Sector regulators, competition officials and procurement officials were urged to learn on the types of competition issues which may arise in the construction sector and ways to mitigate against anti-competitive practices which may lead to inefficiency in the sector and inflated prices affecting the government budget, the public and the economy. This was highlighted by Yang Berhormat Dato Seri Setia Awang Haji Suhaimi Bin Haji Gafar, Minister of Development, in his opening remarks of a discussion on the topic of “Deterring Cartels in the Construction Sector to Enhance Growth & Consumer Welfare in Brunei Darussalam”. The session was organised by the Department of Economic Planning and Development, Ministry of Finance and Economy through the Department of Competition and Consumer Affairs, in collaboration with the Ministry of Development.
Led by competition experts from the Australian Competition and Consumer Commission and the University of Melbourne, the session discussed the significance of the construction sector in the economy and potential competition issues which may arise in this sector. The competition law practitioners shared their experience on ways to mitigate and deter anti-competitive practices in the sector, which if left unattended, may lead to inflated prices and limited choices affecting consumers’ well-being, government spending and potentially may affect the sustainability of the sector’s growth and the economy.
The session was attended by Yang Mulia Dato Paduka Awang Eddie bin Dato Paduka Haji Sunny, Chairman of the Competition Commission of Brunei Darussalam;; and Yang Mulia Awang Haji Marzuke Bin Haji Mohsin, Deputy Minister of Development. Also participated in the discussion were Permanent Secretaries from the Ministry of Finance and Economy and the Ministry of Development, members of the Competition Commission of Brunei Darussalam, as well as senior officials from the Ministry of Development, the Department of Economic Planning and Development, and the Attorney General’s Chambers.
In his opening, Yang Berhormat Minister of Development highlighted that construction sector accounts for approximately 2.5% of gross domestic product (GDP). This number may seem small, but it is a sector with great growth potential based on the rising number of businesses registered related to construction;; the needs of public infrastructure projects and the growing number of commercial properties currently being built. Government spending is expected to reduce as the role of private sector increases. Government will outline various measures to spur private participation to enable the private sector to be the engine of growth. Tendering processes will be more competitive and Public-Private-Partnership (PPP) system will dominate procurements in the construction industry.
With the establishment of the Competition Commission of Brunei Darussalam (CCBD) and the Department of Competition and Consumer Affairs in August last year to implement and enforce the Competition Order, 2015, the Government is committed to promote economic efficiency, economic development and consumer welfare, through prohibiting anti-competitive conducts, such as cartels, price fixing, supply control and bid rigging.
Yang Berhormat Minister shared that the construction sector has received huge attention by the competition authorities, not just in the ASEAN region, but also in the OECD economies, with many case examples, ranging from price fixing in construction materials to bid rigging offences. This is mainly because of certain characteristics unique to this sector. Some of its features, including the market structure, homogeneous nature of the input (construction materials), bidding procedures and sub-contracting work involved, making cartel formation and other anti-competitive behaviours a high probability in this sector.
With the on-going preparatory work towards enforcing the prohibition of cartels and anti-competitive conducts, Yang Berhormat Minister underscored that learning ways to mitigate against anti-competitive practices is important for the Ministry of Development and relevant competition officials involved. In view of the increased tendering activities that come with the long-term infrastructure plan, he also hoped that the procurement officials can learn ways to put in place more competitive tendering processes, and to encourage open and effective competition for more efficient use of government resources.
Yang Berhormat Minister concluded by expressing hope for more collaboration among the sector and the competition law regulator, as well as the industry participants, to work together to tackle any potential market issues in construction sector.
The session was held on 29 October 2018 at the Ministry of Development Building.