| Azlan Othman |
BRUNEI Darussalam fared better in property registration and corporate tax rate in the ‘Bridging the Development Gap: Asean Equitable Development Monitor 2014’ report, which was presented to Asean leaders at the 25th Asean Summit in Nay Pyi Taw, Myanmar.
The report also lauded the sultanate’s low inflation rate but highlighted its low economic growth noting it has to improve its ranking in business registration as well as reduce complexity of legal enforcement of contracts.
The report said with the rapid growth and poverty reduction observed among Asean’s poorer countries, the gaps in living standards across Asean have been narrowing over recent years. Nonetheless, these gaps remain extremely large.
In terms of per capita income in 2013, Brunei Darussalam is categorised as a high income group of $71,759, second highest after Singapore with $78,744. In terms of growth in Asean countries with higher levels of per capita income, Brunei Darussalam, for instance has been volatile over the past 15 years. Economic growth in Brunei Darussalam was relatively low throughout the period. In Brunei Darussalam, however, real output per capita in 2013 was actually six per cent lower than in 1999. Brunei has experienced relatively low inflation rates over the past 15 years. Foreign Direct Investment (FDI) is also appreciably lower in Brunei Darussalam at five per cent.
Procedures for registering new businesses, which include submission of documentation, payment of fees, and the depositing of paid-minimum capital can, if burdensome, dissuade entrepreneurs from entering the formal sector. Since 2003, progress has been made in reducing the complexity, time, and costs of such procedures across Asean.
Business registration remains cumbersome, however, in Brunei Darussalam with 15 procedures. The time it takes to register a business remains high too in Brunei Darussalam. But as of 2013, registering property is the cheapest in the Sultanate. The complexity of legal enforcement of contracts is also very high. Corporate tax consumes just 16 per cent of firm profits.
The Sultanate has also achieved the most success in reducing the financial burden of taxes through the reduction of the corporate rate from 30 per cent in 2008 to 22 per cent in 2010, combined with cuts in the profit tax rate and the introduction of a lower tax rate for small businesses. The Monitor report provided a common basis for understanding trends in equitable development across the region and identifying areas for priority action through the use of macro and micro indicators.
It tracks indicators across two broad sets of economic and human development outcomes and policies. It is designed to facilitate further discussion on policies and programmes that can promote inclusive growth within Asean member states and across the Asean Community. It is also aimed at operationalising the Asean Framework on Equitable Economic Development (AFEED).
Over the past 15 years, faster growth in the poorest countries of Asean has enabled limited convergence in living standards. The Monitor demonstrates that child mortality rates have been cut by two-thirds across Asean and net primary school enrolment rates have risen in most member states, particularly in the poorest ones. In addition, progress in improving health services and access to clean water and sanitation for citizens in the poor member states has helped reduce child and infant mortality.
The Monitor shows that despite the progress, much remains to be done to ensure that the poorest members of the Asean Community—within countries and across countries—are not left behind as Asean integrates further. Development gaps are still prevalent. The average income in the richest Asean member state is more than 45 times that of the poorest, even adjusting for differences in purchasing power. Significant differences still remain across countries at higher levels of education as well as in the quality of education.
In many low and middle income Asean countries, poor women in rural areas also generally have limited access to skilled birth attendants. Large disparities also persist in access to electricity and the use of solid fuels, particularly between rural and urban areas in the poorest countries of Asean. The Monitor was developed through technical assistance from the World Bank.