Organization (WTO),                    role of services in a GVC can perhaps be compared
        services activities can typically be categorised                    to a glue, as manufacturing firms are often highly
        into either ‘embodied’ or ‘embedded’ services.                      dependent on a myriad of services to link and
        Embodied services refer to services inputted                        coordinate their production activities across
        during the production process of other goods and                    different countries and sectors.
        services. Embedded services refer to services
                                                                            Evidence from OECD countries shows that
        input during post-production processes, such as
                                                                            manufacturers increasingly buy, produce and
        during marketing, retail and repair (Anukoonwattaka
                                                                            export services (Anukoonwattaka et al., 2017).
        et al., 2017). This distinction allows for a better
                                                                            This is known as the ‘servicification’ of the
        understanding of the types of services rendered
                                                                            manufacturing sector or the ‘the increased use
        during different stages of the GVC.
                                                                            of services in manufacturing, both in terms of
        In addition to embodied and embedded services,                      production processes and sales’. As a result of this
        services activities can be distinguished as                         servicification, services have helped increase the
        producer or consumer services (Anukoonwattaka                       productive capacity of firms to gradually embed
        et al., 2017). According to the Organisation for                    themselves into GVCs.
        Economic Co-operation and Development (OECD)
                                                                            Demand for services activities happens at every
        Glossary of Statistical Terms, producer services
                                                                            stage of a value chain. Services can be located
        are ‘intermediate inputs to further production
                                                                            upstream from the manufacturing phase of
        activities’ and possess high information content,
                                                                            production, in the manufacturing phase and
        such as business and professional services, financial
                                                                            downstream, when conveying the product to the
        services and insurance services.1 Consumer
                                                                            final consumer. According to the Asia-Pacific
        services are referred to as ‘final or end-use
                                                                            Economic Cooperation (APEC) Policy Support
        services’ and are often directly used or received by
                                                                            Unit, services inputs can be mapped onto value
        consumers (Anukoonwattaka et al., 2017).
                                                                            chains across six separate stages. Table 1 lists the
                                                                            categories and provides illustrative examples of
        3.2 Services in global value chains                                 services falling within each of the categories.
        Services activities are now the largest contributor
                                                                            In recent years, services companies have been
        to GDP and employment. The latest WTO
                                                                            able to create new production models that
        1                deviate from traditional linear models common
Services Activities in Global Value Chains \ 7

Table 1. Mapping services onto GVC production stages

 Production stage                              Examples of services inputs
 Establishment                Embodied         Government negotiations and licence applications; land clearing
                              services         and preparation; construction
 Pre-manufacture              Embodied         Design; research and development; procurement and transport of
                              services         inputs; customs services; licensing requirements for health, safety
                                               and environmental compliance of inputs; storage of inputs
 Manufacture                  Embodied         Transport and handling of raw materials; testing; maintenance and
                              services         repair of equipment; cleaning; utilities; compliance inspections for
                                               environment, health, safety and working conditions
 Post-manufacture             Embedded Packaging; transport; installation; advertising; marketing; branding;
                              services retail; quality control standards assessment
 Post-sales services          Embedded Repair and maintenance of machinery and other facilities; inventory
                              services and warehouse services for parts; reverse logistics*
 Back-office services         Embedded Back-office accounting; legal services; personnel; insurance
Note: * ‘Reverse logistics’ has been added by authors into the list of examples.
Source: Adapted from Low and Pasadilla (2015).

in manufacturing processes. In fact, there has                       economy. Those that succeed in doing so can
been a rising phenomenon of ‘networked’ GVCs                         participate in higher value added segments of
(Anukoonwattaka et al., 2017). This happens when                     supply chains and broaden the scope and of their
service providers offshore or out-source their work                  participation in GVCs (Low, 2013).
to other service providers, therefore creating a
constellation of service providers in one production                 3.3 Managing services in trade
chain. Modern communication and transport
technologies have enhanced the tradability of
services, which has facilitated their incorporation                  Brunei’s government has recognised the importance
in supply chain production as traded inputs (Low,                    of opening services sectors in new and innovative
2013). Such practices have enabled the mapping                       ways to help facilitate growth. Early attempts to
of services inputs into various networks of value                    tackle the vexing issue of making commitments
chains. For instance, developments in IT now                         for sectors that could not be easily seen, tracked or
allow service providers from the information and                     measured across borders gave way to the General
communications, marketing, computer and finance                      Agreement on Trade in Services (GATS) system in
sectors to offshore and out-source their work to                     the WTO. The GATS system divided services into
service providers from other countries.                              four ‘modes’ of supply, depending on ‘who or what’
                                                                     moved across the border. As an example, under
Services used to be considered ‘difficult to trade                   mode 1 no one moved – neither the supplier nor the
across borders’. In the past, services activities                    consumer – just the service that crossed the border.
were described as ‘immobile’ and highly                              At the time, the primary mechanism for mode 1
non-transportable (Anukoonwattaka et al., 2017).                     delivery was by post or letter. Now, of course, most
As a result, many countries did not account for the                  mode 1 delivery is via the internet.2
share of services in supply chains, or measure the
value of services in GVCs. Many services inputs                      2 Mode 2, to continue the simplification, has consumers
                                                                       ‘moving’ to consume a service, like patients going to get
thus tend to be uncaptured and unaccounted for                         hospital services in a foreign country. Mode 3 is what most
in statistics. However, the increasing input and                       view as FDI, where the provider firm ‘moves’ to deliver
contribution that services activities have in GVCs                     the service: the hospital ‘moves to’ or invests in the host
                                                                       country to provide hospital services. Finally, under mode
make it imperative for countries to assess the
                                                                       4, the service provider (or the person) moves to deliver the
extent of the contribution and potential of services                   service: the doctor moves temporarily (typically for less
to build a more diversified, prosperous and dynamic                    than three years) to provide hospital services.
8 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        This system of splitting services delivery made                     investment for GVC operation, it is not possible
        sense to negotiators grappling with services for the                to build a flourishing GVC environment if services
        first time in the late 1980s and early 1990s. A similar             sectors are not opened for participation for CPTPP
        system of working on services trade has continued                   companies. Hence, member governments agreed
        in many trade agreements since then, including                      to allow nearly every single services sector to be
        most ASEAN trade deals.                                             opened to one another under this trade agreement.
        However, businesses today tend to find the four                     The Brunei government also agreed. While Brunei’s
        modes of supply completely incomprehensible.                        ratification of the CPTPP and its entry into force has
        Firms do not view operations through the same                       been delayed,3 the commitments found within the
        lens at all. Instead, they deliver services by whatever             CPTPP can be seen as a clear signal of intent.
        mechanism makes the most sense: online, in
        person, via investment or using any combination of                  3.4 Services activities in the Asia
        the above at once.
                                                                                 Pacific region
        Many of the latest trade agreements have opted
        to abandon the GATS-type schedules and                              Partly as a result of various trade agreements,
        approach. As a member of ASEAN, Brunei has                          service activities have seen unprecedented
        some commitments that reflect GATS approaches.                      growth in the Asia Pacific. In the region, the share
        However, as a member of the CPTPP, Brunei                           of services activities in exports grew from 20.4 to
        has also taken the leap to transform services                       24.1 per cent between 1990 and 2013
        commitments to a different approach. The CPTPP                      (ASEAN–Japan Center, 2017). In 2016, services
        dispenses with the ‘modes’ entirely and simply                      generated about 60 per cent of GDP, employed
        opens services sectors under whatever method of                     more than 40 per cent of the labour force,
        delivery firms opt to use.                                          generated most new jobs and attracted an
                                                                            increasing share – 60 per cent – of greenfield FDI
        Further, CPTPP members have taken a radical
                                                                            projects (Anukoonwattaka et al., 2017).
        approach compared with ASEAN agreements
        by starting from the premise that all services                      Specifically, the transportation, storage and
        sectors will be automatically opened for member                     communications sector saw an increase in foreign
        competition unless specifically closed. This is a bold              value added ASEAN exports from 28.4 to 32.8
        step and shows Brunei’s determination to handle                     per cent. Another high-growth sector was the
        services in a radical new way. Under the CPTPP,                     finance industry, which saw an increase of about
        Brunei has agreed to open all 160 sectors and                       4 percentage points from 12.6 to 16.3 per cent
        subsectors, including logistics and most of financial               (ASEAN–Japan Center, 2017). These figures likely
        services, to CPTPP members.                                         understate the importance of both sectors, as
                                                                            services statistics are often less reliable.
        The reason for taking such an approach is precisely
        to encourage the growth and development of GVC                      The next section introduces Brunei’s involvement
        firms across the CPTPP member states. Given the                     in GVCs and discusses how services activities are
        close connections between goods, services and                       being mapped into value chains in the country.

                                                                            3 As of 15 December 2019, Brunei has not yet signalled its
                                                                              intent to proceed with the CPTPP.
Brunei’s Economy and Diversification \ 9

4. Brunei’s Economy and
Increasingly, countries are interested in doing           Traditionally, Brunei has been heavily reliant on its
a better job of harnessing the potential of               oil and gas industry: oil and natural gas account for
services. This is especially the case for developed       almost 90 per cent of exports. In 2017, petroleum
economies, as services are a large and growing            gas represented 51.2 per cent (B$3.84 billion or
share of the economy for every developed                  US$2.84 billion) and crude petroleum 41.3 per cent
economy. For Brunei, the situation is the same.           (B$3.09 billion or US$2.29 billion) of its exports.
Brunei’s strategic plans for economic development         The main five commodities exported are crude
have been outlined in Wawasan Brunei 2035 and             materials, mineral fuels, chemicals, manufactured
Brunei’s national development plans (RKNs), as            goods and machinery & transport equipment.
well as current Strategic Plan 2018–2023. After           Mineral fuels, the main exported commodity,
reviewing these policies, this section examines           decreased steadily between 2014 and 2016 and
Brunei’s plans for diversification.                       rose again in 2017 and 2018. Currently, the main
                                                          largest export partners are Japan, South Korea,
4.1 Overview of Brunei’s economy                          Malaysia, Thailand and India (OEC, n.d.).
Negara Brunei Darussalam, or Brunei, is located           The top five commodities that Brunei imports
on the coast of Borneo, Malaysia, in Southeast            are manufactured goods, machinery & transport
Asia. Since its independence from the UK on               equipment, food, chemicals and mineral fuels.
1 January 1984, Brunei has transformed itself into a      All five commodities experienced fluctuations
modern economy.                                           and finally surged significantly in 2018, except for
                                                          chemical fuels, which registered only a 1.05 per cent
Brunei has historically been heavily reliant on natural
                                                          increase on the previous year.
gas and petroleum products. Given the wide
fluctuations in the pricing of these commodities,         Unlike other countries in ASEAN, which have
it makes sense that Brunei’s growth figures have          become major and competitive global or regional
also varied. Most developed economies tend to             production centres for a wider range of products
grow more slowly than developing economies.               and services, there are almost no such industries in
Brunei’s GDP figure of 1.33 per cent growth in            Brunei (Lawrey, 2010).
2017 highlights this trend, from US$8.33 billion
                                                          In Brunei, the main commodity – oil and gas –
to US$8.84 billion (World Bank, n.d.a). In a similar
                                                          accounts for the bulk of the economy and adds
fashion, Brunei’s FDI, imports and exports of goods
                                                          little value to other industries. These industries do
all underwent a sharp rise in 2017, after years of
                                                          not appear to be closely inter-related with other
steady decline.
                                                          sectors of the economy and therefore produce
Brunei is a small and wealthy economy, with a             weak value chains between them (ASEAN–Japan
current GDP of roughly B$18.4 billion (US$13.6            Center, 2018).
billion) (Trading Economics, n.d.). Yearly net inflows
                                                          According to a GVC analysis completed by the
of FDI into Brunei experienced a steep decrease
                                                          ASEAN-Japan Center (2018), in ASEAN as a
from 2013 to 2016; in 2017, FDI growth surged
                                                          whole, 40 per cent of exports are foreign inputs. In
by 134 per cent (World Bank, n.d.b). According to
                                                          comparison, foreign value added in Brunei is only
Brunei’s Ministry of Finance and Economy, the surge
                                                          12 per cent. Out of US$7 billion in gross exports,
was the result of FDI inflows in the manufacturing
                                                          foreign value added amounts to under US$900
sector, which increased by US$470 million between
                                                          million. Over the past two to three decades, this
2016 and 2017 (Department of Economic Planning
                                                          share has declined to less than 10 per cent.
and Statistics, 2017). The value of Brunei’s imports
and exports in goods escaped negative growth in           Because of the heavy reliance of exports on the oil
2017, attaining increases of 13.2 per cent and 12.5       and gas industry, this foreign value added share is
per cent, respectively (World Bank, n.d.c).               determined almost entirely by the mining industry.
10 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        Figure 1. Growth in Brunei’s GDP, FDI, imports and exports, 2013–2017 (%)



                                                                                                            GDP growth
                                 0                                                                          FDI Growth

                              –50                                                                           Import Growth

                             –100                                                                           Export Growth



                                        2013        2014       2015        2016        2017

        Source: World Bank (n.d.a, n.d.b, n.d.c).

        Evidence from the OECD (n.d.a) shows that mining                    from ASEAN (ASEAN–Japan Center, 2018).
        and quarrying account for more than 60 per cent of                  Outward FDI is typically related to the creation of
        both outputs and value added in Brunei.                             GVCs outside the country. Both the small value and
                                                                            the small share indicate an almost complete lack of
        The lack of foreign value added, the absence of
                                                                            production networks outside the country.
        other industries and the lack of linkages between
        primary industries and other sectors result in an                   The weak presence of GVCs and RVCs in Brunei
        absence of significantly developed GVCs as well as                  Darussalam reflects the current characteristics of
        regional value chains.                                              the economy, which does not necessarily require
                                                                            the existence of value chains uses little foreign
        Poor GVC participation has also manifested in a low
                                                                            inputs for its exports and attracts a small amount
        level of FDI and a negligible share in FDI to ASEAN.
                                                                            of FDI.
        In recent years, FDI inflows have not exceeded
        US$1 billion, except in 2003. The country’s FDI
                                                                            In recent years, researchers from BP World Energy
        stock as a share of GDP is lower than the ASEAN
                                                                            Outlook have forecast that Brunei’s oil reserves
        average: 51 per cent versus 73 per cent in ASEAN in
                                                                            will sustain the economy only until 2035, giving the
        2016 (OECD, n.d.b).
                                                                            government a timeline of about 15 years to diversify
        Similarly, FDI outflows from the country have been                  (Khidir, 2018). As a result, diversification has
        small, at less than 1 per cent of total FDI outflows                become a top priority of the Bruneian government.

         Table 2. Brunei’s top five exports, 2014–2018 (US$ millions)

          Year           Crude                 Mineral        Chemicals            Manufactured              Machinery & transport
                         materials             fuels                               goods                     equipment
          2014           13.0                  9082.6         439.6                49.6                      133.2
          2015            9.4                  5919.9         138.3                53.7                      182.2
          2016           17.4                  4364.2         237.2                37.8                      241.2
          2017           16.7                  5046.2         204.8                24.7                      141.2
          2018           19.1                  5898.0         243.1                64.5                      169.4
         Source: Department of Economic Planning and Development (2014).
Brunei’s Economy and Diversification \ 11

Figure 2. Brunei’s top five imports, 2014–2018 (US$ million)








                     2014               2015               2016                 2017                2018

               Manufactured Goods   Machinery & Transport Equipment      Food    Chemicals      Mineral Fuels

Source: Department of Economic Planning and Development (2014).

In a bid to promote diversification, the government           for implementation of Wawasan Brunei 2035
has laid out several economic plans. The most                 and provides information to enable better joint
important current document is Wawasan Brunei                  implementation and collaboration of programmes
2035, which guides the country’s national                     and action plans holistically.
development agenda, setting the direction for
                                                              The Framework articulates Wawasan Brunei
implementation of Wawasan Brunei 2035 and
                                                              2035 into Desired Outcomes – the specific
providing information to enable better joint
                                                              achievements to be achieved for each of
implementation and collaboration of programmes
                                                              Wawasan Brunei 2035’s Goals; Key Areas – the
and action plans holistically. Brunei also uses 5-year
                                                              priority areas or specific actions that need to be
national development plans (or RKNs) and ministry
                                                              focused on in order to achieve the Outcomes;
strategic plans, which are, aligned with Wawasan
                                                              and National Key Performance Indicators, which
Brunei 2035 and guided by the Wawasan Brunei
                                                              are used to measure performance on each of the
2035 Framework.
                                                              Key Areas identified. It serves as a guide to the
The next section discusses these plans and their              provision of national development programmes
relevance to Brunei’s economy.                                and projects towards achieving the Wawasan
                                                              Goals, for example infrastructure development
4.2 Strategic goals and planned                              specifically to improve the quality of life of
                                                              the people.
4.2.1 Wawasan Brunei 2035                                     Goal 1 aims to establish a strong base of human
                                                              resources as the engine of economic growth,
The National Vision, known as the Wawasan
                                                              thus putting high importance on the quality of the
Brunei 2035, aims to ensure that, by 2035, Brunei
                                                              education system and development of human
Darussalam will be recognised globally for the
                                                              capital. One particular emphasis is on equipping
accomplishments of its well-educated and highly
                                                              youth with marketable skills and knowledge that
skilled people, its high quality of life and its dynamic
                                                              will allow them to compete effectively within the
and sustainable economy.1
                                                              country and in the international arena. Goal 1 is
In achieving this, the country’s national                     supported by three national outcomes:
development agenda is guided by the Wawasan
                                                              1.      First class education;
Brunei 2035 Framework, which sets the direction
                                                              2.      Equal educational opportunities; and
1 Wawasan Brunei 2035 information supplied by the
  government, December 2019.                                  3.      Human resource development.
12 \ Addressing Barriers to the Integration of Brunei Darussalam’s Business Services Sectors into Global Value Chains

        Goal 2 sets out to achieve the highest quality of life              of life. In 1953, Brunei launched the first RKN, with
        and well-being for the Bruneian people, in a peaceful               an investment of B$100 (US$73.4 million). This
        and healthy environment. Five national outcomes                     RKN increased living standards in the country
        are identified:                                                     and introduced a pension scheme that remains
                                                                            in place to date. Since the first RKN, investment
        1.     High standard of living;
                                                                            in implementation of the plans has increased to
        2.     Upholding sovereignty and stability;                         B$6.5 billion (US$4.77 billion) – the implementation
                                                                            budget of RKN 2012; GDP rose from US$0.11 billion
        3.     A sustainable environment;
                                                                            in 1965 to US$19.04 billion in 2012 (Yunos, 2016).
        4.     A resilient and cohesive society; and
                                                                            The first four RKNs were used to stabilise the
        5.     Excellent health and safety in the workplace.                government agencies of Brunei. In the earlier
                                                                            periods of Brunei’s development, ministers did not
        Goal 3 sets out the target of increasing Brunei’s per
                                                                            hold their positions for a long time, which made it
        capita income to be among the top 10 in the world.
                                                                            difficult to develop long-term strategic plans. As
        This target will help sustain Brunei’s desire to have
                                                                            Brunei gained political and economic stability, the
        a high standard of living, and a strong economy to
                                                                            restructuring of later RKNs worked to diversify
        help achieve this by providing greater opportunities
                                                                            Brunei’s economy by creating a healthy, educated
        and high-quality employment in both the public and
                                                                            and skilled workforce (Yunos, 2016).
        the private sectors. Four national outcomes are
        identified under Goal 3:                                            Brunei is currently actualising RKN11 (2018–2019).
                                                                            A total of B$900 million (US$666 million) has been
        1.     High and sustainable growth;
                                                                            allocated to finance 192 projects. Of these projects,
        2.     Diversified economy;                                         151 are new projects and 31 have been brought
                                                                            over from RKN10 (2012–2017). Moving forward,
        3.     Low unemployment; and
                                                                            it is therefore likely that any project will reflect the
        4.     Macroeconomic stability.                                     key principles and strategic thrusts of RKN10. As
                                                                            RKN11 is currently in its development stage and
        In achieving the aspiration of ensuring a sustainable
                                                                            has yet to be announced, RKN10 still forms the
        economy for Brunei’s future generations, the
                                                                            bedrock for any future project developments in
        nation is required to accelerate economic growth
                                                                            Brunei. Therefore, any policy assessment and
        with a large proportion of it to be contributed by
                                                                            recommendation should comply with these
        the non-oil and gas sector. As such, economic
                                                                            standards and goals.
        diversification is still high on the economic
        development agenda.                                                 4.2.3 Strategic Plan 2018–2023
        Economic diversity is an indispensable factor to
                                                                            In addition to the RKN, Brunei lays out strategic
        ensure a strong and sustainable economy for
                                                                            plans defining the milestones to be achieved
        the country in the long run. Increasing high-value
                                                                            for a sustainable economy. Currently, Brunei is
        growth in production and services with an emphasis
                                                                            implementing its Strategic Plan 2018–2023. THIs
        on innovation and usage of high technology, and
                                                                            has four specific goals as well as guiding principles
        building a broader trading network to enhance the
                                                                            to achieve these. The goals are:
        exports of various sectors, will help attain high
        non-oil and gas fiscal revenues.                                    1.    Ensuring high accessibility to quality and
                                                                                  reliable public infrastructure and services;
        4.2.2 National development plans
                                                                            2.    Enabling affordability for infrastructure and
        To supplement its long-term development plans,
                                                                                  services that support inclusive development;
        the Brunei government has actively promoted
        the growth of target sectors through national                       3.    Optimisation of resources and assets
        development plans, also known as the rancangan                            primarily through efforts for integrated and
        kemajuan negara (RKNs).                                                   sustainable development; and
        The RKN has played a key role in the economic                       4.    Effectively implementing public–private
        development of Brunei. Since the inception of the                         partnerships in order to facilitate investment
        first five-year RKN, Brunei has grown into a country                      in infrastructure development for vibrant
        with a high level of per capita GDP and a high quality                    economic growth.
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