ASEAN KEY DESTINATIONS
Capital market to boost FDIs and local investments
AT THE start of the year, the Autoriti Monetary Brunei Darussalam (AMBD) enforced two laws that aim to build a capital market in the sultanate.
With this comes the expectation that eventually Brunei will soon launch its stock exchange, a place to trade for company securities and a public, alternative source of financing for companies looking to expand.
The potential of the stock exchange in Brunei, if done right, can boost the economy, increase inflow of foreign investments and encourage Bruneians to invest in local company.
Setting up a bourse also aligns with the government’s plan to privatise several facilities and services. Privatisation is expected to promote efficiency, improve quality of services and save operational costs that were borne by the government.
The country’s air and sea ports, the power sector and other areas are being considered for corporatisation and will be run by government-linked companies (GLCs).
These companies and other GLCs could be listed on the stock exchange.
AMBD had earlier identified several companies to be listed, which includes GLC and “few public services that will be required to undergo privatisation process”.
This means the general public can potentially own a stake of local utility forms by purchasing shares of those GLCs in the stock exchange.
Investing in the country
The idea of locals investing to grow these services is an appealing one.
This public money, alongside potential international investors, can boost the quality of services.
In order for their stock to be attractive, these companies will need to present solid and transparent business plan to attract investors.
For example, the expansion of Muara Container Port is expected to draw in more investments and can help turn Brunei into a trans-shipment hub.
Such growth potential makes an investment into port services more attractive.
Privatising the energy sector is a lot more challenging. Earlier in September, the Minister of Energy and Industry had outlined intentions for the Department of Electrical Services to be privatised, citing cost saving and more efficient operations.
But for a listed energy company to become attractive to investors, growth beyond the Bruneian market should be considered. One opportunity is in ASEAN which is home to some of the world’s fastest growing markets. The International Energy Agency said industrial growth in ASEAN can boost regional electricity consumption by 70 per cent in 2040.
Brunei can leverage on its expertise to seek opportunities in less developed areas as an independent power producer or in form of services, consultation and planning. The potential is there, given the right incentives, partnerships and opportunities.
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