My Experience in Brunei
I was at Brunei over the weekend to conduct a wealth management training session for the local financial planners. My previous trip to this beautiful and quiet country was 20 years ago, where I learn how to topo out of the thick Tembrulong Jungle as a young soldier.
This time round, I was to experience the business and social sides of Brunei. Its land area is 4 times that of Singapore, but its population is only 300,000+, of which 50,000 are Chinese. With such a small population and tremendous income from its oil resources, it is one of the most livable countries in the region (if not the world). For example, a landed house costs about $350K (with no property tax); a mid- size Japanese car costs about $30,000 (with no road tax, and petrol is about $0.51 per liter); education and medical benefits are footed by the state.
As there is no income tax payable, a $200K income in Brunei is equivalent to $250K pre-tax income in Singapore (assume tax rate at 20%). With $200K annual income, the ratio of a landed house to income is 1.75 times; whilst a $200K annual after tax income in Singapore, the ratio of a landed house(say $1M) to income is 5 times. This means that a Singaporean has to make more income to sustain a similar lifestyle as his Bruneian counterpart.
There is no stock market in Brunei, therefore the working capital of running a business comes from traditional bank loans or own money. This make the cost of capital of running a business higher and more rigid, but the simplicity of capital can be a plus point. The shortage of equity and debt markets do mean that the businesses in the country are relatively small and simple ones. Huge companies, unless in partnership with the government, can have difficulty accessing to capital.
Another interesting fact is that the unit trusts sold by the local banks are actually unit trusts from Singapore.
I was told by my host that because there is no big stress in making big money to live a reasonably good life, the Bruneians are generally very relax and friendly. This is thought provoking.
This time round, I was to experience the business and social sides of Brunei. Its land area is 4 times that of Singapore, but its population is only 300,000+, of which 50,000 are Chinese. With such a small population and tremendous income from its oil resources, it is one of the most livable countries in the region (if not the world). For example, a landed house costs about $350K (with no property tax); a mid- size Japanese car costs about $30,000 (with no road tax, and petrol is about $0.51 per liter); education and medical benefits are footed by the state.
As there is no income tax payable, a $200K income in Brunei is equivalent to $250K pre-tax income in Singapore (assume tax rate at 20%). With $200K annual income, the ratio of a landed house to income is 1.75 times; whilst a $200K annual after tax income in Singapore, the ratio of a landed house(say $1M) to income is 5 times. This means that a Singaporean has to make more income to sustain a similar lifestyle as his Bruneian counterpart.
There is no stock market in Brunei, therefore the working capital of running a business comes from traditional bank loans or own money. This make the cost of capital of running a business higher and more rigid, but the simplicity of capital can be a plus point. The shortage of equity and debt markets do mean that the businesses in the country are relatively small and simple ones. Huge companies, unless in partnership with the government, can have difficulty accessing to capital.
Another interesting fact is that the unit trusts sold by the local banks are actually unit trusts from Singapore.
I was told by my host that because there is no big stress in making big money to live a reasonably good life, the Bruneians are generally very relax and friendly. This is thought provoking.
posted by Allen Lim @ 6:53 PM
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