One such example is Brunei, a heavily oil-reliant country, which has taken
measures to diversify its local economy in order to participate more effectively
in the different segments of global value chains. Strengthening and promoting
the Brunei Halal brand is one way of gaining a competitive advantage in the
regional, populous and largely Muslim markets.
Brunei is a small, rich country, with a population of less than 380,000 and
gross domestic product (GDP) of about US$ 20 billion (with GDP per capita of US$
52,000), ranking Brunei ninth in the world in 2009. However, more than 80% of
Brunei’s economy relies on oil exports. In the short term this is not a problem,
but in the long term the country needs to diversify. Oil revenues give it the
resources to do so. One of the most important diversification initiatives being
undertaken by the Government of Brunei, with the advice of SQW China Ltd, is to
develop a publicly funded, major agro technology park and food processing
incubator accompanied in parallel by vigorous promotion of the Brunei Halal
brand. These initiatives help local SMEs and farmers to develop and market new
value-added products based on agricultural production and the natural flora of
the rainforest. Key target markets include South-East Asia and China.
Importantly, the plan is a ‘start from the market’ approach, targeting the
population of more than 200 million Muslims in China and South-East Asia, who
are increasingly demanding high-quality halal food products. Supporting the
Brunei Halal brand is a major theme of the initiative.
The technology park will incorporate a mix of research and development,
testing and certification activities, and will attract firms developing and
manufacturing high-value food, medicinal, therapeutic and cosmetic products
derived from fruit, vegetables, herbs and non-timber forest sources. The park
will also provide training and business incubator facilities. The specifications
for a specialist food incubator are currently being drawn up by SQW China Ltd,
in cooperation with the University of Lincoln in the United Kingdom, which
itself operates several food incubators. A botanical garden will be constructed
as part of the structural landscaping for the agro technology park, which will
make it a visitor attraction as well as a location for new business activities.
A distinctive feature of the park is to undertake and commercialize research
into the nutritional and
medicinal properties of the unique flora of Borneo (70% of Brunei is
protected natural rainforest). The combination of botanical gardens, nurseries
and research laboratories will provide an environment in which plants can be
grown and their key nutritional or medicinal properties analysed and
identified.
The aim is to achieve a significant increase in both value and volume of food
products, as well as to ensure the required level of quality and purity. The
agro technology park will also provide space for the manufacture of products for
local and international markets under the Brunei Halal brand. By leveraging the
high-quality halal certification process and technology, firms in Brunei can
export their products and form production and marketing joint ventures with
companies in the region, particularly in China. A subsequent opportunity would
be to manufacture in China, based on Brunei
Halal certification, and to re-export from China to the region. Brunei firms
will thus be better able to increase production to meet regional market demand.
It will be easier to exploit high-value market opportunities, for example in
relation to products based on cattle, fisheries and forestry and subject to a
strict halal certification process.
At the infant industry stage, the Government will subsidize SMEs and farmers
so that they can grow and develop to compete internationally while complying
with the strict halal process.
Ideally, the Government should not be the only promoters of the scheme in the
long term. In the second phase of the project, private sector venture capital
funds will be invited to participate in the expansion of the agro technology
park and incubators. By then the project will become a public–private
partnership project.
To become an integral part of the global value chains, one other important
factor is strengthening the international transport and warehousing logistics
networks for local SMEs and farmers. To facilitate this, certain strategic
alliance arrangements are under way with several southern Chinese ports and
logistics zones in Guangxi and Guangdong provinces to ease the export and import
of raw materials and final products. Private sector venture capital funding will
also participate in the joint development of logistics services.