In the works: Larger projects are opening doors for foreign firms

The government of Brunei Darussalam has in recent years put a great deal of effort into planning new projects, keeping contractors’ interest with its willingness to spend significant sums. However, the construction sector has encountered a number of delays in both the planning and execution of its projects. The construction sector had a relatively strong year in 2012, though going forward the schedule for a number of major contracts in the pipeline – a possible data centre, the Temburong bridge, and the redevelopment of Bandar Seri Begawan’s downtown – is difficult to predict.

FOREIGN INVOLVEMENT: The need for large projects in a small market tends to favour foreign contractors, as local companies often do not have the resources necessary for the increasingly complex projects being tendered. This tension between the need for expertise from abroad and the desire to develop local capacity has also been apparent in the assignment of projects under the 10th National Development Plan (NDP).

The modernisation of the Brunei International Airport, for example, is being carried out through a joint venture between Swee and Trans Resources Corporation, which is registered in Malaysia as a G7-grade contractor and has experience upgrading three Malaysian airports. The BN$130m ($101.2m) project, is designed to increase capacity from 1.5m to 3m passengers annually and is scheduled for completion by the fourth quarter of 2014. Conducted under the aegis of the Brunei Economic Development Board (BEDB), it calls for the addition of 50% more floor space, new arrivals and departures halls, a new Customs and immigration area, and a full renovation of the existing terminal.

BEDB’s housing and infrastructure projects have been accomplished with foreign contractors as well. “Given the size of the projects we are assigned, foreign involvement is natural, but we mandate contractors to work with local companies, and we do everything possible to ensure technology and knowledge transfer,” Julian Fung, the BEBD’s assistant CEO and head of infrastructure development division, told OBG. In addition to the 4000 units in Kampung Mentiri being constructed by UEM, the BEDB hired Bina Puri to construct 2000 units in Kampung Pandan, while Singapore’s TEE International was chosen for 1500 units in Tutong. Meanwhile, one of the BEDB’s major infrastructure projects – the Telisai-Lumut highway – is in the hands of a joint venture between local firm Surati Construction and China’s Third Harbour Engineering. The 18.6-km dual carriageway project includes the construction of a 600-metre bridge – Brunei Darussalam’s largest to date – that crosses the peat swamps of Telisai.

BUILDINGS: Construction of buildings has slowed down somewhat in the Sultanate, with demand for government office buildings seen as having peaked. One major project being carried out in this subsector, however, is the construction of a new building at the Prime Minister’s Office in downtown Bandar Seri Begawan. United Engineers has the BN$131.5m ($102.4m) contract, which is due to be completed in early 2013.

Continued population growth, the inevitable ageing of the society and increasing demand for more complex health care solutions are also driving hospital and pharmacy construction. The biggest project to come out of this sector recently is the multimillion-dollar new building at the Brunei Cancer Centre. The BN$100m contract is held by TSL, the local affiliate of a Singapore-based company. Construction began in April 2012 and is expected to last at least two years.

It will also incorporate green building principles, which the contractors hope will earn it a BCC Green Mark platinum rating – the highest possible grade. Specific techniques include rainwater collection for plant irrigation and solar panels for an alternative source of electricity. Once completed, the building will be able to accommodate radiotherapy and nuclear medicine patients, thus reducing the need to send citizens abroad for complex treatments.

Other key health care projects in the implementation or planning phases include a BN$57m ($44.4m) complex for the treatment of women and children at RIPAS Hospital, as well as a pharmacy service building, a national health and medical store building and the Rimba Health Centre. While these projects were originally included in the Ninth NDP, they have been shifted to the 10th NDP due to various delays.

BRIDGING THE DISTANCE: Four bridges, several of them major projects, are under construction or in planning phases. Temburong – Brunei Darussalam’s least populated, most isolated district – is due to see its connections expand with two new bridges, including one spanning the Pandaruan River and connecting it to the Malaysian town of Limbang. This project has experienced mild delays, but should be ready by late 2013.

Elsewhere, a bridge is being planned to connect Bandar Seri Begawan with Kampung Lumapas, which borders Malaysia, on the eastern side of the Brunei River. The Public Works Department was evaluating 20 prequalification offers in late 2012, with a contract set to be issued in 2013. Another bridge will link Brunei Darussalam’s mainland to the island of Pulau Muara Besar, where a number of petrochemical plants are being built. BEDB, which has been mandated to provide infrastructure and support for foreign investment projects, is facilitating the bridge’s construction. In August 2012 it awarded the contract for consultancy services to a joint venture between Korean bridge specialist Pyunghwa Engineering Consultant (PEC) and Bruneian consulting firm Jurutera OMC. The BEDB hopes to award the construction contract by the second quarter of 2013.

Among the bridges being constructed, the largest undertaking is the proposed Temburong Bridge, which will cross the Bay of Brunei and connect Temburong to the mainland. Feasibility studies costing BN$2.84m ($2.2m) were completed in mid-2012 for the 22-km bridge, and the government is reportedly preparing the tender for early 2013. Early estimates have set the cost of the project at BN$1bn ($778.8m). Malaysian contractor UEM has reportedly been invited to participate in the tender, but given the project’s size in comparison with others in the Sultanate, it is likely that other internationals will also be interested.

LOOKING AHEAD: A number of further projects remain in the exploration phase. The National Data Centre, envisioned as a disaster recovery centre for the ASEAN region, would offer local contractors the opportunity to gain experience in constructing technologically advanced structures according to exacting standards. The final word on the project’s viability is still awaiting the results of a feasibility study, but officials at BEDB, which is in charge of the project, expressed confidence that it would be approved. Similarly, the memorandum of understanding signed between Canadian defence firm CAE and BEDB in April 2012 is expected to lead to the construction of the region’s largest helicopter simulator training facility, but no specific contracts had been signed at the time of press. The project was estimated at $100m, with operations slated to begin in early 2014, although the lack of news since the announcement suggests that date may be pushed back.

CAPITAL PLANS: One of the biggest questions remaining in the sector is the degree to which the government will implement the Bandar Seri Begawan master plan (see analysis). Published in 2010, the document gives concrete proposals for the redevelopment of most of the downtown area. This would include some mainly cosmetic landscaping and environment cleanup work, but also would lead to renovations, new retail construction, and new purpose-built, high-end office space. Much has to be done before the proposal turns into reality, but successful implementation could mean a steady stream of new projects in the coming decade.