Economy Of Brunei Darussalam And Government Expenditures Patterns Business Essay

This study is written on the instructions of the Lecturer of Strategic Management class, Dr Mona and Dr Sainah. The purpose of this study is to rede the Government, Ministry of Industry and Primary Resources, on how it can accomplish industrial planetary fight for Brunei Darussalam ‘s long-run sustainability and development which is focused on the piscaries industry. It is based on my ain cognition, thoughts and some information gathered from the relevant books and web sites. Recommendations have besides been given on how Brunei can accomplish planetary fight and planetary competitory advantages in piscaries industry.

1.1 Economy of Brunei Darussalam

The economic system of Brunei Darussalam is denominated by the oil liquefied natural gas industries and Government expenditures forms. The export of Brunei Darussalam consists of three major trade goods which are rough oil, crude oil merchandises and liquefied natural gas. Japan, the United States and ASEAN states are the chief finish for Brunei ‘s export.

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The Government of Brunei Darussalam has entered a new stage of development in its thrust towards economic variegation. It is promoting to observe that the part from the non-oil and gas-based sector of the economic system, as reflected in the part to the gross domestic merchandise has continued to increase. Apart from that, the figure of constitutions in the private sector has increased from twelvemonth to twelvemonth.

The encouraging tendency was initiated by the Government ‘s moves to advance the development of the private sector as the engine of growing to achieve variegation. A scope of statute law made for international concern and carefully designed to allow flexibleness and cost-efficient capablenesss which will include a full scope of installations necessary for the efficient behavior of planetary concern have been put in topographic point ( Brunei Industrial Development Authority, n.d. ) .

1.2 Fisheries Industry in Brunei Darussalam

In order to off from the trust on oil and gas industries, piscaries has been identified as one of the possible industries that could lend to the variegation of Brunei Darussalam ‘s economic system. As such the Government is giving a figure of inducements for the commercial piscaries development. Currently, Brunei Darussalam is still importing about 50 per centum of its fish demands whilst the piscaries potencies of our state are estimated to be sustainably deserving at least $ 200 million. With chances from the local gaining control and aquaculture industries and the vivacious part, Brunei with its strategic location can move as the Regional Centre ( HUB ) for the handling and distribution of export and import of seafood merchandises to the international market. The extremely accessible coastal main road, modern haven and airdrome installations, all within easy range, contribute towards feasible investing potencies in the piscaries industries ( Ministry of Industry and Primary Resources, n.d. ) .

Fisheries industry in Brunei comprises of three sectors which are gaining control piscaries, aquaculture and seafood processing. The gaining control piscaries sector estimated to lend at least B $ 112 million, aquaculture sector B $ 71 million and seafood processing sector of at least B $ 17 million. Brunei provides an ideal environment for the aquaculture industry as it uses environmentally friendly patterns and has clean, uncontaminated Waterss comparatively free from fish pathogens. Our state has a H2O country of 38,600 square kilometers and a coastline of 160 kilometers. Although it is the smallest state in the part, Brunei has one of the highest per capita fish ingestions at around 45 kgs per twelvemonth.

In its attempt to increase the part of piscaries towards the national GDP, the Government is opening chances for more investings in gaining control piscaries sector particularly in pelagic or tuna fishing. Fishing licences are available for runing purse-seiners, tuna long-liners in the Brunei zone of angling countries. With an estimated population of about 400,000, the entire one-year ingestion of fish is about 15,500 metric dozenss. This should be calculated as possible market. For illustration, if 50 % of 15,500 metric dozenss is imported, the possible replacing market is 7,750 metric dozenss.

The aquaculture sector offers huge chances and is really moneymaking with estimated potency to be deserving B $ 71 million per annum based on the bing available sites. Prime countries suited for aquaculture have been identified and basic substructure like entree roads, electricity and sea H2O supply and coop civilization have been made available by the Government of Brunei Darussalam. In add-on, Brunei has a figure of advantages such as clean and uncontaminated environment, absence of typhoons, inundations and other natural phenomena.

Presently, the Government has besides identified possible countries ready for development with laid down indispensable basic substructure. Meanwhile, the fish processing sector is still comparatively at a little graduated table despite the large Numberss of processors and a joint-venture company involved in the production of a assortment of piscaries merchandises. More suites are still available for enlargement and farther development. In Brunei, Semaun Aquaculture Sdn Bhd has the highest market portion of the current fish providers.

Apart from that, with the current push to make a healthy society in Brunei Darussalam, the local population is taking serious position in increasing the consumption of fish as compared to other beginnings of protein. Fish is a staple diet of a good bulk of population and it is about a necessity in one ‘s day-to-day diet. Marine fish has been the chief beginning of protein for the people of Brunei. The per capita fish ingestion is one of the highest in part at around 45 kgs per twelvemonth. It is anticipated that the steady addition in the population will increase the demand and with the current liberalisation of trade, chances for export are at that place, even though as it is, the local demand and market monetary value in itself already make the piscaries industry attractive ( Fisheries Department, n.d. ) .

2 Findingss

It is of import to analyze both the national and planetary environment of piscaries industry in lending towards Brunei Darussalam ‘s as a land of chance. It can be used for analysing competition in different national markets.

2.1 Competitive Analysis

In order to accomplish industrial planetary fight, it depends on the ability of a house or a state to offer merchandises and services that meet the quality criterions of the local and universe markets at monetary values that are competitory and supply equal returns on the resources employed or consumed in bring forthing them ( Daft and Marcic, 2004, pg. 55 ) . Industrial planetary competitory analysis novices by concentrating on the planetary overall industry in which a state competes. It is critical to analyze competitory forces in the industry environment to place chances and menaces.

Harmonizing to Michael E Porter ‘s well-known model, there are five forces that shape competition which are the hazard of entry by possible rivals, the strength of competition among established companies within an industry, the bargaining power of purchasers, the bargaining power of providers and the intimacy of replacements to an industry ‘s merchandises. Therefore, it is of import to explicate appropriate strategic responses as industry conditions change over clip.

Barriers to Entry

Brunei ‘s piscaries industry as a possible rival has the capableness to come in planetary market. The barriers to entry is high as it is dearly-won. It requires high capital demands and operational costs. Important barriers to entry include economic systems of graduated table, trade name trueness, absolute cost advantages, client shift costs and authorities ordinance ( Hill and Jones, 2009, pg. 46 ) . An of import scheme is happening ways to understate those barriers. In order to accomplish economic systems of graduated table, it includes cost decreases gained through mass-producing a standardized end product and price reductions on majority purchases of natural stuff inputs. If the Government decides to come in on a big graduated table such as in seafood processing sector, it has to raise the capital required to construct large-scale production installations and bear the high hazards associated with such an investing.

The Government can make trade name trueness through uninterrupted advertisement, patent protection of merchandises, merchandise invention achieved through research and development plans, an accent on high merchandise quality and good after-sales service. Local and abroad markets consider Brunei Darussalam ‘s nutrient merchandises synonymous with high quality and being safe ‘halal ‘ . The market for halal merchandises within and outside the part is enormous. There are many well-known states with high market portion in planetary piscaries industry around the universe. Therefore, bespeaking high barriers to entry. ( TradeInvest Africa, n.d. )

Nature of Competition

The strength of the competition in the planetary piscaries industry can be considered high due to some factors which are industry competitory construction, demand conditions, cost conditions every bit good as the tallness of issue barriers. This is focused on some of import facets chiefly on the monetary value war. It is hard to distinguish merchandises in this industry and as a consequence the best scheme is to seek to understate its costs.

Industry constructions vary and different constructions have different deductions for the strength of competition. Demand for fishes is normally high and turning demand tends to chair competition. Exit barriers include the demand to keep an expensive aggregation of assets at or above some minimal degree in order to take part efficaciously in the industry. Hill and Jones ( 2009, pg. 273 ) claimed that viing in the planetary market place typically face two types of competitory force per unit areas which are force per unit areas for cost decreases and force per unit areas to be locally antiphonal.

Dickering Power of Buyers

In any industry including piscaries, the bargaining power of purchasers is normally high particularly when purchasers around the universe are demanding for better merchandise quality and service. Therefore, powerful purchasers should be viewed as a menace. For case, the purchasers can utilize their buying power as purchase to dicker for monetary value decreases when they purchase in big measures.

Dickering Power of Suppliers

This is the ability of providers to raise input monetary values or raise the costs of the industry in other ways. Inputs include stuffs, services, labor and so on. It is of import to observe that alterations in one or more forces in the macroenvironment can impact the fight of the industry and besides the attraction of the industry.

Menace of Substitutes

The being of close replacements is a strong competitory menace as this limits industry profitableness. They can be both direct and indirect replacements. Direct replacements are other types of fish available in the planetary market. The consumers will be more likely to purchase low monetary value fresh fishes or seafood merchandises. Indirect replacements are other types of nutrient such as poulet, beef and veggies.

2.2 SWOT Analysis

SWOT analysis is an indispensable technique to understand the strengths and failings of the concern every bit good as looking at chances and menaces. By placing the failings and bring out the menaces can be easy managed and prevented earlier to avoid hazards in the hereafter.

Strengths

The Government play an of import function as they help SMEs in get downing up concern in footings of development of basic substructures such as location of fish farm. In aquaculture sector, consumers can bask fresh and good quality fish. For illustration, the retail merchants can take any fish they want at the fish farm and the monetary value will be based on weight. Apart from that, it is easier to engage foreign workers to work in any Brunei ‘s company since the Government give precedences.

Failings

In piscaries industry, Brunei may miss of specific experience and cognition in runing the concern. They besides lack in selling activities which is one of the most of import facets in concerns. Technology and deficit of skilled work force are besides other issues.

Opportunities

Fish and other signifier of seafood is a staple diet of a good bulk of the population and it is about necessity in one ‘s day-to-day diet. The growing in ingestion of fishes represents an chance for houses to spread out their gross revenues volume by aiming at the premium section.

Menaces

There are many types of diseases that can infect fishes. The illustrations of fish diseases are protozoon, bacterial, fungous, parasitic and viral. As the fish that lives in unfastened sea can easy be affected by the disease. If this occurs, the house or state will confront major losingss and have to quarantine it. Most significantly, ruddy tide becomes the chief concern because this can jeopardize the fish raising. This can be looked at when Brunei faced ruddy tide, the demand degrees for fish bead aggressively as frights for septic fish. Although, advice and waies had been given but still the consumers were uncertainties to purchase it.

Brunei has a tropical clime, with unvarying temperatures runing from 23EsC to 32EsC ( 73 – 89EsF ) . Humidity is high about 80 % all twelvemonth unit of ammunition and one-year rainfall varies from about 275 centimeter ( 110 in ) along the seashore to more than 500 centimeter ( 200 in ) in the inside. Rainfall is heaviest during the nor’-east monsoon season, particularly during November and December. Heavy rainfalls can impact the pH value of saltwater. If excessively much rain, the saltwater can alter the H2O into acidic ( above pH7 ) . Thus, many fishes will decease and take to the loss production of fish to the house.

Meanwhile, although Brunei is safe from uncontaminated environment, but manmade pollution is ineluctable such as oil split. This has become the menace to the fish farm and fishing countries.

3 RECOMMENDATIONS

One of the aims of this study is to get at certain recommendations and suggestions that might lend to remedial or facilitator actions in which in bend could speed up the development of SMEs such as piscaries industry in Brunei Darussalam to be known and compete globally.

3.1 Global Scheme

It is a strategic usher to globalisation which involves the transportation of information, civilization, engineering, work force and many more. It is effectual when differences between states are little and competition is planetary. It has advantages in footings of economic systems of graduated table, lower cost, coordination of activities and faster production development. Furthermore, Brunei patterns unfastened many-sided merchandising agreements such as Asean Free Trade Area ( AFTA ) and General Agreement on Trade and Tariffs ( GATT ) . These unfastened trade policies are consistent with Brunei ‘s attempts in prosecuting outward looking economic policies which will help the state in spread outing its industrial and primary resources-based industries. The Government of Brunei Darussalam can implement planetary standardisation scheme which focuses on increasing net income borders through cost-efficiencies originating from economic systems of graduated table and economic systems of location. Thus, concern theoretical account is based on prosecuting a low-priced scheme on a big planetary graduated table ( Hill and Jones, 2009, pg. 279 ) .

3.2 Selling Scheme

The concern will non advance itself, publicizing and publicities are the line of life of a concern. The Government should promote enterprisers or companies to be adept in marketing activities. The selling maps can be divided into gross revenues readying, corporate monetary value policy, advertisement, merchandise design every bit good as selling methods. The enterprisers who sell their merchandises themselves experience troubles in all countries of selling. Fisheries industry may confront troubles in selling merchandises due to hapless quality, deficiency of cognition of markets and selling accomplishments. In add-on, this industry frequently lacks the cognition to research the niche markets. The proprietor enterpriser frequently has no particular accomplishments in these affairs and does non cognize where to obtain dependable information about market developments, publicizing chances and better selling channels. They besides lack the resources to publicize and advance their merchandises.

3.3 Market Development

Product quality is the primary consideration in selling. Assorted steps may be taken to help piscaries industry in developing their markets, both locally and internationally. The undermentioned stairss may be taken to: create establishments to heighten merchandise quality, promote them to take up franchises and assist others to develop franchises, provide extra inducements to them to take part in trade carnivals both at place and abroad, give particular consideration in Government procurance, make greater attempt by Government for developing selling and direction accomplishments and institute particular marketing board to manage the selling of Brunei merchandises.

3.4 Market Access

Market entree at the national and international degree should be boosted by enabling piscaries industries to take advantage of the chances for market enlargement through the acceptance of electronic commercialism. The Government should supply better information on markets, make available electronic databases on concern matching and facilitation services and help them to entree the export market through joint trade and investing publicity missions. The Government may see enforcing some duty on those merchandises that are viing with Brunei merchandises until such clip they are able to vie with foreign merchandises. Since an grasp of the Brunei dollar will increase the monetary value of Brunei merchandise, the Government should seek to follow suited steps so that sensible stableness in the exchange rate may be achieved and maintained.

3.5 Competitive Advantage

The key to understanding competitory advantage is appreciating how the different schemes can make activities that fit together to do a state unique or different from its challengers and able to systematically surpass them. Brunei should has a good industrial concern theoretical account in order to derive a competitory advantage and accomplish superior profitableness and net income growing. The most valuable facet is typical competences. Brunei ‘s piscaries industry concern theoretical account should embrace the entirety of how it will choose its clients, define and distinguish its merchandise offerings, create value for its clients, get and maintain clients, produce goods or services, lower costs, present those goods and services to the market, organise activities within the industry, configure its resources, achieve and prolong a high degree of profitableness every bit good as turn the concern over clip ( Hill and Jones, 2009, pg. 6 ) .

Individual states including Brunei have their ain national competitory advantage which indicates their planetary economic value. Harmonizing to Michael Porter, there are four properties of a national or country-specific environment that have an of import impact on the planetary fight which are factor gifts, local demand conditions, fight of related and back uping industries and strength of competition. This model can assist to measure how tough it might be to come in planetary markets. Factor gifts are the cost and quality of factors of production. Brunei ‘s piscaries industry considers has good physical substructure such as ports, Muara Export Zone, Meragang Hatchery, Aquaculture Development Centre and many more. This may the competitory advantage that Brunei enjoys. On the other manus, Brunei additions competitory advantage if able to run into or transcend the high criterions of merchandises quality by domestic purchasers before looking to interrupt into the planetary market like European Nation. Hill and Jones ( 2009, pg. 102 ) claimed that to keep competitory advantage requires concentrating on efficiency, quality, invention and reactivity to clients every bit good as developing typical competences.

3.6 Global Expansion

In order to accomplish industrial planetary fight for Brunei Darussalam ‘s long-run sustainability and development, spread outing globally can enable to increase profitableness and net income growing. Some factors to see are spread outing the market, recognizing cost economic systems from planetary volume and recognizing location economic systems. The strategic issues are to make up one’s mind which foreign markets to come in, when to come in, on what graduated table and what sort of agencies should utilize to spread out globally. Apart from that, set uping a joint venture with a foreign company is another option for come ining a new market.

More suites can be done for Brunei to come in the European Nation ( UN ) market in order to advance local piscaries merchandises ( Brunei Economic Development Board, n.d. ) . One of import portion is to run into international criterions for export. The Hazard Analysis Critical Control Points preparation should be organised continuously by Fisheries Department ( The Brunei Times, 2008 ) .

3.7 Bettering Fisheries Management

This should concentrate on all operational costs and procedures including substructures, installations, engineering, work force, natural stuffs and so on. Among the success factors of industry, good direction accomplishments in both general and concern direction are a really of import factor for the success of industry. Inadequate direction and proficient inability is a really of import restraint to industry development. There is an addition in the degree of fight of domestic and planetary markets which gives rise to a greater demand for qualified and well-equipped directors and concern leaders. All of import factors of production should be improved such as acceptance of new and suited engineering. Fisheries direction could be farther improved by traveling towards maximum sustainable outputs, guaranting economic direction of piscaries and fiting angling attempt to available resources ( Europa, 2007 ) .

4 Decision

Fisheries industry has great possible that contribute to the variegation of Brunei Darussalam ‘s economic system. This industry can make the planetary markets on a big graduated table and vie with foreign merchandises. It is of import to analyze both the national and planetary environment in order to accomplish industrial planetary fight and planetary competitory advantages. In my sentiment, the best suggestion is focused more on concern direction particularly marketing scheme. It is necessary to heighten industry dynamism by easing entree to finance, markets, engineering, human resources and information. It is non the exclusive duty of the Government. Private enterprises themselves must be prepared to play a bigger function.