Locals' new year expectations
MELVIN JONG
BANDAR SERI BEGAWAN
Thursday, January 1, 2009
MANY locals are glad to see the year 2008 end due to concerns over the global financial crisis and hoping the new year will bring a more relaxing environment in all aspects.
"I am just going to take it easy and relax a bit in 2009," said a father of three who only wanted to be known as Martin.
The man in his mid-40s who runs a private business said that even though 2008 was a good year despite the global economic crisis, it had taken its toll on him both mentally and physically.
"It was tough. It might get even tougher in 2009 but I am hoping for the best," said Martin.
When asked about his expectations in 2009, Martin replied that he would be happy if everything remained the same.
"The country is already very good in terms of looking after the population. The country is very safe, has good benefits and also very good social services."
These sentiments were also agreed upon by a mother working in the construction line who requested to be known as Hjh.
"Brunei has done really well despite the global economic crisis, maybe because of the rise in oil prices," she said.
Hjh said that she is looking forward to 2009 as there will be a number of new construction projects which could help boost the economy of the country while also assuring her job security.
She also spoke about her anticipation of the implementation of the new national education system (SPN21) as her child will be part of the intake in just another couple of years.
Hjh added that what she really wanted for 2009 was world peace for everyone to live in peace and harmony, especially after all the wars and disasters that has burdened other parts of the world this year.
"I just want to get credits for all of my subjects in the upcoming GCE 'O' level exams while getting enough sleep," said Wang Eynn, a 16-year-old student of Chung Hwa Middle School in the capital. He said that he was a "bit worried" about the upcoming examinations and feeling anxious to meet the challenge.
However, the eldest of three siblings said that he would prefer to spend more time with his friends and classmates in the new year instead of studying as it would be his last year of school.
"I just hope that everyone will stay healthy and enjoy themselves as much as they can," said Wang Eynn.
Ling, who is in her 20s, hopes to be in a more serious relationship with her boyfriend this year.
"I have already settled comfortably with my job so I am hoping to concentrate on some of my other issues in life," said the Malaysian who has been living in Brunei for the past 12 years.
She added that 2008 was just like any other year as it did not make a significant impact in her life. "It went by quietly, maybe because I am not really up to date about what has been going on in the country,"she said.
She said that it would be better to focus on the present than the future.The Brunei Times
Showing posts with label economic outlook. Show all posts
Showing posts with label economic outlook. Show all posts
Thursday, January 1, 2009
Friday, December 19, 2008
Brunei Darussalam: Safe Haven
Brunei Darussalam: Safe Haven
19 December 2008
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Over the holiday season, Oxford Business Group will also be taking a short break. The online economic briefings will resume on January 5.We send our best wishes to all our subscribers.
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At a time when a majority of asset classes and countries look vulnerable to yet unforeseen financial shocks, the Sultanate of Brunei Darussalam provides plenty of compelling reasons for foreign investors looking for a safe financial haven.
While not immune to the global economic slowdown and falling oil prices - its main export commodity - the Sultanate appears to have very little exposure to toxic financial instruments and enjoys a stable financial sector.
Even before the global financial crisis began, the banks and local authorities were mindful of improving the quality of banking assets and promoting a culture of responsible borrowing and saving. The level of new Non Performing Loans (NPLs) is therefore quite low by regional standards.
As of 2006 a new Banking Order ensured that the local banks were well capitalised, with minimum capital requirements raised to BN dollar 100m. The local banks thus entered the global financial crisis in much better shape than many regional peers.
Yet, it is the macroeconomic story that is a source of confidence. The ongoing financial crisis tends to hit the countries with high debt-to-GDP ratios and significant external financing needs. These are usually countries which have balance of payments problems, with high currency account deficits. The case in point is Pakistan which was on the verge of financial meltdown due to the lack of external financing.
Brunei Darussalam is fortunate to have none of the difficulties experienced by highly leveraged countries with external imbalances. It has traditionally been an exporter rather than an importer of financial capital and has been running high current account surpluses, which were saved in strategic reserve funds.
Its debt-to-GDP is one of the lowest in the region and its consolidated fiscal position provides plenty of room for expansionary government spending policy. The existence of clearly formulated government spending plans is a bonus at a time when most countries are forced to improvise their fiscal stimulus.
In monetary policy, too, Brunei Darussalam looks like a better bet than most countries in the region. Brunei dollar's hard peg to the Singapore dollar does raise concern in some quarters, but in relative terms the Singapore dollar is less vulnerable given Singapore's large foreign currency reserves and well managed monetary policy.
As a place to store liquidity, Brunei Darussalam is therefore one of the safest locations in the region, which gives it an opportunity to establish itself as a financial offshore centre. However, that goal will also require attractive returns on capital, which in its turn requires healthy economic activity.
For now at least the focus is on the central government to inject new momentum into the slowing economy. The challenge is that the public investment has to come at a time of low oil prices and therefore lower government revenues.
The authorities are expected to be very cautious in prioritising their investment to preserve some of their strategic reserves against further external shocks. However, the fall in oil and gas prices might come as a blessing in disguise if the government is able to finance new projects in non-oil and gas sectors.
Even in hydrocarbons downstream space, there could be signs of new developments. When the oil prices were very high, the main issue was that the opportunity cost of using domestic oil and gas to develop new downstream sectors was quite high. That was the main sticking point in rolling out such high profile projects as the Brunei Methanol Company.
The correction in oil prices thus indirectly favours diversification, which has long been Brunei's top strategic economic goal. But as some industry players point out, the key issue is financing. Although the logic of diversification has become far more compelling, banks are reluctant to lend to corporations and financial institutions in a downturn, no matter how safe and liquid they are.
This is particularly true in so-called risky sectors such as small and medium enterprises which lack good quality collateral to raise the necessary financing. It therefore falls on the government and the public sector to play the role of financial intermediaries to get the economy back on solid footing.
Despite the challenges, the economic slowdown in Brunei Darussalam is expected to be much milder. The country may even come out of the crisis ahead of its regional peers with the strong comparative advantage of being perceived both politically and financially stable by foreign investors - a rare asset in these troubled times.
19 December 2008
-----------------------------------------------------------------------
Over the holiday season, Oxford Business Group will also be taking a short break. The online economic briefings will resume on January 5.We send our best wishes to all our subscribers.
-------------------------------------------------------------------------
At a time when a majority of asset classes and countries look vulnerable to yet unforeseen financial shocks, the Sultanate of Brunei Darussalam provides plenty of compelling reasons for foreign investors looking for a safe financial haven.
While not immune to the global economic slowdown and falling oil prices - its main export commodity - the Sultanate appears to have very little exposure to toxic financial instruments and enjoys a stable financial sector.
Even before the global financial crisis began, the banks and local authorities were mindful of improving the quality of banking assets and promoting a culture of responsible borrowing and saving. The level of new Non Performing Loans (NPLs) is therefore quite low by regional standards.
As of 2006 a new Banking Order ensured that the local banks were well capitalised, with minimum capital requirements raised to BN dollar 100m. The local banks thus entered the global financial crisis in much better shape than many regional peers.
Yet, it is the macroeconomic story that is a source of confidence. The ongoing financial crisis tends to hit the countries with high debt-to-GDP ratios and significant external financing needs. These are usually countries which have balance of payments problems, with high currency account deficits. The case in point is Pakistan which was on the verge of financial meltdown due to the lack of external financing.
Brunei Darussalam is fortunate to have none of the difficulties experienced by highly leveraged countries with external imbalances. It has traditionally been an exporter rather than an importer of financial capital and has been running high current account surpluses, which were saved in strategic reserve funds.
Its debt-to-GDP is one of the lowest in the region and its consolidated fiscal position provides plenty of room for expansionary government spending policy. The existence of clearly formulated government spending plans is a bonus at a time when most countries are forced to improvise their fiscal stimulus.
In monetary policy, too, Brunei Darussalam looks like a better bet than most countries in the region. Brunei dollar's hard peg to the Singapore dollar does raise concern in some quarters, but in relative terms the Singapore dollar is less vulnerable given Singapore's large foreign currency reserves and well managed monetary policy.
As a place to store liquidity, Brunei Darussalam is therefore one of the safest locations in the region, which gives it an opportunity to establish itself as a financial offshore centre. However, that goal will also require attractive returns on capital, which in its turn requires healthy economic activity.
For now at least the focus is on the central government to inject new momentum into the slowing economy. The challenge is that the public investment has to come at a time of low oil prices and therefore lower government revenues.
The authorities are expected to be very cautious in prioritising their investment to preserve some of their strategic reserves against further external shocks. However, the fall in oil and gas prices might come as a blessing in disguise if the government is able to finance new projects in non-oil and gas sectors.
Even in hydrocarbons downstream space, there could be signs of new developments. When the oil prices were very high, the main issue was that the opportunity cost of using domestic oil and gas to develop new downstream sectors was quite high. That was the main sticking point in rolling out such high profile projects as the Brunei Methanol Company.
The correction in oil prices thus indirectly favours diversification, which has long been Brunei's top strategic economic goal. But as some industry players point out, the key issue is financing. Although the logic of diversification has become far more compelling, banks are reluctant to lend to corporations and financial institutions in a downturn, no matter how safe and liquid they are.
This is particularly true in so-called risky sectors such as small and medium enterprises which lack good quality collateral to raise the necessary financing. It therefore falls on the government and the public sector to play the role of financial intermediaries to get the economy back on solid footing.
Despite the challenges, the economic slowdown in Brunei Darussalam is expected to be much milder. The country may even come out of the crisis ahead of its regional peers with the strong comparative advantage of being perceived both politically and financially stable by foreign investors - a rare asset in these troubled times.
Monday, December 15, 2008
Brunei Darussalam: 2008 Year in Review
LATEST BRIEFING
IN ASSOCIATION WITH
Brunei Darussalam: 2008 Year in Review
15 December 2008
Even as the external environment continues to pose fresh challenges, Brunei appears to be one of the most resilient countries in South East Asia benefiting from new policy initiatives and government-backed projects.
In the state budget announced in March, the government clearly identified its economic priorities, allocating $720m of the $3.4bn total funding to boost social services, transport and communication, public utilities, information and communication technology, public buildings, security and science, as well as research and technology development.
Of this, $204m was directed to social services, to improve education and the development of human resources, while a further $150m was set aside to support the activities of Brunei's economic development board in developing economic clusters.
One of the main planks in the government's platform of economic diversification is bolstering and opening up the Islamic finance industry. In November, after two years of debate, new legislation was ratified allowing the entry of foreign banks into the sector, as well as fully codifying Islamic financial activities in Brunei.
Prior to the amendments to the banking regulations, the Islamic sector of the industry was restricted to local companies, with foreign players in the market limited to conventional banking.
A number of foreign banks, including HSBC and Singapore-based OCBC, have announced plans to set up Sharia-compliant operations in Brunei, with new entrants expected to follow.
While improving its credentials as a centre for Islamic finance, Brunei also sees great promise in the halal products sector, both through supplying Sharia-compliant goods and services and establishing itself as an accreditation centre for such products.
Through the Brunei Halal Brand (BHB), launched in August 2007 as a mark of quality for halal goods produced locally, Brunei is now providing certification services to foreign producers wishing to guarantee their products meet the requirements of purity set out by Sharia law.
This certifying process will be boosted by the New Halal Science Centre, a research institute designed to develop new products and test existing ones. The centre will be the cornerstone of the government-backed agro-technological park at Tungku, scheduled to open in 2009. It will support the BHB project through providing opportunities for firms involved in research on halal products as well as industrial activities.
The year 2008 was also marked by the government's pledge to step up the country's environmental laws by extending the area listed as forest reserves from 41% of the Sultanate's forested land to 55%. The move, which bans logging activity from the designated areas, aims to both preserve Brunei's pristine virgin forests and support efforts to make Brunei a premium destination for eco-and adventure tourism.
Brunei also stepped up efforts to improve the infrastructure vital to trade. In particular, it launched a project in October to develop a large scale deepwater port at Pulau Muara Besar to serve as a major regional cargo and transshipment centre. When completed in 2012, the port will be able to handle up to 800,000 TEUs (20-foot container equivalent) annually. The port will also be the centerpiece of an industrial zone for halal food processing and a hub for manufacturing industries, including a proposed aluminium smelter.
While the government is working to prepare the economy for the time when the wells run dry, fossil fuels continue to be the mainstay of the Brunei economy. According to an International Monetary Fund (IMF) report issued in May, oil and gas sales provide 90% of the government's export earnings and contribute to 50% of its real GDP.
Though it is estimated that Brunei has sufficient reserves to maintain production at present levels for at least 20 years - the country is currently conducting further surveys to identify new deposits - short-term revenue is expected to shrink when year-end figures are released, due to the dramatic fall in energy prices in the later part of 2008, a situation that will extend into the new year.
Brunei is also broadening the base of its energy industry, building a $400m facility in the Belat district to process methane extracted from the Sultanate's gas fields. When completed in 2010, the plant will be able to produce of 850,000 tonnes of methanol annually, most of which will be exported.
In April, the Brunei National Petroleum Company (BNPC) signed an agreement with Japanese firms Kokuka Sangyo and Itochu to establish a joint company to transport the output from the plant. The two Japanese companies will have a 30% and 20% stake respectively in the new company while BNPC's subsidiary PB Logistics will hold the remaining 50% of shares.
Though lower energy prices may reduce Brunei's export earnings in 2009, strong trade surpluses in the preceding years should allow the government to carry forward its programme of economic growth and infrastructure development, while at the same time maintaining its fuel and food subsidies.
IN ASSOCIATION WITH
Brunei Darussalam: 2008 Year in Review
15 December 2008
Even as the external environment continues to pose fresh challenges, Brunei appears to be one of the most resilient countries in South East Asia benefiting from new policy initiatives and government-backed projects.
In the state budget announced in March, the government clearly identified its economic priorities, allocating $720m of the $3.4bn total funding to boost social services, transport and communication, public utilities, information and communication technology, public buildings, security and science, as well as research and technology development.
Of this, $204m was directed to social services, to improve education and the development of human resources, while a further $150m was set aside to support the activities of Brunei's economic development board in developing economic clusters.
One of the main planks in the government's platform of economic diversification is bolstering and opening up the Islamic finance industry. In November, after two years of debate, new legislation was ratified allowing the entry of foreign banks into the sector, as well as fully codifying Islamic financial activities in Brunei.
Prior to the amendments to the banking regulations, the Islamic sector of the industry was restricted to local companies, with foreign players in the market limited to conventional banking.
A number of foreign banks, including HSBC and Singapore-based OCBC, have announced plans to set up Sharia-compliant operations in Brunei, with new entrants expected to follow.
While improving its credentials as a centre for Islamic finance, Brunei also sees great promise in the halal products sector, both through supplying Sharia-compliant goods and services and establishing itself as an accreditation centre for such products.
Through the Brunei Halal Brand (BHB), launched in August 2007 as a mark of quality for halal goods produced locally, Brunei is now providing certification services to foreign producers wishing to guarantee their products meet the requirements of purity set out by Sharia law.
This certifying process will be boosted by the New Halal Science Centre, a research institute designed to develop new products and test existing ones. The centre will be the cornerstone of the government-backed agro-technological park at Tungku, scheduled to open in 2009. It will support the BHB project through providing opportunities for firms involved in research on halal products as well as industrial activities.
The year 2008 was also marked by the government's pledge to step up the country's environmental laws by extending the area listed as forest reserves from 41% of the Sultanate's forested land to 55%. The move, which bans logging activity from the designated areas, aims to both preserve Brunei's pristine virgin forests and support efforts to make Brunei a premium destination for eco-and adventure tourism.
Brunei also stepped up efforts to improve the infrastructure vital to trade. In particular, it launched a project in October to develop a large scale deepwater port at Pulau Muara Besar to serve as a major regional cargo and transshipment centre. When completed in 2012, the port will be able to handle up to 800,000 TEUs (20-foot container equivalent) annually. The port will also be the centerpiece of an industrial zone for halal food processing and a hub for manufacturing industries, including a proposed aluminium smelter.
While the government is working to prepare the economy for the time when the wells run dry, fossil fuels continue to be the mainstay of the Brunei economy. According to an International Monetary Fund (IMF) report issued in May, oil and gas sales provide 90% of the government's export earnings and contribute to 50% of its real GDP.
Though it is estimated that Brunei has sufficient reserves to maintain production at present levels for at least 20 years - the country is currently conducting further surveys to identify new deposits - short-term revenue is expected to shrink when year-end figures are released, due to the dramatic fall in energy prices in the later part of 2008, a situation that will extend into the new year.
Brunei is also broadening the base of its energy industry, building a $400m facility in the Belat district to process methane extracted from the Sultanate's gas fields. When completed in 2010, the plant will be able to produce of 850,000 tonnes of methanol annually, most of which will be exported.
In April, the Brunei National Petroleum Company (BNPC) signed an agreement with Japanese firms Kokuka Sangyo and Itochu to establish a joint company to transport the output from the plant. The two Japanese companies will have a 30% and 20% stake respectively in the new company while BNPC's subsidiary PB Logistics will hold the remaining 50% of shares.
Though lower energy prices may reduce Brunei's export earnings in 2009, strong trade surpluses in the preceding years should allow the government to carry forward its programme of economic growth and infrastructure development, while at the same time maintaining its fuel and food subsidies.
Wednesday, December 10, 2008
East Asia to slow, govts must spend more-World Bank
East Asia to slow, govts must spend more-World Bank
Editor: evewen
10 Dec 2008 07:08:44 GMT
SINGAPORE, Dec 10 - Economies in East Asia will slow substantially in 2009 as the credit crisis depresses capital flows, exports and investment despite government attempts to boost domestic demand, the World Bank said on Wednesday.
In its semi-annual report, the World Bank predicted, however, the East Asian region will a less severe slowdown than Europe, Central Asia or Latin America, which are similarly exposed to international trade and finance.
It also advised governments to use direct spending, particularly on ongoing infrastructure projects, to stimulate demand.
Economic growth in East Asia, excluding Japan, will slow to 5.3 percent in 2009 -- its slowest pace since 2001 - from a projected 7 percent this year and 9 percent in 2007, it said.
China's growth could ease to 7.5 percent in 2009 from 9.4 percent in 2008, the World Bank said.
(for a graphic with key forecasts, please click on: https://customers.reuters.com/d/graphics/AS_GDPFCST1208.gif)
It said the region had entered the crisis in far better shape than during the 1997 Asian financial crisis, with stronger public finances, external balances and healthier banks and companies.
"Nevertheless, the sudden withdrawal of liquid assets by non-resident investors, combined with capital flight by residents in some places, has pushed these economies back into the danger zone from which they had exited only a few years ago," the World Bank said.
Most expenditure components, barring increased government spending in some countries, will be under pressure in east Asia in 2009, the World Bank said. Export markets would also be sluggish.
"Investment looks likely to be constrained by receding capital inflows and poor prospects for exports.
"Private consumption will be under pressure from more sluggish earnings, weaker employment, and an increased desire to save in hard times," the World Bank said.
The projections could be skewed to the downside by a much longer and deeper downturn in developed economies and the risk of capital flows remaining weak for a prolonged period, the World Bank said.
Commodity prices may slump further should global growth weaken more substantially, bringing in challenges related to deflation, it said.
GOVERNMENT SPENDING
The World Bank said that even though aggressive monetary easing appeared to have cushioned the impact of the crisis on domestic liquidity, difficulties lay ahead.
"The authorities need to be mindful that companies and commercial banks will remain under financial stress that will probably get worse as economic activity slows, defaults accelerate and balance sheets deteriorate," it said, while advising further medium term efforts to improve banking and financial supervision.
Governments trying to buffer their economies through fiscal measures will find the market continuously shifting its assessment of how these countries can finance fiscal stimulus programs without endangering fiscal sustainability, it said.
While tax cuts could help consumer spending over a longer horizon, there is concern consumers would save rather than spend money under current circumstances, it said.
"Direct government spending at this point, therefore, is likely to be a superior option to boost economic activity," the World Bank said.
"New infrastructure spending, however, has long lags before making an impact on the economy, unless the authorities are accelerating projects already under implementation."
Social transfers have also typically been most effective in stimulating spending, and would also protect the poor from the worst effects of the crisis, it said.
(For a table on the World Bank's GDP forecasts, click on [ID:nSGE000084])
Editor: evewen
10 Dec 2008 07:08:44 GMT
SINGAPORE, Dec 10 - Economies in East Asia will slow substantially in 2009 as the credit crisis depresses capital flows, exports and investment despite government attempts to boost domestic demand, the World Bank said on Wednesday.
In its semi-annual report, the World Bank predicted, however, the East Asian region will a less severe slowdown than Europe, Central Asia or Latin America, which are similarly exposed to international trade and finance.
It also advised governments to use direct spending, particularly on ongoing infrastructure projects, to stimulate demand.
Economic growth in East Asia, excluding Japan, will slow to 5.3 percent in 2009 -- its slowest pace since 2001 - from a projected 7 percent this year and 9 percent in 2007, it said.
China's growth could ease to 7.5 percent in 2009 from 9.4 percent in 2008, the World Bank said.
(for a graphic with key forecasts, please click on: https://customers.reuters.com/d/graphics/AS_GDPFCST1208.gif)
It said the region had entered the crisis in far better shape than during the 1997 Asian financial crisis, with stronger public finances, external balances and healthier banks and companies.
"Nevertheless, the sudden withdrawal of liquid assets by non-resident investors, combined with capital flight by residents in some places, has pushed these economies back into the danger zone from which they had exited only a few years ago," the World Bank said.
Most expenditure components, barring increased government spending in some countries, will be under pressure in east Asia in 2009, the World Bank said. Export markets would also be sluggish.
"Investment looks likely to be constrained by receding capital inflows and poor prospects for exports.
"Private consumption will be under pressure from more sluggish earnings, weaker employment, and an increased desire to save in hard times," the World Bank said.
The projections could be skewed to the downside by a much longer and deeper downturn in developed economies and the risk of capital flows remaining weak for a prolonged period, the World Bank said.
Commodity prices may slump further should global growth weaken more substantially, bringing in challenges related to deflation, it said.
GOVERNMENT SPENDING
The World Bank said that even though aggressive monetary easing appeared to have cushioned the impact of the crisis on domestic liquidity, difficulties lay ahead.
"The authorities need to be mindful that companies and commercial banks will remain under financial stress that will probably get worse as economic activity slows, defaults accelerate and balance sheets deteriorate," it said, while advising further medium term efforts to improve banking and financial supervision.
Governments trying to buffer their economies through fiscal measures will find the market continuously shifting its assessment of how these countries can finance fiscal stimulus programs without endangering fiscal sustainability, it said.
While tax cuts could help consumer spending over a longer horizon, there is concern consumers would save rather than spend money under current circumstances, it said.
"Direct government spending at this point, therefore, is likely to be a superior option to boost economic activity," the World Bank said.
"New infrastructure spending, however, has long lags before making an impact on the economy, unless the authorities are accelerating projects already under implementation."
Social transfers have also typically been most effective in stimulating spending, and would also protect the poor from the worst effects of the crisis, it said.
(For a table on the World Bank's GDP forecasts, click on [ID:nSGE000084])
Tuesday, December 2, 2008
World stocks, oil prices fall after grim economic data
World stocks, oil prices fall after grim economic data
LONDON
Tuesday, December 2, 2008
WORLD stocks ended six consecutive days of gains yesterday and oil prices tumbled, boosting flows into the low-yielding yen as data showing slumping manufacturing activity in China and Europe fanned concerns over the economy.
US Treasury prices rose across the board, driving the benchmark 10-year yield to a fresh five-decade low as investors flocked to safe and liquid government bonds.
A closely-watched survey showed eurozone manufacturing activity sank to a level not seen in its 11-year history in November. The grim reading reinforced expectations the European Central Bank would cut interest rates later this week to 2.5 per cent or even lower.
A similar survey from China also showed the manufacturing sector deteriorated.
"The data is just so terribly poor that it's going to be difficult for any kind of period of sustained uptrend in confidence," said Derek Halpenny, European head of global currency research at BTM UFJ.
"Until we're through the deterioration in the data then the likelihood is that risk aversion will remain elevated and we'll see renewed interest in lower-yielding currencies."
The MSCI world equity index fell 1.1 per cent after rising 12 per cent last week.
The FTSEurofirst 300 index of leading European shares fell three per cent following a gain of more than 13 per cent last week, with banks and mining companies leading the way down.
Equity markets had perked up last week after the US government rescued banking giant Citigroup, the Federal Reserve said it would buy up to US$800 billion of mortgage-related and consumer debt and China cut interest rates.
Trading was subdued due to the US Thanksgiving holiday last week, but fund tracker EPFR Global said there were sizeable inflows into European equity funds in the week.
Oil dropped by more than five per cent to US$51.57 a barrel after producer cartel Opec decided to delay a decision on a third supply cut until its next meeting later in December, as economic woes squeeze oil demand.
The low-yielding yen rose around 1.8 per cent to ¥93.78, only a few yen away from the level where finance chiefs from the Group of Seven issued a warning about excessive yen strength in October.
The yuan also tumbled against the US dollar.
Reuters
LONDON
Tuesday, December 2, 2008
WORLD stocks ended six consecutive days of gains yesterday and oil prices tumbled, boosting flows into the low-yielding yen as data showing slumping manufacturing activity in China and Europe fanned concerns over the economy.
US Treasury prices rose across the board, driving the benchmark 10-year yield to a fresh five-decade low as investors flocked to safe and liquid government bonds.
A closely-watched survey showed eurozone manufacturing activity sank to a level not seen in its 11-year history in November. The grim reading reinforced expectations the European Central Bank would cut interest rates later this week to 2.5 per cent or even lower.
A similar survey from China also showed the manufacturing sector deteriorated.
"The data is just so terribly poor that it's going to be difficult for any kind of period of sustained uptrend in confidence," said Derek Halpenny, European head of global currency research at BTM UFJ.
"Until we're through the deterioration in the data then the likelihood is that risk aversion will remain elevated and we'll see renewed interest in lower-yielding currencies."
The MSCI world equity index fell 1.1 per cent after rising 12 per cent last week.
The FTSEurofirst 300 index of leading European shares fell three per cent following a gain of more than 13 per cent last week, with banks and mining companies leading the way down.
Equity markets had perked up last week after the US government rescued banking giant Citigroup, the Federal Reserve said it would buy up to US$800 billion of mortgage-related and consumer debt and China cut interest rates.
Trading was subdued due to the US Thanksgiving holiday last week, but fund tracker EPFR Global said there were sizeable inflows into European equity funds in the week.
Oil dropped by more than five per cent to US$51.57 a barrel after producer cartel Opec decided to delay a decision on a third supply cut until its next meeting later in December, as economic woes squeeze oil demand.
The low-yielding yen rose around 1.8 per cent to ¥93.78, only a few yen away from the level where finance chiefs from the Group of Seven issued a warning about excessive yen strength in October.
The yuan also tumbled against the US dollar.
Reuters
Economic slump hits world industry
Economic slump hits world industry
The writing's on the wall: A cyclist rides past a store near Manchester, northern England. Global industry activity has slumped, forcing even retailers to call in administrators. Picture: Reuters
LONDON/BEIJING
Tuesday, December 2, 2008
EUROPEAN and Chinese industry activity slumped in November, Japanese officials said their economy was slowing rapidly and eurozone finance ministers gathered yesterday to discuss plans to curb recession.
The Bank of Japan called an emergency meeting for today to find ways to help corporate finance. Governor Masaaki Shirakawa warned access to funding was becoming increasingly tough for Japanese firms, to an extent comparable with a credit crunch a decade ago.
"Sluggishness in economic activity has increased rapidly. Overseas economies are experiencing the same kind of rapid change," Shirakawa said of the broader Japanese economy.
Eurozone manufacturing activity sank to a record low in November and the outlook was equally grim.
The Markit Eurozone Purchasing Managers Index (PMI) for the manufacturing sector slumped to 35.6 in November, a low not seen in the survey's 11-year history and way below the 50 mark that separates expansions from contraction.
"The extremely weak ... survey intensifies fears that the eurozone's recession will be deep and prolonged," said Howard Archer, economist at IHS Global Insight.
The eurozone was officially declared in recession this month following a second quarterly contraction in economic output. Analysts do not see the economy growing again until the third quarter next year and then only marginally.
The financial crisis that began with a US housing market collapse last year and escalated into a full-blown global downturn has already knocked several big economies into recession, including the eurozone. Most economists believe the United States and Britain will soon follow.
Similar surveys from China showed its manufacturing industry slumped in November as new orders tumbled, showing the world's fourth-largest economy being sucked deeper into the global maelstrom.
Japan's economy minister was gloomier even than Shirakawa.
"We are moving to the next phase of shrinking consumption some call it deflation production going down and prices going down," Economy Minister Kaoru Yosano told the Financial Times in an interview published yesterday.
Central banks in Britain, the eurozone, Australia and New Zealand are expected to cut borrowing costs sharply this week in response to the crisis. Politicians are also poised to weigh in.
Eurozone finance ministers meet later to pick over a menu of economic measures drawn up by the European Commission, which could inject up to €200 billion (US$258.8 billion) of extra government spending, although that figure includes national schemes already announced.
Agreement may prove elusive. German Chancellor Angela Merkel told her party yesterday the government, which has already unveiled a €32-billion plan, would not take part in a "senseless" competition to spend billions more.
Stocks slid, with investors caught between aggressive steps by central banks and grim economic data.
European shares shed three per cent and stock futures pointed to a lower start on Wall Street ahead of US manufacturing data, which are also forecast to offer up a bleak reading.
Inflation in Thailand, South Korea and Australia plunged in November in synch with a global retreat, giving central banks room to slash interest rates further to soften the blow from the worst financial crisis since the 1930s.
Expectations for more rate cuts in Britain were underlined by the UK's PMI index showing manufacturing shrank at a record pace in November after a collapse in new orders.
Australia's central bank is expected to slash its benchmark rate by at least 75 basis points today on top of 200 basis points of cuts since early September, with a bigger move seen as a strong possibility.
The European Central Bank and Bank of England deliver their verdicts on Thursday.
Hopes the consumer may ride to the rescue looked optimistic.
German retail sales rose slightly in October, helping to offset the impact of slackening exports, but with unemployment expected to rise, the outlook for next year is cloudy.
Sales, including turnover at gas stations and cars, rose by 0.4 per cent, Bundesbank data showed. A narrower measure excluding gas stations and auto sales had earlier shown a decline of 1.6 per cent on the month.
In the US, shoppers tried to take advantage of rock-bottom sales prices over the holiday weekend, traditionally the start of the busiest period of the year for US retailers. But the weekend of activity does not necessarily augur well for retailers' bottom line. Reuters
The writing's on the wall: A cyclist rides past a store near Manchester, northern England. Global industry activity has slumped, forcing even retailers to call in administrators. Picture: Reuters
LONDON/BEIJING
Tuesday, December 2, 2008
EUROPEAN and Chinese industry activity slumped in November, Japanese officials said their economy was slowing rapidly and eurozone finance ministers gathered yesterday to discuss plans to curb recession.
The Bank of Japan called an emergency meeting for today to find ways to help corporate finance. Governor Masaaki Shirakawa warned access to funding was becoming increasingly tough for Japanese firms, to an extent comparable with a credit crunch a decade ago.
"Sluggishness in economic activity has increased rapidly. Overseas economies are experiencing the same kind of rapid change," Shirakawa said of the broader Japanese economy.
Eurozone manufacturing activity sank to a record low in November and the outlook was equally grim.
The Markit Eurozone Purchasing Managers Index (PMI) for the manufacturing sector slumped to 35.6 in November, a low not seen in the survey's 11-year history and way below the 50 mark that separates expansions from contraction.
"The extremely weak ... survey intensifies fears that the eurozone's recession will be deep and prolonged," said Howard Archer, economist at IHS Global Insight.
The eurozone was officially declared in recession this month following a second quarterly contraction in economic output. Analysts do not see the economy growing again until the third quarter next year and then only marginally.
The financial crisis that began with a US housing market collapse last year and escalated into a full-blown global downturn has already knocked several big economies into recession, including the eurozone. Most economists believe the United States and Britain will soon follow.
Similar surveys from China showed its manufacturing industry slumped in November as new orders tumbled, showing the world's fourth-largest economy being sucked deeper into the global maelstrom.
Japan's economy minister was gloomier even than Shirakawa.
"We are moving to the next phase of shrinking consumption some call it deflation production going down and prices going down," Economy Minister Kaoru Yosano told the Financial Times in an interview published yesterday.
Central banks in Britain, the eurozone, Australia and New Zealand are expected to cut borrowing costs sharply this week in response to the crisis. Politicians are also poised to weigh in.
Eurozone finance ministers meet later to pick over a menu of economic measures drawn up by the European Commission, which could inject up to €200 billion (US$258.8 billion) of extra government spending, although that figure includes national schemes already announced.
Agreement may prove elusive. German Chancellor Angela Merkel told her party yesterday the government, which has already unveiled a €32-billion plan, would not take part in a "senseless" competition to spend billions more.
Stocks slid, with investors caught between aggressive steps by central banks and grim economic data.
European shares shed three per cent and stock futures pointed to a lower start on Wall Street ahead of US manufacturing data, which are also forecast to offer up a bleak reading.
Inflation in Thailand, South Korea and Australia plunged in November in synch with a global retreat, giving central banks room to slash interest rates further to soften the blow from the worst financial crisis since the 1930s.
Expectations for more rate cuts in Britain were underlined by the UK's PMI index showing manufacturing shrank at a record pace in November after a collapse in new orders.
Australia's central bank is expected to slash its benchmark rate by at least 75 basis points today on top of 200 basis points of cuts since early September, with a bigger move seen as a strong possibility.
The European Central Bank and Bank of England deliver their verdicts on Thursday.
Hopes the consumer may ride to the rescue looked optimistic.
German retail sales rose slightly in October, helping to offset the impact of slackening exports, but with unemployment expected to rise, the outlook for next year is cloudy.
Sales, including turnover at gas stations and cars, rose by 0.4 per cent, Bundesbank data showed. A narrower measure excluding gas stations and auto sales had earlier shown a decline of 1.6 per cent on the month.
In the US, shoppers tried to take advantage of rock-bottom sales prices over the holiday weekend, traditionally the start of the busiest period of the year for US retailers. But the weekend of activity does not necessarily augur well for retailers' bottom line. Reuters
Tuesday, November 25, 2008
Experts say Asian markets to rebound in 2009
Experts say Asian markets to rebound in 2009
BANDAR SERI BEGAWAN
Tuesday, November 25, 2008
ASIAN markets are set to rebound during the second quarter next year, experts yesterday said during an investment forum here.
"The Asian markets will recover faster than the real economy although banks might take more time," said Sam Hanbury, managing director of Deutsche Asset Management (Asia) Limited, who was among the panelists during the Global Finance and Investments Roundtable.
Global markets have fallen over the past months as the financial crisis, which has its roots in the US, worsens.
Still, experts agreed Asian markets will recover next year, noting the region doesn't have problems with toxic debts like those facing developed countries as Asian banks have deleveraged following the Asian financial crisis of 1997.
Companies in Asia invested back in their shares, consolidated operations while government spending focused on infrastructure framework for better development which means that the balance sheets in Asia are on the positive side, the panelists said. No other part of the world can match the current balance sheets of Asian countries, they said.
Inflation is also no longer a problem due to subsidised commodities, the panelists said. Also, they pointed to the big savings of Asian households, which cushion financial systems.
The financial crisis started due to cheap credit, which led to the accumulation of huge debts.
Aberdeen Asset Management Asia's Peter Elston, who was present at the roundtable but not as a panelist, blamed credit default swaps complex financial instruments for the crisis.
Credit default swaps are used to hedge against the risk of borrowers defaulting on their debt, or to speculate on a company's credit quality. Lax regulation over their trading led to abuse.
"The current credit default swap is like buying insurance from the Titanic and issued by the people from the Titanic," he said, referring to the risky nature of trading these financial instruments.
In his company presentation, Ajmal Bhatty, chief executive of Takaful, Tokio Marine Middle East Ltd, said takaful, or Islamic insurance, is the new growth sector in Islamic finance. Takaful growth is seen at 15 to 25 per cent annually against a mere five per cent growth of conventional insurance, according to his presentation, which also noted takaful industry's "extraordinary level of activity since 2003.
In an interview, he said, one aspect of Islamic insurance that can be further explored is extending the range of savings plans and life insurance available in the market today. "Life insurance and savings plans have not developed so much as the conventional insurance side, which is focused on protection," he said.
Ian Baldwyn, general manager of DST International Pte Ltd, a financial solutions provider, said technology supporting the Islamic financial sector is lacking at present. "Historically, the technology is obviously built for the existing market convention in transacting." Junaidi Bahrum and Debbie Too
The Brunei Times
BANDAR SERI BEGAWAN
Tuesday, November 25, 2008
ASIAN markets are set to rebound during the second quarter next year, experts yesterday said during an investment forum here.
"The Asian markets will recover faster than the real economy although banks might take more time," said Sam Hanbury, managing director of Deutsche Asset Management (Asia) Limited, who was among the panelists during the Global Finance and Investments Roundtable.
Global markets have fallen over the past months as the financial crisis, which has its roots in the US, worsens.
Still, experts agreed Asian markets will recover next year, noting the region doesn't have problems with toxic debts like those facing developed countries as Asian banks have deleveraged following the Asian financial crisis of 1997.
Companies in Asia invested back in their shares, consolidated operations while government spending focused on infrastructure framework for better development which means that the balance sheets in Asia are on the positive side, the panelists said. No other part of the world can match the current balance sheets of Asian countries, they said.
Inflation is also no longer a problem due to subsidised commodities, the panelists said. Also, they pointed to the big savings of Asian households, which cushion financial systems.
The financial crisis started due to cheap credit, which led to the accumulation of huge debts.
Aberdeen Asset Management Asia's Peter Elston, who was present at the roundtable but not as a panelist, blamed credit default swaps complex financial instruments for the crisis.
Credit default swaps are used to hedge against the risk of borrowers defaulting on their debt, or to speculate on a company's credit quality. Lax regulation over their trading led to abuse.
"The current credit default swap is like buying insurance from the Titanic and issued by the people from the Titanic," he said, referring to the risky nature of trading these financial instruments.
In his company presentation, Ajmal Bhatty, chief executive of Takaful, Tokio Marine Middle East Ltd, said takaful, or Islamic insurance, is the new growth sector in Islamic finance. Takaful growth is seen at 15 to 25 per cent annually against a mere five per cent growth of conventional insurance, according to his presentation, which also noted takaful industry's "extraordinary level of activity since 2003.
In an interview, he said, one aspect of Islamic insurance that can be further explored is extending the range of savings plans and life insurance available in the market today. "Life insurance and savings plans have not developed so much as the conventional insurance side, which is focused on protection," he said.
Ian Baldwyn, general manager of DST International Pte Ltd, a financial solutions provider, said technology supporting the Islamic financial sector is lacking at present. "Historically, the technology is obviously built for the existing market convention in transacting." Junaidi Bahrum and Debbie Too
The Brunei Times
Thursday, November 20, 2008
Brunei Sept inflation tame versus Asean peers
Brunei Sept inflation tame versus Asean peers
DEBBIE TOO
BANDAR SERI BEGAWAN
Thursday, November 20, 2008
INFLATION eased a minuscule 0.3 per cent in September from August, but jumped a hefty 3.1 per cent from the same period last year.
The Department of Economic Planning and Development said one of the main reasons for Brunei's significantly low inflation rate compared with other Asean countries is the government's subsidy on rice and sugar, petrol and diesel, and liquefied petroleum gas.
The state subsidy moderated the consumer price index for the indices for food and non-alcoholic beverages, transport, housing, water and electricity and maintenance.
The department cited Brunei's low electricity and water tariff, the minimal medical consultation fee of $1 and regulated prices of new motor vehicles and infant powdered milk for contributing to the low inflation.
While most of the prices of the major groups remained unchanged, one notable drop in price was seen in clothing and footwear, which dropped by five per cent from the previous month.
According to the report from the department, cheaper prices of ready-made clothing, material for both men and women, including footwear, during the Brunei Grand Sales led to the decline.
An economist who wished to remain anonymous said that this would normally happen after major sales.
"People would buy less and so you see shops lowering the cost of their clothing to maintain their business."
Small prawn, cucumber and ikan puteh prices posted significant price increases, which contributed to the food and non-alcoholic beverages group's increase of 0.7 per cent.
Prices of small prawns rose 20.9 per cent, cucumber prices by 13.7 per cent and ikan puteh by 12.6 per cent.
The local economist said this was mainly due to a large number of businesses and households who were making prawn purchases to prepare for the Hari Raya festivities.
"When a large group of businesses or individuals start buying up prawns, the market will have a lower supply and when there is a low supply of something but the demand is high, the price increases," the economist said.
Notable decreases in the same category of goods include cauliflower by 11.7 per cent and wheat flour by 8.9 per cent.
In other groups, the cost of household goods, services and operation fell by 0.9 per cent as a result of cheaper prices of furniture, floor covering, household furnishings, among others.
The Brunei Times
DEBBIE TOO
BANDAR SERI BEGAWAN
Thursday, November 20, 2008
INFLATION eased a minuscule 0.3 per cent in September from August, but jumped a hefty 3.1 per cent from the same period last year.
The Department of Economic Planning and Development said one of the main reasons for Brunei's significantly low inflation rate compared with other Asean countries is the government's subsidy on rice and sugar, petrol and diesel, and liquefied petroleum gas.
The state subsidy moderated the consumer price index for the indices for food and non-alcoholic beverages, transport, housing, water and electricity and maintenance.
The department cited Brunei's low electricity and water tariff, the minimal medical consultation fee of $1 and regulated prices of new motor vehicles and infant powdered milk for contributing to the low inflation.
While most of the prices of the major groups remained unchanged, one notable drop in price was seen in clothing and footwear, which dropped by five per cent from the previous month.
According to the report from the department, cheaper prices of ready-made clothing, material for both men and women, including footwear, during the Brunei Grand Sales led to the decline.
An economist who wished to remain anonymous said that this would normally happen after major sales.
"People would buy less and so you see shops lowering the cost of their clothing to maintain their business."
Small prawn, cucumber and ikan puteh prices posted significant price increases, which contributed to the food and non-alcoholic beverages group's increase of 0.7 per cent.
Prices of small prawns rose 20.9 per cent, cucumber prices by 13.7 per cent and ikan puteh by 12.6 per cent.
The local economist said this was mainly due to a large number of businesses and households who were making prawn purchases to prepare for the Hari Raya festivities.
"When a large group of businesses or individuals start buying up prawns, the market will have a lower supply and when there is a low supply of something but the demand is high, the price increases," the economist said.
Notable decreases in the same category of goods include cauliflower by 11.7 per cent and wheat flour by 8.9 per cent.
In other groups, the cost of household goods, services and operation fell by 0.9 per cent as a result of cheaper prices of furniture, floor covering, household furnishings, among others.
The Brunei Times
Tuesday, November 11, 2008
Unemployment figures indicate slight drop
Unemployment figures indicate slight drop
Encouraging trend: Minister of Home Affairs Pehin Orang Kaya Johan Pahlawan Dato Seri Setia Hj Adanan Begawan Pehin Siraja Khatib Dato Seri Setia Hj Mohd Yusof taking down notes during the meeting.Picture: BT/Ubaidillah Masli
BANDAR SERI BEGAWAN
Tuesday, November 11, 2008
BRUNEI'S latest unemployment figures for locals official registered with the Labour Department stands close to 5,089 people who are currently out there in search of jobs. The statistics update was disclosed yesterday during the Minister of Home Affairs' working visit to the Pusat Pekerjaan Tempatan, the Employment Centre for Locals, which was followed by a meeting where the centre's progress was discussed.
Previously, the figure stood at 6,025 unemployed locals, but with the help of the department, 936 of these individuals have managed to find jobs in the private and public sectors. According to the statistics, 83 per cent of those unemployed were individuals who left school before or just slightly after successfully completing their Secondary Five education.
Home Affairs Minister Pehin Orang Kaya Johan Pahlawan Dato Seri Setia Hj Adanan Begawan Pehin Siraja Khatib Dato Seri Setia Hj Mohd Yusof stressed the importance of addressing the issue during the meeting with the officials from the Labour Department and the centre.
"(This is) a challenge we must face together as it is the role of the Pusat Pekerjaan Tempatan to ensure that these unemployed people are helped to find jobs in Brunei Darussalam," he said.
During the meeting, the minister was briefed on the functions of the centre's action plans and the progress of the special programme for unemployed graduates and school-leavers under the human resource fund which was organised by the Labour Department and supported by the Economic Planning and Development Department.
From the statistics, approximately 69 per cent of those in the private sector were foreign workers and only 31 per cent was local. Pehin Dato Hj Adanan said that the centre should work towards the target of increasing the private workforce to 50 per cent local and roughly 50 per cent foreign employees.
At present there was a total of 79,000 foreigners working in the private sector, not including those who were employed as domestic helpers, gardeners and drivers.
He said that it was necessary to focus and identify which jobs had the most potential in solving the problem of unemployment.
Last year, some 6,991 people registered with the Labour Department as considered unemployed individuals. (ODM1)
The Brunei Times
Encouraging trend: Minister of Home Affairs Pehin Orang Kaya Johan Pahlawan Dato Seri Setia Hj Adanan Begawan Pehin Siraja Khatib Dato Seri Setia Hj Mohd Yusof taking down notes during the meeting.Picture: BT/Ubaidillah Masli
BANDAR SERI BEGAWAN
Tuesday, November 11, 2008
BRUNEI'S latest unemployment figures for locals official registered with the Labour Department stands close to 5,089 people who are currently out there in search of jobs. The statistics update was disclosed yesterday during the Minister of Home Affairs' working visit to the Pusat Pekerjaan Tempatan, the Employment Centre for Locals, which was followed by a meeting where the centre's progress was discussed.
Previously, the figure stood at 6,025 unemployed locals, but with the help of the department, 936 of these individuals have managed to find jobs in the private and public sectors. According to the statistics, 83 per cent of those unemployed were individuals who left school before or just slightly after successfully completing their Secondary Five education.
Home Affairs Minister Pehin Orang Kaya Johan Pahlawan Dato Seri Setia Hj Adanan Begawan Pehin Siraja Khatib Dato Seri Setia Hj Mohd Yusof stressed the importance of addressing the issue during the meeting with the officials from the Labour Department and the centre.
"(This is) a challenge we must face together as it is the role of the Pusat Pekerjaan Tempatan to ensure that these unemployed people are helped to find jobs in Brunei Darussalam," he said.
During the meeting, the minister was briefed on the functions of the centre's action plans and the progress of the special programme for unemployed graduates and school-leavers under the human resource fund which was organised by the Labour Department and supported by the Economic Planning and Development Department.
From the statistics, approximately 69 per cent of those in the private sector were foreign workers and only 31 per cent was local. Pehin Dato Hj Adanan said that the centre should work towards the target of increasing the private workforce to 50 per cent local and roughly 50 per cent foreign employees.
At present there was a total of 79,000 foreigners working in the private sector, not including those who were employed as domestic helpers, gardeners and drivers.
He said that it was necessary to focus and identify which jobs had the most potential in solving the problem of unemployment.
Last year, some 6,991 people registered with the Labour Department as considered unemployed individuals. (ODM1)
The Brunei Times
Thursday, November 6, 2008
Govt guarantee on deposits cushions Brunei from crisis
Govt guarantee on deposits cushions Brunei from crisis
Pipeline: A worker is framed by water pipes at a construction site in Gadong. The crisis has been relatively painless for Brunei partly because of a government move to guarantee deposits. Picture: BT/Rudolf Portillo
DEBBIE TOO
BANDAR SERI BEGAWAN
Thursday, November 6, 2008
THE financial crisis may be hurting economies worldwide, but in the case of Brunei, "it has been relatively painless", thanks in part to the government's move last month to guarantee bank deposits. But the sultanate may not be as lucky if a global recession drags, Glen Rase, Citibank director and chairman of the Brunei Association of Banks, yesterday said.
The impact of the global financial crisis is relatively painless for Brunei due partly to the government guarantee on deposits, which had a very calming affect on the market, he said at the sidelines of a forum yesterday on the impact of the US subprime crisis and inflation on Asean economies.
"It has made it much easier as banks," he stressed.
"I think the region has very different kinds of impact. Brunei is a very liquid economy with a lot of savings here ... so the impacts here are different from some markets, which are heavily dependent on foreign direct investment or foreign financial commerce."
The government's move last month to guarantee deposits came in the heels of similar moves by other governments to safeguard their financial system amid a credit crunch which started in the US.
In the sultanate's case, the guarantee covers all Brunei dollar and foreign currency deposits of individual and non-bank customers in Islamic and conventional banks and finance companies, which are licensed and regulated by the Ministry of Finance. The guarantee will be valid until December 31, 2010.
Still, Rase cautioned that Brunei may feel the pinch if the global recession drags.
"If the recession is very long and the policy response doesn't survive the economy a couple years down the road when everything slows down, then you'll probably see the impact on Brunei, but I don't see any significant impacts now," he said.
Asked about when Brunei will feel the impact of the global financial crisis, Rase said, "Brunei is already feeling the effect of it. Oil prices are down by half and that is a direct response to the US slowdown and much in Europe, Japan and elsewhere. Oil revenues in Brunei are managed so that they don't flow in when prices go up and they don't necessarily collapse when prices come down, which is very well managed. So effectively, the average man on the street isn't going to see a lot of impact unless he or she is invested in other markets."
In case of inflation pressures, he said, "We've seen now that the commodity boom is pretty much over, so the prices of steel and one of the other things that go into building our economy is starting to come down and a lot of the inflationary pressure that is associated with that commodity boom has gone away."
For long-term investors, the crisis may be an opportune time to start buying property assets in London and Australia, where value has gone down, another participant said.
"If you are a long-term owner, this is the sale of the century. Some of the sovereign wealth funds dropped too early, but over the longer term it should be very positive," said Chan Kok Peng, executive director of research and chief economist of BNP Paribas Securities (Singapore).
He added that an equities rebound will not take five years. "Somehow second half of next year, you should see some rebound, but I'm not saying it will go back to the previous peak because of global deleveraging." The Brunei Times
Pipeline: A worker is framed by water pipes at a construction site in Gadong. The crisis has been relatively painless for Brunei partly because of a government move to guarantee deposits. Picture: BT/Rudolf Portillo
DEBBIE TOO
BANDAR SERI BEGAWAN
Thursday, November 6, 2008
THE financial crisis may be hurting economies worldwide, but in the case of Brunei, "it has been relatively painless", thanks in part to the government's move last month to guarantee bank deposits. But the sultanate may not be as lucky if a global recession drags, Glen Rase, Citibank director and chairman of the Brunei Association of Banks, yesterday said.
The impact of the global financial crisis is relatively painless for Brunei due partly to the government guarantee on deposits, which had a very calming affect on the market, he said at the sidelines of a forum yesterday on the impact of the US subprime crisis and inflation on Asean economies.
"It has made it much easier as banks," he stressed.
"I think the region has very different kinds of impact. Brunei is a very liquid economy with a lot of savings here ... so the impacts here are different from some markets, which are heavily dependent on foreign direct investment or foreign financial commerce."
The government's move last month to guarantee deposits came in the heels of similar moves by other governments to safeguard their financial system amid a credit crunch which started in the US.
In the sultanate's case, the guarantee covers all Brunei dollar and foreign currency deposits of individual and non-bank customers in Islamic and conventional banks and finance companies, which are licensed and regulated by the Ministry of Finance. The guarantee will be valid until December 31, 2010.
Still, Rase cautioned that Brunei may feel the pinch if the global recession drags.
"If the recession is very long and the policy response doesn't survive the economy a couple years down the road when everything slows down, then you'll probably see the impact on Brunei, but I don't see any significant impacts now," he said.
Asked about when Brunei will feel the impact of the global financial crisis, Rase said, "Brunei is already feeling the effect of it. Oil prices are down by half and that is a direct response to the US slowdown and much in Europe, Japan and elsewhere. Oil revenues in Brunei are managed so that they don't flow in when prices go up and they don't necessarily collapse when prices come down, which is very well managed. So effectively, the average man on the street isn't going to see a lot of impact unless he or she is invested in other markets."
In case of inflation pressures, he said, "We've seen now that the commodity boom is pretty much over, so the prices of steel and one of the other things that go into building our economy is starting to come down and a lot of the inflationary pressure that is associated with that commodity boom has gone away."
For long-term investors, the crisis may be an opportune time to start buying property assets in London and Australia, where value has gone down, another participant said.
"If you are a long-term owner, this is the sale of the century. Some of the sovereign wealth funds dropped too early, but over the longer term it should be very positive," said Chan Kok Peng, executive director of research and chief economist of BNP Paribas Securities (Singapore).
He added that an equities rebound will not take five years. "Somehow second half of next year, you should see some rebound, but I'm not saying it will go back to the previous peak because of global deleveraging." The Brunei Times
Wednesday, November 5, 2008
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
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
Tuesday, October 21, 2008
Inflation begins to gather strength in Brunei at 0.9%
Inflation begins to gather strength in Brunei at 0.9%
BANDAR SERI BEGAWAN
Tuesday, October 21, 2008
PRICES of basic goods and services in Brunei rose 0.9 per cent in August from the previous month, based on the consumer price index (CPI) released by the Department of Economic Planning and Development (JPKR).
Brunei's August inflation represents a significant uptrend when compared with monthly price changes in the first seven months of the year.
The increase in August prices is attributed mainly to the increase in clothing and footwear basket, and food and non-alcoholic beverages basket, which was 4.7 and 1.2 per cent, respectively.
On a year-on-year basis, prices in August this year were up 3.3 per cent from the same month last year.
A local economist said that one of the factors for this increase could be higher fuel prices in countries from where Brunei buys raw materials as well as flour prices.
JPKR attributed the August inflation in part to some prices reverting back to the original levels after the Mid-Year Sales which took place from June 22 to Aug 3 this year.
Household goods and services and operations also increased 1.7 per cent as a result of higher prices of floor covering, household furnishings, kitchen appliances and utensils and so on. The local economist said that the increase in clothing and footwear and food and non-alcoholic beverages is attributed mainly to external factors, such as increase in transportation, cost of raw materials and so on.
"In Brunei nearly 90 per cent of goods are imported so the price increase is not a matter of supply or demand, but mainly the cost of raw materials in other countries that contribute to the prices," he said.
The cost of food and non-alcoholic beverages in August rose 1.2 per cent over the previous month due to higher prices of flour, noodles, biscuits, fresh and frozen buffalo meat, seafood, vegetables and fruits and so on.
These price increases were the main contributing factors in the 5.5 per cent year-on-year increase for this sub-group.
Food items that recorded notable price increases were instant noodles, sawi hijau, squids, red spinach and rice flour.
"Instant noodle prices showed a 10.6 per cent increase mainly due to the increase in global flour prices," said the local economist. He added that some prices of items in the sub-group tend to go down very quickly.
Notable price drops in the food and non-alcoholic beverages sub-group were for small prawns, kangkong and long beans which dropped 6.9 per cent, 6.4 per cent and 4.9 per cent, respectively.
Transportation cost rose 0.3 per cent due to higher prices of motor vehicles, maintenance and air fares.
JPKR said that the inflation rate for Brunei Darussalam is significantly lower compared to those experienced by other countries in the region. Debbie Too
The Brunei Times
BANDAR SERI BEGAWAN
Tuesday, October 21, 2008
PRICES of basic goods and services in Brunei rose 0.9 per cent in August from the previous month, based on the consumer price index (CPI) released by the Department of Economic Planning and Development (JPKR).
Brunei's August inflation represents a significant uptrend when compared with monthly price changes in the first seven months of the year.
The increase in August prices is attributed mainly to the increase in clothing and footwear basket, and food and non-alcoholic beverages basket, which was 4.7 and 1.2 per cent, respectively.
On a year-on-year basis, prices in August this year were up 3.3 per cent from the same month last year.
A local economist said that one of the factors for this increase could be higher fuel prices in countries from where Brunei buys raw materials as well as flour prices.
JPKR attributed the August inflation in part to some prices reverting back to the original levels after the Mid-Year Sales which took place from June 22 to Aug 3 this year.
Household goods and services and operations also increased 1.7 per cent as a result of higher prices of floor covering, household furnishings, kitchen appliances and utensils and so on. The local economist said that the increase in clothing and footwear and food and non-alcoholic beverages is attributed mainly to external factors, such as increase in transportation, cost of raw materials and so on.
"In Brunei nearly 90 per cent of goods are imported so the price increase is not a matter of supply or demand, but mainly the cost of raw materials in other countries that contribute to the prices," he said.
The cost of food and non-alcoholic beverages in August rose 1.2 per cent over the previous month due to higher prices of flour, noodles, biscuits, fresh and frozen buffalo meat, seafood, vegetables and fruits and so on.
These price increases were the main contributing factors in the 5.5 per cent year-on-year increase for this sub-group.
Food items that recorded notable price increases were instant noodles, sawi hijau, squids, red spinach and rice flour.
"Instant noodle prices showed a 10.6 per cent increase mainly due to the increase in global flour prices," said the local economist. He added that some prices of items in the sub-group tend to go down very quickly.
Notable price drops in the food and non-alcoholic beverages sub-group were for small prawns, kangkong and long beans which dropped 6.9 per cent, 6.4 per cent and 4.9 per cent, respectively.
Transportation cost rose 0.3 per cent due to higher prices of motor vehicles, maintenance and air fares.
JPKR said that the inflation rate for Brunei Darussalam is significantly lower compared to those experienced by other countries in the region. Debbie Too
The Brunei Times
Wednesday, September 3, 2008
Brunei inflation anaemic but flour prices up sharply
Brunei inflation anaemic but flour prices up sharply
Debbie Too
BANDAR SERI BEGAWAN
Wednesday, September 3, 2008
BRUNEI'S consumer price index or CPI showed prices of basic goods and services grew at an anaemic pace of 0.1 per cent in June compared to the previous month.
Based on figures released by the Department of Economic Planning and Development, the inflation rate for Brunei remained significantly lower than other countries in the region partly due to government subsidies on rice and sugar, petrol and diesel and liquefied petroleum gas, which moderated the CPI growth for major group indices such as food and non-alcoholic beverages, transport, and housing, water, electricity and maintenance.
While prices of most goods in the various major groups remained largely unchanged, there were significant changes for flour, cheese and dried bee hoon. The price of flour increased from May to June by 19.7 per cent, which brings the cost of flour to nearly $40 per 22.5-kilogramme bag.
"The price of flour is still continuing to increase, and our supplier has told us that it is not only happening in Brunei," said a representative from LeApple Bakery. She added that the price of flour per 22.5-kg bag was $18 last year and now the price of bread flour has risen to $39.50 and cake flour to $36.50.
"We increased our bread prices last year already but this year, we have not made any adjustments to (the prices of) our products yet," she said. She added that there has been a monthly increase since the beginning of this year and that the supplier has told her that the increases will still continue to happen.
The prices of shallots and limes have decreased by 8.4 per cent and 6.3 per cent, respectively, and an economist said that prices of vegetables and seafood depend on supply.
"A decrease in prices of certain vegetables, shallots and limes, means that during the period of May to June, there was either a surplus of goods available or there was enough supply to meet the demand," he said.
Another notable decrease in the CPI was the 0.4 decrease in clothing and footwear.
"The cost of materials for the clothes have been decreasing since Chinese New Year so this price decrease is following that trend, possibly due to cheap labour and material from China," said the economist.
Compared to the same period last year, the CPI in June this year was 2.4 per cent higher.The Brunei Times
Debbie Too
BANDAR SERI BEGAWAN
Wednesday, September 3, 2008
BRUNEI'S consumer price index or CPI showed prices of basic goods and services grew at an anaemic pace of 0.1 per cent in June compared to the previous month.
Based on figures released by the Department of Economic Planning and Development, the inflation rate for Brunei remained significantly lower than other countries in the region partly due to government subsidies on rice and sugar, petrol and diesel and liquefied petroleum gas, which moderated the CPI growth for major group indices such as food and non-alcoholic beverages, transport, and housing, water, electricity and maintenance.
While prices of most goods in the various major groups remained largely unchanged, there were significant changes for flour, cheese and dried bee hoon. The price of flour increased from May to June by 19.7 per cent, which brings the cost of flour to nearly $40 per 22.5-kilogramme bag.
"The price of flour is still continuing to increase, and our supplier has told us that it is not only happening in Brunei," said a representative from LeApple Bakery. She added that the price of flour per 22.5-kg bag was $18 last year and now the price of bread flour has risen to $39.50 and cake flour to $36.50.
"We increased our bread prices last year already but this year, we have not made any adjustments to (the prices of) our products yet," she said. She added that there has been a monthly increase since the beginning of this year and that the supplier has told her that the increases will still continue to happen.
The prices of shallots and limes have decreased by 8.4 per cent and 6.3 per cent, respectively, and an economist said that prices of vegetables and seafood depend on supply.
"A decrease in prices of certain vegetables, shallots and limes, means that during the period of May to June, there was either a surplus of goods available or there was enough supply to meet the demand," he said.
Another notable decrease in the CPI was the 0.4 decrease in clothing and footwear.
"The cost of materials for the clothes have been decreasing since Chinese New Year so this price decrease is following that trend, possibly due to cheap labour and material from China," said the economist.
Compared to the same period last year, the CPI in June this year was 2.4 per cent higher.The Brunei Times
Friday, July 18, 2008
Brunei's Long Term Development Plan
There is an article on Brunei's Wawasan 2035, the Brunei's Long Term Development Plan for 30 years. Actually the launching of Wawasan 2035 was done early this year with several comments from forbes and coverage from NDP. An explanation of the Wawasan can be found in here.
The goals of the Wawasan are:
that is pursued by the following OSPD:
The OSPD then is supported by four development thrusts:
Through the following budget allocations:
The goals of the Wawasan are:
that is pursued by the following OSPD:
The OSPD then is supported by four development thrusts:
Through the following budget allocations:
Saturday, May 17, 2008
Jobless rate rising in Asean, says ILO
Jobless rate rising in Asean, says ILO
HADI DP MAHMUD
BANDAR SERI BEGAWAN
Thursday, May 17, 2007
b>But figure skewed by Indonesia which has the region's largest labour force
MORE than 27 million jobs were created from year 2000 to last year in Southeast Asia, according to a report by the International Labour Organisation (ILO).
This represents an 11 per cent increase in total employment in the region, which stood at 263 million last year, the ILO said the report, which is a compilation of comprehensive employment and social statistics including labour productivity, employment by sector and the informal economy of Asean countries. It is the first of its kind, said the ILO.
The report stated that young people in the Asean region are being "disproportionately affected" in terms of unemployment.
The unemployment rate in Asean rose from 5 per cent to 6.6 per cent over the same period. However, this figure is skewed by the situation in Indonesia, which has the region's largest labour force. Unemployment in the world's most populous Muslim nation rose from 6.1 to 10.4 per cent.
According to the Brunei Darussalam Key Indicators 2006, there were 7,300 jobseekers in the sultanate last year. The unemployment rate in Brunei shot up 0.8 per cent from 2004 to 2005, and declined 0.3 per cent last year.
The United Nations-specialised agency called for Asean to increase labour productivity and narrow development gaps between members to ensure sustainable growth and build a thriving community by 2015.
The 107-page report, entitled Labour and Social Trends in Asean 2007: Integration, Challenges, Opportunities, warns that although unemployment is commonly seen as an important indicator, other crucial aspects of labour market performance deserve more attention. These include gender gaps, labour productivity, working conditions, the growing informal economy and the working poor. Despite recent economic growth, the region remains home to millions of poor.
Last year, more than half of Asean's 262 million workers earned less than US$2 per day, which leaves them and their families below the poverty line.
"What matters therefore, when evaluating labour market trends is not just the level of employment but also its nature and quality," the report stated.
The ILO warned Asean of its labour productivity, which is lagging far behind productivity bursts in India and China. Between 2000 and 2005, output per worker in Asean grew only 15.5 per cent compared to 26.9 in India and 63.4 per cent in China. "Because of its strong export-orientation, productivity growth is critical to Asean. Accelerating productivity growth is therefore essential, not only for competitiveness but for job creation and poverty reduction," the report noted.
Cross-border labour migration is being driven by uneven labour supply and persistent development gaps, the report added. In 2005, the total number of migrants originating from Asean was estimated at 13.5 million, 39 per cent of whom were in other Asean member countries.
"The large and growing number of irregular migrants means that managing migration and ensuring migrants' protection are becoming pressing issues a major task that Asean has now taken up with its recent Declaration and Promotion of the Rights of Migrant Workers," the organisation said.
The Brunei Times
HADI DP MAHMUD
BANDAR SERI BEGAWAN
Thursday, May 17, 2007
b>But figure skewed by Indonesia which has the region's largest labour force
MORE than 27 million jobs were created from year 2000 to last year in Southeast Asia, according to a report by the International Labour Organisation (ILO).
This represents an 11 per cent increase in total employment in the region, which stood at 263 million last year, the ILO said the report, which is a compilation of comprehensive employment and social statistics including labour productivity, employment by sector and the informal economy of Asean countries. It is the first of its kind, said the ILO.
The report stated that young people in the Asean region are being "disproportionately affected" in terms of unemployment.
The unemployment rate in Asean rose from 5 per cent to 6.6 per cent over the same period. However, this figure is skewed by the situation in Indonesia, which has the region's largest labour force. Unemployment in the world's most populous Muslim nation rose from 6.1 to 10.4 per cent.
According to the Brunei Darussalam Key Indicators 2006, there were 7,300 jobseekers in the sultanate last year. The unemployment rate in Brunei shot up 0.8 per cent from 2004 to 2005, and declined 0.3 per cent last year.
The United Nations-specialised agency called for Asean to increase labour productivity and narrow development gaps between members to ensure sustainable growth and build a thriving community by 2015.
The 107-page report, entitled Labour and Social Trends in Asean 2007: Integration, Challenges, Opportunities, warns that although unemployment is commonly seen as an important indicator, other crucial aspects of labour market performance deserve more attention. These include gender gaps, labour productivity, working conditions, the growing informal economy and the working poor. Despite recent economic growth, the region remains home to millions of poor.
Last year, more than half of Asean's 262 million workers earned less than US$2 per day, which leaves them and their families below the poverty line.
"What matters therefore, when evaluating labour market trends is not just the level of employment but also its nature and quality," the report stated.
The ILO warned Asean of its labour productivity, which is lagging far behind productivity bursts in India and China. Between 2000 and 2005, output per worker in Asean grew only 15.5 per cent compared to 26.9 in India and 63.4 per cent in China. "Because of its strong export-orientation, productivity growth is critical to Asean. Accelerating productivity growth is therefore essential, not only for competitiveness but for job creation and poverty reduction," the report noted.
Cross-border labour migration is being driven by uneven labour supply and persistent development gaps, the report added. In 2005, the total number of migrants originating from Asean was estimated at 13.5 million, 39 per cent of whom were in other Asean member countries.
"The large and growing number of irregular migrants means that managing migration and ensuring migrants' protection are becoming pressing issues a major task that Asean has now taken up with its recent Declaration and Promotion of the Rights of Migrant Workers," the organisation said.
The Brunei Times
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