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PATTERN OF TOURIST EXPENDITURE AND ITS IMPACT ON BRUNEI ECONOMY

by

Dr Mohamed Sharif Bashir

Hajah Nur Annisa Haji Sarbini

Faculty of Business and Management Sciences,

Sultan Sharif Ali Islamic University, Brunei Darussalam

ABSTRACT

Brunei Darussalam's vision is to promote the country as a unique tourist destination

and gateway to tourism excellence in South East Asia. The objectives are to create

international awareness of Brunei Darussalam as a holiday destination; to maximise

earnings of foreign exchange and make tourism as one of the main contributor to

GDP. In addition, it will create employment opportunities. Worldwide, tourism has

generated USD93 million in direct tourism revenue. This makes the tourism industry

an important earner and employer for any country. Besides the growing number of

travellers coming by air, the cruise tourism also increases. The number of ships that

have stopped at Brunei has grown from 4 in 2006 to 24 in 2007. It is expected that

this number will increase. Brunei’s officials are very optimistic about the future of

their tourism industry. Evidently, a small ASEAN economy like Brunei has few

evident opportunities to diversify export earnings away from oil and gas. Thus,

tourism has to emerge as an option to contribute to economic growth. This paper

provides a general overview of Brunei tourism sector as well as examines potential

economic impacts of tourism and assesses its contribution for Brunei’s economy. The

paper aims at measuring the tourists profile and expenditures on Brunei’s economy

in accordance to Brunei Darussalam’s vision to promote the country as a unique

tourist destination and gateway to tourism excellence in South East Asia.

Keywords: Brunei economy, tourism sector ,tourists expenditure and tourists

profile.

1.0 INTRODUCTION

Brunei’s economy depends on its oil and natural gas deposits, which are mostly

offshore, and its investments. Although these are not extensive by world standards,

Brunei’s small population enjoys a very high standard of living. The government has

made recent efforts to diversify the economy, mainly by providing tax concessions on

foreign investment; timber, paper, fertilisers, petrochemicals and glass are the most

promising candidates for development in the growing industrial sector. However,

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these have been fairly limited to date. Some 15 per cent of the land is under

cultivation, with rice, cassava and fruit as the main crops. Japan, which takes half of

the oil produced by Brunei, is the country’s largest single trading partner, followed

by Korea, Singapore, Thailand and Australia. Brunei also belongs to the Association

of South East Asian Nations (ASEAN) and subscribes to its major projects, including

the plan to establish a free-trade zone among member states in around 2010/2015.

In 1995, Brunei joined the IMF and World Bank, making available the technical and

consultative advice from those institutions as it hardly needs their financial support.

The Asian financial crisis in 1997 had little effect on Brunei, because of the country’s

lack of indebtedness. However, it has since become apparent that a substantial

proportion of the country’s financial resources, which are under the exclusive

control of the royal family, have been dissipated through individual profligacy.

Being a small, rich sultanate located on the northern coast of the Borneo Island,

Brunei Darussalam has been one of the major producers of oil and gas within

Southeast Asia, and the export activities of oil and gas make up for about 40 percent

of Brunei’s gross domestic product (Government of Brunei Darussalam, 2002). Apart

from that, with a population of 344,500 in 2001 (Government of Brunei Darussalam,

2002), the country has the fourth highest GDP per capita in Asia, behind Japan,

Singapore and Hong Kong (UNDP, 2002).

Gunn (1993) considered Brunei as a “rentier economy” as the country depends

substantially on earnings from oil and gas exports, relies heavily on imports and it

also is a recipient of substantial foreign revenues and relies far less on taxes as a

source of income.

However, with the emerging competition from neighbouring countries that have

other means of economic development that could uplift their economies, Brunei

economy’s high dependency on oil and gas and the instability of world oil prices

during economic downturn could cause considerable fluctuations in the level of

Brunei’s GDP. There is no doubt that government, construction, services, retail and

some light manufacturing are the other major sectors in Brunei’s economy, as the

government is currently working towards economic diversification in which tourism

plays an important role in order to encourage tourists and foreign investment into

the country and develop education and human resources.

1.1 BRUNEI TOURISM IN BRIEF

Although there are about 40 licensed Travel Agencies in Brunei, only a handful are

actively engaged in inbound ground handling operations for foreign tourists, which

most licensed Travel Agencies deal in ticketing and outbound travel, with the

occasional service to inbound clients.

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Competition in the inbound tourism sector is thus limited, and with the

aggressive promotional efforts by the Brunei Tourism Development Department of

the Ministry of Industry and Primary Resources, the number of inbound leisure

tourists is targeted to increase on an annual basis.

It is undoutedly that Brunei Tourism is targeting at the up-market, discerning and

mature segments in tourist source markets such as the South East Asian countries

like Singapore and Malaysia, as well as other parts of the world, for examples United

Kingdom, Korea, China, Japan, Australia, Germany and Netherlands, which positioned

Brunei as a destination for ecotourism, relaxation, wholesome family trips,

honeymoons, golfing and even for stop-over programs on the Australia / New

Zealand / Bali to Europe or the Far East routes and tour programs covering Northern

part of Borneo island.

In order to support this positioning, Brunei Tourism has actively participating in

several tourism trade shows in these key markets, providing advertisement in

consumer and trade publication, hosting regular media and industry familiarization

trips as well as projecting quality promotional material based on the themes of

Nature, Culture, Heritage and Contemporary Asia. Furthermore, such efforts have

been greatly supported by the Government and the industry with an increasing

number of Tour Operators featuring Brunei in their programs.

With that, Brunei being a small country that is rich in natural beauty has divided

its tourism activities into four main areas, which are Ecotourism and Leisure

Tourism, Agro-Aquatourism, Health and Wellness Tourism and Cruise Tourism.

1.2 Ecotourism and Leisure Tourism

With the country’s 75% of land is covered by pristine, flora and fauna rich tropical

rainforests, ecotourism is understandably one of the main attractions for tourists

visiting Brunei. This will further be strengthened through the feedback that the

researchers have obtained via questionnaires. Currently, ecotourism activities

available in Brunei consist mainly of visiting nature areas, spotting wildlife and

walking along trails, plank and canopy walks maintained by the Forestry Department.

Outdoor activities such as canoeing, kayaking, mountain biking, rock climbing

and tree climbing are some of the examples that can be conducted in rainforest areas

as well as other sport and leisure activities conducted in both coastal and inland

areas such as diving, paragliding, water sports, sand sailing, motorbike rentals and

tours, 4WD tours and yachting.

1.3 Agro-Aquatourism

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Agro-aquatourism is a fast growing concept in the regional tourism industry as

Brunei offers visitors a range of activities related to the agricultural, marine and

plantation sectors. With year round good weather and constant land and sea

temperatures, Brunei offers good opportunities for the production and processing of

an array of fruits and vegetables, as well as aquaculture, for both domestic

consumption and export.

Being located at what is considered to be the epicentre of marine biodiversity,

Borneo is well known as a diving paradise. With well preserved coral reefs and

shipwrecks, Brunei is one of diving’s new frontiers offering opportunities for agro-

aqua enthusiasts.

1.4 Health and Wellness Tourism

Brunei has excellent medical facilities, both at public service level and in private

healthcare. The exclusive Jerudong Park Medical Centre and Gleneagles JPMC,

located near the Polo Club, Golf Club, Theme Park and Empire Hotel in the posh

Jerudong area, offer high quality treatment, especially in the cardio-vascular

departments, to both local residents and foreign patients.

In addition to the medical care that can be provided for tourists, Brunei, with its

rainforests, clean air, absence of tropical diseases and healthy and wholesome

lifestyles, lends itself very well for the development of wellness centres, spas,

Ayurvedic treatments, and Yoga retreats utilizing the many peaceful rainforest

locations available alongside rivers or lake shores, or by the seaside, using natural

products harvested from the forests, with massage and treatment techniques derived

from the Borneo as well as other Asian traditions.

Since alcohol is not sold in Brunei, the country could also provide the perfect

environment for detoxification clinics and other centres treating alcohol or drug

addiction problems, especially for those seeking to undergo such treatment in

anonymity, as the privacy of visiting celebrities is traditionally respected in Brunei.

1.5 Cruise Tourism

With its central location at the Southern edge of the South China Sea, Brunei is

strategically positioned to take advantage of the emerging cruising centre taking

place along the shores of the South China Sea. With port of calls such as Hong Kong,

Vietnam, Cambodia, the Gulf of Thailand, Malaysia’s East Coast, Singapore, Sarawak,

Brunei, Sabah and the Philippines, the cruising industry has the opportunity to

develop a new centre for cruises to rival the Mediterranean and the Caribbean,

especially with the future huge Chinese market fuelling its growth. These increasing

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popularity ports offer excellent connections to the region and beyond, and are likely

to be the main centres from which passengers will embark and disembark to start

their cruises.

2.0 LITERATURE REVIEW

Trade in general enables a nation to specialize in those goods that it can produce

more efficiently and sell such goods that are surplus to its own requirements. Trade

also enables a country to consume more than it would be able to produce if it

depended solely on its own resources, encourages economic development by

increasing the size of markets (Husted and Melvin, 1993).

Brunei is known for its lavishness and is home to a number of high end hotels,

including the renowned Empire Hotel & Country Club, where guests can indulge

themselves in extreme luxury. A study conducted by the Brunei Economic

Development Board stated that aside from Brunei being perceived to be politically

and socially stable, however potential investors are very cautious about expansion or

new investment, as they are either unfamiliar or unaware of investment prospects in

Brunei. The country also possesses a low level of transparency and significant red

tape as foreign organizations perceive Brunei to be biased towards investing

internationally rather than domestically, which gives international investors lack of

confidence.

Relating back to the main objectives of the Brunei Tourism board is to increase

international tourist arrivals by a minimum average of 7% yearly, as well as to

increase average length of stay and expenditure, Brunei Tourism estimates the

number of bona fide leisure and business tourists to be around 100,000 in 2003, with

a 3-day average length of stay.

Specific published studies related with tourism in Brunei are few. Anaman and

Mahmod (2002) established that real wages, the level of oil exports as a proportion

of gross domestic product, government export promotion policies, and trend factors,

such as improvements in infrastructure, significantly influenced Brunei’s long-run

non-oil exports.

Around 43 percent of visitors come from ASEAN countries with a further 24

percent from the Far East. Less than half of one percent is accounted for by Middle

Eastern visitors, however, which means there is a huge potential for growth. The

government has played an important role in the tourism sector by actively

promoting events such as Aberdeen Brunei Senior Masters Golf Tournament, the

Brunei Darussalam Cycling Federation, and other sports such as jungle trekking,

diving, horse riding and other water sports. Ecotourism and culture are also strongly

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highlighted in the government’s campaign to promote the sultanate as a tourist

destination. Brunei has also been able to preserve its tropical forests, which are rich

in flora and fauna, and cover 75 percent of its land area.

3.0 METHODOLOGY

The research sample of this paper consists of foreign visitors from Asian and

Western countries to Brunei Darulssalam such as Singapore, Malaysia, Indonesia,

Japan, Korea, UK, USA, Canada and France. Data were collected in June 2009 at

different locations in Bandar Seri Begawan, the capital of Brunei, such as hotels and

shopping complexes at city centers. A short survey questionnaire was conducted

during the period of the study to some of foreign tourists to Brunei. For the purpose

of this paper, the information needed is on the socio-demographic background of the

tourists, their traveling pattern and their average expenditure pattern. A survey

questionnaire consisted of 21 questions was designed for the study. The

questionnaire is divided into two sections (A) and (B). Section (A) covered the socio-

demographic profile of the respondents; whereas Section (B) captured the

information on the respondents traveling and expenditure pattern. The scales used

are categorical and binomial, with a few open-ended types. The section on tourists

profile required respondents to fill in their personal information in details such as

gender, age, nationality, country of resident, marital status and occupation. Whereby

the section concerning information about traveling pattern constitutes the focal

section of the questionnaire which aims to capture their expenditures patterns. The

respondents were asked almost more than 10 questions related to expenditures

patterns. General descriptive and correlation statistical analyses were conducted on

the data collected.

4.0 FINDINGS AND ANALYSIS

4.1 Demographic Profile of the respondents

The age of the respondents were divided into five categories. The categories include

less than 20 years, 20 to 30 years, 31 to 40 years, 41 to 50 years and 51 and above.

The analysis shows that the most of the respondents were between 20-30 years old

(34.2%) followed by those were between 31-40 and 41-50 and 51 and above years

old (18.4%). The age group between 20-31 years old was the highest in numbers and

they were the group of tourist who came for vacation and convention. While the

tourist whose ages between 20-30 years old they came for leisure and entertainment

and were dominated by female.

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Based on gender profile, there were more than 52% of the respondents are female

compared to the male 47%. In addition, most of group age 20-30 and 51 above were

dominated by female. On country of Origin, the majority of the respondents who

have visited Brunei were from Malaysia (28.9%) followed by UK (15.8%) and USA

(13.2%). Figure 1 below showed origin of all tourists.

Figure 1: Tourist Arival by Country, 2009

Country of origin Share (%)

Malaysia 28.9

Singapore 7.9

Indonesia 5.3

Korea 5.3

Hong Kong 2.6

Japan 7.9

USA 13.2

UK 15.8

Canada 5.3

Austrialia 5.3

Other 2.6

Total 100.0

The largest proportion of the tourist were Administrative and Management’ category

which accounted for 36%. Some categories of occupation are collapsed due to the

smaller scope and sample size. Those who are not in the labour force, namely

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student, housewife and retired, are grouped together. This group formed the second

largest component of the tourists, accounting for 34% of the respondents. The third

largest category was the professional which accounted for 28%. The result showed

that most of the tourist came from Malaysia were under government and

professional categorizes.

4.2 Overall Results on Traveling Pattern

Section B in the questionnaire asked the respondents about their travelling pattern.

Among questions asked were the main purpose of visiting Brunei, duration of stay,

mode of transportation, frequently visited places, major attraction in Brunei, items

purchased and others.

Have You Visited Brunei Before?

Around 58 of the respondents reported that they have visited Brunei before. On

the other hand, 42% respondents said that they have never visited Brunei.

Main Purpose of Visiting Brunei

Vacation, as expected, was the highest response to this question.

Convention/Conference took the second place, followed by those who stated

visiting friends/relatives as the main purpose of coming to Brunei. Some of them

cited business purposes for their reason of visiting Brunei which indicate a

growing potential business attraction.

Travel Arrangement

The majority of the tourists 88% travel independently as opposed to 12% whom

chose the tour package while visiting Brunei. It is also an induction for more

collaboration between tourist and travelling agents and agggresive official

promotion efforts organize between the Brunei Tourism Board, the airline and

travel agents.

Travel Companion

About 44% of the respondents reported that they traveled with their family or

relatives. Around 21% traveled with their friends; 25% traveled alone; and 10%

of the respondents traveled with their business associates.

Duration of Stay in Brunei

Majority of the respondents stayed within less than 1 week while visiting Brunei.

The next largest group stayed for 1 week. The rest stayed for 2-3 weeks.

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Mode of Transportation

More than half of the respondents traveled by air, some respondents were

traveling by road. Respondents may choose more than one type of transportation.

Type of Accommodation

For types of accommodation, respondents were asked about their preferences

among choices of hotel, apartment, staying with friends or relatives, economy

hotels and other types of accommodation. In this survey, the majority of the

respondents amounting to 90% stayed in hotels, while less than 4% stayed with

friends or relatives; and 6% of them resided in the economy hotel.

Main Activities While in Brunei

Respondents were asked about their main activities while visiting Brunei. They

may select more than one activity. As expected, 89% of them stated shopping,

while visiting beaches was another major attraction. The next popular activities

was sightseeing in the cities and visiting museums, taking 83% and 80% of

respondents respectively. The rest of the activities undertaken by the tourists

were walking/trekking and seeking traditional medicine.

4.3 Respondents’ Expenditure Pattern

Items Purchase While in Brunei

Respondents were asked to state the items that they purchased while in Brunei.

Handicrafts and batik were high on the list, amounting to 45%. The next popular

item purchased was batik which accounts for 39% of the respondents. Whereas

jewelery such as watches and gold as well as computer and electronic appliances

also grabbed such interest for the respondents to purchase while in Brunei.

Heard of Brunei From?

An overwhelming response of respondents reported that they heard of Brunei from the word-of-mouth recommendations of either friends or relatives who had visited Brunei before. The next channels of information for the tourists were equally spread among friends or relatives in Brunei, the travel agent and the Internet. These three categories reported around 20% responses each. Others heard of Brunei from the other sources such as airline, travel guides book and other country’s tourism collateral board.

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Choose to Visit Brunei Because..

One of the major questions in the survey is to capture the reasons why people are

attracted to visit Brunei in the first place. A list of choices was given to the

respondents. The top reason was Safe Destination, as reported by majority of the

respondents, which was equivalent to 88%t. Next in the list were friendly people

and jungle trekking activities as well as beautiful beaches.

Major Attractions in Brunei

To complement the previous question, respondents were also asked on what they

considered as major tourists attractions in Brunei. Some of the choices were

similar to the question posted earlier. Surprisingly, the highest response of 60%

claimed that the major attraction to visit Brunei would be because of its safe

destination as well as the curiosity to find out more about Brunei as it is

recommended by friends and/or relatives who have visited or currently living in

Brunei. Other major attractions selected were shopping, friendly people and

jungle sport and easy accessibility.

Visited This Country Before Visited Brunei

To establish the traveling pattern of the inbound tourists, one question was included asking the respondents which country they have visited prior to visiting Brunei. The highest number of respondents said that they have been to South East Asia, Europe and have visited either in Australia, USA or Canada before they arrived in Brunei.

Will Visit This Country After Visited Brunei?

The survey tries to establish the next tourist destinations after Brunei. The same choices of countries as mentioned earlier were presented to the respondents to identify their next destination. Again, Southeast Asia was the first popular destination, as selected by 67% respondents, while other respondents identified Australia, Europe and the USA or Canada as their next tourist destination.

Will You Recommend Brunei to Others?

This was the last question asked in the survey questionnaire to examine the

general perception of the tourists about Brunei. 88 % of the respondents

(n=200) said they would recommend Brunei to others. Some wrote that they

highly and strongly recommend Brunei as a tourist destination. few respondents,

which is equivalent to 12% said that they will not recommend Brunei. Some of

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the reasons cited were the lack of variety of attraction places, expensive retail

prices when compared to the Malaysian Ringgit and inefficient entertainment

services.

This last question also inquired the respondent to give recommendation as to

how Brunei could improve its tourists visits as well as making Brunei an

attractive place for more tourists to come. Some of the recommendations that

they stated include the addition of in-house entertainment, more choices of 4 or

5-star rated hotels, outdoor and indoor tourist attractions, more choices of

shopping complexes as well as providing faster internet connections, if not

improving the current internet connections making it available anywhere and

also cutting down the cost of taxi fares which they claimed to be expensive. Some

also suggested heavy promotion of the reserved jungle at Temburong district,

known as the Belalong Forest Reserve which plays an important role in attracting

outdoor ecotourism enthusiasts as well as improving the wellbeing of the

Jerudong Park Playground, making it one of the most sought-after entertainments

that had successfully attracted tourists 10 years ago, which could be a major re-

vamp project but it would more likely be another reason for tourists to visit

Brunei and enjoy the entertainment, scenery, greenery and natural beauty that

Brunei offers for its tourists.

5. SUMMARY

The overall general profile of the visitors, their travelling pattern, their average

expenditure patterns and the overall profile was examined. In general, the findings

showed that 86.8% of the tourist recommended Brunei as a tourist destination. Around

13% did not recommend Brunei. The findings revealed that in general, the tourists

were male of the 20 to 30 age group. Almost 29% of them were Malaysian. Major

activities performed were shopping and visiting beach, museum and sights seening.

Most of the visitors made their own travelled arrangement and were accompanied by

their friends and majority of them stayed at the hotel. Major items purchased were

handicrafts and batik. The tourists spent the most on accommodation, handicrafts and

food. The purpose of the visit was found to be associated with recommending Brunei as

a tourist destination. For the shopping facilities and the availability of public

transportation, these are endogenous factors that can be improved. Another potential

area to be developed is cultural events and more attraction activities to meet different

tourist desires.

Therefore, based on the findings, the paper has identified a number of key

imperatives as being critical to the development of tourism industry in Brunei. Firstly,

New reasons must be created for the visitors who had been here but were not inclined

to revisit. A new global brand identity for Brunei could be based on the cultural and

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heritage background. What uniquely constitute Brunei must be promoted to keep the

inbound visitors coming. Secondly, it needs to improve many attractions including

shopping complex and transportation, hotels facilities, traditional medicine.

The tourism industry can be based on the concept of “nation equity” which

means improving its perception among would-be travellers, and ecotourism, to avoid

the environmental degradation that often accompanies tourism development. Tourism

may not be the major industry in Brunei that has a major impact on its economy but

being a small country, Brunei certainly has its role to play in providing and exploiting all

the tourism areas available such as ecotourism, leisure tourism, wellbeing and health

tourism, cruise tourism, flora and fauna tourism as well as agro-aquatourism which

most of the area in Brunei are still preserved in its natural form. Through this, Brunei

thus wishes both to use and preserve the diverse ecosystem represented by its tropical

rain forests. By promoting ecotourism for example, Brunei will not only optimize land

use and logistics capacity, but it will seek to maintain the rain forest's industrial and

pharmacological resources and also reduce its current over-dependence on oil and gas

exports. Undoubtedly, these attractions can be one of tourists’ main choices of activities

that provide them with serenity and distinctly diverse experiences that Brunei and its

climate has to offer, in line with its infamous tourism catchy line “Brunei Darussalam: A

Kingdom of Expected Treasures”.

For further future research in this area, we suggest that the sample size would be

increased to enable us to measure and further analyze the tourists’ expenditure pattern

with regards to their profile. And also, through this future research, we need to see the

contraction between the economic impact of tourists’ expenditure and social

characteristics of the tourists from different destinations. For policy implication, we

suggest that the policy makers should give more emphasize on the development of the

infrastructure including transportation, financial services, hotels and restaurants,

entertainment and travelling facilities such as that provided by the Immigration

Department for facilitating the tourists’ arrival. Furthermore, the private sectors should

play a role in participating to promote tourism activities as this could bring benefits in

terms of generating employment opportunities and increasing earning incomes as well

as expanding the production capacity of the small and medium enterprises.

References:

Anaman, K. A. and T. H. (2002). Mahmod. "Supply of Non-Oil Exports in Brunei Darussalam from 1961 to 2000". Unpublished paper. Department of Economics, Universiti Brunei Darussalam, Bandar Seri Begawan.

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Government of Brunei Darussalam (2001). Brunei Darussalam Eight National Development Plan 2001-2005. Bandar Seri Begawan: Department of Economic Planning and Development.

Gunn, G. C. (1993). "Rentier Capitalism in Negara Brunei Darussalam". In Southeast Asia in the 1990s, edited by Hewison C., R. Robison, and G. Rodan. Sydney: Allen & Unwin.

Husted, S. and M. Melvin (1993). International Economics, 2nd ed. New York: HarperCollins College.