BUDGET SPEECH FINANCIAL YEAR 2015/2016

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1 BUDGET SPEECH FINANCIAL YEAR 2015/ The purpose of the Bill is "To allow the withdrawal of a total of Six Thousand, Four Hundred Million Brunei Dollars (B$ 6,400,000,000.00) from the Consolidated Fund for the services in Financial Year (FY) 2015/2016, and to allocate for the purposes set out in the Schedule". In doing so, I will elaborate briefly on current developments; national economic projections; global challenges; and their impact on government s revenue and country s economy, which are the basis for the preparation of the National Budget for the FY 2015/ I will also share the Government s spending priorities, projects and initiatives that will be implemented and the provisions in the Budget that will support the National Budget theme for FY 2015/ Indeed, we are thankful to Allah the Almighty, who has bestowed peace, harmony and prosperity as well as extensive and continuous sustenance to this country. With Allah's grace, we have been able to maintain socio-economic stability and continue to implement the National Development Plan. Citizens and residents of this country are very lucky to be able to experience development and enjoy a high standard of living. All this is made possible with the blessing of Allah the Almighty, as well as the wise and visionary leadership of His Majesty Sultan Haji Hassanal Bolkiah Mu izzaddin Waddaulah, Sultan and Yang Di-Pertuan of Brunei Darussalam. 4. To ensure that the Government is able to continue implementing development projects as well as handling and deal with unpredictable economic challenges, the Government need to continue adopting prudent financial management. Since mid- 2014, the world once again faced challenges relating to drastic fall in oil prices. Comparing to the decline in global oil prices in 2008, economic analysts have predicted that the global oil prices will remain at low levels for a much longer period. As we have seen, global oil prices had experienced a sharp and continuing decline since last June 2014, from US$113 per barrel to nearly US$45 per barrel in January 2015, a reduction of more than 60%. Consequently, several International Institutions have updated their respective forecasts for global oil prices in The Energy Information Administration (EIA), the United States of America, in January 2015, lowered their projections for Brent for the year 2015, to US$57.58 per barrel from US$83.42 barrel projected in November Meanwhile, some international financial analysts had predicted oil prices in 2015 to range between US$40 to US$55 per barrel, compared to US$70 per barrel predicted earlier. 5. The sharp decline in global oil prices has been shaping global economy s current state of alert. The International Monetary Fund (IMF) in the World Economic Outlook Report issued in January 2015 had revised and lowered their projections for global economic growth in 2015 to 3.5%, from 3.8% forecasted earlier in October The continued decline in oil prices had also raised fears of deflation and depreciation of currencies, which in turn could trigger another global economic downturn. The current state of global oil prices will definitely bring a significant impact and direct pressure to the country's economy, affecting revenue for companies that are active in the Hydrocarbons Sector, as well as Government s revenue, which rely heavily on this sector. 6. Meanwhile, the Non-Oil and Gas Sector has continued to show encouraging development. However, its overall contribution to the country s economy is still minimal and therefore need to be intensified in order to balance the level of contribution of the Oil and Gas Sector towards Gross Domestic Product (GDP).

2 Towards this, efforts need to be further enhanced to diversify the economy so that growth will be more sustainable and economically viable. 7. Taking into account the current situation, the Department of Economic Planning and Development (DEPD), Prime Minister's Office, had revised the country's economic growth forecast for the second time to -0.9% for 2014, a reduction from its previous forecast of 1.1%. This decrease is attributed to the negative growth in the Oil and Gas Sector at -6.7%. On the contrary, the Non-Oil and Gas Sector is expected to grow stronger at an estimated rate of 3.4% in 2014 compared to 2.7% in This steady growth is contributed by the private sector, which is expected to grow at 3.9% and Government Sector at 2.5%. For 2015, the economy is projected to grow at a rate of 1.4%, Insya Allah. 8. With the global and domestic economic outlook; and the Oil and Gas revenue scenarios, the Government s Revenue Estimate for the FY 2015/2016 is projected to amount to B$4,117,120, This projection takes into account estimated Oil and Gas Sector revenue amounting to $3,212 million (78.0%); and the Non-Oil and Gas Sector revenue at $ million (22.0%). 9. Alhamdulillah, although the country is faced with an increasingly challenging economic environment, prudent policies adopted by the Government over the years, has enabled the country s socio-economic development plan to be continuously implemented. 10. Thus, in light of the uncertain and unpredictable global economic situation, measures to control expenditure need also to be strengthened in order to offset the direct effects of the decline in the Government s revenue collection. In this case, each government agencies will take measures to control expenditure, among others include: i. Controlling utility expenditure such as the usage of electricity, water and telephone, through internal rules setting and enforcement; i Ensuring that events or programs being organized are necessity and implemented in moderation and does not involve excessive spending as well as wastage; Reviewing facilities extended to government officials whilst on duty or attending courses abroad to avoid wastage; and Ensuring that the management, maintenance and repair of public assets such as buildings, infrastructure, equipment and other facilities are implemented in a planned manner, by giving priority to issues on safety and structural integrity in order to reduce long-term government spending. 11. In ensuring Government's finances will remain strong and steady, continuous efforts will be taken to create business and investment friendly economic environment. These efforts are to enhance economic activity, including attracting more Foreign Direct Investments (FDIs) into the country. Success in these efforts will hopefully open up more business opportunities for the Small and Medium Enterprises (SMEs) in the country, which will in turn increase the country s production rate, hence creating more job opportunities for the locals. This will also help to expand the resource base of the country s revenue.

3 12. In addition, from the Government s financial management aspect, government agencies are required to implement prudent spending, prioritising results (outcomes) from the expenditure incurred; and redouble their efforts to increase government s revenue, especially in terms of the efficiency in revenue collection management. With this approach, Insya Allah, Government s financial management will continue to be strengthened to address economic challenges effectively without affecting the country s socio-economic development programs and public services. 13. In this context, the Government need to increase its efforts to strengthen the foundations or fundamentals of the country s economy, in order to create a dynamic, balanced and sustainable development. Taking into account these requirements, the proposed Budget for the FY 2015/2016 was planned based on the theme "Quality Human Capital, Supporting Inclusive Development". Skilled, knowledgeable and dynamic human capital will be able to contribute to the improvement of productivity, both in public and private sectors. With emphasis on economic growth and human development, more quality job opportunities can be created and filled by locals. This theme was chosen in continuation as well as to support previous budget theme, 'Generating Economic Growth, Creating Employment Opportunities'. 14. Based on the factors presented earlier, expenditure estimates for the FY 2015/2016 including provisions for the Development Fund, is proposed at $6,400,000, This amount is $250 million lesser compared to the provisions for the FY 2014/2015. It takes into account projected government revenue which is expected to decline. However, the total proposed expenditures are still much higher than the Government s revenue estimates mentioned earlier. This means that, the proposed Budget for the FY 2015/2016 will lead to a budget deficit of around $2,282 million or $2.282 billion. In this regard, with the trend in oil prices still declining and volatile, there is a possibility for the government s revenue to decline further, leading to bigger deficit for FY 2015/2016. Therefore, every government agencies is reminded to take austerity measures in planning expenditure, to avoid any form of wastage or unnecessary spending that could prejudice spending that supports Government and national priorities. 15. In planning the said Budget, priority will be given to continuing efforts in generating sustainable and inclusive economic growth; and to improve the socio-economic development of the country. Provisions allocated are intended to achieve several key goals which include improving achievement in the field of education; increasing productivity and efficiency in the Public Sector; emphasizing on capacity building for youths; providing and upgrading industrial infrastructure; developing Small and Medium Enterprises (SMEs); and facilitating and supporting an eco-system that foster economic activities, businesses and investments in the country. 16. To support the said budget theme, the focus and priorities of Government spending for the FY 2015/2016 are towards the following four focuses: i. Firstly, Strengthening Education and Training. This focus emphasizes on human capital development through a robust National Education System and relevant to the needs of the job market. This will be a major investment to produce citizens that are educated and highly skilled, yet virtuous and have strong faith that can contribute towards sustainable development of the country. This focus will also give priority to training programs and skills development for youth at various levels, including through technical and vocational school or through relevant institutions, such as the Youth Development Centre, Entrepreneurial Development Centre and others;

4 i Secondly, Increasing Productivity in the Public Services and Private Sector as the basis for strong cooperation to support rapid and sustainable growth of the economy; Thirdly, Stimulating Investment Activity, to attract and encourage more investment activities, including from foreign investors, which can open up more business opportunities for SMEs, as well as employment opportunities for the locals; and Fourthly, Enhancing the Welfare of Citizens and Residents, to improve the citizens and residents quality of life and socio-economic conditions, including efforts to eradicate poverty. 17. Please allow me to briefly describe these priorities. Firstly, Strengthening Education and Training. 18. Strengthening National Education System is an on-going effort to build human capital in the country, which is considered as a major investment to produce educated, skilled and honourable citizens. In this regard, several provisions will be made available to provide educational opportunities and various training to develop skills and strengthened capabilities to meet the demands of the local labour market. 19. Among the provisions provided include: i. To finance the recruitment of teaching experts and instructors in literacy (English Language) and numeracy (Mathematic), a total of $30 million is provided under Focus Expenditure with Scheme Value of $220.1 million; i An allocation of $67.1 million is provided for Educational Services, amongst others to finance the recruitment of Principals and Head Teachers from overseas under the Leadership Program and Administration of Primary and Secondary Schools; to finance the National Entrepreneurship Project; and recruitment of teachers under the Centre for British Teachers for Primary and Secondary Schools throughout the Country; $39.6 million for Scholarship, which include provision of $35 million for sending students abroad under the Ministry of Education management and an overall provision of $43.1 million made available for Education Allowance; An allocation of $700, with a Scheme Value of $2.2 million under the Ministry of Education to implement the Programme for International Student Assessment (PISA) Based Test for Schools (BTS); v. Under the Ministry of Religious Affairs, an allocation of $4.4 million will be made available to finance Government Scholarship needs; and $2.7 million for Education allowance; vi. Under the National Development Plan (NDP), an overall allocation of $36.4 million with Scheme Value of $595.9 million, for the Education Sector. This is to finance construction, upgrading and renovation projects for Religious Schools & Arabic Preparatory Schools; Primary Schools; Secondary Schools; Vocational Schools & Technical Colleges; and Higher Education Institutions.

5 20. In addition to the Government Scholarship Scheme, with the consent of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam in conjunction with His Majesty's 68th Birthday Celebration Ceremony, the Government has introduced an Education Loan Scheme. The scheme aims to provide an opportunity for potential students to continue their studies in higher education institutions, either locally or overseas, in accordance with specified conditions. In the first year of its launching, a total of 141 students have been awarded the loan to undertake undergraduate courses in various fields, including Religious and Arabic Studies, in line with the national requirements. 21. In addition, $30 million is available under the NDP s Human Resources Fund; $17.2 million for Brunei Polytechnic and $22.7 million for Institute of Technology Brunei, to continue efforts in diversifying and increasing local youth opportunities, including school leavers, to further their studies in specific fields of technical and vocational streams. 22. Several initiatives had also been implemented by the Ministry of Education in preparing and implementing entrepreneurial culture for students, at various levels of education. This include the introduction of National Entrepreneurship Agenda to foster 'entrepreneurial mind-sets' in local youths. To date, a total of 1,222 students had participated in various programs such as 'Success Weekends', 'Community Incubation Program', 'Summer Venture Program', and 'Co-Curriculum Student Activities'. 23. Provision of US$1.5 million had been allocated with a two-year implementation period under the National Entrepreneurship Project. This project is intended to generate more youth and school leavers that are interested and able to venture into businesses to support the Government's vision in strengthening the Private Sector in this country. To ensure the success of this program, Ministry of Education has established an Entrepreneurship Village through cooperation of a visiting Professor from Babson College, USA. 24. In shifting the country s economy towards a Knowledge-Based Economy, Ministry of Education is working towards transforming the Education Sector from Knowledge Acquisition to Knowledge Creation, based on the Malay Islamic Monarchy Philosophy, in line with the National Education System objectives for the 21st Century (SPN21). In support of these efforts, the Ministry of Education has implemented several initiatives among others: i. Enhancing knowledge in literacy and numeracy as a field that needs to be focused on. This effort is intended as a basis for ensuring high level achievements among students, in the subjects undertaken; i Implementing Technical and Vocational Education (TVE) Transformation that seeks to uphold the technical and vocational education, that is responsive to the needs of the job market, and in line with the demands of technological development and country s economy. Some of the measures taken include updating the training curriculum based on competence by expanding the apprenticeship program, improving the training environment and introducing new Schemes of Service; Focusing on improving the quality and professionalism of teachers through teacher s competency development in this country. This focus is consistent with the two strategic focus areas of Ministry of Education, which are Professionalism and Accountability, and Teaching and Learning Excellence.

6 The initiatives involve preparing Brunei Teachers Standard (BTS) Framework and the establishment of the Brunei Darussalam Teacher s Academy which will support the new Teaching Scheme of Service introduced in 2008, in an effort to produce teachers who are competent, professional and highly motivated; and Focusing on Leadership Development to improve the quality and performance of School Leaders and School System Performance which involves the preparation of Leadership Competency Standard. 25. In line with efforts to increase local content in economic activities of specific sectors, the Government through various agencies are actively providing technical and vocational training, as follows: i. Through the Energy Industry Competency Framework, Energy Department at the Prime Minister s Office, provides skills training programs in specific areas to meet the industry s needs. This includes the Industrial Skills Qualification (ISQ), courses for welders; scaffolders; Marker/fitter; and riggers, which has produced 24 female welders for the first time in this country. To date, a total of 1,218 students had attended these courses, where 761 people had completed the course and employed by certain companies in the Oil and Gas Sector; and Establishment of Brunei Maritime Academy in Sungai Duhun Industrial Site, involving various government agencies, aimed to generate locals as professionals labour maritime and seafarers, as well as approved and recognized by the International Maritime Organisation. Currently, 215 participants are attending the course. 26. To build the capacity of youth in a holistic manner as envisaged, efforts are being focused towards instilling reading culture and supports the programs of self-reliance and skills training for youth. Towards this, several specific provisions will continue to be provided, among others: i. An allocation of $3 million will be provided for National Service Program (Program Khidmat Bakti Negara), which is an increase of $1 million from the provisions in Financial Year 2014/2015; i A total of $200, provided to support programs geared towards fostering culture of independence among youths; An allocation of $600, to cover the allowances of teachers for Al Quran and Muqaddam classes under the Ministry of Religious Affairs; and Provisions of $900, for the Youth Development Centre, including for Renovating and Upgrading of Youth Development Centre. 27. With the allocated provisions and initiatives that have been implemented, Insya Allah, the capability of local youths to contribute to the Country s socio-economic development will be enhanced. With the large allocation and expenditure provided for the purposes of capacity building and human capital, it is the country s aspiration to be able to produce more experts, professionals, entrepreneurs and school leaders who will succeed in the future and will contribute to the inclusive and sustainable development of the country, Insya Allah. In addition, through opportunities for

7 education and training provided, Insya Allah, it will help to address social issues such as unemployment and poverty. 28. The second budget focus is Increasing Productivity. To achieve Brunei Vision 2035, the country needs productive and innovative workforce in the public and private sector. Given the country's economic activity is still driven by the Government Sector, improvement in the productivity levels of the public sector is expected to support the creation of a conducive environment for businesses and investments, which in turn will provide the expected impact of increasing productivity in the Private Sector, and to the government s revenue. 29. This focus on increasing productivity has been mentioned by His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam in conjunction with His Majesty s 64 th Birthday Ceremony on July 15, 2010 in which he commanded that: "... Public Service... needs improvement, both in productivity and work ethic. I want the Public Service, to continuously assess their own strengths and weaknesses, based on set Key Performance Indicators. This will enable us to measure the extent to which the Public Service can carry out its responsibilities in fulfilling the expectations of the country and the public ". 30. To strengthen efforts towards this, the Government continues to take necessary steps to improve the level of its services. This includes enhancing coordination to strengthen its planning, and at the same time carrying out continuous monitoring and assessment of service and productivity levels at every levels in the government agencies. In this regard, the Delivery Unit, Prime Minister's Office is working with several ministries to ensure that several key areas that have been identified will be implemented effectively. 31. In line with the aim to increase productivity and effectiveness of the public service, several initiatives have been undertaken, which include: i. Expanding capabilities and use of e-customs System under the initiative of National Single Window for the facilitation of trade; i Further enhancement to the Invoice Tracking System by enabling Notification Service notify payment status of vendors claims; Enhancing the Tax Administration and Revenue Services System (STARS) to receive online tax payments through epayment Gateway of the Treasury Department to improve services to corporate tax payers in order to encourage compliance; Implementation of the Registration of Companies and Business Name Project (E-Registry) under the Ministry of Finance to enable the process of registration and the establishment of the company to be made in a quick, easy and efficient manner. Through this system, company registration can be implemented within a short period of time; and v. Under the Ministry of Home Affairs initiative, replacement of the Miscellaneous Licences Act with the Business Licence Act effective on 1 st January Any application that meets certain conditions can be granted business licence as soon as the registration of the company or business name has been approved. The approval of company registration and business

8 license is possible to be obtained on the same day. This is to support the goal to shorten the time required to start a business. 32. In addition, funds are also provided to support ICT initiatives by government agencies, among others, $95.6 million for the Information Technology Programme for Ministries and $43.6 million under the NDP for implementing Information Technology and Info-Communications projects and programs. 33. These initiatives are continuation of earlier ones to enhance the level of Public Services through ICT. These include e-darussalam Service Portal that enable users to get access to online services provided by government agencies; E-Payment Gateway Project; and One Government Network Project which replaces EG Bandwidth. Specific measures will be undertaken to further enhance the services that can offer online payment to enhance the level of government services. 34. To further strengthen government's initiatives in ICT, Brunei Solutions Development Centre (BSDC) has been established under the E-Government National Centre, Prime Minister's Office, in collaboration with Microsoft Corporation. BSDC is responsible for developing software to further accelerate growth and improve the quality of the local ICT industry, in addition to providing joint training and knowledge transfer program for local IT graduates and service providers. So far, the BSDC is working with two government agencies and four companies in the IT Vendor Program. 35. In addition, the government will continue to take initiatives to support efforts in capacity building and productivity in the Private Sector. Among the efforts that had been undertaken include: i. Providing opportunities and facilities to increase the level of education and skills to the local workforce, including providing scholarship assistance to attend courses, training or further education within or outside the country under the Human Resources Fund Program, under NDP; i Providing appropriate programs to support the needs of Research and Development (R&D); Science and Technology; and Innovations in which an allocation of $16.6 million with project value of $212.3 million will be provided under the NDP. Meanwhile, through the Brunei Economic Development Board, a total of $5 million will be available for Brunei Research Incentive Scheme to attract R&D activities of international companies to this country, with the aim to develop the capacity of local companies in R&D; Establishing a Centre for Advanced Materials and Energy Sciences under the collaboration of University of Brunei Darussalam; Energy Department at the Prime Minister s Office; and the industries. The centre is responsible for inter disciplinary scientific research in the field of material science and energy for the high-tech industry s needs; and Under the Ministry of Industry and Primary Resources, a total allocation of $400, will be provided for the maintenance and development of Telisai Aquaculture Research Centre (ARDC); Serasa Production Centre (BDC); and Fishing Industry Productivity Improvement Project. 36. The budget s third priority is to stimulate Investment Activity. The goal is to drive towards a more balanced development of the country, supported by strong, comprehensive and sustainable economic fundamentals, in order to achieve a more

9 sustainable economic growth and support the country s aspiration under Brunei Vision In this regard, the government noted the drop in Brunei Darussalam s ranking by three positions to 101th in the World Bank s Ease of Doing Business Index 2015 with new scope and methodology. The report, however, gave better marks to Brunei Darussalam, based on Distance to Frontiers (DTF), which measures the gap between countries current position against countries that adopt the best procedure. 38. The report identified the need for government agencies to further improve efforts at all levels that could result in improving the score achieved and ranking. This will definitely requires efforts and pro-active attitude as well as more innovation from government agencies to establish a 'Pro-Business' and 'Pro-Investment' policies, rules and environment. As a continuous effort, the Delivery Unit and Wawasan 2035 Council had begun evaluating the achievements of plans and targets in the Outline of Strategies and Policies for Development [OSPD]. 39. The evaluation is aimed at assessing the effectiveness and impact of initiatives and measures that have been taken to the targeted parties, especially the business community and investors. The outcomes of the evaluation will help to further strengthen cooperation and coordination amongst government agencies, thus enabling plans to be made in a concerted manner, according to priorities, to ensure its effectiveness to the targeted 'key stakeholders'. 40. One of the main focus of the Government's efforts in supporting the development of the Private Sector is in promoting the development of Small and Medium Enterprises (SMEs). Towards this, several steps have been identified to achieve these targets. Among others, this includes: i. Reviewing SMEs grants and schemes to enhance their effectiveness and assist them in their business management in terms of corporate governance, human resources, and business model preparation; i Provision and strengthening of policies that support the development of local SMEs, as well as developing and monitoring of Key Performance Indicators for all existing SME s scheme; Inculcating a pro-business work culture in the Public Service. Among others, by evaluating and analysing any issues that arises from implementing policies, rules or processes that can hinder the development of the Private Sector, and to improve the assessment of performance or productivity of government agencies concerned; and Leveraging BruneiHalal including assisting SMEs in obtaining international and BruneiHalal certificates, to enable them to develop into both regional and international markets. 41. Emphasis on the development and progress of SMEs are also to support the country s industrialization efforts to improve the balance of production and exports that are currently overly dependent on the Oil and Gas Sector. In line with the objective of supporting the development of SMEs, His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam has consented for the following measures:

10 i. For Corporate Income Tax rate for gross sales (Gross Sales/Turnover) of companies that does not exceed $1 million for Year of Assessment 2015 will be charged at a rate of 0% (no Corporate Income Tax will apply); i Capital Allowance rate for the purchase of Plant and Machinery will be given at the rate of 150% of the purchase price, subject to the rules set; and The Industrial Building Allowance rate has also been revised in which the Initial Allowance is increased from 10% to 40%; and Annual Allowance is increased by 4% to 20%. Through these revision to the Capital Allowance and Industrial Building Allowance, it will enable entrepreneurs and investors to recover their investment costs faster. 42. In addition, these efforts are also aimed to generate more permanent job opportunities, especially for the local youth in certain sectors. In line with this goal, steps and efforts have been and are being implemented for the recruitment of locals to fill vacancies in the Private Sector, among others including the following: i. For the Oil and Gas Industry, Local Business Development (LBD) Framework was created, among others, to increase recruitment of local workers in the Oil and Gas Sector. In line with this initiative, the Oil and Gas Sector Career Fair that has been organized yearly since 2012 until 2014, has been able to provide permanent employment to a total of 6,403 locals compared to 5,600 being targeted. Through this LBD framework, 27 local companies have been offered to carry out contracts worth a total of $770 million; i Under the Energy Industry Competency Framework, which was launched in July 2013, a total of 746 conditional offers of employment were given to the trainees, in which they will be offered employment after successfully completing their respective courses. Meanwhile, 244 former trainees have started working after completing their training program. This framework is designed to ensure that the provision of the skilled programs can meet the real needs of the industry and sector concerned; and Conducting survey on the needs of human resources in the medium and long term for all sectors in the country, for the purpose of mapping to assist in the planning of the needs of courses and training to be provided by the concerned agencies. 43. The Government will also continue to identify the needs of the development of the country and related future job opportunities, which will be created. In line with the initiatives being planned, allocations are provided for expanding the Private Sector including SMEs, among others: i. Provision of $2.5 million for the Maintenance and Improvement of Infrastructure for Industrial Sites under Focus Expenditure; Project of Improvement of Infrastructure for Fishing Industry is allocated $1.5 million; and $300, for the Improvement of Infrastructure for Fishery Department's Complex and Jetty, under the Ministry of Industry and Primary Resources;

11 i $1.5 million for Trade Development under the Ministry of Foreign Affairs and Trade; An allocation of $300, for the Project of Upgrading Infrastructure and Facilities of Agricultural Development Area and Station's Department in all districts; and v. Provision of $300, for Tourism Product Development and Marketing under the Tourism Development Department for promotion, marketing and tourism product development projects. 44. Meanwhile, Ministry of Industry and Primary Resources is actively in the process of planning for the establishment of a central body responsible for the development and growth of Micro, Small and Medium Enterprises (MSME) to coordinate planning and action in supporting integrated development of MSME. This includes the coordination of existing schemes or programs or that is to be created for MSME. To support the implementation of MSME Development program, new provision amounting to $1.5 million will be provided under Focus Expenditure. 45. In addition, under NDP, $5 million with Scheme Value of $74.2 million will be allocated under the Small and Medium Enterprises Development Fund. Furthermore, the Brunei Economic Development Board also provides facilities as follows: i. Financing Program for Small and Medium Enterprises Development with an allocation of $9 million with Scheme Value of $60 million; i Provision of $1.8 million for Future fund; Enterprise Technical Assistance Scheme with an allocation of $3 million that provides financial support for up to $300,000.00; and Development Scheme for Potential Local Companies is allocated $15 million. 46. In an effort to generate more economic activities in the country, planning and efforts have been made to promote increase in domestic consumption. For this, allocations will be provided for the repair and upgrading of infrastructures that can attract locals to spend in their own country. At the same time, these measures will improve facilities for the public and tourists in the country that can contribute to the increase in domestic consumption. Among the provisions include for upgrading and beautifying areas and public facilities and business infrastructure under the management of Bandar Seri Begawan Municipal Department, Tutong Municipal Department and Kuala Belait and Seria Municipal Department, such as Upgrading and Repairing Several Areas in the Bumiputera Commercial and Trade Centre Building, Bandar Seri Begawan; and local business areas in the Belait District. 47. Meanwhile, developments in the government s efforts in attracting Foreign Direct Investment to the country, Alhamdullilah, has begun to show outcomes where it has supported the Government's efforts in creating employment opportunities for the locals and contribute to the Gross Domestic Product. Developments in these areas among others include: i. Operation of Halal Pharmaceutical and Nutraceutical Plant with an investment of approximately US$18.5 million in Salambigar Industrial Site, a joint venture effort of several parties in the country with Viva Pharmaceutical of Canada. So far, a total of 34 locals have been employed. Recently, the Company has

12 secured a Foreign Site License from the Canada Health Authority, which enabled the company to commence export activities; i Establishment of CAE Brunei Multi-Purpose Training Centre, a joint venture project between Ministry of Finance and CAE, Canada with an investment of B$182 million. The centre is equipped with world-class simulator training facilities in an effort to develop Aerospace Sector in this country. This project provides employment opportunities to locals whereby to date 33 locals have been recruited; Hengyi Refinery and Petrochemicals Plant Project, Pulau Muara Besar, which is expected to create 800 job opportunities directly and 1,200 jobs indirectly for locals. This project is estimated to contribute US$1.33 billion to the GDP once it is fully operational; Ammonia and Urea Brunei Fertiliser Industries Company Project with an investment value of US$1.1 billion, which could directly generate as many as 200 jobs for locals; v. Margarine Plant project which is still under planning and expected to be operational by The project is targeted to contribute US$54.3 million to annual sales revenue by year 2018 and create about 80 jobs for locals; and vi. Establishing Threading Plant for the supply of oil tubes. This initiative will not only bring in investment and creation of employment opportunities for the locals, but also transfer of technology and knowledge from Japan. 48. In 2014, several new initiatives had also been implemented to strengthen effort in providing a conducive environment for investment and business, to develop the country's private sector including attracting Foreign Direct Investments. Among the initiatives that had been launched include: i. Establishment of the Brunei Darussalam Arbitration Centre, which provides administrative and arbitration & mediation service, to meet the needs of domestic and international consumers in addressing any commercial issues and disputes; i Launching of the Credit Bureau by the Authority Monetary of Brunei Darussalam. Establishment of the Credit Bureau can facilitate local banks and financial institutions in implementing their credit risk management, which can encourage the process of lending to the private sector in the country. In addition, the establishment of the Credit Bureau is also aimed at building a stronger financial infrastructure and at the same time contribute to financial stability in the country; Making several amendments to the Companies Act, including abolishing Statutory Declaration; Common Seal and audit exemption for companies with earnings during the respective year not exceeding $1 million. This is an additional initiative in the effort to facilitate and accelerate the process of registration of companies and reducing business costs; Brunei Intellectual Property Office (BrulPO) under the Brunei Economic Development Board has introduced international registration system for patents and industrial designs. Since its introduction in 2012, BruIPO had

13 received a total of 30 patent applications from the Universiti Brunei Darussalam and 21 applications from SMEs and local inventors; v. Introduction of 'Code of Corporate Governance, Brunei Darussalam' under the Companies Act. At this stage, the code is intended as a reference for companies in this country to further strengthen the governance of the company s operations in accordance to international best practices; and vi. To stimulate more conducive environment for economic activity and investment in the country, His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam had consented for the issuance of Competition Law. 49. With all the allocations and initiatives, it is hoped that investment activities in the country can be intensified, multiplied and made more effective. At the same time, concerted efforts by all government agencies in ensuring that business processes are simplified and expedited are also necessary to facilitate business and investment in the country. Entrepreneurs and businessmen in this country need to take the opportunities to expand their business or company, to become a more robust and sustainable business. In support of these efforts, the role of human resources need to be given proper emphasis. Therefore, employers in the private sector need to give attention to the welfare and well-being of the employees by providing a more conducive working environment, as well as wages, facilities and benefits according to their qualifications, duties and responsibilities. 50. The fourth priority of the Budget is Enhancing the Welfare of Citizens and Residents. Government policy is to ensure that citizens and residents enjoy appropriate prosperity and living standards. Towards that, the government has continuously given emphasis on the welfare of the citizens and residents as a basis for inclusive society development, in addition to supporting the efforts in creating a progressive and dynamic society. 51. Alhamdulillah, through the Human Development Report 2014 by the United Nations, the country's ranking remained at 30th in the Human Development Index. The rating in this category of 'Very High Human Development is the result of the government s plan and on-going efforts that always take care of the affairs of the citizens and residents. Towards that, the provision of basic facilities and necessities such as free education, quality medical services, and subsidies for basic necessities such as rice and electricity, Insya Allah, will continue. The government, through relevant government agencies will continue to extend welfare assistance to qualified citizens and residents of the country as part of efforts to eradicate poverty. 52. In line with that objective, appropriate provision will continue and given priority. Among others, from the aspects of public health, provision for the Supply and Medical Services at $31.9 million; $30 million for Heart Disease Treatment Services at JPMC, Brunei Cancer Centre and Brunei Neuroscience, Stroke and Rehabilitation Centre; and $700, for Health Promotion. For dealing with natural disasters and epidemics, $17 million will be provided for the needs of agencies concerned. 53. Meanwhile, several major projects are also identified in the effort to increase effectiveness in the management of public safety. These include Brunei Darussalam Coordination Detection System Project and the National DNA Database Project with a total allocation of $15 million.

14 54. The government also will continuously ensure basic infrastructures and public facilities in the country are upgraded and given proper maintenance. Towards that, certain allocations will be provided, among others: i. An addition of $20 million to $70 million for Public Utilities and Infrastructure under Public Works Department; i $5 million allocation for Upgrading of Water Supply System; and $5 million for Upgrading of Drainage and Sewerage System, including for Local Flood Mitigation; and $400, for Building Bridges/Small Roads under Brunei Muara District Office, Ministry of Home Affairs. 55. Allocations will also be continuously provided for Upgrading of Electrical Power Supply System. Among the allocations include $9 million to finance Upgrading of Electricity Supply System Project and Maintenance of Gas Turbine Generator Project; and an overall allocation of $132.1 million will be available under the Electric Sector, under the NDP. 56. Allocations for the provision of affordable housing for low and medium income citizens will continue to be provided. Under the NDP, the National Housing will be provided $78.7 million with scheme value of $741.6 million to finance several projects under the National Housing Scheme and Landless Indigenous Citizen Scheme in all districts. Meanwhile, $15.0 million is also allocated under the NDP as a continuation to the implementation of the National Housing Project under the Brunei Economic Development Board. 57. To promote community activities and further strengthen and foster cohesion and cooperation among the society and villagers, the following allocations will continue to be provided under the Ministry of Home Affairs: i. $700, for Mukim and Village Economic Activities; and For Mukim and Village Consultative Council Activities, an allocation of $630, will be provided. 58. Continuous measures will also be undertaken by the government to ensure that poverty issues are addressed effectively. Among the allocations provided include $2.5 million for the Assistance Program under the Ministry of Education particularly to assist students from lower income groups, including for religious schools; and $100, for Skills Training Programme to empower recipients of financial assistance in tackling poverty issues under the Ministry of Culture, Youth and Sports. 59. The government will continue to plan and provide appropriate programs needed to achieve goals and objectives of the Budget presented. Expenditure planning by ministries and departments need to be based on the principle of using resources more prudently through a more efficient, effective and productive spending; stimulate economic growth that is sustainable and inclusive; value for money; using shared facilities concept; and avoid wastage. In line with this principle, expenditure planning will continue to be based on the principle of 'Fiscal Sustainability' and 'Fiscal Consolidation'. It also need to be based on budget priorities; achieve targeted outcomes; and based on a realistic real needs.

15 60. However, the need to strengthen government's financial position and ensure long term fiscal sustainability and macroeconomic stability will continue to be emphasized. In line with this, the government will continue to monitor world oil price situation, which had drastically declined since mid-year If there is a need, the government will take further steps to ensure that government spending will remain within its financial means and sustainable in long term. As a precautionary measure, actions will be taken to control government spending as a response to the reality of new global economic structure where majority predicted oil prices will be stable at lower level compared to prices in recent years. Hence, apart from spending planning that support government priorities, ministries and departments must also ensure that government revenue collection under their control are improved and made more effective. Towards that, all parties must cooperate in assisting the government in its efforts to generate more income from the Non-Oil and Gas Sector, for example by settling the public and private sector arrears to the government agencies which is currently amounted to approximately $435 million. 61. With the direct impact of world oil prices to the government revenue, government's ability to fund planned development programs will definitely be affected. However, we also believe in the wisdom in the current economic challenges. We as citizens and residents of Brunei Darussalam are very grateful for the blessings that we have accomplished so far in which the citizens and residents of the country at all levels have continued to enjoy the development and improvement in the living standards in a peace and harmony environment. The challenge of the fall in the oil prices can also be used as a catalyst in efforts to further enhance the country's productivity in the Public or Private Sector, and for intensifying efforts to further diversify the country's economic activities so that it is not too much dependent on the Oil and Gas Sector; and to use the resources available in a more prudent, efficient and optimal manner. 62. With the diversification agenda of the country's development that have switched and focused on developing the Non-Oil and Gas Sector, among others through increased capacity and efficiency, strengthening of the Non-Oil and Gas Private Sector in particular SMEs, as well as surge in domestic and foreign investment, as factors to generate quality and sustainable growth, hence investment in human capital is essential for producing a workforce that can contribute to the country's development and revenue, significantly and effectively. The private sector need to also be equally supportive in identifying the needs of skills and competence of local youth, so that they will be able to meet the needs of the local labour market and contribute meaningfully to society and economic development. 63. From the Public Service point of view, a healthy and competitive work ethic, which stresses upon the performance and accountability, need to be used as a work culture, to enable all the efforts that are planned to achieve its goal in support of the budget priorities and focus. Building a progressive and dynamic human capital also meets His Majesty Paduka Seri Sultan and Yang Di-Pertuan of Brunei Darussalam commandment in conjunction with the Institute Technology Brunei Convocation 2013 in which His Majesty reminded that:.individual excellence is not measured by achievement in the field of education but also measured in terms of human development in a holistic manner. Therefore, in addition to achieving success in education, the graduates also need to equip themselves with the components of human capital that will enable them to face various obstacles.

16 64. Through the Government's planning and efforts in providing various facilities and initiatives, contributions by the Private Sector, whether local entrepreneurs or foreign investors, in redoubling their efforts to develop their own business, are very much needed and appreciated. Through improving their business performance, it can support the government's goal to increase the Private Sector's contribution to the country s economic development and revenue in a sustainable manner, and at the same time can create more permanent employment for local youth. 65. With God s Will, it is our hope that all the initiatives and efforts planned by the government will be able to give the outcomes and benefits intended, in accordance with our wish to make this country a peaceful nation, with Allah the Almighty s blessings. With this, I request for this law to be passed.