TPP to strengthen Brunei economy, says deputy minister
BANDAR SERI BEGAWAN
BRUNEI is aiming to ratify the Trans Pacific Partnership (TPP) within two years, but first needs to revise several pieces of legislation, including minimum wage, labour and transparency laws, said the deputy minister of foreign affairs and trade yesterday.
In a wide-ranging interview with local media, Dato Erywan Yusof said the TPP will improve the overall business and investment environment in the sultanate, while attracting foreign investment to drive economic growth and diversification.
A 21st century trade agreement
Brunei was one of four founding members of the TPP, which was created to phase out thousands import tariffs as well as other barriers to international trade.
“It gives Brunei the distinct advantage to attract investors who comply with TPP rules,” the deputy minister said. “Also, for countries like the United States which don’t have an FTA with ASEAN, they can actually penetrate the markets of ASEAN by using Brunei as a launching pad to other countries.”
Dato Erywan said small-to-medium enterprises can now expand their business to TPP countries without import duties, which should boost private sector growth.
He added that in April the Ministry of Foreign Affairs and Trade (MOFAT) will organise an outreach session with the private sector to explain the opportunities the TPP and ASEAN Economic Community will present to local businesses.
The importance of the deal to Brunei’s economy cannot be understated, with the country’s total trade with TPP nations amounting to $10 billion in 2014 – 64 per cent of Brunei’s overall trade.
Once ratified, the 12-nation free trade agreement (FTA) will account for 40 per cent of the global economy, equivalent to US$30 trillion ($41.7 trillion).
While the trade pact is intended to make the sultanate more competitive in the international market, it also will bring in competitively-priced goods and services from other TPP countries.
The deputy minister explained that even before TPP, Brunei already has a very liberal trade regime - with import duties eliminated on more than 90 per cent of goods - so flooding the market with cheaper commodities should not be a concern for local businesses.
“This has been general concern from a lot of businessmen in Brunei… But Brunei eliminated most import duties 10 years ago, so there is nothing to be scared of,” he said.
“Other countries have been enjoying zero tariffs here (in Brunei) and now we have access to new markets. So it is time for Brunei businessmen to go to TPP markets, because their tariffs will now be at zero.”
Dato Erywan said the challenge remains in addressing non-tariff barriers, such as transparency and ease of doing business.
Harmonising national policies with international standards
Touted as a “high-standard trade agreement” the TPP also requires all members to meet uniform environmental and labour standards, such as implementing minimum wage, fair hours of work and workplace safety policies.
What it does is build our own capacity and upgrade our labour laws, whether it is on wage or discrepancies in legal working age, said the deputy minister.
“We have reviewed our own laws trying to make it more compliant with international norms and rules, and that also includes minimum wage.”
Dato Erywan said before the TPP can be ratified, Brunei will have to accede to remaining intellectual property treaties, and amend transparency laws.
“It gives companies and investors confidence that Brunei is a regulated market… There are a few laws which we need to upgrade and review in order to ratify and that’s why ratification will take some time,” he said.
“Within two years is probably the best projection. In order to ratify you need to not only have the laws in place but you also need to be able to implement them effectively.”
Falling oil prices have not been kind to an economy that is heavily reliant on exporting fossil fuels. With more than 95 per cent of Brunei’s exports comprising oil and gas, the government is urgently seeking avenues to diversify the economy.
MOFAT’s deputy minister said the country should be looking into high-tech industries and services, such as ICT and alternative energy. “These are the two key words. But of course we still need labour-intensive industries.
Those are the things that will give employment to Brunei. Like the Pulau Muara Besar project, it is high tech but it also requires a lot of manpower to run it.”
“We keep churning out a lot of graduates each year and we need to speed up the amount of employment we can create.”
ASEAN as a force for peace in Asia-Pacific
During the interview, Dato Erywan also touched on security issues in Asia-Pacific, stressing the importance of ASEAN centrality in maintaining peace in the region.
Regarding North Korea’s launch of a long-range rocket last Sunday – a move which has quickly destabilised relations with its neighbour to the south – the deputy minister said Pyongyang must refrain from any action which further escalates the tense atmosphere.
“Northeast Asia is such an important partner to ASEAN. Especially in terms of economic cooperation, so any instability in the Korean Peninsula, ASEAN will also be affected.”
“The only way forward - that is a long-term solution - is through dialogue and not through any means of force. ASEAN has always tried to be the neutral party that has brought both sides together.”
South China Sea and the stalled Code of Conduct
When asked about Brunei’s approach territorial disputes in the South China Sea, MOFAT’s deputy minister said Brunei has thus far employed a two-pronged approach.
“His Majesty the Sultan mentioned this approach in 2013 – the bilateral approach and the regional approach - there is a distinct difference between the two. Bilateral is where the countries talk to each other about sovereignty claims. Regional is where ASEAN and China ensure the sea is a peaceful place.”
China claims over 90 per cent of the waters as its sovereign territory, overlapping with the claims of Brunei, Malaysia, Vietnam, the Philippines and Taiwan.
The sea is thought to be rich in mineral resources, and is also home to vital international shipping lanes.
“It’s a long-term issue, and rightly so, we are a claimant country… What needs to be done now is consultations and negotiations on the Code of Conduct, which ASEAN and China have agreed to do sometime early this year,” said Dato Erywan.
When asked about China’s land reclamation projects in the South China Sea and growing military presence, he said: “ASEAN’s position is to to refrain from actions that escalate tensions… There is a lot of argument for or against development in the South China Sea. All parties need to sit down so we can identify what is right and what is wrong, and see what can be done.”
The Brunei Times