THE crash in oil prices, which are threatening to breach the US$50-mark, are sending economic shockwaves through some of the oil-producing nations.
According to Morgan Stanley, the price of oil could average as low as $53 a barrel in 2015, which would be a nearly 50 per cent drop from the average 2014 levels.
To get a clear perspective, oil was trading at $115 in June 2014. In over six months time, the plunge has been dramatic.
Countries in the Asia-Pacific that will be feeling the pinch of the oil plunge are those in the region that export oil: Brunei, Malaysia, Australia and Myanmar.
If you look at the top 10 or 15 nations ranked on GDP per capita, Qatar tops at $145,894 per capita, Luxembourg second at $90,333, followed by Singapore at $78,762, Brunei at $73,823, Kuwait at $70,785, Norway at $64,363, United Arab Emirates at $63,181; Switzerland at $53,977 and United States 10th at $53,001.
The next five in the top 15 include Hong Kong, Saudi Arabia, Bahrain, the Netherlands, and Australia. Needless to say, there are more oil producing nations on the list.
For a smaller economy, shrinking revenues may have a telling effect. But in theory, what comes down will eventually go up. When it will go up? And to what level the prices may plunge before they recover must be some of the questions on many people’s mind.
What we in Brunei can do to soften it? It is the question everyone here should ask himself/herself.
The first thing we have to do is curb our mentality to go across the border and spend. When I say don’t spend, I mean on basic necessities and not on entertainment.
We need to really curb the habit of crossing the border to buy groceries. During challenging economic periods, the lesser amount of Brunei dollars spent across the border the better.
A banker recently told me that it costs a country more to bring back its currency spent outside its borders. I am not an economist or a numbers man and it was too much for me to grasp what he said.
The year-end sales and sales during festive season are conducted in Brunei to attract the populace to spend at home, which improves business confidence and thereby the local economy.
We have always had budget surplus thanks to oil and gas revenues that have been wisely channeled into development and improve public facilities which the people continue to enjoy.
During challenging times such as the current oil price plunge, we as Bruneians have a responsibility to do something that might go a long way to cushion the impact.
The big dip in oil prices is not our doing and no one has control over it as the market decides.
So it’s time to shop locally and help Brunei Darussalam tide over a crisis that has gripped the world. I would like to remind everyone of John F Kennedy’s famous quote – ask not what your country can do for you, ask what you can do for your country.
– Common sense