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Brunei sets up national economic recovery plan

KUALA LUMPUR: The government of Brunei will implement an economic recovery plan to boost the local economy and promote sustainable long term growth.

Prince Mohamed Bolkiah, the brother of Brunei's ruler Sultan Hassanal Bolkiah, said over the weekend the government will implement the National Economic Recovery Plan (NERP) to inject liquidity and confidence into the economy.

The six-month NERP includes the establishment of a $200 million government fund for small and medium-scale projects, and an additional $200 million working capital credit from banks.

A second plan will subsequently be implemented for sustainable long-term growth, the prince said at a news conference.

The bank loans will be backed by a 75 percent government guarantee, the prince said.

The plan was formulated after five committees under the National Economic Council, headed by the prince, submitted reports to Sultan Hassanal Bolkiah.

"The report outlined the economic situation of the country, which in the long run appears to be unsustainable because of a number of factors," the prince said. "I realise that these are urgent matters."

He said Brunei's growth in income did not match its population growth. Brunei has sustained a budget deficit since 1994, which currently stands at $1 billion, or 15 percent of gross domestic product.

Rising unemployment and a weak private sector were cited as further reasons for the plan.

A recent government report said Brunei's population has grown by about 2.5 percent per year since 1985, while average annual economic growth over that period has only been 1.25 percent. The report added that the economy needs to create an average of 2,500 new jobs a year.

Infrastructure development, information technology and small-scale tourism projects, will be promoted under the NERP, the prince said.

Unlike its Southeast Asian neighbours, oil-rich Brunei did not fall into recession after the region's financial crisis erupted in mid-1997, and was spared having to borrow from overseas.

Brunei's economy is forecast to grow by three percent this year, after 2.5 percent growth in 1999, and one percent in 1998, Deputy Finance Minister Selamat Munap said last month.

But the sultanate on Borneo island will not return to its long-term target of five to six percent annual growth until it diversifies its economy, reducing its reliance on oil and gas and promoting private business, he said.

About two thirds of Brunei's economic activity is centred in state-controlled sectors, including oil and natural gas.

Fast-track payment and credit systems will be set up for entrpreneurs, the Prince said. The auctioning of government tenders will also be speeded up.

The ministry of finance will be instructed to set aside a special budget to implement the measures and a secretariat under Prince Mohamed will monitor the implementation of the plan.-Reuters