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Good life is under threat in Brunei
Inter Press Service - July 27, 2000
After being rocked by a multi-billion-dollar financial scandal involving members of its own royal family, Brunei has finally come to grips with the fact that its oil reserves will start running out in 25 years' time. The Southeast Asian country's people will need to find other ways of maintaining their affluent and pampered lifestyles.
Brunei's citizens don't pay income taxes, there is no interest on housing loans and health care is free. They even have a lavish themepark on the outskirts of the capital where all rides are free of charge, perhaps the only one of its kind in the world. Oil revenues have also helped pay the salaries of some 60 percent of Brunei citizens, who work for the government with high pay, short working hours and perks such as interest-free car loans.
Many of these perks will soon come to an end, according to sweeping economic reforms announced by the government earlier this month. The new measures include plans to impose income taxes, slash government subsidies and set up a regional financial center to service Islamic banking worldwide.
"We are now opening up to the world. We know we lag behind our neighboring countries," Wahab Juned, director-general of the Brunei Economic Council (BEC), said at a recent news briefing. He said the 1997 Asian financial crisis has helped Brunei to open its mind and reconsider its economic policy, which was dependent on oil and gas reserves.
Brunei's economic output – more than half of which comes from oil and gas – grew by just 1 percent in 1998 and 2.5 percent last year.
In a bid to diversify its economy, Sultan Hassan al Bolkiah announced on his 54th birthday this month that Brunei will become an international financial center focusing on Islamic financial services. "The center is designed to make our nation the financial center for Islamic banking, securities and insurance," he said in his annual "state of the sultanate" speech to the nation.
"Although it is a very competitive area, this is a niche which we can succeed in," Brunei businessman Timothy Ong, also chairman of the Asia-Pacific Economic Cooperation Business Advisory Council, told the Singapore-based newspaper Straits Times.
The financial center idea is a key proposal in Brunei's National Economic Recovery Plan, which was formulated following the 1997 Asian financial crisis and the collapse of the Amedeo conglomerate headed by Prince Jefri Bolkiah, the sultan's brother.
The government has been keen to emphasize that lessons from the 1997 Asian financial crisis have encouraged Brunei to reform its economic policies. However, Brunei was one of the least effected of the Asian economies. This is why many analysts believe that it is the Amedeo scandal which has rocked the foundations of not only Brunei's economy, but its society as well.
Prince Jefri, the 46-year-old younger brother of the sultan, was Brunei's finance minister from 1986 to 1997. He was also the head of the Brunei Investment Agency (BIA), which managed the country's overseas investments once valued at more than $110 billion.
Prince Jefri was fired from BIA in 1998 after his conglomerate, Amedeo, collapsed, leaving $6 billion in debts. Subsequently, it was also found that under Prince Jefri's tutelage BIA has squandered more than $40 billion in state funds in a variety of dubious investments, while he was also finance minister.
Earlier this year, the sultan took his brother and 70 others to court to recover some of these state funds. The court case exposed the lavish lifestyle of the royal family and how its members have used state funds as virtually their private money. It was the first time that the people of Brunei were given an insight into the highly secretive financial dealings of the BIA. The sultanate's accounts are not made public, and it is a criminal offence to divulge or report on the country's finances.
During the court case, it was revealed that Prince Jefri had kept 40 call girls at his service at any one time in London. He also had four wives, 35 children and a large staff to maintain. He has reportedly spent $2.7 billion over a 10-year period on his lavish lifestyle. He is believed to own some 2,000 cars, a number of yachts and 17 aircraft.
The $15 billion lawsuit, which cut into the core of the sultanate's newfound financial insecurity, was settled out of court in late May. Under the settlement, the prince and his co-accused agreed to return all assets – including hotels and properties in many continents – bought with the state's money to the state.
Brunei's leaders have now begun thinking the unthinkable – and calling for transparency. "Transparency is not a new thing. The issue now is how far we want to be transparent," said Education Minister Abdul Aziz Umar recently. "Brunei, like other countries in the region, is now accepting transparency as something good, especially in terms of creating a conducive environment for investments." he added.
The local newspaper, Borneo Bulletin, commenting on the government's new economic thinking, said the government is now trying to function as a regulator and facilitator rather than a service provider. "Apparently the government also wants to run like a corporation now and to make Brunei run like a Brunei Incorporated," it said.
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