Foreign Direct Investment Initiative Brunei Darussalamnoruleconomics.weebly.com › uploads › 2 › 5 › 8 › 1 › 2581367 › fdi-cit… · Brunei Darussalam. National, Regional,

Copyright © 2006 Monitor Company Group, L.P. — Confidential — CAMNational, Regional, Cluster Competitiveness — Jan 2006 1

Copyright © 2003 by Monitor Company Group, L.P.No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means —electronic, mechanical, photocopying, recording, or otherwise — without their permission. This document provides anoutline of a presentation and is incomplete without the accompanying oral commentary and discussion.

INNOVATIONINNOVATION

ECONOMIC PERFORMANCEECONOMIC PERFORMANCE

BUSINESS ENVIRONMENTBUSINESS ENVIRONMENT

CLUSTERSCLUSTERS

PRODUCTIVITYPRODUCTIVITY

ECONOMIC COMPOSITIONECONOMIC COMPOSITION

SPECIALIZATIONSPECIALIZATION

STRATEGYSTRATEGY

COLLABORATIONCOLLABORATION

Foreign Direct Investment InitiativeBrunei Darussalam


This initiative was about getting FDI strategy right for Brunei

Darussalam, and implementing it effectively

Develop a robuststrategy and actionplan for Brunei toattract and nurture

Foreign DirectInvestments

Develop a robuststrategy and actionplan for Brunei toattract and nurture

Foreign DirectInvestments

Identify/confirm priority industry clustersand specific segments to focus on

Identify/confirm target investor types anddetermine Brunei’s optimal valueproposition

Determine assets and capabilitiesrequired to build highly competitiveclusters

Develop the policy and institutionalframework required to achieve the above

Generate commitment from key playersto collaborate and implement strategy

Specific Objectives

Overall Objective


We undertook a thorough process to ensure that decisions were

sound and action-oriented

AssessCurrent FDI

Strategy andPerformance

ConductData/

KnowledgeAudit

AssessCurrent FDI

Strategy andPerformance

ConductData/

KnowledgeAudit

Determinepotential

clusters andprioritisation

criteria

Assessplatform

capabilities /performdiamondanalysis

Identify keycompetitors

for FDI

Assess keysuccess

factors forattracting FDI

Determinepotentialinvestor

types

Assessopportunities

and needsby investor

type

Cluster Assessment

Competitor Analysis

Foreign Investor Assessment

Prioritisetarget clustersand company

types

Prioritisetarget clustersand company

types

Establishrange

of policyoptions

Establishrange

of policyoptions

Determineoptimal valueproposition

to targetinvestorTypes

Determineoptimal valueproposition

to targetinvestorTypes

Determineimplications on

policy andInstitutionalframework

Develop actionplan / cluster-

specific businessplan

Determineimplications on

policy andInstitutionalframework

Develop actionplan / cluster-

specific businessplan

PrioritizedTarget Clusters

Developed ActionPlans to Attract

FDI

Mapped andIdentified Potential

Clusters

Identified ClusterCapability Gapsand FDI Policy

Options


$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

Note: * Adjusted for Purchasing Power Parity

Source: Porter, Michael E. “The Microeconomic Competitiveness Index: Measuring the Microeconomic Foundations of Prosperity.” The GlobalCompetitiveness Report 2002-3, Oxford University Press; Monitor Group 2003 Brunei Competitiveness Survey of key industry, academic and government leaders in

Brunei, February-April, 2003.

2001 GDP perCapita*

Microeconomic Competitiveness Index

USA

FinlandNetherlands

Switzerland

Germany

UK

Denmark

SingaporeNew Zealand Taiwan

Norway Iceland

Ireland

Greece

Israel

Italy

S Korea

Hungary

India

France

Canada

Spain

Czech Rep

Slovenia

Portugal

BrazilMalaysia

China

Argentina

Ukraine

Vietnam

Jordan

Uruguay

Nigeria

Brunei

Haiti

Brunei’s GDPper Capita =

$18,000

Brunei’s MICI = -0.97 (69th outof 81 countries surveyed)

Brunei’s wealth is not matched by commensurate competitiveness


Incentives CompetitionAdministrativeInfrastructure

PhysicalInfrastructure

DemandCondition

HumanRessources

Clusters Technology CapitalMarkets

Brunei’s current Microeconomic Business Environment lags many

comparable countries

Rank

Brunei’s overall rank forMicroeconomic Business

Environment: 65th out of 81

Source: Global Competitiveness Report 2002-2003, Monitor Group 2003 Brunei Competitiveness Survey of key industry, academic and government leaders inBrunei,February-April, 2003

BRUNEI ISMORE

COMPETITIVE

50th

20

1

40

60

81

50th 51st56th

61st66th

70th

78th 80th

BRUNEI ISLESS

COMPETITIVE

Measures of the Quality of Brunei’s Microeconomic BusinessEnvironment


Key Competitive Strengths and Weaknesses of Brunei

Stable and fair government

Good standardized educationsystem

Robust oil and gas cluster

Ample financial resources

Underdeveloped businessclusters

Poorly developed local privatesector

Lack of entrepreneurial culture

Slow Government DecisionMaking

StrengthsStrengthsStrengths WeaknessesWeaknessesWeaknesses


Cautious expansion due to economic downturn

Lack of awareness

Low transparency and significant red tape

Biased towards investing internationally rather than domestically

Small size as a potential advantage

Importance of access to domestic or proximate markets and low-costsufficiently skilled labors

Investment incentives and strength of relationships are key

Interviews with foreign investors yielded key learnings


These learnings yield key implications for developing FDI strategy

Be focused in targeting inward investments

Be realistic and pragmatic with expectations and objectives

– Unrealistic goals often result in inaction

Understand and overcome challenges and disadvantages relative tocompetition

Providing economic incentives is not enough to win… need to providedifferentiated value proposition

Be proactive and aggressive in tapping investors and leverageinternational networks

Developing clusters is critical to ensuring that FDI ‘sticks’


There are four key strategic initiatives for Brunei to focus on to

become more competitive

Target specific clustersTarget specific clustersTarget specific clusters

Build the Brunei BrandBuild the Brunei BrandBuild the Brunei Brand

Drive Key Policy ReformsDrive Key Policy ReformsDrive Key Policy Reforms

Empower Public-PrivateSector Collaboration

Empower PublicEmpower Public--PrivatePrivateSector CollaborationSector Collaboration


Cluster Strengths were Analyzed for Prioritized of Cluster Analysis

What are existing clusters inBrunei that are relevant for FDI?

– Contribution to GDPList of Relevant

Clusters

IntermediateClusters

PriorityClusters

Which of these clusters can be regionallyor globally competitive given existingeconomic performance and underlyingcapabilities?

– Employment share– Export output– Level of innovation - patents

Which clusters offer optimal economicattractiveness and strategic feasibility

– Size of addressable market, employmentpotential, FDI potential

– Factor inputs, policies, competitive position

Focus of March 27,2003 National

Workshop

20+

8

4

50+possibleclusters


StrategicFeasibilityfor Brunei

EconomicAttractiveness

Higher

Lower

Lower Higher

Apparel

Education &Knowledge

AgriculturalProducts

Specific opportunities were identified within each priority cluster to

ignite cluster development

Note: * Meetings, Incentives, Conventions and Exhibitions Source: March 27, 2003 National Workshop

Cluster Prioritisation Assessment

Prioritized clusters for FDI Other clusters for development

FinancialServices

AssetManagement

FundManagement

SportsTourism

MICE*

Eco-Tourism

MedicalTourism

Hospitality &Tourism

BusinessServices

SoftwareDevelopmentTransportation

& Logistics

AircraftMaintenance

Targeted Sub-clusters

5

11 5


Cluster-specific business plans were developed to facilitate

effective implementation

Identify criticaldecisions and actionsitems

Identify keystakeholders

Assign roles andresponsibilities to eachkey stakeholder


Select policy reforms were also needed to facilitate cluster

development

Hospitality andTourism

Hospitality andHospitality andTourismTourism

Business ServicesBusiness ServicesBusiness Services

Financial ServicesFinancial ServicesFinancial Services

Long term land lease by foreign investors

Simplify visa application process

Relax alcohol policy for non-Muslims in restricted areas

Expand “Mutual Funds Order 2000” to capture assetmanagement firms

Pioneer status for anchor mutual / asset management firms

BIA to mandate its fund management firms to operate in Brunei

Revise immigration laws to ensure sufficient availability inskilled labour

Review effectiveness of Intellectual Property law


Transportationand Logistics

Transportationand LogisticsBusiness ServicesBusiness ServicesBusiness ServicesFinancial ServicesFinancial ServicesFinancial ServicesHospitality and

Tourism

Hospitality andHospitality andTourismTourism

Establishbaseline data andgoals for touristarrivals andreceipts

Update anddevelop newTourism MasterPlan

Introduceaccreditation andlicensing systems

Develop local artsand craftsindustry

Determine termsand conditions ofsetting up mutualfund/asset firms

Spur governmentusage of domesticfinancial services

Increaseparticipation ininternationalfinancial markets

Determinefeasibility ofdeveloping Bruneias a centre ofexcellence forstructuring Islamicfunds

Identify size of andprovide forspecialized R&Dfunding

Foster localcapabilities insoftware usageand development

Introduce anaccreditationsystem for localbusiness services-related companies

Ensure wideavailability ofworld-class ICTinfrastructure

Design incentivepackagestargeted tospecific investorneeds

Generateawareness ofBrunei’s aircraftmaintenancecapabilities

Support RoyalBruneiEngineering toaggressivelyexpand workdone for foreignclients

Cluster-specific initiatives were pushed to help develop the cluster

and attract FDI


These initiatives required public-private sector collaboration

Coordinating CommitteeCoordinating CommitteeCoordinating Committee

Ministry of Foreign AffairsMinistry of FinanceMinistry of Industry / Primary ResourcesMinistry of CommunicationsMinistry of EducationMinistry of Home AffairsBrunei Economic Development Board

Ministry of Foreign AffairsMinistry of FinanceMinistry of Industry / Primary ResourcesMinistry of CommunicationsMinistry of EducationMinistry of Home AffairsBrunei Economic Development Board

Financial ServicesSub-Committee

Financial ServicesFinancial ServicesSubSub--CommitteeCommittee

BIA

BIFC

Financial InstitutionsDivision

Cluster Participants /Brunei Association ofBanks

BIA

BIFC

Financial InstitutionsDivision

Cluster Participants /Brunei Association ofBanks

Business ServicesSub-Committee

Business ServicesBusiness ServicesSubSub--CommitteeCommittee

BIT Council

Immigration Dept.

Cluster Participants /Brunei YoungEntrepreneurs

BIT Council

Immigration Dept.

Cluster Participants /Brunei YoungEntrepreneurs

Hospitality andTourism Sub-

Committee

Hospitality andHospitality andTourism SubTourism Sub--

CommitteeCommittee

Tourism Unit

Attorney General

Land Dept.

Immigration Dept.

Ministry of ReligiousAffairs

Cluster Participants /Brunei Hotel Association

Tourism Unit

Attorney General

Land Dept.

Immigration Dept.

Ministry of ReligiousAffairs

Cluster Participants /Brunei Hotel Association

Transportation andLogistics Sub-

Committee

Transportation andTransportation andLogistics SubLogistics Sub--

CommitteeCommittee

Royal BruneiEngineering

Royal Brunei Airlines

Dept. of Civil Aviation

Ministry of Defence

Cluster Participants

Royal BruneiEngineering

Royal Brunei Airlines

Dept. of Civil Aviation

Ministry of Defence

Cluster Participants

Office ofCoordination

Office ofCoordination

Documents

Foreign Direct Investment Initiative Brunei Darussalamnoruleconomics.weebly.com › uploads › 2 › 5 › 8 › 1 › 2581367 › fdi-cit… · Brunei Darussalam. National, Regional,