Abstract:

Exports of hydrocarbons have been a great boon to the small state of Brunei Darussalam and as such, it provides an example of a country that has not been overly afflicted by the “resource curse”. But it has been adversely affected by oil and gas price volatility that inevitably has a profound impact on hydrocarbon exporters, despite resorting to futures markets. Given Brunei’s minimal non-hydrocarbon tradable sectors, it has not been unduly afflicted by the Dutch disease but like all other countries that are heavily reliant on the export of hydrocarbons, is confronted by the iron law of resource depletion: reserves of oil and gas are estimated at 24 and 22 years respectively. But what has been of even more pressing concern since 2014 is the precipitous fall in the price of oil. This reality has prompted the government of Brunei to embark on industrial diversification. This paper provides 3 hi-tech sectors which can be deemed as comprising the basis for an industrial policy: semi-conductors and fibre optics, hi-tech farming, and advanced manufacturing