farmers market provides an additional source of income for farmers at the Eco Ponies Garden village. This suggests that proper employment and income from agritourism can create a better standard of living for the community.

The findings concur with the existing literature and highlight that the income received is usually reinvested for maintenance, the production of alternative agrifood products, harvesting local produce and promotional marketing. The intention to reinvest implies that owners see long-term economic advantages and are eager to plan for future agritourism products. Brunei's untapped rare biodiversity and expansive forests are two of its largest natural assets that require minor infrastructural construction to accommodate tourism activities. The farmers and owners of all three areas studied saw this as an opportunity to build on their individual agritourism products. An advantage of investing in agritourism is that it can be done with a modest amount of capital by utilising pre-existing forest resources with care to ensure sustainability. For instance, Eco Ponies Garden started in 2015 with zero budget, relying solely on tourism and food sales to gradually build facilities. With Brunei's abundance of natural resources and proper planning, agritourism can be a productive industry.

Moreover, sustainable practices to safeguard and maintain the environment's ecosystem are crucial to the livelihoods of the three agritourism farms. All operations and tourism activities at the farms practise sustainability to avoid environmental degradation such as pollution, habitat destruction and irresponsible foraging. Sumbiling Eco Village is a pioneer in being an ecovillage, diligently promoting sustainable living practices (Siti Rozaidah et al. 2019). It implemented its own forestry system which includes tree planting to preserve the pristine rainforest. Staff are encouraged to plant one local tree for every visitor they bring into the forest. Plastic waste used to pollute the riverbank but vegetation was able to flourish once again after years of rehabilitating the village into the reduce, reuse and recycle (3R) concept by reducing plastic usage, reusing old tyres as tubing floats and recycling food waste as compost.

Eco Ponies Garden addresses environmental concerns by advocating sustainable foraging, limiting the quantity of harvests and replanting rare jungle plants in the garden for conservation. It emphasises ethical food sourcing: in just a few years it has been able to reduce over-foraging of rare ingredients endemic to the village and grow organic food using its own biochar fertiliser by mixing burned soil and dried leaves. It also incorporates a green building strategy by constructing cottages according to the contours of the jungle path to avoid cutting down any trees and using old repurposed wood or recycled materials for furniture. The clay hut and oven are a few defining features of sustainability at Eco Ponies Garden, built using only a mixture of biodegradable materials such as sand, soil, grass and bamboo scaffolding in place of nails.

Tasbee Meliponiculture Farm also imposes strict rules to protect the surrounding environment, such as prohibiting the use of pesticides and chemical fertilizers to avoid harming the bees. The forest remains an important food source for the meliponary. The three farms are multifunctional in the sense that they rely on agroforestry. Combining recreational farm activities and agroforestry brings more value to the
farmland, such as through wind or flood protection, so it can have stronger multi-functionality (Barbieri and Valdivia 2010). At Tasbee Meliponiculture Farm the forest provides extra heat protection for the stingless bees, which cannot survive in high temperatures, and its leaves can be additional food for the bees during the dry season when flowers and fruit are scarce.

Additionally, tourism activities at the farms have heightened the sociocultural awareness of international and domestic tourists on indigenous food heritage. Many community-based destinations around Southeast Asia have experienced sociocultural exchanges through interactions between international tourists and local staff (Ling et al. 2017; Nguyen et al. 2018; Manalo et al. 2019). The presence of Iban and Dusun indigenous communities at the farms allows for a full immersion in their local cultures, lifestyles and languages. Local staff and farmers reported that their communication skills, such as the use of the English language, have improved and they are able to hold discussions and exchange lifestyle experiences due to constant interactions with international tourists. Likewise, international tourists can increase their cultural capital by learning local languages, experiencing village life during the farmstays and participating in the daily routines of the farms. Indigenous cultures get disseminated into a wider cultural setting while local and foreign tourists can immerse themselves in the indigenous cultures.

Indigenous groups in Sarawak, Malaysia, have discovered that tourism can be a functional tool to preserve their culture and agricultural heritage, especially for the once nomadic Penan tribe in Long Lamai village (Falak et al. 2016). Meanwhile, Chiphat village in Cambodia was reportedly able to revive traditional ethnic Khmer culture by teaching visitors their culture at the homestay and producing practical handicrafts such as sustainable woven food containers (Reimer and Walter 2013). Similarly, in Brunei, farms have received positive benefits in preserving and reviving indigenous cultures through food and cultural activities. Sumbiling Eco Village pays homage to the Iban culture by teaching visitors how to cook village specialties, demonstrating how to use the traditional blowpipe hunting tool and occasionally having villagers perform the ngajat dance in full traditional attire.

Eco Ponies Garden has revived the traditional food of Tutong, Kedayan and Dusun communities through organised public events, such as fruit-tasting festivals, farm-to-table dining and cooking classes. Its farm-to-table menu is customised to the availability of the local harvest—healthy meals infused with wild herbs and presented in a gourmet style. Gourmet ethnic food is a way to show that local flavours can be creatively plated and refined to invoke appreciation for organic food and local agriculture. The farm involves a type of food tourism that gives people space to explore the dining setting while directly corresponding with the food producers or participating in the cooking of the cuisine. A neighbouring tourist destination in Bario, Sarawak, has proven that slow food tourism of organising food events featuring sustainable and traditional food in rural areas can be used as a strategy to attract high-rolling ecotourists (Adeyinka-Ojo and Khoo-Lattimore 2013). Although Eco Ponies Garden does not identify as a slow food tourism spot, it works in a similar way by staging traditional ethnic food or seasonal fruit in a contemporary aesthetic
styling at its rustic farm to create awareness of the capabilities of locally sourced produce to modern consumers.

All three study sites are located in remote villages far from the capital city, so the village life is accentuated in their tourism experience. Although authentic agritourism concepts emphasise a stark difference between authentic and countryside tourism, both are intricately intertwined in this case as the agritourism activities involve working participation in the village culture. When tourists visit or stay overnight, they are hosted by different family members who they spend time with during various activities and meals. The Sumbiling Eco Village and Eco Ponies Garden overnight stay programmes are intended to show tourists the daily lifestyles of Iban and Dusun villagers as well as how they exercise their intangible agricultural heritage. Several villages across Sarawak have applied the ‘cultural theme park’ concept of organising village infrastructure to exhibit various Sarawakian ethnic traditions, food, cultural objects and rituals—equivalent to living museums. Villages have living props for tourists to engage with and, inadvertently through the cultural activities, some domestic tourists are able to reconstruct their own ethnic identities and reconnect to their ancestral roots (Hamzah 2017). Unlike the cultural theme parks in Sarawak, Sumbiling Eco Village and Eco Ponies Garden are situated in authentic villages and although some cultural activities are simulated as tourist activities, the communities and ethnic groups were consulted. The traditional dance is authentic and not cut short to accommodate tourist turnover. Experts from the ethnic community are consulted for games such as blow-piping. In fact, the two farms are identity-building mediums for domestic tourists, especially youths who are alienated from past cultures. They can learn intangible village heritage such as wildcrafting herbs and the disappearing Dusun art of steaming rice in animal-shaped woven leaves.

Finally, there is the strength of human resource development. Agritourism farms often blend education and recreation to sell novel experiences as tourism products, subsequently classifying agritourism as an educational tool, especially for youths (Petroman et al. 2016; Maharjan and Dangol 2018). Agritourism activities at the three study sites involve experiential learning, such as the skill of extracting stingless bee honey and sustainable cooking using bamboo or edible leaves, which are uncommon forms of knowledge that can only be obtained by participating at the farms. The multifunctional farms also organise events for public and educational institutions, for instance agriculture workshops, school trips, student summer camps, cooking lessons and academic projects.

Besides educating tourists, agritourism also helps in boosting human capital by employing local staff and volunteers at the farms. Although the farms are small, they provide employment to local staff, especially local farmers and villagers. When there are big groups of tourists or large events, young volunteers or temporary staff are hired to help set up, host and make arrangements. Increased job opportunities at farms due to an uptake of tourism activities is a common benefit of agritourism (Ummiroh and Hardiyani 2013; Bwana et al. 2015; Ling et al. 2017; Nguyen et al. 2018). Data show employment in agriculture at an average of 1.38% from 2020 to 2022 (World Bank 2022). The development of human capital also stems from the capacity-building aspect of agritourism activities. Despite the absence of formal training, staff are able
to upskill and reskill themselves by learning different knowledge about farming, culinary skills and event management. Obtaining new skills is part of the contribution of agritourism to the local community (Tiraieyari and Azimi 2012). The farmers, villagers and volunteers became multiskilled from basic farming tasks to hosting tourists, cooking, building constructions, maintenance works, event management, carpentry, tour guiding, developing products and entrepreneurship.

### 9.3.2 Internal Analysis of Weaknesses

A major weakness of agritourism in Brunei are financial constraints. Its abundance of natural assets does not equate to financial capital, particularly for community-based agritourism operators. Even though they are small-scale, they still need stable financing as tourism activities and visitors increase to accommodate developments of the farms. Villagers rely heavily on tourists to bring business to their accommodation services, gastronomy services and agrifood products. During the off-season, such sites struggle to match their peak season earnings, so owners tend to use their personal funds to pay the salaries of the villagers and staff. In some Indonesian examples, agritourism income is managed by groups of farmers' cooperatives represented by farmers, agriculture experts and various stakeholders, with the sole purpose of easing the farms' financial burden (Ummiroh and Hardiyani 2013; Budiasa and Ambarawati 2014). However, in Brunei there is no centralised management such as a farmers' cooperative or association that provides financial aid. Farms can only receive whatever financial support the government decides to provide.

Another common issue faced by the three sites is the difficulty of setting value-based pricing. Tourism sites often price their products or services according to their values from the perspectives of tourists (Monyane 2014; Armoni et al. 2018). The difficulty lies in matching the value of the products with the perspectives of both domestic and foreign tourists who frequently find the prices to be expensive for the local market, which staggers the supply and demand of local tourism products. As such, the three farms must creatively alter their production and pricing to a range that is acceptable to local consumers.

There is also a lack of institutional support and collaboration. Brunei's agritourism is still in its infancy stage, although established as long ago as 2008. The development thus far has been slow compared to neighbouring countries with more expansive framework and infrastructure. In Malaysia and Indonesia, for instance, there are managing institutions such as farmers' cooperatives and the integration of agritourism into national tourism plans (Ummiroh and Hardiyani 2013; Budiasa and Ambarawati 2014; Liew and Ong 2018). In contrast, Brunei has not integrated agritourism into its national tourism framework or guidelines to consolidate the operations of the farms. The main priorities of the national tourism framework are to develop adventure and sports, diving, cruise, Islamic, gastronomy, and meetings, incentives, conferences and exhibitions tourism (Tourism Development Department 2021). Relevant state departments have acknowledged the operations of the three study sites, but
without a directive role in the agritourism sector there is no sanction to corroborate official collaborations between the state and the agritourism community. The enterprising farm owners and staff stated that although they have been self-reliant institutional support is still needed for making advances, especially for domestic tourism promotion. The local population has shown less support in purchasing experiences compared to international tourists because local people are less informed about the farms, suggesting that existing efforts to promote local tourism sites by relevant agencies still need vast improvement.

Furthermore, the small-scale and seasonal nature of farm produce represents a weakness. The capacity of the three sites is limited to small-scale harvests suitable to cater to their regular number of customers, so their income from produce sales is not high. Tasbee Meliponiculture Farm is the smallest in terms of production capacity— even though the meliponary houses 18 stingless bee species only two can be harvested for commercial use. Out of all the agriculture activities, honey extraction is the most delicate process and each extraction produces only about one or two spoonfuls of raw honey. It takes two to three extractions to fill a 15-ml jar. This has led to a mismatch of supply and demand as tourists seek to purchase larger amounts of honey than the farm can produce. Likewise, Eco Ponies Garden and Sumbiling Eco Village harvest seasonal fruit and vegetables, so tourists cannot receive the same experience or try similar local food as described on social media platforms such as TripAdvisor or by word of mouth. Gastronomy activities and menus have to change according to the season. This has created inconsistent tourist experiences and reviews. Due to the unavailability of continuous supply, the three sites are unable to depend on agrifood production alone and have incorporated value-added products such as outdoor sports as an alternative strategy. This study therefore has shown Brunei's agritourism as a combination of community-based tourism on a working farm which includes other main activities rather than farming alone.

Lastly, there is a lack of human resources and expertise. Despite developing human capital through capacity building among the locals, only Sumbiling Eco Village has hired villagers as permanent staff. Both Eco Ponies Garden and Tasbee Meliponiculture Farm have resorted to recruiting international and local temporary project-based volunteers to minimise costs, which highlights a lack of economic sustainability. Eco Ponies Garden is a well-known host for international volunteers, volunteer tourists or voluntourists. In volunteer tourism, tourists bear a responsibility to create positive impacts within the host community while also gaining an authentic and deep understanding of them (Terry 2014). Voluntourism brings a number of benefits as evidenced by Eco Ponies Garden, such as overseas innovative ideas, different skill sets and structure to assist local farms. However, this kind of temporary workforce has its own problems. The argument is that volunteer tourists are ‘vacation minded’, where they only use volunteering to provide themselves with personal growth, camaderie and a sense of globetrotting adventures (Brown 2005). Despite their positive reputation, voluntourists’ travel desires outweigh their sense of commitment. They stay for a maximum of two months at Eco Ponies Garden, but they are still inherently tourists who have prearranged travel plans. Meanwhile, local temporary volunteers get paid a minimal wage and hence are unlikely to stay for long.
### 9.3.3 External Analysis of Opportunities

The global evolution of agritourism has contributed to a change in the agriculture landscape. It is now seen as a product offering in situ cultural experiences that can promote better understanding of agricultural practices, traditions and knowledge to the general public (Barbieri and Streifeneder 2019). This can perhaps be seen as an additional tourism promotional strategy to encourage domestic tourism. This was particularly relevant when international travel bans were imposed in Brunei due to the COVID-19 pandemic. All three farms reportedly experienced a surge in local demand due to international travel restrictions. There was a burgeoning interest in tourism activities at the farms. Mori Farm, a large moringa herb garden, collaborated with a local art gallery to hold an outdoor painting event with a guided tour at their farmland (Lau 2020). The emerging interest implies an opportunity for proposing new tourism strategies or packages in Brunei. Instigating agritourism activities at farms would potentially extend the capacities of the local agriculture industry by augmenting farm experiences with value-added products in tourism packages. The agritourism model in Brunei is community based in tandem with pooling village resources and joint action with local youth. As previously mentioned, community-based tourism is being evaluated by a relevant tourism agency, so there is already a moderate foundation for inaugurating community-based agritourism in the national tourism plan.

### 9.3.4 External Analysis of Threats

Although initiatives such as the Visit ASEAN tourism campaign were inaugurated, high and intense competition still exists between the member countries. Besides an underlying spirit of collaboration, there is intense competition for tourist arrivals. Brunei is faced with competitive neighbours offering a variety of different agritourism products with more choice and competitive pricing. For instance, the community-based agritourism of a salak (snakeskin fruit) plantation in Bali was able to competitively lower the price of its agritourism packages to about USD1 per person for large groups, inclusive of entrance fees and U-picking of the fruit (Budiasa and Ambarawati 2014). Conversely, Sumbiling Eco Village offers a day-trip 'rainforest discovery trek' package which costs a steep USD66 for two visitors. The argument for the high cost in Brunei is that local people and ethnic groups are not exploited and are paid well for their contribution. In addition, the price of maintenance for all farms is costly as production is not at an optimum.

Aside from regional competition, the three study sites have to compete with larger tourism operators within Brunei. For instance, Freme Rainforest Lodge is the main competitor of Sumbiling Eco Village, located in the same area and with more outdoor sports facilities. The cheapest day-trip package is about USD65, inclusive of refreshments and access to outdoor and water sports facilities (Freme Rainforest Lodge
2024). Conventional tour agencies can also be a threat because they can accommodate more tourists and have more resources. They can facilitate accommodation and transportation for larger groups of tourists across districts, although this might not be particularly in line with the principles of sustainability and could create a different experience for tourists. However, authentic experiences based on local knowledge and genuine products are not emphasised by the three farms' marketing. This has created a disadvantage for them.

Environmental degradation is also often associated with rapid urban and agricultural development. Cameron Highlands in Malaysia, for instance, has been facing issues where modernising tourism developments pollute the natural environment and subsequently cause immense flooding and landslides in residential areas. Additionally, the use of pesticides and fertilisers is a rising concern (Ling et al. 2017). In the case of Brunei, Eco Ponies Garden revealed an issue of over-foraging or irresponsible foraging in their village which caused a scarcity of the roselle flower, an important ingredient in their food and drinks. This might have been caused by the lack of awareness of local villagers and tourists on the scarcity of wild ingredients. There was also a dearth of other ingredients, such as the butterfly pea flower and soft bamboo shoots. Farmers were not trained to replant wild ingredients gathered in remote parts of the jungle. Despite the benefits of agritourism, such as job opportunities for villagers and positive economic and social impacts, its promotion and implementation should be carefully planned to reduce adverse impacts on the environment.

## 9.4 Conclusion

The slow yet persistent developments of Sumbiling Eco Village, Eco Ponies Garden and Tasbee Meliponiculture Farm are testament to the ingenious capabilities of the community of villagers and farmers in their pursuit of participating in the tourism industry. The SWOT analysis based on the interviews reveals that the number of strengths outweigh the weaknesses of agritourism. Community-based agritourism in Brunei has resulted in positive impacts in four main facets: economic, environmental, sociocultural and educational, all of which greatly benefit farm owners, villagers, farmers and local youth. The weaknesses described in the analysis provide reasons as to why agritourism is still underdeveloped, despite operating since 2008. Agritourism farms struggle with rapid growth due to internal and external disadvantages. The internal disadvantages are based on the deficiencies of farm resources in terms of funding, fluctuating income, premium pricing, small-scale production, limited seasonal harvests and unreliable human resources in the form of volunteer tourists. The external disadvantages are caused by a lack of institutional support or collaboration from relevant agencies, the absence of agritourism in the national tourism framework to guide the farms, the non-existence of centralised management such as associations to represent the welfare of the farms and farmers, and inadequate promotional marketing to attract domestic tourists.
Nonetheless, the recent burgeoning interest in farm tourism can be an opportunity to catalyse agritourism as a tourism strategy. However, accelerating agritourism development can prove to be challenging, with threats from stiff regional and domestic competition. Small farms are in a precarious position as their competitors are larger and fully equipped with more resources, facilities and recreational activities at cheaper prices. Moreover, the farms are reliant on nature as their main asset, hence depleting natural resources from unsustainable practices should not be taken lightly. Even so, the research findings suggest that agritourism can indeed be beneficial in building sociocultural and environmental resilience in Brunei, as it has done for other countries around the globe. As revealed from the developments of the three study areas, agritourism will be able to appraise the farming community's capabilities and highlight the significance of local agricultural heritage while preserving the rare biodiversity that nurtures the growth of native wild plants and hinders ecological deterioration.

It is important to note that although the farms have been operating since the late 2000s, their agritourism ventures are still ostensibly at an early development stage and the farm owners are still deliberating their next tourism activities, such as expanding their agrifood programmes based on responses from international and domestic tourists. The recent budding interest of local people in organising recreational events at farmsteads is indicative of a positive inclination of the community towards accelerating the scope of agritourism to a multitudinous range of farms. The different themes identified from this SWOT analysis present an overview of the significant parts of Brunei's agritourism to compensate for the limited literature and information in the local scene. However, given that it is still gradually developing and transforming, further in-depth investigations are required to understand the various ramifications of community-based agritourism. Based on this exploratory study, the proliferation of agritourism farms is possible in the near future with more support from the public and relevant organisations to secure the operations of the farms. Grassroots initiatives can achieve state-wide significance if incorporated into the nation-building strategy as supporting a growing sector.

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Wardi Wasil. 2020. Bidasari hideout kitchen: Eco Ponies' blessing in disguise. *The Brunei*, 16 May. https://www.pressreader.com/brunei/the-brunei/20200516/281754156510522. Accessed 13 May 2024.

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**Wei Lee Chin** is an Assistant Professor in the Faculty of Arts and Social Sciences, Universiti Brunei Darussalam. She specialises in destination competitiveness with specific reference to developing countries in Asia. Her research interests include small-scale island tourism, tourism community development, agritourism, smart tourism, film tourism, socioeconomic sustainability as well as tourism impacts in Asia. Her key publications include: Destination competitiveness: Evidence from Bali. *Current Issues in Tourism* 20(12) (2017); The relationship between destination competitiveness and resident's quality of life: Lessons from Bali. *Tourism and Hospitality Management* 26(2) (2020); Agritourism resilience against Covid-19: Impacts and management strategies. *Cogent Social Sciences* 7(1) (2021); and, Distribution of (in)equality and empowerment of community-based tourism: The case study of tourism. *International Journal of Hospitality and Tourism Administration* (2023).

**Siti Fatimahwati Pehin Dato Musa** is an Assistant Professor at the School of Business and Economics, Universiti Brunei Darussalam. She holds a PhD in agricultural economics and rural development from Newcastle University, UK. Her area of specialisation is in development economics, focusing on food security, agricultural development and sustainable food systems. She is a recipient of several university grants. Her recent publications include: Smart farming: Towards a sustainable agri-food system. *British Food Journal* 123(9) (2021); Agritourism resilience against Covid-19: Impacts and management strategies. *Cogent Social Sciences* 7(1) (2021); and, Does
unemployment affect the relationship between income inequality and food security? *International Journal of Sociology and Social Policy* 43(1/2) (2022).

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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<figure><img src="image_75.png" /></figure>
Chapter 10

Cross-border Tourism between Brunei
Darussalam and Sarawak, Malaysia

<figure><img src="image_76.png" /></figure>

Check for
updates

Wei Lee Chin

**Abstract** Borders set the authorised limits of national sovereignty or the frontiers up to which a state may exercise its authority. In recent years, cross-border tourism has become an increasingly important economic activity between Brunei Darussalam and the East Malaysian state of Sarawak. This chapter focuses on factors influencing the frequency of cross-border tourism and investigates the cross-border shopping behaviour of Bruneian visitors crossing between Brunei and Miri in Sarawak. The surge in visits to Sarawak may have profound implications for Brunei's revenue as high outflows of expenditure are believed to have contributed to a significant number of economic leakages. The approximate number of times people leaving Brunei was recorded as high as 2.4 million in 2018–2019, before the COVID-19 pandemic. This analysis aims to examine the purchasing patterns of Bruneian visitors as well as their motivating factors. The latter are alluded to as drivers of cross-border tourism with major reasons including price benefits, a favourable exchange rate as well as non-price factors such as the availability of choice.

**Keywords** Brunei Darussalam • Sarawak, Malaysia • Cross-border tourism • Motivational factors • Tourist behaviour • Purchasing patterns

**10.1 Introduction**

International boundaries were traditionally delineated to act as constraints on the movement of people, goods and services, and which, as a result, could prevent economic, social and political interaction between countries. However, in an age of deepening global integration, the relationships among nations are becoming more permeable and cross-border economic activities are intensifying, supporting greater trade and other forms of exchange. Boundaries have become points of contact or convergence (Timothy 1995). One of the most significant examples of such cross-border activities is international tourism. Conventional tourism is defined by UN

<footnote>Wei Lee Chin (✉)
Faculty of Arts and Social Sciences, Universiti Brunei Darussalam, Gadong, Brunei Darussalam
e-mail: weilee.chin@ubd.edu.bn</footnote>
Tourism (formerly the United Nations World Tourism Organisation) as the move-
ment of people across international borders for a plethora of different reasons, such
as business tourism, leisure tourism, medical tourism or visiting friends and relatives,
which includes at least a night or 24 hours away from home. Although there is a lack
of agreement in defining cross-border tourism, Dallen J. Timothy and Richard W.
Butler (1995) and Mark P. Hampton (2010) agree that it should include day-trippers
regardless of the purpose of the visit (business, leisure or shopping) and time frame
(a minimum time period or overnight stay), as long as there is some sort of geograph-
ical proximity or common border as seen between countries like the United States
and Canada or Singapore and Malaysia. The case study presented in this chapter
looks at this phenomenon with regard to Brunei and the East Malaysia state of
Sarawak, particularly the city of Miri. In light of this, tourists who stay overnight can
also be considered as contributing to cross-border tourism, just like conventionally
defined international tourism. Similarly, a cross-border tourist is identified as ‘an
individual tourist or consumer visiting neighbouring countries with the purpose of
directly consuming goods and services which are cheaper in that country and/or are
unavailable in the country of origin’ (Anaman and Rose Aminah 2002).

Cross-border tourism is an important driver that is encouraged by governments and international bodies due to the positive impact it brings to the economy (Boonchai and Freathy 2020). With the rapid economic development of Southeast Asia as one of the world's fastest-growing tourism destinations, it is important to recognise the huge impact that cross-border tourism has on the economies of the region. Understanding the reasons for a destination's competitiveness is essential in ensuring sustainable economic development (Chin 2017; Chin et al. 2017; Chin and Hampton 2020). Greater cross-border development was intensified in the 1990s within the Association of Southeast Asian Nations (ASEAN) region with projects such as the Indonesia–Malaysia–Singapore growth triangle (IMS-GT) as well as the Brunei–Indonesia–Malaysia–Philippines East ASEAN Growth Area (BIMP-EAGA), aiming to encourage subregional economic cooperation and cross-border tourism within the participating areas through intergovernmental collaboration, destination marketing and increased investment (Hampton 2010).

Cross-border tourism between Brunei and Sarawak, East Malaysia, reveals 2.4
million trips were made by Bruneian residents crossing the border to Sarawak before
the onset of the COVID-19 pandemic in March 2020 (DINR 2019). Given the popu-
lation of Brunei is estimated to be 450,500, 2.4 million represents an average of 5.3
cross-border visits per person per year. The sheer volume of visits clearly calls for
a study in examining the motivating factors and purchasing patterns of Bruneians
during these trips. In this study, Miri is chosen as a destination of interest due to
its long tradition of Bruneians crossing the border for shopping. Fifty respondents
were interviewed at the Brunei immigration post from October to December 2019,
not long before the outbreak of the pandemic. The main objectives are to identify
the factors influencing cross-border tourism between Brunei and Miri as well as to
investigate cross-border shopping behaviour and motives. Reasons such as shopping
for groceries and essential household items are identified for both day-trippers and
short-term visitors. Entertainment activities like pubs, bars and live music as well
as leisure and recreational activities such as unisex facial and massage parlours, and spending a night in a hotel outside Brunei are all factors identified in this survey. Although this research was done before the COVID-19 pandemic, it is already evident that Bruneians have resumed their visits to Miri for the same purposes. To illustrate, Bruneian visitors to Sarawak have returned to pre-pandemic levels of around 848,075 visitors from January to August 2023 (Dayak Daily 2023).

## 10.2 Borders and Tourism

Cross-border tourism has attracted a significant interest among scholars due to its impact on economic revenues and retail sales on both sides of the border. Alon Gelbman and Dallen Timothy (2010) suggest that this kind of tremendous economic growth is due to a unique form of borderland attraction where communities living in between two societies have the potential to create circumstances that are favourable for cross-border tourism. For example, the arrival of tourists from Singapore has triggered economic growth in Johor Bahru in Malaysia, just 1 km away. Another border town that continues to record remarkable economic growth as a direct result of cross-border activity is Miri (as well as Kuala Lurah and Limbang) due to the presence of tourists from Brunei.

A growing literature looks at the related effects of cross-border tourism: purchasing patterns (Lukić 2012; Krainara and Routray 2015); shopping and economic restructuring (Karlsson and Lindgren 2010); and the close relationship between motivation and marketing (Park et al. 2019; Woyo and Slabbert 2019). In addition, various studies examine different geographical locations for such cross-border activities: the United States and Canada (Di Matteo and Di Matteo 1996; Ferris 2010; Lipovic et al. 2015); the United States and Mexico (Guo and Wang 2009; Fullerton and Walke 2019; Sullivan et al. 2012); Singapore and Malaysia (Piron 2002; Hui and Wan 2008); Brunei and Malaysia (Subramaniam et al. 2008, 2013; Anaman and Rose Aminah 2002); and Hong Kong and China (Wang 2004; Lau et al. 2005; Zhang et al. 2018; Baek et al. 2020).

According to a study of cross-border trips between the United States and Mexico, the majority of respondents used a car and their spending per trip was recorded as USD500 on average (Sullivan et al. 2012). Francis Piron (2002) reports that approximately 900,000 day-trippers cross from Singapore, a high-income country, to Johor Bahru in Malaysia, a middle-income country, for shopping, recreation and food. Kwabena A. Anaman and Rose Aminah Ismail (2002) examine a decline in retail sales in Brunei during the festive season as Bruneians spent their money in nearby Malaysian towns like Limbang and Miri. Similarly, a survey by Peng Ju (2011) on cross-border tourism between Hong Kong and Shenzhen in China finds that most respondents were day-trippers and spent most of their money on low-end goods, with an average spend of USD39–64 (for 50% of respondents) and USD13–39 (for 30% of respondents). The study also shows that 80% of Hong Kong residents visited Shenzhen more than once in a month. Other studies investigate visitors' purchasing
behaviour and motivation factors. Motivation is a 'psychological state that drives an individual towards achieving a desired target' and is a significant factor to understand, explain, and conceptualise travel behaviours (Park et al. 2019: 65). Travel motivation can be affected by a number of factors: culture, as tourists may be spurred by linguistic and cultural similarities or uniqueness in cultural attributes (Weidenfeld 2013); value for money (Frenţ 2016); natural beauty such as beaches and architecture (Shida Irwana et al. 2014); and psychological aspects of human needs such as taste, relaxation and social belongingness (Mustaffa et al. 2017). Economic, social and environmental factors are antecedents of tourist satisfaction, and thus affect tourist behaviour and their revisit intentions (Jarvis et al. 2016). The study by Jonghyun Park et al. (2019) shows that economic factors are seen as the most influential causes affecting tourist behaviour and revisiting intentions, followed by nature and cultural aspects.

## 10.3 Cross-border Framework and Methodology

One useful insight from the model of cross-border shopping presented by Thirunaukarasu Subramaniam et al. (2008) is their emphasis on day-trippers or short-term visitors and their ability to group market characteristics into three different attributes which are more applicable to the ASEAN context. Their integrated model builds on the work of Terry Clark (1994) and Ho-fuk Lau et al. (2005) to create a framework for analysing cross-border shopping patterns. The framework synthesises consumer and market characteristics as the main influences on cross-border shopping. Consumer characteristics comprise socioeconomic characteristics such as age, gender, income, occupation and employment, as well as motivational characteristics (Fig. 10.1). On the other hand, market characteristics include three main attributes: product and service attributes, which look at price, promotion, quality as well as the availability of products and services; shopping area and related attributes, which comprise the environment and level of comfort of the premises; and physical and other factors, which deal with distance, exchange rates and boundary management.

As shown in previous studies, pricing is directly linked to the effects of cross-border shopping behaviour (Piron 2002; Lau et al. 2005; Sullivan et al. 2012; Park et al. 2019). The relative strength of a country's currency does have an impact on the behaviour of shoppers which determines the flow of the currency. Singaporeans crossing the Causeway in Johor Bahru, Bruneians shopping in Miri and Limbang, and Hongkongers travelling to Shenzhen are commonplace due to attractive low retail prices. Subramaniam et al.'s framework takes into account consumer characteristics such as income, age and gender to identify whether the behaviour of shoppers is influenced by differences in these variables. This provides significant information on the link between the frequency of cross-border visits and tourist incomes. In addition, market characteristics such as shopping attributes, products and service availability are also taken into account. These attributes are significant to vendors in providing an understanding to satisfy consumer needs and wants. Factors such as
<figure><img src="image_77.png" /><figcaption>**Fig. 10.1** Framework for analysing cross-border shopping patterns. *Source* Subramaniam et al. (2008: 64)</figcaption></figure>
accessibility, the variety of shops and products, prices, facilities and entertainment are all examples of market characteristics that can add value to a shopping retail space. It is therefore helpful to identify whether such attributes affect the decisions of cross-border visitors. Furthermore, physical factors such as distance and boundary management are also highlighted in this framework. Distance and cost might be two significant factors that affect the motivation and decision-making of cross-border shoppers, including the time spent on travelling and the waiting time at customs checkpoints. Boundary management is also deeply associated under physical factors as one of the key attributes. Strict or lenient boundary management might also affect the decisions and motivations of cross-border tourism. All these factors included in the framework provide a more comprehensive picture of consumer behaviour and motivation in crossing borders, which helps explain and predict motives that influence travel decision-making.

This study adopts a qualitative approach using semi-structured interviews encompassing an intense two and a half months of research using a rapid rural appraisal approach. The limited budget and logistical constraints made this approach suitable as I used my pre-knowledge to maximise qualitative data collection. In terms of positionality, I did a pilot study and discussed and amended the interview questions before going into the field to ensure questions were clear and easily understood by the respondents. During the pilot study, it was observed that respondents had no major difficulties answering the questions, but a few minor changes were made to facilitate analysis. Besides interviews, direct observations and notes were collected and detailed in a field journal to echo the significance of self-reflection in qualitative fieldwork.

The target population for this study were Bruneian visitors, identified by their car registrations, at the border checkpoint in Sungai Tujoh. Respondents included were both day-trippers (same day return visitors) and short-term visitors (overnight/more than 24 hours). During the fieldwork, 50 semi-structured interviews were conducted during the peak season (October to December) with an average interview duration of 45 minutes to an hour. Interviews were intentionally carried out during the peak season and during peak times, as respondents were more willing to be interviewed while waiting in the queue for immigration and customs checkpoints. The interviews were carried out at different times of the day and week to reduce any form of bias. Interview respondents were selected using convenience sampling, based on proximity and availability on the day of the interview. Semi-structured interviews were used, allowing a high degree of flexibility for respondents to convey their viewpoints and perceptions more freely on issues they felt relevant to the topic discussed. The semi-structured format also meant that respondents could be asked to elaborate or clarify the reasoning behind their answers. Data collected were then analysed to examine key themes based on testing the framework's components. The information collected from respondents are detailed to understand their motivational or behavioural factors relating to crossing the border and to recognise visitors' purchasing patterns and willingness to spend money on goods and services. Sungai Tujoh was chosen for fieldwork as no previous research has been undertaken on the border between Brunei and Miri.
I recognise some limitations of this study. The results are not necessarily definitive or conclusive given the small sample size. Additionally, fieldwork was conducted during the pre-COVID period and therefore might not accurately represent the current post-COVID situation when boundaries have been reopened. Nonetheless, the results reflect interesting cross-border patterns that existed and persist, and provide a comprehensive picture in understanding and predicting motives that influence travel decision-making between Brunei and Miri. Not least, the data collected for this study provide significant information on the reasons behind the outflow of Bruneian tourists.

## 10.4 Cross-border Tourism between Brunei and Miri, Sarawak

Globalisation, advances in technology and improved telecommunications, transportation and infrastructure have combined to stimulate an escalation of cross-border tourism between Brunei and Miri in Sarawak. The completion of the ASEAN Bridge (Batang Baram Bridge) in 2003, connecting Miri and Brunei across the Baram River, created a significant and permanent link between these places, which quickly resulted in a much higher number of tourist movements. One of the many factors that influences cross-border tourism between Brunei and Miri is clearly the ease of travel in terms of infrastructure (the bridge instead of slower ferries), and the absence of visa requirements for Bruneian citizens and permanent residents. In addition, the extension of border operating hours from 6.00 a.m. to 12.00 a.m. since September 2015 has made crossing the border even more convenient. This has enabled a smoother flow of people and vehicles and, as a result, thousands of Bruneians flock to Miri for shopping and entertainment, especially during weekends, and visitors are able to make day trips instead of overnight trips (The Star 2020).

Table 10.1 shows the number of Bruneian residents leaving the country for East Malaysian states in 2018–2019, mainly from three areas, namely the Sungai Tujoh immigration control post (a two-hour drive from Brunei-Muara district) for Miri; the Kuala Lurah control post (a 25-minute drive from Bandar Seri Begawan) for Limbang; and the Serasa ferry terminal (about 30 minutes from the capital), where visitors leave for the Malaysian federal territory of Labuan and Kota Kinabalu, the state capital of Sabah. The enormous figures demonstrate the frequency of trips made by Bruneians leaving the state.

Table 10.2 shows a breakdown of the quarterly trips via the same three departure points in 2018–2019. The data help to indicate the peak periods of travel and thus identify important trends throughout the year. The peak period is the last quarter of the year, likely due to the long school holidays in December and the Christmas and New Year festive season. Educators and teachers account for a significant proportion of the workforce and they take their annual leave during school holidays (DEPS 2019).
<table><caption>**Table 10.1** Bruneian residents leaving for East Malaysia states, 2018–2019</caption><thead><tr><td>Control post</td><td>Number</td></tr></thead><tbody><tr><td>Sungai Tujoh</td><td>1,129,050</td></tr><tr><td>Kuala Lurah</td><td>1,261,023</td></tr><tr><td>Serasa ferry terminal</td><td>36,343</td></tr><tr><td>Total</td><td>2,426,416</td></tr></tbody></table>

Source DEPS (2019)

<table><caption>**Table 10.2** Bruneian residents leaving for East Malaysia states, by yearly quarters, 2018–2019</caption><thead><tr><td>Control post</td><td>Jan–Mar 2018</td><td>Apr–Jun 2018</td><td>Jul–Sep 2018</td><td>Oct–Dec 2018</td><td>Jan–Mar 2019</td></tr></thead><tbody><tr><td>Sungai Tujoh</td><td>278,598</td><td>247,978</td><td>272,698</td><td>329,776</td><td>316,109</td></tr><tr><td>Kuala Lurah</td><td>313,662</td><td>284,358</td><td>312,674</td><td>350,329</td><td>313,661</td></tr><tr><td>Serasa ferry terminal</td><td>9,677</td><td>6,762</td><td>8,121</td><td>11,783</td><td>9,313</td></tr></tbody></table>

Source DINR (2019)

In this study, the Sungai Tujoh figures are highlighted as Miri is chosen as a destination of interest due to the long-standing tradition of Bruneian residents crossing the border for shopping trips. Further, there are no previous studies specifically on cross-border behaviour and spending patterns between Brunei and Miri, and indeed there are only a few studies on cross-border tourism between Brunei and Malaysia more generally. Table 10.2 shows a large increase of 57,078 people leaving Brunei via Sungai Tujoh in October–December 2018 compared to July–September 2018. This phenomenon raises a major policy concern about whether Bruneians were ‘overspending’ in Miri since this could lead to serious economic leakages in the long run. According to Tourism Malaysia, Bruneians spent BND1.16 billion (MYR3.5 billion) in Malaysia in 2019, indicating an increased from BND1.12 billion (MYR3.4 billion) in 2018 (Rasidah 2020). The increase in economic leakages (the outflow of money) was evident with the high number of visitors crossing the border and their high-spending behaviour. The Brunei government has launched several campaigns such as Kenali Negara Kitani (KNK, Get to Know Your Own Country) and the Brunei December Festival in the hope of promoting domestic tourism and to encourage spending within the country. During the COVID-19 pandemic, the government temporarily suspended non-essential travel and cross-border activities between Brunei and Malaysia. This compelled Bruneians to spend locally and this has boosted local tourism businesses during that period, especially in community-based tourism and agritourism activities (Chin and Siti Fatimahwati 2021; Najib and Chin 2021). In addition, the Ministry and Finance and Economy imposed new entry and exit charges from 1 August 2020. The BND6 return trip tax charges applied to all land and sea border arrivals and departing passengers once the border reopened. This raises the potential for further study to examine the scale of Bruneians resuming
their visits to Miri for the same purposes or whether the imposition of a tax affects
the frequency of tourists crossing the border.

**10.5 Findings and Discussion**

The motivational factors and purchasing patterns of cross-border Bruneian visi-
tors were investigated. The personal profiles of respondents such as age, gender,
marital status, occupation, motivational characteristics and income are presented in
Table 10.3.

Visitors to Miri are mostly from the working population and were relatively young; only five respondents were aged 50 and above. There were more female respondents (29) than males (21). The majority of respondents were from those working in various sectors such as the government (42%), semi-government entities (14%) and the private sector (8%), while 6% were retirees, 6% unemployed and 20% entrepreneurs (self-employed). Half of the respondents had a personal income of less than BND2,000, 32% earned from BND2,001 to BND4000, while 12% were categorised in the higher-income group with earnings of BND4,001 to BND6,000 and 6% at BND6,001 and above.

The home areas of respondents were mostly from Kuala Belait (48%), the district nearest to Miri, while 42% were from Bandar Seri Begawan and 10% from Tutong district. No respondents were recorded from Temburong. The frequency of cross-border trips was then compared with the distance respondents travelled. More trips were taken by people residing nearer to the border of Sungai Tujoh such as residents from Kuala Belait in comparison to those in the capital. Most of the Belait residents reported frequent trips to Miri, once a week and some more than that. The proximity of Miri to Kuala Belait allowed a steady flow of people to Miri which might create competition with local businesses. Residents who lived further away from the border mostly recorded going to Miri once a month or less often.

The socioeconomic characteristics of cross-border visitors were inextricably linked to motivational and purchasing patterns. Interviews reveal that the main reason for cross-border activity was shopping, mentioned as one of the most common activities and reasons by all the respondents, both day-trippers and short-term visitors. Entertainment was in second place and included activities such as karaoke, pubs and bars, live music, smoking and drinking in public, arcades and nightclubs. Leisure and recreational activities ranked third as respondents preferred the cheapness and availability of such activities during short holidays where families stayed in hotels for a day or two to use their facilities. Further, there were similar tastes in terms of food and culture, unisex massage parlours where both husband and wife could share a room, hair and nail salons, spas and unisex facial parlours. Respondents emphasised the importance of three motivational characteristics, with shopping (100%), entertainment (82%) and leisure/recreation (76%) as the highest ranking.

Surprisingly, 56% of respondents used Miri as a point of transit to a variety of other destinations. For example, one respondent said, 'Flying to Kuala Lumpur is
<table><caption>**Table 10.3** Brunei–Miri cross-border visitors: Socioeconomic profile of respondents</caption><thead><tr><th>Consumer characteristics</th><th>Number of respondents (n = 50)</th><th>Percentage (%)</th></tr></thead><tbody><tr><td><strong>Age</strong></td><td></td><td></td></tr><tr><td>20–29</td><td>5</td><td>10</td></tr><tr><td>30–39</td><td>27</td><td>54</td></tr><tr><td>40–49</td><td>13</td><td>26</td></tr><tr><td>50 and above</td><td>5</td><td>10</td></tr><tr><td><strong>Gender</strong></td><td></td><td></td></tr><tr><td>Male</td><td>21</td><td>42</td></tr><tr><td>Female</td><td>29</td><td>58</td></tr><tr><td><strong>Marital status</strong></td><td></td><td></td></tr><tr><td>Single</td><td>20</td><td>40</td></tr><tr><td>Married</td><td>30</td><td>60</td></tr><tr><td><strong>Occupation</strong></td><td></td><td></td></tr><tr><td>Student</td><td>2</td><td>4</td></tr><tr><td>Employed</td><td>32</td><td>64</td></tr><tr><td>Unemployed</td><td>3</td><td>6</td></tr><tr><td>Self-employed</td><td>10</td><td>20</td></tr><tr><td>Retired</td><td>3</td><td>6</td></tr><tr><td><strong>Job (employed)</strong></td><td></td><td></td></tr><tr><td>Government</td><td>21</td><td>42</td></tr><tr><td>Semi-government</td><td>7</td><td>14</td></tr><tr><td>Private</td><td>4</td><td>8</td></tr><tr><td><strong>Income</strong></td><td></td><td></td></tr><tr><td>Less than BND 2,000</td><td>25</td><td>50</td></tr><tr><td>BND2,001–4,000</td><td>16</td><td>32</td></tr><tr><td>BND4,001–6,000</td><td>6</td><td>12</td></tr><tr><td>BND6,001 and above</td><td>3</td><td>6</td></tr><tr><td><strong>Motivational characteristics (free to choose more than one option)</strong></td><td></td><td></td></tr><tr><td>Shopping</td><td>50</td><td>100</td></tr><tr><td>Entertainment</td><td>41</td><td>82</td></tr><tr><td>Leisure/recreation (facial, nails, hair, massage)</td><td>38</td><td>76</td></tr><tr><td>Transit</td><td>28</td><td>56</td></tr><tr><td>Medical services/postal services</td><td>25</td><td>50</td></tr><tr><td>Visiting friends and relatives</td><td>10</td><td>20</td></tr><tr><td>Business</td><td>6</td><td>12</td></tr><tr><td>Weddings</td><td>6</td><td>12</td></tr><tr><td><strong>Place of residence</strong></td><td></td><td></td></tr><tr><td>Bandar Seri Begawan</td><td>21</td><td>42</td></tr><tr><td>Tutong</td><td>5</td><td>10</td></tr><tr><td>Kuala Belait</td><td>24</td><td>48</td></tr><tr><td>Temburong</td><td>–</td><td>–</td></tr><tr><td><strong>Frequency of cross-border trips</strong></td><td></td><td></td></tr></tbody></table>

(continued)
<table><caption>**Table 10.3 (continued)**</caption><thead><tr><th>Consumer characteristics</th><th>Number of respondents (n = 50)</th><th>Percentage (%)</th></tr></thead><tbody><tr><td>Once a week</td><td>19</td><td>38</td></tr><tr><td>More than once a week</td><td>3</td><td>6</td></tr><tr><td>Once a month</td><td>16</td><td>32</td></tr><tr><td>More than once a month</td><td>9</td><td>18</td></tr><tr><td>Once every two months</td><td>2</td><td>4</td></tr><tr><td>Others</td><td>1</td><td>2</td></tr><tr><td colspan="3"><em>Types of tourists</em></td></tr><tr><td>Day-tripper</td><td>31</td><td>62</td></tr><tr><td>Short-term visitor</td><td>19</td><td>38</td></tr></tbody></table>

*Source* Compiled from primary data collection

cheaper if we fly via Miri because of its domestic flight from Miri to KL'. Others used Miri as a point of transit to Europe via budget airlines like AirAsia X. Similarly, 50% of respondents crossed the border for both medical and postal services. Respondents mentioned the cheaper alternatives for health care such as check-ups, gynaecology, ultrasound and minor surgery like dental fixtures, cataracts and myopia correction, which are all common procedures undertaken by Bruneians in Miri. The long waiting time for minor procedures in government hospitals in Brunei was the main reason suggested by all respondents who had had their procedures in Miri. Some added that they wanted a second opinion and that Miri was a cheaper alternative than private hospitals in Brunei such as Jerudong Park Medical Centre. Postal services were another common reason that attracted Bruneians to Miri. A lot of international online platforms do not ship directly to Brunei and even if they do the shipping costs are usually more expensive than shipping to East Malaysia. Respondents were willing to cross the border to collect their purchases made via online shopping. Vendors such as Taobao, one of the world's biggest online shopping platforms and owned by the Chinese multinational Alibaba, ship directly to East Malaysia destinations like Miri but not to Brunei. Moreover, respondents pointed out the efficiency of postal services in Miri while collecting parcels and the lenient customs checks when crossing borders. Some 20% of respondents crossed the borders to visit friends and relatives, although this was not usually the sole purpose. Such visits were normally accompanied by other activities. The findings also show that a handful of respondents (12%) travelled for business activities, such as buying goods, printing name cards, buying car parts for their businesses as well as engaging wedding services such as banquet caterers, decorators and photographers.

When asked, all respondents mentioned that significant market characteristics like price and the availability of a variety of products and services played an important role in attracting them to make visits. All respondents agreed that buying groceries and shopping in Miri were cheaper than in Brunei. One respondent said,

> Buying groceries is a must when in Miri. Groceries like vegetables, canned food, toothpaste, tissues, shampoos are cheaper in Miri. We can save a lot if we shop across the border while having more choices to choose from. They have high street brands like H&M, places to buy
working attire, their Guardians and Watsons are better stocked than the Brunei ones. Even their Toys 'R' Us are cheaper and better stocked than in Brunei.

Another respondent said,

Why not getting the most out of our trip? We wanted to go see our relatives but at the same time we will shop as well and occasionally have a drink or two. We will sometimes bring the whole family to the cinema which is cheaper or shop for things that we couldn't get in Brunei. For example, we couldn't find a lot of winter clothing in Brunei so we went to Uniqlo in Miri. They have a lot of variety to choose from.

In addition, all respondents mentioned the limited choices available in Brunei in terms of goods and services. Even if they are offered in Brunei, respondents could get the same goods and services at a fraction of a price across the border.

Starbucks or Coffee Bean are cheaper than in Brunei. KFC and McDonald's are all the way cheaper in Miri. Having a massage costs BND80 in Brunei while I can get a good massage for MYR120 (BND40) in Miri. I don't mind doing day trips because I feel my money spent is worth more across the border.

Other respondents remarked on the availability of weekend promotions that attracted them to cross the border.

There are a lot of two for one sales in supermarkets across Miri during the weekends. Mummies like me will buy our baby products like Pampers and formula from Miri. My other family members will go for household goods like detergents and toilet rolls to smaller products like yoghurt and so on. They are all value for money if you have a loyalty card of that particular supermarket. It is very attractive and value for money.

Surprisingly, respondents did not see product quality and after-sales service as significant in motivating their spending behaviour. They did not expect great after-sales service in Miri as compared to Brunei. 'You get what you pay for. I am happy to buy a computer or phone accessories in Miri, but I wouldn't expect great after-sales service due to the price I pay'. This might be due to low expectations because of the cheaper price paid by cross-border shoppers. However, most respondents noted that they would not purchase expensive electronic items like laptops and iPads in Miri. They would rather purchase such expensive items in Brunei due to convenience, copyright installation issues, warranty issues and fake goods, although they might have a slight price differential.<fnref n="1" /> Although product quality was not seen as significant to respondents, service quality was. Most respondents mentioned good leisure and recreational services did play a role in motivating them to spend and would determine whether they returned to that particular service. 'Service is important to me. I always like to try out new hair salons and nail services. If the service isn't good, I will not return although it is cheap'. Another respondent said, 'My husband and I are frequent visitors of V Spa [a beauty salon and wellness centre]. Their massage service is extremely good. We are hooked and we keep going back every time we go to Miri'. All the female respondents had used facial services in Miri before and all agreed on the importance of service quality as a significant motivating factor.

<footnote n="1">¹ This might not be specific to Bruneian cross-border tourists but also to customers across the world.</footnote>
Shopping area conditions is one of the market characteristics in the framework, entailing a comfortable environment, clean premises and easy communication. However, respondents in this study did not find this a significant motivator or deterrent. Most respondents agreed that Brunei has cleaner premises in comparison to Miri and yet this did not stop them from crossing the border. 'Cleaner premises and comfortable malls are a bonus but this does not stop us or hinder us to go to Miri because the overall price and variety still win'. Another respondent said, 'This is something that is out of our control. It is the same as going to Bangkok or any overseas destination. We cannot ensure that their malls, markets or food courts are clean and comfortable. We don't go to a mall because it is clean. We go there to make a purchase'. This finding shows that less priority is given to market characteristics like the environment as customers are free to choose shopping malls they think are cleaner. The shopping-related environment is seen as an insignificant market characteristic in this case.

However, other factors, such as the exchange rate and boundary management, did play a critical role in affecting respondents' spending behaviour. All respondents mentioned that they made more frequent trips to Miri when the exchange rate was in favour of the Brunei dollar. This means that they would be willing to spend more, subject to the exchange rate. One respondent said, 'When the exchange rate is good, I would change more money than my usual trip with the intention to safeguard for future use. But I always end up spending more. My family would even consider doing health checks too when the exchange rate is good'. Another respondent said, 'I will usually bring my family to stay overnight in Miri like at the Marriot or Pullman when the exchange rate is good so the children can swim. The adults can relax at the same time by going to spas'. Others said that they tended to spend more on impulse purchases and on wants instead of needs as they felt it was more value for money due to the exchange rate. Border management, such as lenient customs checks, was also a factor mentioned in the interviews. One of the respondents said, 'Parcels that are sent to Brunei directly go through a more stringent process in customs than through Miri'. Others mentioned that the lenient border checks allowed them to get items such as meat products, cosmetics and soft drinks that would otherwise be taxed.

The question of distance of travel was investigated during the interviews. Interestingly, respondents from Tutong and Brunei-Muara did not express distance as an issue though the results show the frequency of visits was less in comparison to those who reside in Belait. Normally, most Belait residents were day-trippers while more than half the residents from Tutong and Brunei-Muara were short-term visitors with at least one overnight stay. Results also show that respondents who travelled furthest tended to spend more per trip in comparison to respondents who lived nearby. On average, respondents who lived further spent about BND500-800 per trip with a frequency of once or more a month. On the other hand, respondents who lived nearer made more frequent trips (at least once a week) but spent only around BND200-300 per trip. However, both cohorts might end up spending the same amount per month due to the frequency of trips of respondents who lived nearer. The results make sense as the amount of money spent correlates with the frequency of the trips and distance travelled. Another result is the difference in spending behaviour between
day-trippers and short-term visitors. Day-trippers tended to spend money on food and beverages, shopping for goods like bags, books, household products, clothes, toys, cosmetics and shoes. Short-term visitors normally spent on accommodation, entertainment facilities like karaoke, live music and drinking, leisure activities such as spas, massage and nail services, household products, medical check-ups and dental services.

## 10.6 Conclusion

Given the significance of cross-border spending behaviour as a legitimate issue of economic leakages, this study, based upon the case of Brunei–Miri cross-border behaviour, provides valuable insights on the motivating factors and purchasing behaviour of Bruneian visitors. The top three motivational characteristics were shopping, entertainment and using leisure and recreational facilities. Other factors included using Miri as a point of transit to other destinations, cheaper and alternative medical and health care facilities as well as efficient postal services. All respondents mentioned that significant market characteristics like price and the availability of a variety of products and services played an important role in attracting them to cross the border. This confirms the findings of Thomas M. Fullerton and Adam G. Walke (2019) in their study of cross-border activities between the United States and Mexico. The benefits and presence of price differences in neighbouring countries often outweigh the costs of travel. This also concurs with Cristi Frenţ’s (2016) measurements of the impact of tourism, in which value for money for goods or services is the main criterion attracting people to cross borders.

In addition, one of the motivational factors highlighted in the findings is the similar taste in food and culture. Travel motivation can be affected by cultural similarities (or differences), which resonates with Adi Weidenfeld’s (2013) and Mustaffa Jaapar et al.’s (2017) findings on how cultural similarities encourage a sense of belongingness. This is highly relevant in this study as Brunei and Miri share a similar cultural background and language, which creates a sense of familiarity. The results also show respondents did not see product quality and after-sales service as significant in motivating their spending behaviour due to cheaper prices. Rather, they mentioned good leisure and recreational services played a role in motivating them to spend and helped determine whether they would return to that particular service. This falls in line with Diane Jarvis et al.’s (2016) notion of economic, social and environmental factors being antecedents of tourist satisfaction. Cross-border tourists are more likely to develop revisit intentions when they are satisfied with the price and services offered. However, the findings do not agree with Jarvis et al.’s environmental factors, as respondents did not find a comfortable environment and clean premises to be significant motivators. The shopping-related environment is seen as an insignificant market characteristic in this case.

Another factor, such as the exchange rate, played a critical role in driving cross-border visitors from Brunei to Miri. This coincides with the study by Jonghyun
Park et al. (2019) which shows that economic considerations are as the most influential factor affecting tourist behaviour. No respondents in this study mentioned the importance of natural beauty such as beaches or architecture as motivational factors, as claimed by Shida Irwana Omar et al. (2014). This could be due to the limitations of the small sample size of this study.

Future studies could include a higher number of respondents or different times of the year. The framework offered by Subramaniam et al. (2008) for analysing cross-border shopping patterns is therefore partially accurate for this study as some elements such as shopping area attributes were not seen as characteristics to motivate respondents to cross the border. There is no one size fits all model. Hence, it is hoped that this study provides preliminary empirically based insights into cross-border issues and acts as a baseline for more studies to be conducted, especially in the period of rebuilding tourism after the COVID-19 pandemic.

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**Wei Lee Chin** is an Assistant Professor in the Faculty of Arts and Social Sciences, Universiti Brunei Darussalam. She specialises in destination competitiveness with specific reference to developing countries in Asia. Her research interests include small-scale island tourism, tourism community development, agritourism, smart tourism, film tourism, socioeconomic sustainability as well as tourism impacts in Asia. Her key publications include: Destination competitiveness: Evidence from Bali. *Current Issues in Tourism* 20(12) (2017); The relationship between destination competitiveness and resident's quality of life: Lessons from Bali. *Tourism and Hospitality Management* 26(2) (2020); Agritourism resilience against Covid-19: Impacts and management strategies. *Cogent Social Sciences* 7(1) (2021); and, Distribution of (in)equality and empowerment of community-based tourism: The case study of tourism. *International Journal of Hospitality and Tourism Administration* (2023).

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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<figure><img src="image_79.png" /></figure>

# Chapter 11
## Fuelling the Brunei Darussalam Economy: Opportunities for Islamic Financial Services

Hairul Azrin Besar

**Abstract** Since the establishment of the first bank in Brunei Darussalam, the banking industry has assumed its traditional role as a place of safekeeping, investment and clearing of financial transactions. During the 1980s banks served corporations as remittance institutions and Brunei's window to settle international trade. The late 1990s and early 2000s marked a change of culture in the banking industry where banks were considered as a source of credit, contributing to the growth of personal debt and a source of funds to businesses. This chapter examines the historical development of banking in the country and the rise of Islamic finance in the 1990s. Ideally, Islamic finance, with its strict requirement of syariah compliance, emphasises the relationship between the respective transactions and its economic substance, which influences the economic development of the country significantly. With this premise, the study investigates the opportunities of Islamic financial instruments in contributing to the growth of Brunei's economy. The movement towards a fair and inclusive financial structure through the offering of Islamic social financial instruments such as waqf and zakat is also scrutinised.

**Keywords** Brunei Darussalam • Banks • Islamic finance • Waqf • Zakat • Economic growth

### 11.1 Introduction

The operation of Islamic finance in Brunei Darussalam started in 1991 when the sultan remarked on the importance of opening an Islamic bank and providing Islamic banking services as a religious obligation, referencing the success of such banks in other Islamic countries around the globe. Tabung Amanah Islam Brunei (TAIB), a statutory entity, was launched in 1991 with the main aim of providing a trust fund

<footnote>Hairul Azrin Besar (✉)
UBD School of Business and Economics, Universiti Brunei Darussalam, Gadong, Brunei
Darussalam
e-mail: azrin.besar@ubd.edu.bn</footnote>
for the *hajj* pilgrimage (Ebrahim and Tan 2001). This was followed closely by the establishment of Islamic Bank of Brunei (IBB) in 1993, the country's first Islamic bank. IBB was converted from the International Bank of Brunei following its offering of shares to the public. At that time, it was the only public company in Brunei with shares owned by the government and the public.

The establishment of TAIB and IBB led to the initiation of the Islamic insurance industry, which comprises subsidiary companies of these institutions to support their financial and operational risks. Brunei saw further development of Islamic finance companies and securities with the establishment of IBB Kredit and IBB Securities, also in the early 1990s, marking the growth of the Islamic finance industry in the country. Peripheral services providers such as accountants, auditors, lawyers and educational institutions also contributed resources to support this growth. The rise in industry knowledge and understanding over the years has led the public to raise questions on the validity and strict requirement of *syariah* compliance of the industry (which highlights its similarity with the conventional banking and finance industry).

This chapter examines the opportunities the finance industry has in offering Islamic contracts for businesses and individuals. Islamic contracts of transactions (*muamalah*) are mostly inherited from their application in the early Islamic period when they were developed and dynamically improved by scholars, making such contracts retain their validity and practicality in the current period. The main objectives of the contracts are to comply with *syariah* requirements and ensure the protection of all parties, preserving their rights and ensuring obligations are properly executed. Revisiting Brunei in the early 1900s, the discussion closely examines the country's economic and financial environment, tracing the development of the banking and finance industry to the present. Looking forward, the chapter discusses commercial *muamalah* contracts and social contracts which can be used by financial institutions to offer dynamic services that contribute productively to the country's economic growth.

## 11.2 Historical Review of Brunei's Economy and Financial Industry

### 11.2.1 The Colonial Era

Brunei is a country with rich historical accounts that trace back to the 1400s. Without going into the historical details, it may be important to state that Brunei entered the colonial era in 1839 with the arrival of James Brooke, who was offered the governorship of Sarawak by Sultan Omar Ali Saifuddin II for helping to crush a rebellion (Naimah 2002). In 1888 Brunei became a British protectorate under which foreign relations would be managed by the colonial authorities and a consular office was set up (Hughes-Hallett 1940). Finally, in 1906 Sultan Hashim Jalilul Alam Aqamaddin entered into a supplementary agreement with the British to embrace
a residential system (ibid.; Horton 1986, 1994; Naimah 2002). During this period, Brunei was in a poor state, with no funds to fuel government activities. The country's income was dependent on forest products such as catechu, an extract of acacia trees, and coal. This forced the country to take a loan of $200,000 (Straits dollars) from the Federated Malay States in 1906—which was exhausted by 1908 (Horton 1994). An interest payment of $48,000 was overdue before the disbursement of two loans of $200,000, making the total loan $400,000. Most of the loan was used to buy the old taxation rights which had been practised by the sultanate before the residency era.

### 11.2.2 Financial Institutions in Brunei

Before the introduction of the Banking Act in 1957, banks were governed through English law administered by a British resident in Brunei. The first bank to be established was the Post Office Savings Bank in 1935, which was later destroyed during the Japanese occupation. Hongkong and Shanghai Bank (now HSBC) was established in 1947 after the war (Ebrahim and Tan 2001). This was followed by the establishment of Standard Chartered Bank in April 1958. Malaysian banks started operating in the country with Malayan Banking opening its doors in November 1960, followed by the United Malayan Banking Corporation (now Rashid Hussein Bank, RHB). The National Bank of Brunei was established in 1965, while Citibank started its services in the country in 1972. In 1981 the Island Development Bank marked a joint venture between the Bank of Philippines, Dai-Ichi Kangyo Bank of Japan and the sultan (Saunders 1994). In 1986 Brunei embarked on a National Development Plan to diversify its economy away from the oil and gas industry, acknowledging the need for proper banking facilities in the country.

Unfortunately, in the same year, the banking industry was hit with a financial scandal involving the National Bank of Brunei in which loans amounting to BND1.3 billion were extended to companies owned by Singaporean shareholders (Singh 1988: 64). The scandal marred the banking industry in Brunei, leading to the permanent closure of the bank. With Island Development Bank the only local bank, it enjoyed the patronage of the government and later changed its name to the International Bank of Brunei. In 1992 the country established the first Islamic financial institution, namely TAIB (Ebrahim and Tan 2001). Later, the International Bank of Brunei was converted to Islamic finance services, donning a new name, the Islamic Bank of Brunei. Another local bank, Baiduri Bank, was established in 1994 and provided conventional banking services. Reaffirming its commitment towards economic diversification, low interest loans were granted to small businesses through the then Ministry of Finance (MoF). This led to the establishment of the government-owned Development Bank of Brunei to manage those loans.

To strengthen the local banking institutions to compete with international financial institutions, a merger was proposed between IBB and the Islamic Development Bank of Brunei in 2005, forming Bank Islam Brunei Darussalam (BIBD), the largest local bank with high capitalisation. BIBD continued as a public entity, being the
only Islamic bank operating in the country. Enhancing the banking industry and regulation of financial institutions, the government revised the Banking Act 1957 with the issuance of the Banking Order in 2006, followed by the amendment of the Finance Companies Act 1973 in the same year. With the revised Banking Act, the Islamic Banking Order was repealed to its 2008 iteration that incorporated changes to banking requirements. Under the new regulation, banks were required to have a minimum capital of BND100 million while finance companies were required to have a minimum capital of BND25 million to operate. This was in accordance with the international requirement for banks and financial institutions to be appropriately capitalised. From this survey, it is evident that Brunei's financial industry has been growing slowly but steadily since the early 1990s. This growth was impacted by the 1997 Asian financial crisis but quickly recovered in the early 2000s, partly due to increased emphasis by the government to make the country an international financial centre.

The growth of Islamic finance in the country necessitates the governance of the industry by a central *syariah* body so that its operation and products can be monitored. Previously, Islamic banking clientele and the bank itself faced hardships, especially in any legal disputes as they would be heard in the civil court rather than the *syariah* court. Thus, the Syariah Financial Supervisory Board (SFSB) was established under an order gazetted in 2006 whereby the board is the authority on Islamic laws for Islamic banking, Islamic insurance (*takaful*), Islamic finance or other related business regulated by the MoF.

Acknowledging the growing complexity of the financial industry, the Autoriti Monetari Brunei Darussalam (AMBD) Order 2010 was issued to establish a monetary authority to act as a central bank for the country, effective from 1 January 2011. Since then, the authority has been the main reference and supervisor for the finance industry. The AMBD was also entrusted with the management of Brunei's currency, reserves and settlement operations. In the aftermath of the global financial crisis in 2007-2008, the Deposit Protection Order was issued in 2010, incorporating the Brunei Darussalam Deposit Protection Corporation under the Ministry of Finance with the main aim of protecting depositors in the event of financial institutional failure. Enhancing credit information in the financial industry, a Credit Bureau was also established in 2012 under the AMBD to ease the banks in accessing the credit information of customers before they grant any banking products and services. In June 2021 the AMBD was renamed and is now Brunei Darussalam Central Bank (BDCB).

Another major development of Brunei's financial industry was the issuance of Islamic bonds (*sukuk*) by the government through the MoF in 2006. The initial issuance was for BND150 million three-month *sukuk* bonds at an indicative return rate of 3.4%. Since then the government has issued BND9 billion in 122 issuances. The return rate for the bonds drastically decreased from 3.4% to a low point of 0.1% in 2011, and slightly improved to 1.98% for 14-day bills and 3.625% for three months tenor (the length of time remaining before a financial contract expires) in December 2022.
Citibank closed its operation in Brunei in March 2014, followed by HSBC in 2017, reducing the number of foreign banks. The low return rates of investment products, such as term deposits and Islamic bonds, have also affected finance companies in the insurance industry that rely on investments for returns. With the absence of a local capital market and limited domestic financial instruments to generate returns, finance companies have to look at other measures such as cost-cutting to ensure their returns are still favourable for their shareholders. Although the financial industry is facing these challenges, it is still considered a viable contender in the diversification of the country's economy. With diversification efforts being encouraged, especially through micro, small and medium enterprises (MSMEs), a financial institution with the aim of serving the MSMEs was established in September 2017, known as Bank Usahawan, offering Islamic financing products based on two kinds of contracts: an Islamic financing structure in which the seller and buyer agree to the cost and mark-up of an asset (murabaha); and a financial instrument in which a buyer purchases a commodity from a seller on a deferred payment basis and the buyer sells the same commodity to a third party on a spot payment basis (tawarruq).

### 11.2.3 Finance Industry: Part of Economic Diversification

Efforts to diversify the economy of Brunei have been increasingly undertaken since 1953 through the First National Development Plan (NDP). During that period, the concern mainly centred on the possibility of natural resources being exhausted, which would immediately deprive the country of the accumulated wealth generated by the oil industry (Stockwell 2004). The lack of skilled resources to venture into industrial activities dampened diversification activities, but steps were made to ensure that people were appropriately educated to provide skilled resources in the future. Unfortunately, the government was also in dire need of a skilled workforce to assume administrative posts temporarily filled by expatriates from Malaysia and Britain (Horton 1986). Most of the resources were thus channelled towards attaining religious understanding, education and administrative knowledge and skills. The discovery of new oil wells and later natural gas provided temporary relief in ensuring the revenue and income from the industry to generate its development agenda.

Since achieving independence from the British in early 1984, Brunei has revisited the move towards economic diversification through the launch of the Fifth NDP (Naimah 1996). The main areas identified for the diversification programme were agriculture and industrial activities. In the short term, the agriculture sector aimed to provide self-sufficiency, especially in the production of rice, which would then reduce imports of the commodity. On the other hand, the government would improve infrastructure and provisions of commercial sites to attract industrial activities. The diversification plan was not materially successful as most of the education endeavours found few people interested in acquiring agricultural skills. In addition, the attractive salaries and benefit schemes provided in public service encouraged many people to work for the government rather than in the private sector (Blomqvist 1998).
activities would require the population to be skilled in manufacturing activities which were not readily available. Labour costs were also high as the country had a small population and the allure of government posts made it challenging to retain employees in the private sector. Thus, by strengthening the private sector, the government had initiated the privatisation of state-run services (Naimah 1996).

The finance industry was identified as a potential contributor and efforts were made to establish an international financial hub (Menon 1987). The government decided to set up the Brunei International Financial Centre in 2000 through the MoF in order to attract the financial industry to operate from the country. Several laws were then enacted to provide respective regulations as part of the financial infrastructure. These laws included the International Banking Order 2000, International Business Companies Order 2000, International Limited Partnership Order 2000, International Trusts Order 2000, Investment Incentives Order 2001 and International Insurance and Takaful Order 2002. This attracted several international financial institutions to set up base in Brunei as the country was having excess liquidity locally. At the same time, another Islamic bank was established through the merger of IBB and the government-owned Development Bank of Brunei into the Islamic Development Bank of Brunei in 2001, pursuant to the provisions of Islamic finance (Mohd Yusop 2007).

## 11.3 Challenges of Islamic Finance: Deferred Payment Sale
(Bai Bithaman Ajil)

Since its inception in 1992, Islamic finance in Brunei has been mirrored by the industry in Malaysia which has been established, and is successful and accepted by the community. Safekeeping contracts (wadiah) are used for deposits while financing and advances utilise the sell and buy back contract called bai bithaman ajil, where one sale is executed at a lower cash price and another at a higher price deferred. The difference between the two prices is considered as ‘profit’ to Islamic banks (Khan and Mirakhor 1989). This is acceptable to the industry as it closely resembles the conventional loan contract where loans and advances are expected to be paid deferred with the addition of interest. The main difference is that a loan is executed in a single contract whereas bai bithaman ajil is basically a combination of two sales contracts executed with different payment terms and prices.

Perusing the classical view, the transactions are actually classified under one of the controversial sales contracts of bai inah (Zuhaylī 2001). This contract is only allowable by the Shafi'i school of Islamic jurisprudence which posits that the intention of the transaction is ignored as it is not visible. However, in banking practices where the transaction is repeatedly executed, the intention of the transaction is clear. The matter of sale (commodity) is not important and if this is taken out of the sales contract there is a clear form of funds in cash (at a lower amount) against a deferred
flow of funds (a higher amount), a net result of access of funds due to the element of time or deferral which may fall under the definition of usury (riba).

In the Malaysian context, *bai bithaman ajil* has been heavily criticised as being more oppressive compared to conventional banking practices (Nuarrual Hilal and Sharifah Zubaidah 2010). As a result, the Islamic finance industry in Malaysia has tried to find an alternative contract to replace *bai bithaman ajil*. Such instances give rise to the area of financial engineering in Islamic finance where the industry tries to search, mix and match *muamalah* contracts to deliver a product similar to that of conventional finance on the basis of public interest (*maslahah*) and competitiveness. Unfortunately, this has produced incoherent contracts claimed as *syariah* compliant but detached in its legal form and economic substance (El-Gamal 2007a). This leads to further debate on the compliance of Islamic finance institutions, particularly those that still provide financing and advances based on sales contracts. The Islamic finance industry focuses on utilising other Islamic contracts which are universally acceptable as such contracts could be used to finance international projects and attract international collaborations.

## 11.4 Viable Muamalah and Social Contracts

The challenges brought forward by the utilisation of sales contracts in Islamic financial institutions warrant a search for other *syariah* compliant contracts which can deliver and achieve the objectives of *syariah*. More importantly, it is envisioned that the industry should be able to provide *syariah* compliant products with harmonised legal form and economic substance. After all, the introduction of the industry in the Bruneian context is aimed at attaining the fulfilment of the legal obligation that must be discharged by the Muslim community as a whole (fard al-kifayah) and addressing the financial needs of the community. In the early stages of Islamic finance, equity-based contracts were always pushed to the forefront as fair and practical agreements which could benefit the industry and the public (Seniawski 2000). By offering financial products utilising such contracts, Islamic financial institutions did not need to combine the contract with others.

In recent years, there has been increasing interest in the use of two types of social contracts to fuel the economy, providing finance to entrepreneurs who cannot access financing from banks: *zakat*—the third Pillar of Islam, the official alms tax levied on certain types of property and payable by every adult Muslim of sufficient means; and *waqf*—the endowment of a certain property for the sole benefit of a certain philanthropy. Although there is the notion of microfinance introduced at a later period, it still requires the generation of expected returns, which may not be fulfilled by these entrepreneurs. Hence, *zakat* or *waqf* can fill this space and encourage them to run sustainable ventures, raising their standard of living and contributing to economic growth.
### 11.4.1 Equity-based Contracts of *Mudarabah* and *Musyarakah*

Mudarabah and musyarakah are equity-based contracts which preserve the right of the partners. Mudarabah is a legal contractual arrangement under Islamic law between two partners for profit sharing—one provides capital and the other provides entrepreneurial or management skills. Musyarakah is a joint venture investment or equity raising (shareholder capital) by a group of partners, each of whom can participate in the management of the business and work for it. Although risk is high, considering the unknown return generated by the venture, they ensure the entrepreneur is able to concentrate on the project or business without the worry of repayments (El-Gamal 2007c). Profit is shared between the partners in accordance to the agreed rate while losses are limited to the extent of capital contributed to the venture. As a small country encouraging MSMEs to play an active role in the economy, Brunei would benefit from these equity-based contracts.

The main hindrance of a loan with fixed payment is that it is detached from the economic activities financed by the loan. Should an entrepreneur acquire loans from the banking industry, the banks would be mainly interested in the immediate repayment of capital with additional returns, regardless of the performance of the business. Even if businesses are facing hardships, banks do not see this as their problem and will demand payment be made as usual if the regulators or government do not step in—as demonstrated during the COVID-19 pandemic. Consequently, the businesses will suffer not only from their hardships but also from the pressure of fulfilling their monthly payment obligation.

Risk is borne by the businesses and not the banks, leaving the banks with only a credit risk from the instances where businesses are not able to pay, which is softened by the collateral securing the finance. Thus, conventional loans are basically a burden to businesses where they are on the losing end. One-sided contracts are drafted by financial institutions to protect their own rights and interest. Indirectly, this shows that the loans extended to businesses are not in sync with economic development as they are not related to business activities or economic contribution.

On the other hand, the contracts of mudarabah and musyarakah are embedded with the respective conditions and rules to ensure all parties are properly protected. Additional conditions can be infused into the contracts if they do not contradict the classical conditions and rules. Implementing this contract would safeguard businesses and give banks the opportunity to undertake active participation in projects and business risks. As such, financing is channelled to productive economic activities which will directly affect the bank should there be an unfavourable economic environment. Undertaking these contracts would foster mutual risk-taking by Islamic financiers and businesses, positively contributing to society rather than concentrating on gaining profit at the expense of others (El-Gamal 2007b).
## 11.4.2 Zakat

Zakat is an obligatory social contribution levied on Muslims to assist defined members of society. It has been labelled as a form of wealth redistribution to the less fortunate members of society (AlMatar 2015). Although it is levied and defined in Islam by types of wealth, the modern contextual definition of wealth subject to zakat differs across Islamic countries depending on the respective religious authorities. The same goes for the interpretation of the receiver of zakat (asnaf). Appropriate religious authorities are expected to interpret the recipient eligible in respective groups. In the Qur'an, the recipients of zakat are generally mentioned as eight broad groups which may all or partially be present in society:

> The Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom. (At-Tawbah 9:60)

In the modern context, the interpretation of the recipient of zakat has dynamically changed, not only providing funds but also extending seed funds to improve recipients' standard of living and turning them from recipients to givers of zakat. In this interpretation, zakat is used to provide training, capital for businesses and necessary tools and resources. It can be used to finance entrepreneurs who are considered not bankable to be more productive and contribute positively to the economic growth of the country. In this way, zakat is similar to the use of equity-based financing where payments or returns are only expected if the businesses are making a profit. Once businesses perform and accumulate assets, they will be subject to pay zakat. It is also useful to note that zakat is not based on profit but on the net assets of a business (Oran 2009; Bashir and Nurul Nabilah 2012). Even though a business is suffering losses, as long as its net assets are higher than the zakat threshold (nisab), it is compulsory to pay zakat.

In the Bruneian context, zakat collection and distribution fall under the purview of Majlis Ugama Islam Brunei (MUIB, Brunei Islamic Religious Council), mandated under the Islamic Religious Council Act and Kadi Courts Act (Cap. 77). A notable contribution of zakat in financing and empowering its recipients is the capital assistance programme introduced in the 1990s (Bashir et al. 2012). The programme was enhanced in 2001 to provide not only cash as capital but assets such as fishing boats, grass cutter machines and agriculture resources like seeds and fertilisers (Zaki and Khairul 2021). However, there were issues where the assets were sold for cash, disrupting the sustainability of the respective businesses. Acknowledging other issues related to sustaining businesses, such as skills and knowledge, the empowerment zakat recipient programme was introduced in November 2007 in collaboration with the Youth Development Centre (Bashir et al. 2012). Recipients were trained through this programme to undertake future businesses or at least gain skills to secure employment. This gave recipients the opportunity to improve themselves and encouraged them to be contributors rather than recipients of zakat.
Implementing *zakat* as a social finance tool can create more opportunities to uplift non-bankable members of society. This is sustainable if businesses strive to positively contribute to the economy and become *zakat* payers in the future.

### 11.4.3 Waqf

Unlike *zakat*, *waqf* is not mandatory for Muslims. It is a benevolent contract where a person donates their wealth in the way of Allah and does not require any worldly return. The wealth is manged by a custodian and is accessible to the public or in special cases to specific people named by the donor. One of the conditions attached is that the wealth must be preserved and sustained to provide benefits to the public.

Classically, *waqf* has been utilised to benefit the community, especially by the provision of public goods (Saduman and Aysun 2009; Babacan 2011). This includes goods for religious purposes such as mosques, social purposes such as roads and schools, and economic purposes such as water channels, shops and bazaars. Common provisions of facilities for entrepreneurs are irrigation for the agricultural sector, ports, roads and water channels for the transportation of goods, warehouses and physical stores for businesses. These will ameliorate production costs and expenses such as rent, which could affect the performance of the entrepreneur as these are normally expensive and could be considered sunk costs (Ahmed 2007). In addition, machines which are not frequently used, such as harvesting machines in agriculture, can be donated through *waqf*. The machines can then be accessed by all farmers, eliminating the common cost of the machine across the industry. Current information technological advances have provided online platforms for traders to market their services. The cost of such technology—from development, housing, maintenance and cost of servers—can be provided through *waqf* and benefit the public. This would also contribute to economic growth as most of the common needs of entrepreneurs have been covered through *waqf*.

Similar to *zakat*, *waqf* is under the jurisdiction of MUIB in Brunei, mandated under the Islamic Religious Council Act and Kadi Courts Act (Cap. 77). In comparison to other Muslim countries, the management of *waqf* properties in Brunei needs further development. Most *waqf* properties assisting entrepreneurs and economic activities are managed by Badan Tanmiah Brunei (Hubur 2019). These include business complexes and fuel stations. There is a move to explore cash *waqf* in the country but this has yet to materialise, especially in service of economic activities (Mas Nooraini 2022). Generally, *waqf* properties in Brunei are used as religious sites such as mosques, burial grounds and religious schools. Exploring the use of *waqf* properties would contribute greatly to society, especially to MSMEs undertaking high start-up costs, including rental, business space and technological platforms.
## 11.5 The Way Forward

In the early 1900s Brunei was not in a financially good position—the country had to resort to loans which resulted in huge amounts of debt servicing, much higher than the original debt, which impacted on people’s welfare. The discovery of oil as the primary export resource helped to create financial stability and reduced dependence on foreign debt. The country has always promoted Islam as the formal religion of the state and believes it is not merely a religious practice but a holistic way of life. As such, it is only natural that the country implements Islamic practices in all aspects of life, including finance. Moving forward, it is anticipated that Islamic financial instruments, both commercial and social, would provide access to capital for entrepreneurs without the heavy burden of debt and oppressive interest charges which deter business development. The COVID-19 pandemic showed that even when businesses were not operating—with movement restrictions on both businesses and customers—fixed costs such as rental, loan payments and maintenance of fixed assets were still due, which caused businesses to incur further losses and even cease operations. At the same time, the period provided unexpected business funding through Islamic social finance platforms such as charitable contributions (infaq), where people contributed as a group to fund small businesses in providing goods and services, such as foods, toiletries and basic necessities, to the frontliners. To some extent, this offered continuity and sustainability for small businesses.

Islamic instruments through muamalah contracts offer good opportunities to finance businesses, whether they are start-ups or established corporations. These instruments are flexible and aimed at maintaining the rights of both parties and a fair shouldering of risks. Currently, most Islamic finance products utilise the contract of sale combined with other contracts, creating debt and resulting in financial institutions resembling creditors who are only collecting profit from the transactions. They do not participate in risk-taking in the utilisation of the funds extended and assume rent-seeking behaviour (El-Gamal 2007b), hence the emergence of the debate about their syariah compliance. The application of muamalah contracts would ease the burden of business as partnership or equity financing denotes the sharing of profit based on performance rather than fixed monthly payments as practised in loans. This will be more beneficial in agriculture financing as Brunei is encouraging youth and society to engage in such activities. Agriculture in itself carries uncontrollable natural risks, such as floods, drought and diseases which could disrupt productivity. Exploring Islamic finance to provide the required funding will benefit those engaged in agricultural activities in the country.

Implementing muamalah contracts without the need of combining contracts will preserve contractual rights and provide a pure Islamic product which is more acceptable and equitable for businesses. Considering the pandemic, the government and regulators issued new regulations to defer the principal payment of loans or financing (partly or fully) to ease financial burden (MoFE 2020). If the financing had initially been given through equity contracts, the businesses would not need to pay any amount
should there be no profit. Furthermore, should there be losses, it would be shared in
accordance to the capital contributed, which can instil empathy from the financier.

On the other hand, waqf can complement a business with the provision of public
facilities to reduce the cost of operation. Waqf can also prevent businesses from incur-
ring fixed charges such as rent and cost of seasonal machinery if they are provided as
public goods. Evidence during the pandemic revealed that building owners showed
compassion by deferring or reducing rentals on their premises, including discounts
on rental rates on government buildings to MSMEs. Entrepreneurs, especially of
start-ups, would find this helpful and conducive in promoting their growth. Such a
concept has been seen in the establishment of the iCentre in Brunei where budding
technology entrepreneurs house their companies without worrying about having an
expensive physical office.

For entrepreneurs who need funding but do not qualify to access funds from
formal financial institutions, zakat can provide them with the required initial capital.
Coupled with waqf facilities, they can concentrate on developing their businesses
without worrying about initial set-up costs, renting properties or warehouses and, if
available, the respective equipment needed. This will foster their growth and positive
economic contribution to the economy, rather than concentrating on the repayment
of debts.

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**Hairul Azrin Besar** is the Director of Sultan Omar 'Ali Saifuddien Centre of Islamic Studies and a faculty member at the School of Business and Economics, Universiti Brunei Darussalam. He was awarded a PhD in accounting and finance from the University of Glasgow, United Kingdom. He has an interest in the fields of accounting, governance and Islamic finance. Prior to this he had been involved in the Brunei Islamic banking industry entrusted with syariah governance and audit since 2000 and is currently a member of the Syariah Financial Supervisory Board. He has published works and presented papers on governance, Islamic banking and finance, takaful and financial reporting. He is the coauthor of: The practice of shariah review as undertaken by Islamic banking sector in Malaysia. *International Review of Business Research Papers* 5(1) (2009); and, Profitability vs poverty alleviation: Has banking logic influences Islamic microfinance institutions? *Asian Journal of Accounting Research* 4(2) (2019). He is also part of the editorial team for *Journal of Islamic Accounting and Business Research*.

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Chapter 12
# Challenges and Opportunities of Digital Marketplaces in Brunei Darussalam

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Mohammad Nabil Almunawar and Mohammad Alif Azizi Abdullah

**Abstract** Digital marketplaces are sites that provide online transaction facilities for their customers. As such, business transactions can be done anytime and anywhere between sellers and buyers through digital platforms, making them very flexible compared to physical stores or traditional marketplaces. Digital marketplaces are not new as they were among earlier e-commerce business models introduced in the 1990s, such as eBay and Amazon. However, local digital marketplace platforms are relatively new in Brunei Darussalam, as most such platforms started only a few years ago, although Bruneians are used to buying products from well-known global platforms. Several reasons have caused the emergence of local digital marketplace platforms, such as the very high internet penetration, the limitations of social media in supporting business transactions, the experience in making transactions using global digital marketplaces, the impact of the COVID-19 pandemic which forced people to conduct online transactions to avoid physical contact and the availability of digital technology for setting up platforms. This chapter discusses Brunei's digital marketplace. It examines theories of the digital marketplace, such as transaction cost economics and multisided markets. Four examples of Brunei's digital marketplace are analysed—Al-Huffaz Management, Babakimpo, Naindah and Super Squad Soccer—and opportunities and challenges for them to survive and grow are discussed.

**Keywords** Brunei Darussalam · Digital marketplace · Transaction cost economics · Multisided markets · Value network · E-commerce

**12.1 Introduction**

The internet and its related technologies have changed the way people communicate, interact and transact. The term e-commerce is used to describe transactions happening digitally, mostly through the internet. Nowadays, many firms, including firms in

Mohammad Nabil Almunawar (✉) · Mohammad Alif Azizi Abdullah
UBD School of Business and Economics, Universiti Brunei Darussalam, Gadong, Brunei
Darussalam
e-mail: nabil.almunawar@ubd.edu.bn
Brunei Darussalam, utilise the internet to market and sell their products and services to customers directly or through intermediaries. To do so, a firm needs to have an operational e-commerce system in place, which consists mainly of a secure e-commerce server and a user-friendly website to allow customers to order products and services confidently and make payments digitally and securely.

For micro, small and medium enterprises (MSMEs), putting in place an e-commerce system is the main obstacle to trading online. The total cost of ownership of the e-commerce system is rather high and MSMEs may lack the necessary capital and technical knowledge to develop and operate the system. This is especially true in Brunei as more than 90% of companies are MSMEs. For these reasons, and after intense discussions in the early 2000s, the government of Brunei formed a dedicated committee to help increase the adoption of e-commerce systems in the country. Until recently, the creation of online sales systems through ownership of an e-commerce site has met with limited success. Besides the total cost of ownership and lack of technical expertise for developing e-commerce systems, there are two other main reasons for this. The first is the emergence and widespread use of social media platforms that do not require technical expertise and allow companies to engage their customers at a very low cost. The second is the creation of a few digital marketplaces in the country in the last few years. They provide opportunities for MSMEs to market their products and services through the platforms provided by digital marketplace firms.

Many MSMEs in Brunei utilise social media, especially Instagram and Facebook, to market their products and services (Alif Azizi et al. 2020, 2021; Nasshata Fatiha et al. 2021). There are a few identifiable advantages of utilising social media: 1) it is easy to create a social media page; 2) the cost to develop and operate a social media site is very cheap; 3) social media can reach many customers easily; and 4) customers can be served and engaged interactively. However, social media do not support business transactions. Hence, business transactions are done separately through a manual method or directed to an e-commerce site that can handle online transactions and payments. A business transaction is an action in which two business actors, such as a seller and a buyer, exchange value (Almunawar and Anshari 2020, 2021). For example, a seller gives a good or product to the buyer and receives a monetary value from the buyer. For a business transaction to happen, a series of activities or a transaction process need to be conducted, such as a buyer searching for and finding a seller of a product, negotiation (including price negotiation if any), confirmation of the transaction and payment. This is followed by the delivery of the product.

An online business transaction occurs when the process is done virtually. Most online business transactions nowadays, especially business-to-consumer or consumer-to-consumer transactions, are conducted through the internet. Essentially, the main e-commerce function is to support online business transactions. To provide this, a firm can develop its own e-commerce site or join a digital marketplace. As mentioned earlier, developing an e-commerce site is expensive and many MSMEs cannot afford to have their own e-commerce sites. With the recent technological
advances in digital marketplaces, MSMEs can sell their products or services online through them, which is simple, and they can reach a wider pool of customers online.

What is a digital marketplace? A marketplace is a location that provides facilities for buyers and sellers to conduct business transactions. A digital marketplace is a virtual space that provides online transaction facilities for its customers. However, in a digital marketplace location is not relevant; rather, it offers digital space for buyers and sellers to transact digitally through a computer network such as the internet (Almunawar et al. 2020). In a digital marketplace, business transactions can be done anytime and anywhere, making it very flexible compared to the traditional marketplace.

Business transactions through e-commerce, especially through digital marketplaces, are growing as internet penetration in Brunei is very high at about 120%, the highest in Asia (Internet World States 2022). According to the Authority for Info-communications Technology Industry of Brunei Darussalam, 76% of Bruneians experienced using e-commerce in 2018 (AITI 2018). The survey also finds that global marketplaces such as eBay, Zalora, Amazon, AliExpress and Lazada are popular among Bruneians; taken together, their market share for online transactions was 95%, leaving only 5% of the market for local e-commerce transactions. This is normal as local e-commerce sites were not very well developed at that time. Local digital marketplaces started appearing in Brunei in 2016–2017, including Babakimpo, Naindah and J3sMart. However, the number of local digital marketplaces grew significantly during the COVID-19 pandemic as the need to conduct digital as opposed to in-person transactions increased significantly.

There are a number of reasons that explain the recent growth of local digital marketplaces in Brunei. First, the high internet penetration indicates consumers can be approached digitally. However, as noted above, creating an e-commerce site that can handle online transactions and payments is difficult and not cost-effective for most MSMEs. Second, although using social media is an easy way to promote business and reach customers, social media hardly handle online business transactions. Third, Bruneians have long-term experience of buying products through global digital marketplaces (Alif Azizi et al. 2020, 2021). Fourth, the COVID-19 pandemic created some difficulties or limitations for people to interact and transact physically, so digital marketplaces allowed people to fulfil their needs, such as buying food and having it delivered to their homes. Food vendors and restaurants were therefore still able to serve their customers, helping them to sustain their businesses at a very difficult time. Fifth, the advances in information and communication technology, such as cloud computing and mobile computing, allow operators to set up their digital marketplaces easily and serve their customers efficiently through collaborations with digital business ecosystems.

To expand digital marketplaces, operators need to embrace MSMEs and offer them the capability of providing online transactions and payments at a very affordable cost. In fact, some operators ask for sales commission and offer free registration and subscription fees. Some digital marketplaces act as enablers, linking producers or vendors with consumers for exchanges, which were previously difficult to transact.
This will spawn new businesses. In Brunei, for example, HeyDomo, GoMamam and Ta-Pow! are enablers between food vendors and their customers.

The discussion in this chapter is organised as follows. In Sect. 12.2 we review the development of e-commerce and digital marketplaces, followed by a summary of the theoretical literature on transaction costs, two-sided markets and value networks. This is followed by a discussion on how a digital marketplace operates. The methodology is discussed in Sect. 12.3. Section 12.4 presents our findings and a discussion of four digital marketplaces in Brunei: Al-Huffaz Management, Babakimpo, Naindah and Super Squad Soccer. Section 12.5 offers a conclusion including some limitations of the study and future directions for research.

## 12.2 Literature Review

### 12.2.1 E-commerce

The advance of computer networks, especially the internet, has not only changed the way people communicate but also the way people transact. Although e-commerce-like activities were conducted through electronic data interchanges from business to business, which still exist, the main driver that spread e-commerce globally was the internet and especially the World Wide Web information system (Manzoor 2010). Essentially, e-commerce is an exchange of goods, services and money between two parties conducted electronically. The parties directly involved in the exchange are usually businesses and consumers, involving exchanges between businesses, businesses and consumers, and between consumers. Third parties that enable exchanges include financial institutions like banks that mediate the payment electronically, digital marketplaces and delivery agents.

E-commerce can be classified into pure e-commerce, in which everything is conducted digitally, and partial e-commerce in which only the transaction process is conducted digitally (Almunawar and Anshari 2020). We can see this easily through digitisation in e-commerce. Digitisation is a transformation of non-digital or physical objects or processes into digital objects or processes. There are essentially three types of digitisation in e-commerce: of product/service, of the transaction process and of delivery. Whenever possible, the transaction process and the delivery are digitised because it is cheaper and faster. For example, e-commerce for information products such as software and music are pure e-commerce. Previously, buying software, which is a digital product, was conducted manually and the delivery was done manually too since the software was normally stored in a physical medium such as a CD-ROM. Today, buying and selling software is pure e-commerce, which can be done swiftly as all three dimensions of e-commerce—products, transaction process and delivery—are digitised. Despite this, most e-commerce transactions are actually partial e-commerce as physical products such as food and clothes and services such as transportation and car maintenance cannot be digitised, and therefore their delivery
cannot be digitised either (ibid.). Hence, for partial e-commerce only the transaction process is digitised. In other words, the digitisation of the transaction process is the minimum requirement for commerce to be called e-commerce.

Globally, e-commerce has continued to grow steadily in the last decade. This growth is strengthened by improvements of internet speed connections and the widespread adoption of smartphones with access to 5G technology which started to be deployed worldwide in 2019. That year the total value of e-commerce reached USD9.09 trillion. The COVID-19 pandemic precipitated a surge in online sales as online shopping increased dramatically. The annual growth of e-commerce is expected to reach 14.7% in the period up to 2027 (Grand View Research 2020). E-commerce in Association of Southeast Asian Nations (ASEAN) member states is also growing fast. ASEAN is the fifth-largest economy in the world (after the United States, China, Germany and Japan) with a combined gross domestic product (GDP) of USD3.6 trillion in 2022 (ASEAN Secretariat 2024). ASEAN has a young population as 65% of its nearly 700 million people are under 35 years of age and it is estimated that 50% of ASEAN's population will join the ranks of the middle class by 2030, doubling the size of the region's middle-class population of 2020 (Kao 2023). It is estimated that there are 460 million active internet users, accessing mainly via mobile devices (The ASEAN 2022: 22). ASEAN clearly offers huge business opportunities through e-commerce. Although e-commerce is still relatively small compared to traditional business transactions, there is fertile ground for e-commerce to grow in the coming years. Brunei has the smallest population of ASEAN member states at only 445,000, but Brunei is the second richest country after Singapore in ASEAN on the basis of GDP per capita derived from purchasing power parity (PPP) at USD79,408 (IMF 2023). And as already noted, internet penetration in Brunei is very high indeed, as is the proportion of the population making use of e-commerce.

### 12.2.2 Digital Marketplace

Major businesses can afford to have e-commerce systems so that they can sell and sometimes deliver their products or services directly to customers through their websites. Companies cut transaction costs and make more profits if transactions can be done in this manner. In addition, customer services may also be enhanced since they can analyse buying patterns to generate customer profiles for targeted selling. In contrast, most MSMEs do not have the financial and technical means to run their e-commerce websites. As a result, most of them need a third party that can link them to their customers in order to participate in e-commerce. There are two main options for MSMEs, including those in Brunei, to pursue e-commerce: social media or digital marketplaces (Alif Azizi et al. 2021).

Many MSMEs in Brunei have opted for social media platforms such as Facebook and Instagram for marketing their products or services (Bouargan et al. 2020). Although social commerce is on the rise, the use of social media for exchanges or transactions has a significant limitation, as the main e-commerce feature, the
digitisation of transaction process, cannot be done through current social media plat-
forms. In other words, social media can be used efficiently for identifying products
or services, but placing an order must be done separately as current platforms do not
provide buying and selling options. In other words, MSMEs use social media plat-
forms only for marketing their products and providing some customer engagement
and services.

As noted previously, another way for MSMEs to pursue e-commerce is through digital marketplaces, where transaction and payment processes can be taken care of by dedicated operators. MSMEs can reach and transact with their customers efficiently through digital marketplaces so they do not need to prepare an e-commerce system, thereby saving on investment and operating costs. Depending on the revenue model of the digital marketplace, it is most likely that an MSME only needs to pay a commission fee for products or services sold and an additional fee if they want to have a premium service from the digital marketplace. Many MSMEs in Brunei participate in e-commerce through social media and digital marketplaces.

12.2.3 Transaction Cost Economics

Business transactions are at the heart of any form of commerce, including e-
commerce. A transaction happens if two economic actors exchange values, such
as goods or services, with money. The exchange process can be done directly or
mediated by a third party or intermediary. The transaction cost is the cost incurred
in leading to and conducting a transaction. This may include search, negotiation and
related legal costs, such as the cost of establishing a memorandum of agreement.
The need for intermediation in performing transactions can be understood through
the lens of transaction cost economics theory, first proposed by R.H. Coase (1937)
and further discussed and refined by Oliver Williamson (1981, 1998, 2008). Instead
of a production function, transaction cost economics sees a firm as a governance
function. If the cost to acquire a component or input in producing output through a
market is high, higher than internalising it in the firm, the firm will internalise the
process to produce the component in a hierarchy or vice versa. In general, a firm or
an economic actor will seek to minimise the transaction cost in acquiring its needs.

We can apply transaction cost economics theory in the context of acquiring needs with or without an intermediary. Suppose S is a supplier or seller, C is a consumer or buyer, and I is an intermediary (Fig. 12.1). An intermediation is likely to happen if T<sub>SC</sub} > T<sub>SI</sub> + T<sub>CI</sub>, where T<sub>SC</sub> is the transaction cost between S and C, and T<sub>SI</sub> is the transaction cost between S and I, and T<sub>CI</sub> is the transaction cost between C and I (Klein and Selz 2000; Sarkar et al. 1998). There are some cases where I is necessary and becomes the enabler for S and C to transact. However, according to Mitrabarun Sarkar et al. (1995), intermediaries, especially cyberintermediaries, should not be seen purely from the lens of transaction cost economics as they add value to specific services.
<figure><img src="image_82.png" /><figcaption>**Fig. 12.1** Supplier, consumer and intermediary</figcaption></figure>

Williamson (1979, 1981) states that the two main assumptions of transaction cost economics are bounded rationality and opportunism. Bounded rationality is the limitation of humans to process information and to acquire resources to exercise their rationality, such as solving complex problems or processing information. Opportunism is the tendency of humans to fulfil their self-interest. With these two assumptions, according to Williamson (1979), there are three critical dimensions or variables in transaction costs: uncertainty, frequency of recurring transactions, and asset specificity or the degree of specificity in an asset. An asset with a high asset specificity hardly has a substitute and an asset with a low asset specificity has many substitutes. Besides these three main variables, other variables can be added, such as trust and a customer's interest (Stabell and Fjeldstad 1998; Williamson 1979). A customer is interested in transacting if they gain a good value or benefits from the transaction.

### 12.2.4 Two-sided or Multisided Markets

Digital marketplaces like eBay, AliExpress and Gojek operate on the basis of two-sided or multisided markets. One of the important strategies for the expansion of a digital marketplace is to exploit the network effect of the market's expansion (see below). Network externality is the effect of additional customers or users of a particular product or service on the utility of existing customers or users of the same product or service. Positive externality means an increase in the utilisation of products or services resulting from additional consumers or users, while negative externality is the opposite. A classic example of a product that exhibits network externalities is the telephone. The utility or value of a telephone increases if the total amount of telephones increases.

Michael Katz and Carl Shapiro (1985) highlight indirect network externalities, a topic discussed further by Matthew Clements (2004). Complementary products or services create indirect network externalities. For example, the utility of a smartphone increases along with the rise in social media available applications, and the number of social media applications grows with the total number of smartphone users. Indirect network externalities can take place in more than one related network linked by intermediaries. For example, the utility of a credit card platform to its customers is
proportionate to the total number of merchants that accept the credit card issued by the platform. Similarly, the utility of a credit card platform to merchants rises with the growth of customers on the platform. Intermediated indirect externalities are two-sided markets or networks where the network externality of one side is dependent on the size of the other side (Roson 2005; Rochet and Tirole 2006).

A two-sided market has two or more different types of customers or users who transact through an intermediary or a platform, in which the volume of transactions is sensitive to the allocation of price between the two sides. Jean-Charles Rochet and Jean Tirole (2004) provide a formal definition to a two-sided market by comparing and contrasting it to a one-sided market in two connected markets. Some literature on two-sided markets also discusses how an intermediary creates a price structure that attracts both sides to join the platform (Rochet and Tirole 2003; Roson 2005; Armstrong 2006; Chakravorti and Roson 2006; Rysman 2009; King 2013).

Price structure or price allocation between two-sided networks is the key to internalising the value of the platform to make profit and growth. In general, a platform can design two prices, fixed and variable prices (such as subscription and usage fees) for consumers from both sides to attract and retain them. Geoffrey G. Parker and Marshall W. Van Alstyne (2005) develop an intriguing model of two-sided networks that explains how a platform creates a price structure to stimulate the growth of one side, such as giving incentive to customers to grow the customer market, which will in turn stimulate the growth of the other side such as the seller market. A proper price allocation will help bring growth to both sides of the network. However, price allocation should be accompanied by strategies of expansion of the networks by developing and maintaining the business ecosystem centring on the platform. The key for this strategy is to properly manage the platform, which can be done systematically using value network.

### 12.2.5 Value Network

There are several value network concepts discussed in the literature with different approaches (Stabell and Fjeldstad 1998; Peppard and Rylander 2006; Allee 2008). Their value network concepts are briefly highlighted. Verna Allee (2008) considers that networks are interactive agents that carry specific roles and values geared towards the achievement of a specific task or outcome by converting intangible and tangible assets into negotiable offerings. The fundamental concept of Allee's value network is value conversion, where agents engage in intangible and tangible exchanges to achieve economic or social good. A value network is divided into two categories, internal value networks and external-facing value networks. Internal value networks are interactions between or among agents (individuals or workgroups) that make up an organisation. External-facing value networks are interactions of an organisation with other organisations, institutions or customers.
According to Joe Peppard and Anna Rylander (2006), a value network is a network of connected entities such as suppliers, collaborators and intermediaries that facilitates complex relationships of different players to deliver services to end customers. Value is created through these relationships. How value is created, and its position in a network, is described by network value analysis, which can be used to construct a competitive strategy.

Charles B. Stabell and Øystein D. Fjeldstad (1998) extend Michael Porter's (1985) value chain concept into three generic value configurations—value chain, value shop and value network. A business applies a value network if it mediates customers or clients. Note that the business itself is not a network, but it provides a networking service to facilitate exchange between customers; the network is the interaction among customers and the value network is the service that facilitates the matching among customers. Value network defined by Stabell and Fjeldstad fits with a digital marketplace that mediates multisided markets. The value network diagram defined by them is a very useful framework to guide a digital marketplace operator to manage a platform to properly serve all customers and to grow both sides of the market.

## 12.3 Methodology

We adopt the case study method to describe the development of digital marketplaces in Brunei. A case study of a digital marketplace platform helps to gain a deep understanding of why the platform was developed, how the platform addresses challenges and opportunities as well as its likely future direction. For this purpose, several digital marketplaces were selected. We visited the chosen digital marketplace and interviewed managers or leading representatives from Al-Huffaz Management, Babakimpo, Naindah and Super Squad Soccer to obtain information. Face-to-face interviews were conducted from March to May 2019 with a particular focus on opportunities and challenges for operating digital marketplace platforms in Brunei. To attain a better perspective, a questionnaire was created specifically to collect relevant information. The interviewees were identified and selected through common characteristics established initially that included high-level knowledge of their respective businesses, media appearances as the main spokespeople of their businesses and an understanding of the transition of their businesses to a digital marketplace. Interviewees were aged from 23 to 55 years old. The average time to complete an interview was approximately 20 minutes. Conversations were recorded using a smartphone through a voice memo application.
## 12.4 Results and Discussion

With a very high internet penetration and almost everyone in Brunei having a smart mobile device, especially a smartphone, the growing adoption of the digital marketplace is highly anticipated. As noted, although most Bruneians still prefer to use global-based digital marketplaces such as eBay, Alibaba and Lazada, the limitations on movements and physical distancing enforced by the government in response to the COVID-19 pandemic helped the adoption of locally based digital marketplaces. These opportunities were clearly felt by Babakimpo and Naindah. Both are local e-commerce digital marketplaces established in 2017. Consumers from both sides of the marketplace can be easily reached through their platforms and their capacity can be expanded flexibly. Both Babakimpo and Naindah are enablers for sellers and consumers to interact online, negotiate and transact regardless of time and space. Another notable opportunity established by them is the availability of their headquarters and warehouses in Brunei. This speeds up delivery as well as potential returns or exchanges of products.

Many companies market their products and services on social media due to the flexibility, wider penetration and the minimal cost it brings to the companies. Notable examples are CityMobile, Porterabia, Grab Dobi and Intracorp. However, as already highlighted, social media do not provide a mechanism for buyers and sellers to transact directly. If consumers were to purchase their products and services, a third-party application such as WhatsApp or BIBD Mobile needs to be used. Transactions are therefore done manually (by cash) or using other payment mechanisms such as digital wallets (BIBD QuickPay, BruPay or Pocket) which are usually made on the firms' premises.

As should be clear, a digital marketplace platform is needed for efficient business transactions as it handles all transactions swiftly, including payment. Companies can still advertise and engage their customers through social media but need to adopt a digital marketplace to provide better transaction experiences and security. Applying the transaction cost economics theory, a digital marketplace acts as an intermediary between the MSMEs (as sellers) and consumers. However, a digital marketplace does not only act as an intermediary but more importantly is an enabler for MSMEs to transact with their consumers (Almunawar and Anshari 2021). Our survey indicates that the digital marketplace is growing and has a positive impact both for businesses and their customers. For example, a restaurant can reach more customers through the digital marketplace beyond their traditional customers, which can be translated into more revenue. In addition, digital marketplaces attract consumers as they give them many benefits such as easy access and convenience, and offer them many choices, which is a value option. Although local digital marketplaces can rival foreign marketplaces in terms of faster delivery and faster exchanges or refunds, they lack the same variety of products where international known brands are not available. As a result, local digital marketplaces have a lower value option compared to global marketplaces.
It is vital for any digital marketplace to have an efficient payment system to conclude transactions and it is much better if the payment system is integrated into the digital marketplace platform. Digital marketplaces in Brunei are keen to integrate e-wallet capability into their business so as to enable customers to store points or e-cash that can be exchanged for products or services in their respective marketplace. By doing so, customers can access and pay with e-cash and points through their smartphone, limiting the use of cash and promoting cashless payments. The presence of an online marketplace also allows customer reviews to be seen by businesses and potential consumers, which provides transparency and relevant information of the credibility and quality of products and services offered. The transparency and track record of good services of companies provided by a digital marketplace will not only enhance customers' trust but also attract new customers.

While the high internet penetration in Brunei has a direct influence on the rise in use of digital marketplaces, consumers are still leaning towards buying products and services through social media due to a lack of proper marketing strategy and exposure. However, through the digital marketplace, businesses do increase their channels to reach customers and serve them better, without leaving the benefits of social media for their marketing channels.

An interesting finding from this study is that the current digital marketplaces in Brunei create value for customers of current and upcoming businesses. Problem-solving is valuable for consumers and is offered by some of the digital marketplace platforms to solve some issues, such as making bookings for specific services (sports and religion-related services), religious expertise and platforms for local products. One example is Babakimpo, which is primarily digital marketplace that offers 1K1P (1 kampong 1 product). 1K1P is an initiative of the Ministry of Home Affairs to encourage each village to develop, produce and market its products and services. The e-commerce marketplace arranges products based on categories and sellers are not allowed to register on the platform, while a digital marketplace has various sellers that have their own products and the platform allows third-party sellers to register on the platform. Local products such as stingless bee honey (*madu kelulut*), intricately woven cotton and silk cloth (*jongsarat*) and the Indian jujube fruit (*bidara*, *Ziziphus mauritiana*) can potentially reach a bigger market in ASEAN if it can compete with similar products. For small and medium-sized enterprises (SMEs) and individuals, digital marketplace platforms offer great value to reach large markets with ease, as they do not need to worry about handling transactions and delivery. Most platforms can arrange the delivery through trusted companies such as Go Rush, JiFEE and other reliable couriers.

While Zalora, eBay, Amazon and AliExpress all ship to Brunei, other popular marketplaces such as Lazada and Shopee only ship to Malaysia. However, there is an alternative way of using a 'runner' service where customers make additional arrangements with their business to bring back products ordered from Lazada and Shopee through Limbang and Miri in Sarawak. 'Runner' businesses provide a specific address in Limbang and Miri for customers to use for a delivery and collect them at their business premises back in Brunei.
Despite the increase in use of digital marketplaces in Brunei, companies and consumers are still uncertain about implementing them. From a business's perspective, the uncertainty is due to the lack of expertise in terms of maintaining an online marketplace and establishing an online payment mechanism that can be expensive. From a consumer's standpoint, the uncertainty is due to the trust factor in buying and making transactions through a digital marketplace. The trust factor would be higher in Brunei due to the habit of buying from physical shops where customers can touch and feel the products, while purchasing online is based on a description and images of the products. This can generate a feeling of anxiety and uncertainty towards buying and making transactions online.

### 12.4.1 Current Digital Marketplace in Brunei Darussalam

International marketplaces such as e-Bay, Zalora, Amazon, AliExpress, Lazada and Shopee have been predominantly used by Bruneians to shop online. A survey by the Authority for Info-communication Technology Industry (AITI) in 2018 showed that only 5% of local e-commerce sites are used by Bruneians. The survey identified e-Bay, Zalora and Amazon as the top three marketplaces in Brunei, while clothing and accessories are the top items purchased online. Significant factors that have been identified in online usage of these marketplaces are the absence of crowds online, discreet purchases, the ease of comparing prices from other sellers and the availability of reviews from other online shoppers.

As Table 12.1 shows, there are several notable digital marketplaces in Brunei. Most are relatively new, dating to 2016–2017. The types of businesses are categorised into service-based and transaction-based digital platforms. A service-based digital platform is much more personal and usually involves a single firm marketing its products and services, giving it control over the content and functionalities of the platform. A transaction-based digital platform has various sellers and vendors displaying their products and services whose accessibility is rather limited since the content and functionalities are controlled by marketplace operators.

Al-Huffaz Management is a platform launched in 2016 that provides Islamic religious-based services, which are primarily of Qur’an recitations, and it features over 1,500 students and 150 active tutors. Foreign competitors such as Asatizah (Singapore), QuranHour (Malaysia) and Umma (Indonesia) provide similar services. Super Squad Soccer is a platform for local football/futsal enthusiasts to play in different venues throughout Brunei and has over 1,000 active users. Babakimpo, J3sMart, MondeB2B and Naindah are transaction-based digital platforms that offer an extensive range of products, a platform for 1K1P, and a means for MSMEs to import and export products internationally. Dart Brunei is the first transport network company in Brunei that provides ride-hailing services through a mobile application, hoping to follow in the successful footsteps of foreign companies such as Grab and Gojek. Dart Brunei offers a transportation booking service and school run services to its customers, with certain clear benefits such as going to places with limited
<table><caption>**Table 12.1** Brunei Darussalam: Digital marketplaces</caption><thead><tr><td>Company name</td><td>Year established</td><td>Type of business</td><td>Product/service</td><td>Features</td></tr></thead><tbody><tr><td>Al-Huffaz management</td><td>2016</td><td>Digital platform</td><td>Services (Qur'an recitations)</td><td>Over 1,500 students, with 150 active tutors<br>A platform to learn the Qur'an</td></tr><tr><td>Babakimpo</td><td>2017</td><td>E-commerce marketplace</td><td>Products (online shopping)</td><td>Over 6,000 products<br>Provides a platform for 1K1P</td></tr><tr><td>Naindah</td><td>2017</td><td>E-commerce marketplace</td><td>Products (online shopping)</td><td>An intermediary to inspect products<br>Provides a platform for local and international sellers</td></tr><tr><td>Dart Brunei</td><td>2017</td><td>Digital platform</td><td>Services (transportation)</td><td>First ride-hailing platform in Brunei<br>Provides employment opportunities</td></tr><tr><td>J3sMart</td><td>2017</td><td>E-commerce marketplace</td><td>Products (online shopping)</td><td>Provides a variety of products that are not available locally<br>Owns personal logistics company</td></tr><tr><td>Super Squad Soccer</td><td>2018</td><td>Digital platform</td><td>Services (football/futsal platform)</td><td>Over 1,000 active players, with 2 venues<br>A platform for recreational football</td></tr><tr><td>MondeB2B</td><td>2019</td><td>E-commerce marketplace</td><td>Products (online marketplace)</td><td>Businesses validated by government and private organisations ensuring trust<br>Platform for MSMEs to export and import products</td></tr></tbody></table>

parking, providing international students with transportation in order to avoid needless driving. Dart Brunei has generated employment opportunities, contributing a positive impact to the community by reducing unemployment.
## 12.4.2 Case Studies

### 12.4.2.1 Al-Huffaz Management

Al-Huffaz Management's primary role is to teach the Qur'an, matching tutors with students, with the platform acting as an intermediary in order to ease the learning process. The company was originally a group of experienced individuals who had been providing Qur'an classes since 2003. There was an increase in demand for these classes as the company developed and this growth led to the employment of tutors to accommodate these demands. Al-Huffaz was well received by the public due to the nation's status as an Islamic monarchy that practises religious teachings in daily life. The employment of a digital marketplace for the company enables Al-Huffaz to provide the convenience of attending classes at the user's request rather than fixed classes that could conflict with people's daily schedules. Most of the users are young parents and elderly people. One of the challenges Al-Huffaz faced was gaining the trust of the public to use their services, given that people are accustomed to traditional ways of studying Qur'an recitations, mostly at mosques on public holidays. The platform enables users to study with tutors based on their current location, view the tutor's live schedule, book a desired slot and attend the class. A few hours before a class begins, a reminder is sent via email to both the student and tutor.

Al-Huffaz aims to become the world's largest Qur'an platform, focusing on developing in Southeast Asia in the future. This will be a massive challenge but is achievable through collaboration with non-digital platforms that offer similar services. Through these non-digital platforms, Al-Huffaz can expose its brand, starting with Southeast Asian countries, and provide its services and expertise through video-conferencing. With a stable user base, Al-Huffaz can open offices in neighbouring countries that are managed by non-digital platforms. While there are competitors in neighbouring countries, the large number of Muslims in Southeast Asia suggests there is a big enough market to support a number of similar providers.

### 12.4.2.2 Babakimpo

Babakimpo was established in 2017 when it began hiring employees. It is a transaction-based digital platform that generally markets household appliances, groceries, cosmetics and electronics. Babakimpo is a subsidiary of Goldmyne Hardware, founded in 1991 as a locally owned company that initially operated as a hardware and roofing materials supplier that dedicates itself to 'Made in Brunei' products. Goldmyne is today a large corporation that has moved into sanitary ware, furniture and building materials, and supplies safety equipment and maintenance products to the oil and gas industry. The company also owns a logistics company that manages its procurement operations.

Goldmyne created Babakimpo to provide opportunities for local entrepreneurs to engage in e-commerce and to encourage Bruneians to shop within the national
borders. Its products are stored in a warehouse which is located in a separate place from its principal office. Initially, the company bought a server to assist in its operations and the storage of data. The presence of an online marketplace enables the company to monitor the number of purchases and makes it convenient for customers to browse various products through their smartphones. Since Babakimpo is fairly new, it is still developing its brand to provide people with a local platform comprising both local and foreign sellers. It provides fast delivery for customers buying from local sellers while it may take up to two weeks for purchases from foreign sellers. Data collected from customers enable the company to create statistics which are used to improve efficiency by determining frequently purchased products (electronics, clothing, groceries) and recognising the time when transaction traffic is at its highest. These factors have helped the company in making promotions and discounts to increase sales and revenue. Babakimpo is advantageous for Bruneians because of the presence of a physical store and headquarters where product exchanges and refunds can be done promptly. The company also offers a platform where local people can sell their products, including 1K1P products from rural parts of the country.

Babakimpo is confronted with a number of challenges such as the difficulty of raising awareness among local people of the benefits of using its platform. This issue emerged due to the established preference for businesses marketing their products through social media rather than an online marketplace and the habit of customers searching for products and services on Facebook. By contrast, Babakimpo's digital platform provides shopping and payment under one platform, enabling orders and transactions to be processed immediately after purchase. This contrasts with buying from social media sites where processing orders are subject to the responsiveness of sellers, making payments and communicating through a third-party app (such as WhatsApp). Businesses can benefit from the available platform specifically provided for them to market their products and services since this can increase their credibility and marketability when the legitimacy of sellers is often questioned on social media. This relates to the challenge of gaining users' trust to conduct transactions through the platform. This issue arises due to the lack of secure payment connections, where SSL certificates and third-party logos act as indicators of trusted shopping platforms which Babakimpo does not have. One of the features that has been introduced to improve the shopping experience is the cash on delivery option.

### 12.4.2.3 Naindah

Naindah was established in 2017 and is funded by its parent company, TechBru Solution. It is a platform that acts as an online marketplace for businesses and local people to advertise used and new products such as clothing, electronics, furniture, groceries and sports equipment. Naindah hopes to encourage Bruneians to buy from local businesses to stimulate a shopping culture of spending within the borders of the country. As such, its primary function is to act as an intermediary between buyers and sellers that checks the products before putting them on its online platform. However, Naindah's personnel do not possess the qualifications to check these products. While
it does eliminate some consumer concerns regarding the quality of products in relation to defects and authenticity, the company does not indicate the level of eligibility in product inspection. Naindah simply guarantees that products are undamaged and in the best condition before delivering them to customers via its logistics service NaindahGo, which provides customers with tracking options and same-day delivery.

Naindah offers competitive prices to vendors using its marketplace, including two seller plans: MyNaindah (BND50) and Warehouse (BND1 + 10%). The company has been trying to attract international vendors to give the platform a greater variety of products, but it has struggled to attract foreign sellers due to the low level of recognition in the market compared to AliExpress and Lazada. So the absence of foreign sellers on the platform is a challenge. There is also the issue of whether to outsource or insource the expertise to maintain, troubleshoot and add new features to the platform. At the moment, Naindah uses a website and a mobile app to attract customers. Its next step is to create a mobile app to incorporate grocery shopping, international payment mechanisms and mobile payments. The company has the potential to be successful by incorporating well-known international brands into its marketplace, improving the platform's features by including a live-chat facility for customers, and providing its own personnel with certified product checking training to enhance the credibility of its oversight before reaching customers.

#### 12.4.2.4 Super Squad Soccer

Super Squad Soccer was initially known as Weekend Warriors and emerged in 2018. It functions as an online platform for football/futsal enthusiasts, the most popular sports played by men in Brunei. With such a demand for football and futsal it was opportune to provide a platform where people could play as a team or individually across different venues in all districts. The platform is the first of its kind in Brunei. The digital marketplace accessed through the Super Squad Soccer website enables users to book their slots and pay fees with a debit or credit card through the online mechanism. The platform aims to ease the convoluted process of gathering players, getting the proper equipment and securing venues. The platform enables Super Squad Soccer to attract players through the use of social media, mainly Instagram and Facebook, and by verbal communication. The company markets its brand through social media and the services it offers through its dedicated platform. An online website is available to register players and create their profiles, buy credits to play, and book slots for upcoming sessions and attend them.

Super Squad Soccer faces several challenges like the difficulty of hiring personnel with a specific skill set such as Avalon programming skills that can potentially improve its business features. Avalon is a statistically typed language supported by algebraic data types that offers users the ability to generate more powerful functions in programs. Due to the urgency of hiring personnel who could use Avalon, it is time-consuming for the company to consider sending fresh graduates or current employees abroad for training. Another challenge of having an online platform is the inability to maximise its full potential due to the small size of the market in Brunei.
Only a small fraction of the population uses the platform. In comparison, a platform that has a market reach to include Malaysia and Indonesia would have enormous potential to flourish and create a huge user base compared to that of Brunei alone. Due to the limited local demand, potential developments of the platform are restricted unless exposed to a bigger population. The platform currently boasts around 1,000 active users. However, due to the need to generate consistent profits to pay for salaries, equipment and fees for venues, it remains to be seen whether Super Squad Soccer can be a successful business in the long run. A potential solution to counter this issue is to open more venues in different districts and allow higher educational institutions with football/futsal facilities to use the brand's name, which can generate more profits. The company aims to go global, possibly developing the platform and expanding to the rest of Southeast Asia. Golazo from Malaysia and Stranger Soccer from Singapore are Super Squad Soccer's main competitors. Some significant advantages Super Squad Soccer has over its rivals are providing match referees and team bibs across different venues; customised bibs can be purchased, letting their players personalise them.

## 12.5 Conclusion

A digital marketplace is a two-sided or multisided market that manages the interaction and transactions between two or more distinctive users. Although the use of the digital marketplace by Bruneians has been around since the early development of e-commerce such as through eBay and Amazon, the digital marketplace in Brunei is relatively new, with the first one appearing as late as 2016. All these digital marketplaces are still relatively small and only cater to local market demand. Yet they are competing with global digital marketplaces such as e-Bay, AliExpress, Zalora and Lazada which have already established a strong foothold in the country due to their vast inventory of well-known and trusted brands and general popularity among consumers.

However, issues regarding the length of time taken for delivery (usually up to two weeks, especially during the COVID-19 pandemic) and the cumbersome process involved in exchanging or refunding products created an opportunity for the local digital marketplace to survive and grow. Delivery takes longer even if products are shipped to nearby Miri and Limbang in Sarawak; they incur additional charges and the risk of damage is high. A number of obvious steps will enable Bruneian digital marketplaces to compete with global competitors: managing delivery times more efficiently, incorporating a larger number of popular well-known brands, and improving the processes for exchanges and refunds. If these conditions were met, Bruneian consumers would favour buying from local marketplaces. In particular, local digital marketplaces can collaborate with trusted services in Brunei that can provide same-day delivery, facilitated by local offices and warehouses. The management of a digital marketplace is crucial, where each platform needs to develop a good business ecosystem to survive and grow. By considering these factors to expand their
businesses, there is an opportunity for them to grow and be a first-choice market-
place for Bruneians. Digital marketplaces help local goods such as 1K1P to reach
consumers, either local or potentially in the wider Southeast Asia market.

There are some limitations to the analysis presented in this paper. First, the case
studies try to cover several digital marketplaces operating in Brunei and most of
them are relatively new. Although the case studies provide important information,
they are brief and do not cover all the digital marketplaces in the country. Second,
the case studies are snapshots; they do not cover in detail how the various digital
marketplaces have developed and operated over time. We are interested in studying
the adoption of digital marketplaces in Brunei from both sides of the market. In
light of this, we are currently developing a framework for understanding the digital
marketplace ecosystem. It will be interesting to see how economic actors contribute
to the wider business ecosystem and their connections as well as the emerging forms
of governance.

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**Mohammad Nabil Almunawar** is an Associate Professor at the School of Business and Economics, Universiti Brunei Darussalam, where he was the former Dean. He received his PhD in computer science/information systems from the University of New South Wales, Australia. His research interests include applications of information technology in management, e-business/commerce, digital transformation, digital marketplaces/platforms, the digital business ecosystem, health informatics, information security and cloud computing. He has published more than 150 papers in refereed journals, books, book chapters and encyclopaedias. He is currently the editor-in-chief of *International Journal of E-Business Research and Journal of Business and Economic Analysis*. His recent publications include: *Inclusivity and accessibility in digital health* (2024, coeditor); *Strengthening sustainable digitalization of Asian economy and society* (2024, coeditor); and, Customer acceptance of online delivery platform during the COVID-19 pandemic: The case of Brunei Darussalam. *Journal of Science and Technology Policy Management* 15(2) (2024, coauthor).

**Mohammad Alif Azizi Abdullah** is a PhD candidate at the School of Business and Economics, Universiti Brunei Darussalam. His research interests include digital marketplaces, the digital business ecosystem, e-business/e-commerce and big data. His current research focus is on measuring the health of digital ecosystems in Brunei Darussalam. His publications, as coauthor, include: The impacts of COVID-19 on MSMEs in Brunei Darussalam. In *COVID-19 and its reflection on SMEs in developing countries* (2021); The rise of digital marketplace in Brunei Darussalam. In *Handbook of research on innovation and development of e-commerce and e-business in ASEAN* (2021); and, Digital ecosystem: The case study of BruHealth. In *Digitalisation and organisation design* (2022).

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