Oil-rich Brunei declares sweeping economic reforms

Oil-rich Brunei declares sweeping economic reforms

BANDAR SERI BEGAWAN (AFP): Mindful that its vast oil resources
would run out in 25 years, Brunei on Sunday announced sweeping
economic reforms including plans to impose income taxes, slash
subsidies and set up a regional financial hub.

Officials said the Asian financial crisis in 1997 had jolted
the tiny Southeast Asian sultanate into realizing it has to shed
its almost total dependence on oil and gas revenues.

"We are now opening up to the world. We know we lag behind our
neighboring countries," said Wahab Juned, director-general of the
Brunei Economic Council, a private-sector dominated advisory
body.

He said at a news briefing here the financial crisis was a
"blessing in disguise" because "it taught us in many ways in
terms of preparing for sustainable growth in the future."

Wahab said estimates show Brunei's oil and gas reserves, which
have brought prosperity to the nation of more than 300,000
people, would last another 25 years.

Now the sultanate is in a race against time to restructure the
economy before its most precious resources run out.

Wahab said the government was in the process of introducing
tax reforms to widen the revenue base as well as remove some
subsidies.

Brunei citizens currently do not pay income taxes, there is no
interest on housing loans and health care is free.

Wahab said an announcements will soon be made for privatizing
a key government-owned company which he declined to identify.

On his 54th birthday Saturday, Brunei's ruler Sultan Hassanal
Bolkiah said his kingdom has established a financial center aimed
at making the state a regional hub.

The Brunei International Financial Center "is designed to make
our nation state as the financial center for monetary sector,
banks, security and insurance," he said.

Deputy Finance Minister Selamat Munap said the financial
center would borrow features from international financial centers
in Singapore and Bahrain.

Five legislations relating to international banking and trusts
were already in place, and regulations on insurance licensing,
securities and mutual funds would be ready by year-end.

"It's about time for us to be more pragmatic about
requirements," Wahab said Sunday. "We need to do things which are
normal for every country to do in terms of managing assets
better. We don't want to be caught by surprises," he said.

Brunei's gross domestic product is forecast to grow 3.0
percent this year, virtually unchanged from 1999. The annual
population growth rate is faster at 3.1 percent.

Total GDP value last year was 8.2 billion Brunei dollars
(US$4.7 billion).

The economy is forecast to grow between 4.4-4.5 percent in
2001. Wahab declined to give figures on the government's foreign
reserves but stressed that Brunei's financial position "is still
strong."

The country was rocked by scandal in 1998 following a battle
royale between Sultan Bolkiah and his flamboyant brother Prince
Jefri Bolkiah, who was accused of squandering billions of U.S.
dollars from a firm managing Brunei's petrodollar investments.

Brunei hopes to bolster its international image when it hosts
the Asia Pacific Economic Cooperation (APEC) summit in November.

The summit gathers the leaders of 21 Pacific rim economies,
including US President Bill Clinton, Chinese leader Jiang Zemin
and the prime ministers of Japan and Australia.