File photo of Indian Prime Minister Manmohan Singh (R) and His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam (L) at the Presidential palace in New Delhi on May 20, 2008. Picture: AFP
Tuesday, December 7, 2010
THE Oxford Business Group (OBG) said the first successes of the recently established free trade agreement (FTA) between Brunei and India have become evident and could spell opportunities for local construction firms.
In a paper, OBG cited the interests shown by an Indian trade mission in the Sultanate's construction sector during a recent visit. The mission had identified the Sultanate's construction sector as a promising area for trade expansion. "The sector offers Indian firms a chance to tap into one of the Bruneian economy's major growth drivers, with a swathe of major construction projects either under way or on the drawing board," OBG said in a paper.
"The FTA is thus likely to benefit many Bruneian companies, such as local construction outfits. Domestic companies may also benefit in terms of developing niche products that larger construction giants are obliged to subcontract fulfilling Brunei's development goal of creating a more knowledge-based and higher-value-added economy," OBG said.
The free trade deal between India and Brunei Darussalam is part of the wider FTA between the subcontinent and the Asean states.
New Delhi has had to individually ratify the deal for each of the 10 member states of the association, with Brunei joining at the start of November to become the seventh participating Asean member.
Cambodia, Laos and the Philippines have yet to enter the agreement, with the Indian government saying that these countries will likely be approved in the coming few months, OBG said.
In the report, it said trade between India and Brunei stood at some $453 million in 2009, citing Indian Ministry of Commerce data. This represents only around one per cent of the total $435 billion in trade between India and Asean that year.
The Sultanate's construction sector has been expanding in recent years, OBG said citing government data.
According to the Department of Economic Planning and Development (JPKE), at constant prices the construction sector was worth B$488.9 million in 2007, B$497.6 million in 2008 and a provisional B$477.4 million in 2009. Over this period, the sector contributed around four per cent of GDP, the group said.
OBG said major construction projects under way currently include the Ministry of Development's National Housing Programme, which aims to provide low-cost housing for 30,000 Bruneians.
There is also major work being carried out to construct an integrated waste-management system (IWMS), and a new dam at Ulu Tutong, estimated to cost about B$120 million.
A complete refurbishment of Brunei International Airport is ongoing.
In addition, there is the Pulau Muara Besar (PMB) deepwater port project, which when completed will also house a manufacturing complex, including an aluminium smelter and an export processing zone for halal food on its 955ha site, it said.
There are plans for lifestyle and tourism, economic, and community zones.
Meanwhile, the 271ha Sungai Liang Industrial Park (Spark) will also be expanded with the construction of Spark Zone Village, which will house amenities and facilities such as conference and meeting rooms, open office spaces for rent, a multi-purpose hall, an exhibition hall, banks, a pharmacy, eateries and retail shops.
"All of these are major attractions for construction companies around the world and Indian outfits are among the firms interested in winning contracts," OBG said.
"Yet while many of the large construction projects in Brunei attract overseas bidders, the picture is not always so clear for domestic companies," OBG opined.
"Few locals can match giant internationals when it comes to bidding wars, meaning that Bruneian firms tend to end up serving as subcontractors for the larger international enterprises. Yet advocates of free trade policies argue that while FTAs allow overseas enterprises better access, they also oblige locals to raise their game and open up opportunities overseas.
"Bruneian companies now have much greater access to Indian markets as well, and the rapidly growing Indian economy is a potentially massive money-spinner," the OBG report said.
In a paper, OBG cited the interests shown by an Indian trade mission in the Sultanate's construction sector during a recent visit. The mission had identified the Sultanate's construction sector as a promising area for trade expansion. "The sector offers Indian firms a chance to tap into one of the Bruneian economy's major growth drivers, with a swathe of major construction projects either under way or on the drawing board," OBG said in a paper.
"The FTA is thus likely to benefit many Bruneian companies, such as local construction outfits. Domestic companies may also benefit in terms of developing niche products that larger construction giants are obliged to subcontract fulfilling Brunei's development goal of creating a more knowledge-based and higher-value-added economy," OBG said.
The free trade deal between India and Brunei Darussalam is part of the wider FTA between the subcontinent and the Asean states.
New Delhi has had to individually ratify the deal for each of the 10 member states of the association, with Brunei joining at the start of November to become the seventh participating Asean member.
Cambodia, Laos and the Philippines have yet to enter the agreement, with the Indian government saying that these countries will likely be approved in the coming few months, OBG said.
In the report, it said trade between India and Brunei stood at some $453 million in 2009, citing Indian Ministry of Commerce data. This represents only around one per cent of the total $435 billion in trade between India and Asean that year.
The Sultanate's construction sector has been expanding in recent years, OBG said citing government data.
According to the Department of Economic Planning and Development (JPKE), at constant prices the construction sector was worth B$488.9 million in 2007, B$497.6 million in 2008 and a provisional B$477.4 million in 2009. Over this period, the sector contributed around four per cent of GDP, the group said.
OBG said major construction projects under way currently include the Ministry of Development's National Housing Programme, which aims to provide low-cost housing for 30,000 Bruneians.
There is also major work being carried out to construct an integrated waste-management system (IWMS), and a new dam at Ulu Tutong, estimated to cost about B$120 million.
A complete refurbishment of Brunei International Airport is ongoing.
In addition, there is the Pulau Muara Besar (PMB) deepwater port project, which when completed will also house a manufacturing complex, including an aluminium smelter and an export processing zone for halal food on its 955ha site, it said.
There are plans for lifestyle and tourism, economic, and community zones.
Meanwhile, the 271ha Sungai Liang Industrial Park (Spark) will also be expanded with the construction of Spark Zone Village, which will house amenities and facilities such as conference and meeting rooms, open office spaces for rent, a multi-purpose hall, an exhibition hall, banks, a pharmacy, eateries and retail shops.
"All of these are major attractions for construction companies around the world and Indian outfits are among the firms interested in winning contracts," OBG said.
"Yet while many of the large construction projects in Brunei attract overseas bidders, the picture is not always so clear for domestic companies," OBG opined.
"Few locals can match giant internationals when it comes to bidding wars, meaning that Bruneian firms tend to end up serving as subcontractors for the larger international enterprises. Yet advocates of free trade policies argue that while FTAs allow overseas enterprises better access, they also oblige locals to raise their game and open up opportunities overseas.
"Bruneian companies now have much greater access to Indian markets as well, and the rapidly growing Indian economy is a potentially massive money-spinner," the OBG report said.
courtesy of--The Brunei Times
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