Brunei's low FDI linked to tertiary education index

Brunei's low FDI linked to tertiary education index
By Azaraimy HH

Brunei's low index on the number of students in tertiary education, around 0.18, in comparison to the Asean average index of more than 0.30, indicates future challenges towards promoting Foreign Direct Investment (FDI) into the country as the Sultanate aspires to transform its economy into value-added downstream industries and service-oriented economic activities.

The index is reported in the UNCTAD World Investment Report 2011. Currently, according to SGS Economics and Planning Consultant, Brunei has recorded the lowest level of FDI among Asean countries, with Vietnam attracting the highest, followed by Indonesia and Singapore.

The Bulletin spoke to Mr Roger Gibbins, Director of Australian-based consultant company SGS Economics & Planning on what the index represents.

Mr Gibbins explained that there is little feasibility for Brunei to compete in labour-intensive manufacturing industries with other Asean countries due to the Sultanate's small populace, therefore, Brunei needs to leverage on value-added and service-oriented economic activities in its economic diversification effort.

According to Mr Gibbins, to establish such an economic eco-system Brunei needs to create a knowledge-based economy populated by educated and trained workforce.

Looking at the index and assuming it will stay that way, the prospect of achieving what Brunei aims for at the moment looks pretty unlikely, he said, because in terms of Foreign Direct Investment (FDI), foreign investors will likely consider those index as bad indicator for development of value-added and service-oriented economic activities.

However, he fully believes that there is imminent improvement to those types of indexes with the existence of a sophisticated education system now in place in the Sultanate and robust education accessibilities such as various education scholarship offerings.

The latest being the further education scholarship for those working in the private sector offered through the Department of Economic Planning and Development (JPKE), Prime Minister's Office.

Mr Gibbins spoke to the Bulletin during the Land Optimisation Forum organised by the Centre for Strategic and Policy Studies (CSPS), which centred on the ongoing study of land optimisation being carried out by SGS Economics & Planning. The study was commissioned by CSPS.

Why Brunei has a lower index than the Asean Average index in the number of students in tertiary education despite Brunei having a good education system and infrastructure in place?

"Brunei's economy is essentially driven by revenue from the oil and gas sector, and that revenue is injected back into the economy through public services. Therefore, Brunei has a large portion of public sector," he said.

"So (a large portion of) income goes to the public sector and spent on services through the public service sector. Because of that a large portion of the economy in the public sector rises.

"What it leads to is the need for people in the workforce to try to go into education is not so great because the jobs in the public sector are secured," he explained.

He anticipated that in Brunei, those working in the private sector would be more attracted to furthering their education given the opportunity or accessibility to scholarships.

The potential economic clusters identified in the study currently carried out by SGS Economics & Planning are currently in the areas of highly skilled workforce. Therefore, there is a need to transform a large portion of the workforce into an educated workforce as opposed to, for example, labour-intensive manufacturing industries.

He said Brunei's workforce proportion needS to be transformed and the workforce needs to adapt to the new economy.

With the current industrial portfolio, he said in the future, the private sector would not be able to support a growing size of the workforce, thus the need for planned economic diversification has become even more important.

The economy must also be globally competitive in order to be sustainable, leveraging on the knowledge-based economic activities.

He said, basically the challenge is to set out for a bigger private sector and more qualified workforce.

FDI flow into Brunei is centred on retail and business services. Brunei FDI primarily comes from the Asean region itself, with Malaysia topping the table, followed by Singapore. While within the Asean region the largest overall source of FDI comes from United States of America, followed by Japan, United Kingdom and Germany.

Dipetik dari - Borneo Bulletin Online, Rabu, 26 Oktober 2011.