| Hakim Hayat & Aziz Idris |
THE Ministry of Finance and Economy (MoFE) yesterday announced a proposed government budget of BND5.86 billion for the 2019/2020 fiscal year while forecasting another wave of budget deficit of BND1.5 billion for the new fiscal year, on the back of sluggish gross domestic product (GDP) growth due to falling revenues in the dominant oil and gas sector over the last few years.
A BND2.2 billion deficit was recorded in the last fiscal year 2017/2018 while the country is expected to record another deficit for the current fiscal year of 2018/2019 despite recovering global oil prices – now averaging USD62.70 per barrel which is higher in comparison previous years’ prices.
The 2019/2020 proposed budget sees a BND5.6 million increase from last fiscal year’s approved budget of BND5.3 billion, as the country also continues to record positive growth in the non-oil and gas sectors.
Addressing Parliament on the second day of the 15th Legislative Council (LegCo) meeting yesterday, Minister at the Prime Minister’s Office (PMO) and Minister of Finance and Economy II Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah in the budget speech said the volatility in the global oil prices will continue to impact Brunei’s economy that is heavily dependent on the oil and gas sector revenues.
The International Monetary Fund’s (IMF) latest World Economic Outlook in January 2019 is forecasting a 3.7 per cent growth in global economy for 2018 and predicts a slight decline at a rate of 3.5 per cent in 2019 while it predicts Brunei’s economic growth to recover by 2.3 per cent for 2018 and jump to 5.1 per cent in 2019.
Despite the positive outlook from the IMF, Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew revealed that Department of Economic Planning and Development (JPKE) statistics show that economic growth for 2018 was at 0.1 per cent, which is much lower than the forecast due to a decline in the oil and gas sector by -0.1 per cent caused by falling global oil market prices.
Despite this, the minister shared that the non-oil and gas sector recorded a positive growth of 0.5 per cent in 2018, mainly contributed by the agricultural, livestock, wholesale and retail trade subsectors.
He also urged caution as a number of factors might continue to hinder global and ASEAN regional economic growth such as impacts from political and trade tensions, technological advancement such as the Fourth Industrial Revolution and also the position of monetary policies of developed countries; all risks which might impede Foreign Direct Investment (FDI) into Brunei.
Shedding more light on the priorities of the proposed budget centred on the theme ‘Investing in Our Future’, the minister said the approach for the national expenditure budget is geared towards long-term economic growth but cautioned that in Brunei’s context, economic growth does not necessarily drive increase in government revenue, hence more concerted effort is needed to achieve a balanced national budget to ensure the country’s resilience and fiscal stability.
He said investment in human capital will be continuously enhanced to ensure that the country’s workforce is equipped with skills and expertise that fulfills the needs of the job market, adaptable and highly productive.
Fiscal Consolidation Programme
The government’s efforts in achieving a balanced budget also needs a whole of government approach to the fiscal consolidation policy implemented a few years ago and this, he said must be given continued and serious attention.
The minister said that His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam has consented for a Fiscal Consolidation Programme Guideline to help each ministry formulate their own fiscal consolidation plans.
“This includes re-assessing government revenue and expenditures with the main objective to focus expenditures towards activities than can spur economic growth and a more efficient consumption,” he said.
Some of the Fiscal Consolidation Programme’s initiatives include corporatisation and privatisation, public-private partnership (PPP), evaluating subsidies against targets, re-assessing fees and charges, efficient fiscal management, diversification of revenue streams, consolidation of the government’s asset management system and efficient revenue collection.
Investing in Our Future
The minister said the theme for the proposed budget for the fiscal year 2019/2020 ‘Investing in Our Future’ emphasises the importance of planning that must be carried out now through the implementation of efficient programmes and initiatives that are capable of offering an ecosystem for the growth and diversified economy for today and tomorrow, without too much reliance on the government.
He said the implementation of the programmes and initiatives are aspired to drive national development by creating job opportunities in various fields and new industries, increasing business and economic activities and the provision of capable, skilled and marketable human capital.
“All these efforts would not just enhance the quality of life and welfare of the people today, but will also be reaped by the next generations,” he added.
The minister outlined four main focus of the proposed 2019/2020 budget: increasing investment activities; facilitating businesses; generating competent and employable human capital and preserving public welfare.
In the first focus of increasing investment activities, the minister among others highlighted that the country aims at increasing the growth in the oil and gas sector and opening more job opportunities by giving attention to businesses that can be further intensified in priority sectors such as downstream oil and gas; food; tourism; services and info-communication technology (ICT) by taking into account the country’s existing competitive and comparative advantage in terms of infrastructure, natural resources and economic environment that has shown growth and has massive potential to be further developed.
The government is also proactively luring in quality FDIs to develop the private sector.
Meanwhile, towards a more efficient public sector, a key initiative actively pursued is the corporatisation of a number of government agencies through PPP with cooperation with government linked companies (GLCs).
“This is not just to achieve efficiency, effective government expenditure and quality service, but is also a platform to increase investment activities and in driving further the private sector to generate more quality job opportunities for locals,” he added.
In the second focus of facilitating businesses, the minister outlined the country’s continuous effort in supporting economic growth by prioritising the private sector, particularly in enhancing the roles and capabilities of micro, small and medium enterprises (MSMEs).
For the third focus on generating competent and employable human capital, he said the government will continue to prioritise investment towards competent and employable human capital to help the country’s economic growth.
He said the focus emphasises on the aspects of education development plans that can generate more experts, professionals, entrepreneurs and leaders of today and tomorrow.
Meanwhile, for the fourth focus of preserving public welfare, the minister said the government will continue to maintain the social welfare of the people, including the provision of basic needs and services such as free education, quality health services and also subsidies for basic necessities such as rice, electricity, petrol, housing, water and others.
Meanwhile, among the key budget allocations outlined by Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew are:
Improving investment activities
• BND21.7 million for the tourism sector with planning cost (harga rancangan) of BND66.2 million
• BND91 million allocated to promote the agriculture and fishery sector including the development of livestock industries
Ease of Doing Business
• BND91.4 million to enhance the infrastructure for information technology in all sectors
Human Capacity Building and Employment
• BND15.9 million for training programmes
• BND1.2 million to fund youth and NGOs
• BND101.53 million to improve students’ well-being
• BND48.7 million to improve the capacity of all government officers and staff
• BND17 million for i-Ready Apprenticeship programme
• BND36.6 million to finance the Capacity Building Centre
Preserving public welfare
• BND100 million for health services and supplies
• BND14 million for welfare assistance
• BND95.4 million to improve electrical power supply
• BND294.3 million for the Temburong Bridge project with planning cost of BND1.04 billion
• BND10.5 million with planning cost of BND21 million to improve public transport
• BND33.1 million for water management and coastal protection
In closing his speech, the minister reminded that the budget for 2019/2020 must be utilised in a “more forward-looking manner” and “geared towards growth” to face the challenges in the future.
He also highlighted the importance to accelerate PPP and FDI initiatives to help the country achieve its economic diversification efforts, ensuring the fiscal stability and resilience, as well as in reducing the dependence on oil and gas revenues.