‘Weak business climate to continue’
BANDAR SERI BEGAWAN
BRUNEI'S business environment will continue to be weak, despite the lowering of business tax in 2008 from 30 per cent to 25.5 per cent and the introduction of a new threshold tax, which has lower tax rates for businesses with profits below $100,000, business owners said.
The Ministry of Finance recently announced a further deduction in the corporate income tax based on the amount of employer contributions to the pension fund.
Under the previous set-up, companies that paid a certain amount of contributions to the Employees Trust Fund (TAP) were allowed to deduct the same amount from their taxable income. With the amended tax law, the deductible amount is now double the TAP contributions.
This in effect increases the company's revenues after tax payments, said the Minister of Finance II, Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abd Rahman Hj Ibrahim during the State Legislative Council upon announcing the amended tax regulation.
Many business owners said that the introduction of the tax deductibles will lessen their financial burden, but unless consumer sentiment improves, the future is quite grim.
They called for more encouragement on spending in the country instead of abroad to ensure sustainability of businesses.
The purpose of these tax measures might also be thwarted, said business proprietor Alimin Nawi, adding that this is due to the introduction of the Commercial Building Tax for building owners in the newly gazetted capital by the Municipal Department.
"It's quite incomprehensible. They take one tax away and introduce another one (building tax), which is far more significant compared to the old one. Although I don't own my own building, imagine those who run their business in their own buildings," said Alimin Nawi, a business proprietor.
The ease of doing business in Brunei has yet to change due to red tape in several ministries, said an official from a foreign conglomerate.
The official did not want to be named, is a local who works for an international conglomerate which has tried to penetrate the development sector for several years, but is still unsuccessful.
"The problem lies in the tenders where quantity matters over quality. When breakdown happens due to the low budget involved, then finger pointing starts."
"There is also no cooperation in the relevant ministries, where our tenders are mostly rejected with a letter stating that it is unsuccessful, but fails to mention why. Is it on our expertise, our prices or our goods, we will never know," he said.
He added that with the formation of Brunei Economic Development Board (BEDB), the ease of doing business has improved, where there is better cooperation. "Doing business with BEDB is much easier and has contributed a lot to the country's development. But, they don't handle all of Brunei's projects, so ministries should try to ease their secrecy attitude a little bit to ensure that foreign direct investments (FDI) continue to stream in," he said.
The issue of the ease and cost of doing business in the country was also raised in yesterday's LegCo session by member Sulaiman Hj Ahai, a business proprieter, where he proposed import tariffs, further tax reductions on training, witholding tax issues on service charges for e-government initiatives, be reviewed to accelerate economic growth.
The Brunei Times