Brunei looking at different resources

Brunei may be the closest thing to a fairy tale kingdom left in today's world. But recent economic shocks are nudging this rich, sleepy sultanate toward a new reality. Asia's financial crisis, and a renegade prince who ran the tiny country's largest company until it collapsed last year, have shaken a deep faith in Brunei's massive oil economy and its revered royal family.
The pious Islamic monarchy in the Borneo jungle has long seemed content to be largely left to itself, enjoying a choice between new cars and modern buildings, or ancient fishing villages and wooden canoes. But it has stepped into the limelight as host of the Southeast Asia Games, taking place Aug. 7-15, and next year it will host the massive Asia-Pacific Economic Cooperation summit with 21 world leaders. Both are high-profile events geared to catch the attention of much-needed foreign investors and tourists.
"Five years ago you wouldn't have heard the word 'tourism' in Brunei. But now the government is trying to develop it," said Sheik Jamaluddin, Brunei's director of industrial promotion and tourism development. "But we are not going to open our doors wide and let everybody in. We'll control it," he said, likening unchecked tourism to a "cancer" that has hit other Asian countries with environmental ruin and cultural corruption.
Aside from its lavish mosques, Brunei has scant tourist attractions. Bars and discos are outlawed - as is alcohol - and everything is fiercely expensive. But officials hope the virgin rain forest covering 80 % of the country can boost ecotourism, Jamaluddin explained. The country also wants the Southeast Asian Games to advertise Brunei as a venue for more international sporting events, creating "sports tourism," he added.
Brunei's unique modern feudalism, supported by vast oil reserves and protected by an all-powerful, benevolent sultan, once seemed a solid economic fortress. But the recent collapse of neighbouring economies gave Brunei, one of the world's richest yet most isolated countries,a rude shock.
Oil prices plummeted. The Brunei $ lost 15 % of its value against the U.S. greenback. The state-run Brunei Investment Agency heavily invested overseas and saw its portfolio returns battered. Brunei's gross domestic product growth fell to 1 % in 1998, from 4 % in 1997.
Matters worsened last year with the collapse of the largest private company, Amedeo Development Corp., and an estimated loss of $ 16 bn. The company was run by the sultan's brother, Prince Jefri Bolkiah, and the company's failure caused a huge rift in the royal family and large dents in the local economy. The government could not ignore the deep psychological and economic effects of the crises on Bruneians, who are used to material comforts and have long placed their well-being in the hands of the royal family without question.
"The middle class was affected, quite significantly this time around, for the first time ever," said a researcher in Singapore. "The sale of motorcars and things like that suddenly ground to a halt." Along with boosting tourism, Jamaluddin said the government is studying nearby Singapore's development strategy of generous tax incentives and other perks for multinational companies as a way of adding to its oil and gas base.
"We're looking to improve our incentive package," he said, adding this could mean a reduction in Brunei's 30 % corporate tax. The country has no personal income tax, for citizens or foreigners. Though observers have noted Brunei's attempts to diversify its economy, many said they will believe it when they see it.
"They're too concentrated on the petroleum products. They haven't really made any major movement into other industries," said a Singapore-based consultant. "Although they've been talking about (diversification) for ages, you don't really see anything."