No direct effect of global crisis on Brunei, says Baiduri Bank GM

No direct effect of global crisis on Brunei, says Baiduri Bank GM


Less exposure: Pierre Imhof, the general manager of Baiduri Bank says Brunei is relatively safe. Picture: BT file photo
DEBBIE TOO
BANDAR SERI BEGAWAN

Wednesday, November 5, 2008

THE present global financial crisis may not directly affect Brunei but its indirect impact can be felt on the economy.

Pierre Imhof, the general manager of Baiduri Bank, said: "The automobile and construction industries in Brunei can be affected indirectly. Since most of the cars are imported from Japan and South Korea, the local automobile industry can feel the effect, depending on the volatility of the currencies. However, it's too early to say whether the (Japanese) Yen will increase significantly against the Brunei dollar to see the difference," he added.

Imhof said that the construction industry could see an indirect positive impact. If there is a recession in the rest of the world, the raw material costs may see a decline. Thus reducing import costs for countries.

The Baiduri Bank general manager said that the magnitude of the present global financial crisis can be compared with the one that happened in 1929.

"It lasted many years and in certain countries the effects could be felt till the World War II," he said.

Asked about locals who have invested in foreign currencies, Imhof said that if the investments are long term, then the value of these investments, in the form of assets, real estate, equities or bonds, may pick up again after the crisis.

"The effect would be felt if it was more on the level of the portfolio or the accumulated assets than that of the level of day-to-day life," he said.

Imhof said that Brunei has always been relatively safe in an environment of crisis due to the fact that it is dependent on oil and gas production.

"The production has been relatively stable for many years and therefore the income of the country is mainly derived from oil and gas. There is very limited exposure of the country or direct exposure to the rest of the world. My view is that if oil and gas prices are going down, the income generated by this activity will be lower," he said.

"We must also observe that the prices of oil went up to US$150 (per barrel) a few months ago, which was totally unexpected and it dropped back to US$60 which is much lower than the peak; but it is still higher than what it was three years ago, so I believe that it is still at a level at which traditional oil producers, like Brunei, are generating a significant income," he added.

Imhof said that Brunei was still mainly domestic economy.

"As long as it generates income from oil and gas, and there is a strong incentive given by the government and the authorities to promote projects and spending, then I think Brunei will be relatively safe," he said.

The Brunei Times