‘Brunei is small’ mindset not good for SMEs
Article from Borneo Bulletin. Published on Thursday Jul, 05 2012
By Danial Norjidi
Human capital development and a focus shift, businesswise, onto services and innovation are essential towards Brunei achieving its goals as part of Vision 2035.
“In terms of Brunei’s Vision 2035, there are three main goals. In fact, I’ve discovered that out of your three main goals, two are already done,” said Dr Peter Ting, the Regional Vice President of Market Innovation at the Blue Ocean Strategy Regional Centre, speaking to the Borneo Bulletin yesterday on the sidelines of the Local Business Development Workshop at The Empire Hotel and Country Club.
“First, you want to be one of the top 10 richest countries in the world – you are already top five in terms of GDP per capita,” he said. “Secondly, in terms of achieving a world class, high quality of life for the people, you have already achieved it.
“The only one left is building the high intellectual human capital.”
He said that this is a good position to be in with so many years left and having two out of three done. He added, however, that the only thing hindering Brunei is mindset, especially with the SMEs.
This mindset, he explained, is the thinking that Brunei is so small, and on perceived difficulties of how we can expand and go regional, beyond the borders of Brunei.
In response to this, Dr Ting compared Brunei to other similar places, saying, “The length of Singapore is many times smaller than Brunei. Luxembourg, for instance, is also smaller. Dubai and the UAE are also smaller.
“So in terms of length area comparison, Brunei has got much more, so other than oil and gas, which constitutes the bulk of your revenue, you also have ecotourism which is hardly scratching the surface,” he continued.”And being a Muslim country, tapping into Halal food, you can then consider how to tap into a Middle Eastern market, which is huge.”
He suggested, however, that Bruneian SMEs should not to focus on manufacturing.
“There is no way that you can compete with China, Vietnam, Myanmar, Thailand,” he said. “Stay out of the Red Ocean. Don’t go into manufacturing. Only go into essential manufacturing, maybe as a pilot project, a pilot factory, small-scale.”
Continuing, Dr Ting said, “In order to achieve Vision 2035, human capital development, I find, is the key. Businesswise you really have to shift the focus onto services as well as innovation.”
He cited South Korea in 1970 as an example, saying they were worse-off in terms of GDP per capita compared with Malaysia. “Look at what it has become now,” he said.
He also cited Singapore as an example, saying that when they were separated from Malaysia, they were so scared on what to do next.
“They had no raw materials, so they only focused on services and innovation, and that’s how they managed to come out as one of the top 10 richest countries in the world,” he said.
“So if Brunei really focused on human development, and focused on brain design and ownership, developing of your IP, then you can really go regional, despite the fact that your population is less than half a million,” he explained.”So really focus on your co-competency. The country’s rich, with plenty of natural resources.”
Touching on precisely how this can be achieved, Dr Ting expressed his belief that it has to begin among the leaders of SMEs and the country, and that there has to be a unified agenda to develop the human capital, especially in the areas of service and innovation with a focused, harmonised and synergised agenda to really groom the next generation of thinkers, and build an economy that is sustainable.
“I call it a sustainable ecosystem,” he said. “Rather than have people help a little bit here and there, think of the overall ecosystem to make sure that you are sustainable not only for this generation but for many generations to come, because at the moment, the revenues from oil and gas, we are assuming will last forever, but things can change.”
He cited “huge consulting company” Arthur Anderson as an example, saying it fell apart, and stressed, “Anything can happen.
“There could be other alternatives that could replace oil and gas. Anything can happen, so since SMEs currently contribute to about 22 per cent of your economy, just imagine, if we do something about it and increase from 22 per cent to 50 per cent.”
In Hong Kong it was presumed that the overall economy was shaped by a few big companies, but in actuality 70 per cent of it comes from SMEs, he said.
He said that if Brunei can manage to push the SMEs contribution to the GDP out to over 50 per cent, then the overall economy will become very healthy and very strong, rather than just purely depending on government funding or projects.
“I think the first thing I would recommend is to change the mindset. You need to overcome the fear of going regional,” he said. “Other than overcoming the fear, the second aspect is to develop a new generation that is hungry for greater success and significance beyond the safe borders of Brunei.”
He explained that this has to be cultivated and developed, and that people cannot simply be told to be enterprising and to venture beyond Brunei.
“We’ve got to show them the way,” he said. “From talking to all the participants here, I think they all really appreciate what the government is doing for them.
“Most of them receive a lot of help from MIPR (the Ministry of Industry and Primary Resources), and I asked them what do they want me to convey to MIPR, if any, and all of them told me that the one critical need is strategy implementation and execution.
“This is because they have many seminars, many workshops, and great plans and ideas, but sometimes it falls short in terms of execution – the strategy execution,” he continued. “So once they formulate a wonderful strategic plan, how to translate into a very detailed, concrete execution plan? And once you start execution, how to monitor its performance so that we can really scale out the SMEs? Let’s say we set a goal from 22 per cent to at least 50 per cent – it’s about how we get there.”
Dr Peter Ting is an advocate and expert on the Blue Ocean Strategy, which he described as being useful for massive growth and a big, fast impact.
“If we want to go from 22 per cent to 50 per cent, we’ve got to think Blue Ocean, just like Apple Inc,” he said. “No other company has beaten Microsoft before, but Apple Inc did. So without innovative Blue Ocean thinking, it is not possible to achieve that sort of growth.”
Red Ocean Strategy, on the other hand, is for marginal growth and value improvement, where one competes in a market space that has many players coming in.
Dr Ting also commented on the challenges faced by local SMEs. “I would call it visual awakening,” he said. “People will not change unless they see the need to change. If they feel that they are already very comfortable where they are, they will be thinking, ‘Why take the risk?’
“But the risk or fear of failure can be overcome, because the Blue Ocean Strategy is about minimising the risk and maximising the opportunity,” he continued. “Most people think that if you were to expand or be in business, you’re taking a risk, and the risk of failure is high, so that kind of mindset puts a lot of fear into the people, and that’s why we believe that the Blue Ocean Strategy gives a pattern; a systematic approach of minimising your risk, rather than going through trial and error of doing business.”
He explained that the two-day workshop serves to give the participants a bird’s eye view that when you do business, it does not mean that you always need to go through trial and error or that if you persist until the end then you will make it.
“Not everyone can persist that long; if you run out of money how can your persist?”
Dr Ting then said that Bruneian SMEs seem to be so well looked after by the Government and His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam.
“We ought to capitalise on the advantages that we have and at the same time, use them as a stepping stone to daringly go regional, and take on regional opportunities, because many people see that the Brunei market is very small.
“Yes, it is small – use that as a test pad. Use it as a pilot training ground, but with the eyes towards the entire region – at least the Asia-Pacific region,” he said. “Go beyond the shores of Brunei, and believe in that while we are small, small is beautiful, but it may not remain beautiful forever.
“To maintain that beauty, we must have the mindset to go regional, and that’s from small and then you can become big,” he added.