The Organisation for Economic Cooperation and Development's (OECD) optimistic outlook for Brunei is underpinned by an anticipated recovery of China and Japan.
The country had positioned itself well on the diplomatic stage, culminating in an eventful, though not resultful 23rd Asean Summit here early this month.
At the summit, Myanmar was for the first time formally handed over the Asean chairmanship which takes effect from January 2014.
For Brunei, this means the nation has to look forward and carry on with its economic transition as the Asean Economic Community comes closer.
Three weeks ago it was noted in Investvine.com that Brunei is currently suffering from sluggish growth.
The country was ranked last in terms of GDP growth in Asean by the United Nations with a growth expectation of just 1.5% in 2013, down from 1.6% in 2012 and 2.2% in 2011.
However, a recent report by the Organisation for Economic Cooperation and Development (OECD) came to Brunei’s rescue.
It noted that the institution expects the sultanate to grow “by an average” of 2.4% from 2013 to 2017, and after that to grow even stronger at 2.7% annually.
This optimistic outlook is underpinned by an anticipated recovery of the large economies in the region, particularly China and Japan.
With Japan, the main customer for Brunei’s oil and gas exports, the Sultanate has struck an interesting deal at the Asean Summit.
Notwithstanding that Japan will continue to remain Brunei’s largest hydrocarbon client, both countries have agreed to foster their ties in the energy segment in a creative way.
While Japan will continue buying mainly liquefied natural gas from Brunei, visiting Prime Minister Shinzo Abe has said that he acknowledges Brunei’s overdependence on oil and gas production and is ready to help the Sultanate to diversify its industry by providing technological cooperation in the areas of renewable energy and energy conservation in the future.
This can be indeed a fruitful cooperation for both countries.
Since the earthquake and tsunami in Japan in 2011, the country has understandably seen an explosion of interest in renewable energy.
A plethora of wind and solar projects were announced, especially in the early days after the Fukushima nuclear plants were shut down.
Goldman Sachs said recently that it will invest as much as US$487 million ( RM1.461 billion) in Japanese fuel cell, solar, wind and biomass efforts.
The Japanese government, meanwhile, has set renewable targets of between 25 and 35% of total power generation by 2030, by which time some US$700 billion (RM2.1 trillion) would be invested in new, renewable energy projects.
This can indeed support Brunei during its transitional period towards a more diversified economy and open totally new options for the nation’s businesses.
This report first appeared in http://www.investvine.com