Brunei ranks 59th in global connectedness

Azlan Othman

Brunei Darussalam ranks sixth among ASEAN member countries, 12th among Asia Pacific countries and 59th out of 169 countries for global connectedness based on international flows of trade, capital, information and people, according to the DHL Global Connectedness Index (GCI) 2020. The Sultanate jumped 12 places from last year with a score of 56 points.

The biggest jump was in the depth of its global connectedness where the Sultanate was at 28th place globally and jumped 18 places from last year but dropped to 100th place in breadth index of such global connectedness.

Southeast Asia countries benefit from linkages with wider Asian supply chain networks as well as Asean policy initiatives promoting regional economic integration, the report said.

Globally, current forecasts implied that the index would fall significantly in 2020 due to the distancing effects of COVID-19 on societies such as closed borders, travel bans and grounded passenger airlines after holding steady in 2019.

Nonetheless, the pandemic is unlikely to send the world’s overall level of connectedness below where it stood during the 2008 and 2009 global financial crisis, the report stated.

The report noted that trade and capital flows started to recover and international data flows surged during the spreading of the pandemic as in-person contact went into the online world, boosting international Internet traffic, phone calls and e-commerce.

East Asia and the Pacific has the fourth highest level of overall global connectedness, ranked second on depth, and fourth on breadth. This region’s high depth rank is driven by the trade pillar, on which its depth is second only to Europe’s. East Asia and the Pacific’s relatively high trade intensity reflects the export oriented development strategies pursued by many of its countries and the associated growth of multi-country supply chains across the region.

Meanwhile, East Asia & Pacific exports contain a higher proportion of foreign value-added than those from any other region.

Countries in East Asia and the Pacific have deep connections at regional level. Roughly 55 per cent of the region’s flows are with other countries in the region. On this metric, East Asia and the Pacific fall second only to Europe, the report stated.

The United States is East Asia and Pacific’s largest partner country, with 14 per cent of its total flows. The East Asia and Pacific region is at the centre of several integration initiatives. In 2016, the ASEAN agreed to a Master Plan on Connectivity 2025 that puts forward a set of goals to strengthen integration between its member states.

Among those goals are improving logistics, harmonising regulations, and improving mobility of people throughout the bloc, which have been impeded by the persistence of non-tariff barriers in the region.

ASEAN has also prioritised the development of an integrated digital economy, which has been estimated to have the potential to boost regional GDP by USD1 trillion. In August 2020, the bloc approved an ‘ASEAN Digital Integration Index’ to track progress toward this goal.

Five out of the 10 countries with the largest outperformance are in ASEAN namely Cambodia, Singapore, Vietnam, Malaysia, and Thailand, the report added.

Southeast Asian countries benefit from linkages with wider Asian supply chain networks as well as ASEAN policy initiatives promoting regional economic integration. Cambodia’s rank has risen sharply over the past decade, reaching 46th place in 2019. As a lower-middle-income country, Cambodia has a relatively low predicted connectedness, but it far exceeds expectations. It achieved its high score based primarily on depth, where it ranked 24th in 2019, and specifically on trade depth, where it ranked 10th.

Singapore is truly a star of global connectedness, having achieved the second highest rank on outperformance versus expectations, as well as overall. This shows that Singapore’s impressive level of connectedness is due to more than just its prime location on the Strait of Malacca and compact size.

It is an outperformer on both depth and – to a lesser extent – breadth. In 2019, Singapore ranked first on the trade pillar and fourth on the capital pillar. Singapore also ranked first on trade depth and second on information depth.

In 2019, Vietnam was the top ranked lower-middle-income country, at 38th. It was particularly strong in depth, where it was the top outperformer, though it also outperformed on breadth. Its best performance was on the trade pillar, where it ranked fifth overall. Vietnam has become a serious competitor to China not only in textiles manufacturing, but also increasingly in high-tech products.

Malaysia has long been ahead of its peers in terms of the depth of its global connectedness. Like the other top countries, it exceeded expectations on both depth and breadth scores. In 2019, it ranked 16th overall. Additionally, Malaysia has the distinction of being the most populous country with a depth score in the top 25. Its top pillar rank was fourth on the trade pillar in 2019, through a combination of relatively high ranks on both depth and breadth.