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Change Your Life! |
Brunei: Paradise Lost, will it be regained? |
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August 8, 2000
SERIA, Brunei (AP) - Off Borneo island's west coast lies a 1,300-mile (2,100-kilometer) spaghetti of undersea pipelines, the throbbing economic heart of tiny Brunei. Each day it pumps about 200,000 barrels of oil and generates an equivalent amount of natural gas to support Brunei's 320,000 people and one of the world's richest monarchies. The exports have made Brunei - once a backwater trading entrepot - a paradise of tax-free wages, free education and health care, subsidized housing and wide boulevards with the latest Mercedes and BMW sedans. The booms and busts of world stock markets saw new tycoons come and old ones go from the billionaires list published by Forbes magazine in July. But Brunei's ruler, Sultan Hassanal Bolkiah, 54, stayed firmly in first place, as he has year after year, with an estimated wealth of dlrs 16 billion. Though such wealth can lead to excess, Bruneians didn't complain when billions were spent on gold-plated domes for palaces and mosques, gold-dusted carpets in exclusive polo clubs, race horses, golf courses and an amusement park designed to be Asia's Disneyland. Almost everyone was rich by the region's standards. Even after Asia's recent economic slowdown, Brunei's gross domestic product is dlrs 4 billion, averaging dlrs 14,500 for each citizen. That's a lower per-capita income than in the United States or Germany, but about the same size as South Korea and Taiwan. But now, Brunei is reconsidering an economy based only on oil and reviewing the gravy train that has kept the sultan's subjects content and the absolute ruler in place. The reclusive sultanate hopes that establishing links with big world players like the United States and Japan will amount to a coming-out party when it plays host to the 21 leaders from the nations of the Asia-Pacific Economic Cooperation forum in November, a week after the U.S. presidential election. Past forums have been held around the Pacific Rim, from Vancouver to Kuala Lumpur, but never in a country so rich yet removed from the high-tech and trade revolutions sweeping the globe. "It is about time for us to be more pragmatic about our requirements," says Wahab Juned, director general of the Brunei Darussalam Economic Council, a new planning unit created by the sultan. A new economy must be more diversified and people must be taxed and pay for services, Wahab says. The government says it plans to privatize several utilities, beginning probably with the state-owned telecommunications company. Even if taxation does not lead to a demand for representation, it could generate pressure for a more liberal government, with people asking how their money is being spent, officials privately acknowledge. Since there is no parliament, finances are not scrutinized or debated. No annual budget is presented and allocations to only some of the government ministries are announced. The petroleum and natural gas companies - an equal partnership between the sultan's government and Royal Dutch-Shell - does not release revenues. Independent analysts estimate Brunei will earn about dlrs 6 billion from exports this year. No one outside the top echelons knows how that is divided between royalty and subjects, but what is accepted by many people is that Brunei is spending 15 percent more than it earns and that the system must change. More than 5 percent of the work force is unemployed, and without new industries, thousands of school graduates each year have nowhere to work. The government realizes that with a population growing faster than the economy, it cannot afford to pick up the tab anymore. So very soon, Bruneians will file tax forms, write checks for school fees and get billed at government hospitals, Wahab says. In his birthday speech in mid-July, an annual statement on the economy, the sultan urged "changes in mindset and positive-orientated attitude; efforts to avoid excesses, minimizing deficit and increasing national revenue." He spoke from his throne in a hall lighted with swaying chandeliers. Sharing the gold-painted backdrop were his two wives, the light sparkling in their diamond-studded tiaras and necklaces. Things began to crumble in Brunei during Asia's economic crisis in 1997, which came at a time of low oil prices. Demand shrank and Asian buyers became fussy about signing long-term contracts. New exploration in deeper waters was proving costly. Brunei had to seek buyers in the United States, where it competed with Middle East and North Sea crude. When oil prices bounced back last year, Brunei stepped up production to recoup losses, but the problems of the sultanate's dependency on crude had been made clear. "Now, the market is more volatile," said John Darley, head of Brunei Shell Petroleum. An added woe was the scandal when the sultan discovered in 1998 that his younger brother, Prince Jefri Bolkiah - known for his yachts, private jets, performance cars and prize race horses - had squandered an estimated dlrs 16 billion in oil revenues from money meant for Brunei's overseas investment. The sultan took his favorite brother to court. Just when an embarrassing legal battle was taking shape, an out-of-court settlement was reached in June. Jefri has promised to return the money he wasted, but since no details of the deal were made public, Bruneians don't know if or when it will ever be done. Apart from a tiny garment industry, Brunei's only noticeable manufacturing facility is a German joint venture cement plant. The government bars cement imports so the factory can enjoy a protected domestic market. New economic plans envisage an ecotourism sector based on scuba diving and rain-forest trekking, creation of a tax haven to attract offshore investors and foreign banks, improvements in telecommunications and the introduction of computers to every school. The government concedes it is a late starter, but says it intends to join the globalized economy. "We don't mind being criticized," says Wahab, the economic planner, "but we are now opening up." On the Net: Brunei news site: http://www.brudirect.com
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