Development and Growth through Economic Diversification: Are there Solutions for Continued Challenges Faced by Brunei Darussalam?

Abstract

Since its independence in 1984, the government of Brunei Darussalam has made economic diversification as its prime economic agenda to decrease its heavy dependence on oil and gas industry. The oil and gas industry has significantly contributed in the present level of economic prosperity of this small nation of 0.4 million people. However, being a very capital intensive industry it offers few job opportunities. The majority of the local population relies on better paid government jobs in the non-oil sector. As the rate of growth of new employment opportunities created in the public sectors remains far lower than the rate of growth of local labor force, more and more people must be employed by the private sector. However, a small private sector largely consisting of small service enterprises paying lower wages fails to attract local labor force. The result is a continuous increase in the rate of unemployment among locals now standing at over 12%. This paper will review government’s efforts in diversifying its economy to reduce its vulnerability in revenue generation and create jobs for its increasing labor force. Based on a review the paper will suggest some possible solutions that could be considered by the government and the civil society of Brunei Darussalam.