Improving market competition can help enhance the efficiency of the logistics sector in Brunei Darussalam and support efforts to diversify its economy.
An independent study by the Organisation for Economic Cooperation and Development (OECD) reviewed 63 laws and regulations that are relevant to the logistics sector in the country. It focused on freight transportation, freight forwarding, and small-package delivery services.
The study is part of a series of competition assessment reviews by OECD for the Association of Southeast Nations (ASEAN) to identify rules and regulations that may hinder the efficiency of the logistics market. Supported by the UK Prosperity Fund, the project will publish country and regional reports of its findings.
OECD and the Competition Commission of Brunei Darussalam (CCBD) launched two reports based on the study last February.
The logistics sector in Brunei is relatively small, contributing 1.7% to the gross domestic product (GDP) in 2019, said CCBD in a news release. However, it is vital to enabling trade and to achieving economic development and diversification.
OECD notes that Brunei, which is heavily dependent on oil and gas mining, has been diversifying its economy for the last 20 years. Logistics is one of its priority sectors for development. The country wants to become a logistics hub in ASEAN and has set up the Terunjing Free Trade Zone.
“Such efforts to diversify the economy have become even more pressing following the impact of the COVID-19 [coronavirus disease] pandemic,” the OECD report says. It notes decreased exports and lower GDP growth forecasts by the Asian Development Bank at 1.4% in 2020 and 2% in 2021 because of the pandemic.
OECD gave several policy recommendations based on its findings. These include removing regulatory and operational overlaps for maritime transport, setting price ceilings instead of minimum rates for port handling and storage of goods, and aligning requirements for sea and road freight forwarding.
Meanwhile, the country’s Ministry of Transport and Infocommunications (MTIC) has created the Brunei Logistics and Transshipment Task Force (BLTTF) in 2020 to facilitate joint efforts of government and businesses to improve the logistics and value chain ecosystem.