BRUNEI LEGISLATIVE COUNCIL: STILL A WORK IN PROGRESS

UNCLAS SECTION 01 OF 02 BANDAR SERI BEGAWAN 000081

SENSITIVE

SIPDIS

DEPARTMENT FOR EAP/MTS/COPPOLAMG

E.O. 12958: N/A
TAGS: PGOV PINR PHUM ECON BX
SUBJECT: BRUNEI LEGISLATIVE COUNCIL: STILL A WORK IN PROGRESS

REF: BANDAR SERI BEGAWAN 59

SUMMARY
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1.(SBU) On March 12, 2009, The Sultan of Brunei opened the fifth
Legislative Council (LegCo) session since its reinstatement in 2004.
The global economic crisis was front and center during discussions,
although Brunei is riding out the storm well. However, budget
revenues are forecasted to drop slightly. While there was some
discussion, the overall substantive debate was limited. One LEGCO
member said that there needed to be more transparency, especially
regarding residency requirements. The press was limited by
government instruction on the level of budget details, especially
regarding government subsidies, that could be published. The
eight-day protocol-conscious session received mixed reaction from
the public because of a lack of "heated" debate. However, there was
more discussion than in years past. In addition, there were public
calls for more transparency and debate. The Legislative Council
remains a work in progress, with forward momentum on democratic
principles slow. End Summary

LEGISLATIVE COUNCIL BACKGROUND
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2.(U)The Legislative Council (LegCo) is comprised of: 14 Ex-Officio
members that included the Prime Minister, His Majesty the Sultan of
Brunei, the Senior Minister at Prime Minister's Office, the Crown
Prince, the Minister of Foreign Affairs and Trade, Prince Mohammad,
and twelve appointed cabinet ministers. The non-government appointed
members included seven dignitaries and one representative each from
the four districts (Brunei-Muara, Tutong, Kuala Belait and
Temburong). His Majesty has stated that members should express
their views without fear, doubt or hesitancy.

OPENING DAY: SULTAN FOCUSES ON ECONOMICS
--------------

3. (SBU)At the opening of the Legislative Council (LegCo),attended
by Ambassador Todd, The Sultan said Brunei is fortunate that its
socio-economic situation remains stable. However, he also noted that
the government revenue has been dropped, slightly, due to declining
oil prices. The Sultan said he has created a Sustainability Fund,
within the Ministry of Finance, to control and regulate the
management of funds, In addition, he noted Brunei's Fiscal
Stabilization Reserve (FSR) Funds are the key sub-fund which serves
as a means to eliminate or reduce the oil revenue deficits, if they
occur. Any depreciation in the government's oil revenue will be
compensated by transferring funds to the FSR Fund from the
Sustainability fund.


BRUNEI GOVERNMENT BUDGET AND ANTICIPATED DEFICIT
-------------- ---
4.(U)The LegCo passed a BND 4.98 billion budget for 2009/2010 which
saw a increase of BND 200 million from the 2008/2009 BND 4.78
billion. Despite the budget increase, the Minister of Finance II,
Pehin Rahman Hj Ibrahim predicts a BND 1.68 billion deficit after
the revenue of 2009/2010 fiscal year is projected to drop to BND4.03
billion from the BND5.602 billion in the 2008/2009 fiscal year. The
projection took into account the expected increase in government
services revenue and Corporate Income Tax at $766 mil compared to
$704 mil last year. Pehin Rahman underscored that the revenue from
the non oil and gas sector and government services only supports 19%
of the total predicted government expenditure.

5.(U) The 2009/2010 budget was allocated into the following areas:
BND 1, 060,900,000 for human resources development and capacity
building, BND 1,046,000,000 for Defense and Security, BND 680.73 mil
for construction sector and public facilities, BND 340.5 mil for
improvement of medical health services, BND 270.3 mil for
socio-economic and public welfare, BND178.17 mil for expansion and
strengthening private sector, BND30 million for the disaster
preventive budget, and BND10 mil for collecting relevant data to
eradicate poverty.

TRANSPARENCY AND PERMANENT RESIDENT STATUS
--------------
6.(U)Pehin Goh King Chin, a business tycoon and the only Chinese
non-government LegCo member, urged government agencies to be more
transparent in the GoB guidelines regarding permanent residency (PR)
status. (NOTE: Permanent Residency remains a particularly sensitive
issues, especially in the ethnic Chinese community. End Note.)
Pehin Goh noted that "when an application is made and not approved,
it the reasons for rejection should be more transparent". Pehin Goh
also made a plea to allow husbands of PR women to remain in Brunei.
He explained that foreign husbands must return to their home country
at the retirement age resulting in the separation of family. He
stressed that "separating a family can be considered as a crime
under international laws on basic human rights". In this context,
he proposed for the relevant committee to review the requirements
for the PR status to solve this problem. Pehin Goh also rekindled

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the debate on the unresolved issue of ownership of properties by PRs
who are Bruneians holding certificates of identification, which was
tabled at the last session.

THE LIMBANG CLAIM BLUNDER CLARIFIED
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7.(SBU) The LegCo session coincided with the signing of Brunei -
Malaysia Letters of Exchange to resolve their territorial dispute.
The signing stole much the public and political spotlight from the
LegCo session. As noted in Reftel, there were a series of media
statements made regarding the disputed province of Limbang. In
response to a question on Limbang, Pehin Lim Jock Seng, the Minister
of Foreign Affairs & Trade II and only Chinese government member,
said during a LegCo session issue of claims over Limbang were never
discussed. Per reftel, the local media was instructed to make Pehin
Lim's comments headlines the following day.


GOVERNMENT SUBSIDIES: DISCUSSED BUT NOT MADE PUBLIC
-------------- --------------
8.(SBU)At the closing of LegCo, the Minister of Finance II, Pehin
Rahman, highlighted the amount of government subsidies and credited
Brunei's welfare system as the most generous in the world. At
present, the government supports the welfare burden comfortably,
according to Pehin Rahman. However he noted that, "the nation's
income source has yet to achieve the aspired diversification".
Pehin Rahman read out each of the itemized subsidies list to prove
his point. However, a Borneo Bulletin journalist told the Embassy
that the press received instruction from the Ministry of Finance not
to publicize the list. To overcome the forecasted budget deficit,
Pehin Rahman stressed to the public must exercise "prudent spending
and avoid wastage on subsidized items like power usage and petrol".
He also urged LegCo members to find out effective ways of raising
public awareness to settle dues to finance valuable projects to
create more employment and reduce poverty".


BRUNEI'S PUBLIC REACTION
--------------
9.(SBU) There was a positive impact where locals noted the LegCo is
now starting to speak about the sensitive issues of Permanent
Residence openly. 'Bruneiresource' blogger, the Permanent Secretary
at the Ministry of Development, Rozan Yunos said the session was
"important so that the public can raise important questions in a
public chamber through appointed representatives" and advised the
public that, "if you want to hear your questions, you better know
who your district representatives are and email them what you need
them to ask." The Dean of Faculty Business, Economics and Policy
Studies at the University of Brunei Darussalam, Dr Roger Lawrey,
commented on the Sustainability Fund as "very prudent and exemplary
move made by the government to protect its (Brunei) income and
revenues for sustainability".

10.(SBU)However, many Bruneians were disappointed or indifferent
because the session was primarily scripted and deliberated in a
highly protocol-conscious manner. The lack of interest from the
public was evident as there were only a handful of non-government
observers like students and foreign missions at the session despite
it being open to the public. 'Brunei LifeStyle' blogger summed up
public sentiment by saying "the session could have had more heated
debate." Another local observer agreed that the "meeting lacked the
true sense of debate" where "most of the deliberations of the
meeting followed a repetitive cycle". In addition, Brunei's only
political party, then National Development Party (NDP),took no
interest in the LegCo session, and did not make any comments on
their official website or observe the session.

COMMENT
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11. (SBU) There was little public interest in LegCo as Bruneians
knows that the session is often scripted. This scripted nature was
evident during Embassy officials' observation of LegCo sessions.
However, Brunei's budget deficit does pose as a real public concern,
along with the level of government subsidies. While there was some
public discussion of the budget, subsidies, and other general
welfare concerns, the GoB's restrictions on releasing detailed
information to the public, via the media, limited debate and public
discussion. Overall, the Fifth Session of the Legislative Council
saw more discussion and question and answer sessions with GoB
Ministers. There was acknowledgement of potential budgetary woes
and a realization that unlimited subsidization cannot go on forever,
However, real decision making authority, full debate, and true
public interaction are lacking.

TODD