There are multiple factors that can affect businesses, either individually or in various combinations, ranging from the market itself to price, quality, labour, exchange rates, rental, and supply and demand.
In the context of Brunei Darussalam, locals opt to shop in the neighbouring country due to goods being cheaper across the borders. We could accept it as a phenomenon due to the exchange rate, or we could see it as a fait accompli that no one authority would take seriously or deal with critically to offset its impact on domestic businesses.
Left unchecked, it could drastically reduce the country’s critical mass of demand needed to sustain these businesses. It can already been seen in the way goods are priced in a number of sectors, with products often three or four times higher compared to the neighbouring country, due partly to the far stronger Brunei dollar.
If there is no effort to make the differential indeterminate, for instance, by way of control to narrow the price gap, I believe the outflux problem will continue, thus negatively impacting local businesses in the long term.
Take the automobile sector as an example. Spare parts are priced excessively high on such differential. While agents procure these goods from overseas – probably from the same sources – the local price is still benchmarked on the same differential. The issue is whether the method is duly justifiable or simply a convenient way of explaining away the higher price that is in fact exorbitant.
In other sectors, such as retail, the same trend tilts in favour of the neighbouring country. In some instances, sales and marketing teams employ transboundary door-to-door services, compounding the already lower price. As a result, the cumulative effect on local businesses’ survivability is negative, or worse, fatal. Therefore, it is high time for affirmative actions to avert its impact.
For one, the outflux is not absolute; a portion of the populace actually prefers to spend their money at home. These people could help to sustain local businesses, thus need some degree of protection in the form of stricter price control regulations. The objective is two-fold: to stabilise demand and minimise threat of profiteering. For example, if a product had been obtained from across the border, it would not be sold three times the cost price. Automobile spare parts are also notoriously priced this way, so are products in other sectors.
Such an unhealthy trend must be regulated for the good of local businesses. Only if the price is more tightly regulated and transboundary services addressed appropriately will niche businesses have a better prospect in terms of development and sustainability to nourish the domestic market.