Brunei Darussalam moved up two spots to 13th place in the Sustainable Trade Index (STI) 2020, according to the Economist Intelligence Unit bi-annual report commissioned by the Hinrich Foundation.
The Hinrich Foundation released the third edition of its Sustainable Trade Index on October 27, commissioned to the Economist Intelligence Unit.
Besides evaluating the capacity of 20 Indo-Pacific economies for sustainable trade, the index also examines the importance of sustainable trade for building more resilient economies and communities in the future. The country was given above average scores in both the economic and social pillars, to earn an overall score of 48.5 out of a 100 scale in the report.
The Sultanate ranked 15 in the 2018 survey.
Compared to the last survey in 2018, the Sultanate jumped 11 spots in the economic pillar to seventh place. While it dropped five spots to 14th place in the social pillar, it found that Brunei excels in its strong labour standards.
In the environmental pillar, the Sultanate dropped three places to 18th place, compared to 2018.
Brunei comes third in air pollution, which, according to the report, “is not a surprising result for an economy with a tiny population and little economic activity beyond oil and gas production. However, it could be argued that it exports air pollution in the form of hydrocarbons – Brunei is 18th in transfer emissions and 20th in share of natural resources in trade.”
The country report for this year is not yet available. But in its report two years ago, the Hinrich Foundation said Brunei had made significant progress in opening its economy to trade, an encouraging sign for its future trade sustainability.
In the environmental pillar, the report said, “Brunei recorded low levels of air and water pollution, but was the worst performer for the natural resources as share in trade indicator.”
The report also said the most improved index is in tariffs and non-tariff barriers to trade. This indicator provides a broad measure of the impediments to trade in a country, by measuring barriers such as trade quotas, licensing and import inspection. In the 2018 Index, Brunei’s improvements in this area enabled it to climb 10 spots to third place in this indicator, outperforming all countries except Singapore and Hong Kong.
The Sultanate’s top performance is in terms of gross fixed capital formation. This indicator measures gross fixed investment in the national economy. Like foreign direct investments (FDIs), a country’s gross investment encourages trade and economic growth. Brunei scored second out of 20 economies for this indicator, reflecting a substantial amount of investment in its own economy.
Meanwhile, the report said that out of the 20 Indo-Pacific economies studied for economic growth, social capital development and environmental protection, the highest ranked countries of Japan and South Korea both had scores of 75.1, tying for the first time atop the index.
Japan and South Korea both received scores of 75.1 (out of 100), placing them five points clear of Singapore in third place (70.0) and a group of other economies — Hong Kong and the United States (US) — in the high 60s.
The economic pillar is, by far the most tightly packed in this edition, which was also the case in 2016. The difference in scores between the top-ranked economy, Hong Kong at 69.1, and the economy at the bottom, Laos at 44.6, is just barely over 25 points.
Japan registered the strongest performance in the environmental pillar (80.0), leading the same group of four — Singapore (78.7), Hong Kong (77.4) and South Korea (75.2) being the other three — that has excelled.
“The COVID-19 pandemic has provided a stark and painful reminder of why the concept of sustainable trade is so critical,” said Founder and Chairman of the Hinrich Foundation Merle A Hinrich.
“Imbalanced trade practices have played a key role in aggravating the health, economic and social outcomes of the pandemic. It is now crucial for Asia to strike a balance between short-term goals and long-term resilience, especially as it looks to recover from COVID-19.”
COVID-19 is expected to be more disruptive to global trade than the 2008 financial crisis. The pace of recovery will depend on the duration of the pandemic and the effectiveness of government responses.