Economic Activities Between Brunei and Malaysia

By 1980’s, Brunei Darussalam as an oil-producing country is the third largest oil producer in Southeast Asia. Brunei Darussalam’s oil production peaked in 1979 at over 240,000 barrels per day (38,000m3/d). Japan has been the main customer for Brunei Darussalam’s oil exports; other major customers include South Korea, Taiwan, United States and the countries of ASEAN. Whereas Malaysia has established a diverse and quickly-growing manufacturing sector that plays an increasing role in the Malaysian economy.

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From the late 1970s, United State was the single largest foreign investor and the major investment projects were in the chemical, electronics and electrical industries. The industrial sector also consists of oil refining, machinery assembly, and light industries including foodstuff processing and textile manufacturing. However, the extensive growth of the electrics assembly and electronics sectors in the 1970s and 1980s makes Malaysia an important producer of radios, television sets, stereo equipment, and other related products.

In the 1980s, the Malaysian government launched its national automobile project, the locally produced Proton car, and in the late 1980s, Proton is being exported to the international market. Although Malaysian economy has achieved fairly rapid industrialisation since the early 1970s, it continues to remain an export-oriented economy based largely on primary production, with agriculture, forestry and fishing forming the most important productive sector. Tin and petroleum are the major significance in the Malaysian economy. Malaysia was once the world’s largest producer of tin in the 1980s.

After that, petroleum and natural gas took over from tin as the mainstay of Malaysian economy. Compare to Brunei Darussalam only main focus on explore and export of oil and gas, Malaysia relatively has a wider area of economic activities. This is because Malaysia is rich in natural resources. Brunei’s agriculture sector is relatively not widely produced if compared to Malaysia. By 1990s, Brunei Darussalam provided over 5 million tons of LNG per year to three Japanese utilities under a long-term agreement renewed in 1993. Since 1995, Brunei Darussalam also supplied LNG to the Korea Gas Corporation as well.

In 1999, Brunei Darussalam’s natural gas production has reached 90 cargoes per day. Brunei Darussalam is the fourth-largest exporter of LNG in the Asia-Pacific region behind Indonesia, Malaysia, and Australia. It also is the ninth-largest exporter of liquefied natural gas in the world. Due to the non-renewable nature of oil and gas, economic diversification has been in Brunei Darussalam’s national development agenda. In the current Seventh national Development Plan, 1996-2000, the government allocated more than $7. 2 billion for the implementation of various projects and programs.

For Malaysia, there was a further growth in the manufacturing sector, especially in export-oriented electronic production, including semiconductors, silicon wafers and other items. Malaysia has become the world-s third largest producer and one of the world’s largest exporters of semiconductors. However, Malaysia’s manufacturing sector was negatively affected by the Asian financial crisis and experienced a serious contraction during 1997 and 1998. Fortunately in 1999 and 2000, Malaysia managed to reverse the recessions in manufacturing and made an impressive growth of 12 percent per annum in this sector.

Other than that, the tourism sector has become the third largest foreign exchange earner in 1990s. The increase in earnings was attributed largely to the success of the Visit Malaysia Year (VMY) 1990 programmes. The revenue from tourism increased to rm4. 5 billion in 1990 surpassing the revenue earned from traditional economic sectors such as export of palm oil, sawn log and rubber. Since 1990, tourism has maintained its position as one of the top five foreign exchange for the country. In the mid-2000s, Brunei Darussalam is still heavily dependent on revenues from crude oil and gas production to finance its development programs.

They planned for deep sea exploration and are expected to find significant new reserves. Oil and gas and government spending still account for the most of Brunei Darussalam’s economic activity. However, the government has also worked to develop Brunei Darussalam as an international offshore financial centre as well as a centre for Islamic banking. Since 2002, Islamic banking is growing, primarily in the Islamic bond market. Brunei Darussalam also promotes ecotourism because over 70% of Brunei’s territory that remains as primal tropical rainforest has taking an advantage.

Brunei Darussalam is a participant and seeks to take a leadership role in the trilateral Heart of Borneo conservation initiative. Aside from this, Brunei Darussalam receives income from rents, royalties, corporate tax and dividends. Brunei’s non-petroleum industries include agriculture, forestry, fishing and banking. However, Brunei Darussalam is also ranked as having one of the highest rates of macroeconomics stability in the world and the highest in Asia. Whereas for Malaysia, the rubber production is peaked during 2000s. Malaysia is one of the top exporters of natural rubber.

Rubber was once the mainstay of the Malaysian economy. Rubber industry in Malaysia is relatively efficient and its products are of superior quality due to the successful research and development efforts pursued, particularly by the Rubber Research Institute of Malaysia. The diversification of Malaysian agriculture has been significant with the rapid growth of other products, particularly palm oil, timber and cocoa. The palm oil industry recorded the most rapid growth, making Malaysia the world’s largest exporter of palm oil, with the country currently producing nearly 60 percent of the world’s palm oil output.

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