1 Borneo Island

“The LORD reigns, let the earth rejoice; Let the many islands be glad.”

Psalm 97:1 (NASB)

“In the vast archipelago of the east, where Borneo and Java and Sumatra lie, and the Molucca Islands, and the Philippines, the sea is often fanned only by the land and sea breezes, and is like a smooth bed, on which these islands seem to sleep in bliss, islands in which the spice and perfume gardens of the world are embowered, and where the bird of paradise has its home, and the golden pheasant, and a hundred others of brilliant plumage, whose flight is among thickets so luxuriant, and scenery so picturesque, that European strangers find there the fairy land of their youthful dreams.”

Captain Frederick Marryat  (10 July 1792 – 9 August 1848) was a Royal Navy officer, a novelist, and an acquaintance of Charles Dickens. Source: Quote Master and Wikipedia.

Brunei

1.0 Physical Geography:

Size: Borneo stands as Asia’s largest island, boasting a sprawling landmass covering 743,330 square kilometers. To put this into perspective, it’s equivalent to the combined land area of Germany, the United Kingdom, and the Netherlands.

Population: Borneo is home to a population of 22 million people. By way of comparison, this figure is dwarfed when set against the combined populace of the three European nations mentioned above, which totals 167 million.

Location: Positioned at the heart of the Asia Pacific region, Borneo is geographically noteworthy for its proximity to other significant locations:

• Approximately 1,500 kilometers to the north lies China’s Hainan Island.
• To the south, Australia’s Darwin is approximately 2,000 kilometers away.
• In the east, Borneo is situated about 3,000 kilometers from the USA’s Guam.
• In the west, it is approximately 3,500 kilometers from India’s Kolkata.

Distance Within Borneo Island:

• Borneo stretches from north to south, covering a distance of 1,200 kilometers, spanning from Kudat to Banjarmasin.
• From west to east, the island spans 330 kilometers, stretching from Kota Kinabalu to Sandakan.

Maritime Features: Borneo is flanked by the South China Sea to the north and west, providing access to the Pacific Ocean in the east and the Indian Ocean in the south.

Tropical Climate: Situated between 6 degrees north and 4 degrees south of the equator, Borneo enjoys a tropical climate characterized by abundant sunshine and rainfall. The Northeast Monsoon season typically spans from December to February. The island basks in an average of 2,400 hours of sunlight annually, with an annual precipitation of approximately 2,500 millimeters. Temperatures range between 25 and 32 degrees Celsius, offering a warm and humid tropical climate conducive to thriving plant life.

Calm Environment: Northern Borneo is renowned as the “Land Below the Wind” for its location below the East Asian typhoon belt. The island experiences infrequent earthquakes and volcanic eruptions.

Unique Attributes:

• Low Population Density
• Abundant Sunshine and Rainfall
• Strategic Access to the Asia Pacific Market

2.0 Political Landscape:

Borneo Island is divided among three countries, with Malaysia and Brunei situated to the north, while Indonesia occupies the southern part of the island.

Brunei: Brunei’s territorial divisions are organized into four districts: Brunei-Muara, Belait, Tutong, and Temburong.

Indonesia: Indonesia’s administration of Borneo encompasses five provinces: North Kalimantan, South Kalimantan, Central Kalimantan, East Kalimantan, and West Kalimantan.

Malaysia: In Malaysia, Borneo is represented by two states: Sabah, often referred to as North Borneo, and Sarawak.

The current political boundaries of Borneo were established during the colonial era under the British and Dutch colonial rulers.

Unique Attributes:

• Former Colonies with a Shared Colonial Legacy: All three countries that share Borneo Island have a common historical background as former colonies. This shared colonial history has influenced their political and administrative systems.
• Well-Established Administration and Legal Frameworks: As a result of their colonial past, these nations have well-established administrative structures andlegal systems, contributing to stable governance and the rule of law on the island.

3.0 History 

Borneo was the name derived after the nation of Brunei.

3.1 Brunei:

• Between the 15th and 17th centuries, the Brunei Empire held dominion over the entire island of Borneo.
• In the 19th century, Brunei ceded Sabah and Sarawak to the British North Borneo Chartered Company.
• Brunei became a British protectorate in 1888 and had a British Resident established in 1906.
• Brunei finally achieved independence from the United Kingdom in 1984.

3.2 Indonesia

• Kalimantan, the Indonesian part of Borneo, possessed abundant natural resources such as oil, rubber, spices, timber, coal, diamonds, and gold. These resources attracted the interest of Chinese, Dutch, and Japanese colonial powers.
• The Dayaks were the primary inhabitants of the region until the 17th century when Malay sultanates were established in the central and western areas.
• In 1777, Chinese miners defeated local Malay sultans and established the Lanfang Republic. However, Dutch occupation in 1884 brought an end to Chinese influence.
• During World War II, Kalimantan was occupied by the Japanese. It later became part of the Republic of Indonesia between 1949 and 1950.

3.3 Malaysia:

• From 1882 to 1946, Borneo was a British protectorate known as the sovereign North Borneo Chartered Company.
• Following World War II, it became a crown colony of the United Kingdom from 1946 to 1963, known as British North Borneo. Today, it is the State of Sabah, Malaysia.
• Sarawak, in the 16th century, was under the control of the Bruneian Empire. It was later governed by English explorer James Brooke and his descendants from 1841 to 1946.
• Sarawak became a British Crown Colony in 1946 and gained self-government in 1963. It was one of the founding members of Malaysia.

Unique attributes:

• Recent Independent Nations: The nations on Borneo Island have relatively recent histories of gaining independence from colonial powers, which has influenced their modern development.
• A New Frontier for Investment in the Asia Pacific Region: Borneo presents opportunities for investment and growth in the Asia Pacific region due to its rich natural resources and strategic location.

4.0 Economy

Borneo’s economy is diversified and driven by various sectors, including agriculture, logging, mining, ecotourism, and petroleum. Its rainforest is remarkably ancient, dating back 130 million years, making it one of the oldest in the world. Notably, Borneo is a significant global source for tropical timber.

Brunei: Brunei stands out as a nation rich in oil and gas resources, ranking as one of the largest oil producers in Southeast Asia. The Gross Domestic Product (GDP) of Brunei is approximately US$13.6 billion.

Malaysian States of Sabah and Sarawak: These states have a history of being top exporters of timber and produce copra, rubber, and cocoa. They have also seen discoveries of valuable resources like gold, copper, coal, and diamonds in the past. Presently, the revenue generated from oil palm and petroleum extraction plays a pivotal role in their economies.

• Sabah’s GDP is approximately US$22 billion.
• Sarawak’s GDP is approximately US$33 billion.

Kalimantan (Indonesian Borneo): Kalimantan boasts valuable mineral resources, including coal, iron ore, gold, diamonds, and petroleum. In addition to mining, the region’s main agricultural products encompass rubber, fish, rattan, resin, and rice.

• Kalimantan’s GDP stands at approximately US$90 billion.

Unique Attributes:

• Opportunities for Developing Vast Unexplored Natural Resources: Borneo’s wealth of untapped natural resources, including its ancient rainforests and mineral deposits, presents significant economic potential and investment opportunities for sustainable development.

5.0 Language

In Borneo, language plays a crucial role in communication and daily life.

Malay: Malay is the most widely spoken language in Borneo. It serves as a common language for effective communication in government, commercial, and community sectors.

English: English is a key component of the education system, and students in Borneo learn English in all schools, contributing to their proficiency in this global lingua franca.

Indigenous Languages: Indigenous peoples of Borneo communicate in their respective native languages, which include Dayak, Kadazan, and various other local dialects. These languages are an integral part of the cultural heritage of the region.

Unique Feature:

• The use of Malay as a common language facilitates effective communication across various sectors, fostering cohesion and interaction among the diverse population of Borneo.

6.0 Investment Opportunities

6.1 Low Hanging Fruit Industries:

Borneo presents various low-hanging fruit industries ripe for investment:

• Agriculture: Leveraging its fertile land and tropical climate for the cultivation of crops and agribusiness.
• Aquaculture: The region’s rich aquatic resources offer substantial potential for fish farming and related industries.
• Aviation: Developing and expanding air travel infrastructure to accommodate growing tourism and business needs.
• Education: Investing in educational institutions to meet the demand for quality education and skills development.
• Finance: Strengthening financial services and institutions to support economic growth and investment.
• Infrastructure: Developing and upgrading essential infrastructure, including transportation, utilities, and telecommunications.
• Logistics: Capitalizing on Borneo’s strategic location to enhance logistics and supply chain services.
• Mining: Exploring and exploiting valuable mineral resources, such as coal, gold, and diamonds.
• Property: Investing in the real estate sector, including residential and commercial properties.
• Tourism: Developing the tourism industry, including eco-tourism and adventure tourism.

6.2 The Needs for a Team of Stakeholders:

The successful realization of these investment opportunities requires collaboration among various stakeholders:

• Private Equity Funds and Other Investors’ Funds: Providing the necessary capital for investment across different industries.
• International Operators: Bringing expertise and global standards to specific industries, enhancing their competitiveness.
• Target Market Customers: Identifying and catering to the needs and preferences of the local and international customer base.
• Local Developers: Playing a crucial role in executing projects and ensuring they align with local regulations and practices.
• Government Agencies: Providing regulatory support, incentives, and infrastructure development to facilitate investment.

6.3 Financial Needs and Sources of Fund

• Total Funding Needs: A total investment of US$623 billion is required to support 26 projects across various industries.
• Source of Funds: Private equity funds and other investors are primary sources of capital for each industry. These funds may come from domestic and international sources, depending on the scope and scale of each project. Collaboration between public and private sectors can also be explored to secure necessary funding and resources.

6.4 Foreign Investment History

Borneo Island has seen a rich history of foreign investment from American, European, and Asian nations, contributing to its economic development.

6.4.1 American Colony in North Borneo:

• In 1865, the American consul in Brunei, Charles Lee Moses, signed a lease with the Sultan that granted land rights in North Borneo.
• The concession was sold to Joseph William Torrey and Thomas Bradley Harris.
• Torrey established the first American colony in the Far East, named “Ellena,” with the mission to explore the riches of Borneo.
• Lack of financial support, experience, and government backing led to the failure of this venture.
• Torrey eventually sold his rights in the lease to German Baron Von Overbeck and Alfred Dent.

6.4.2 German Interest in North Borneo:

• Baron Von Overbeck, a German entrepreneur and diplomat, purchased the American Trading Company of Borneo in 1876.
• He formed a joint venture with financiers Alfred and Edward Dent and led an expedition to Borneo for mineral resources and territory rights.
• Overbeck gained support from the Sultan of Sulu and became the Maharaja of Sabah and Rajah of Gaya and Sandakan.
• However, he faced challenges due to a lack of financial support, experience, and government backing.
• In 1879, he transferred all his rights to Alfred Dent.

6.4.3 British Control in North Borneo:

• In 1881, Queen Victoria granted Alfred Dent a royal charter, leading to the formation of the North Borneo Chartered Company.
• North Borneo became a British protectorate in 1888, attracting investments in tobacco, timber logging, sago, rubber, coconut, coal mining, and infrastructure.

6.4.4 Japanese Investment in North Borneo:

• Japanese investments in Borneo before World War II were primarily in fishery and agriculture.
• Various Japanese companies ventured into tobacco estates, pearl farming, coconut and rubber estates, and rubber plantations.
• Post-war, Japan’s investments expanded to include copper mines, gold mines, oil exploration, timber logging, and veneer mills.

6.4.5 British Administration in North Borneo:

• After World War II, the Crown Colony Government took over the administration of North Borneo from the Chartered Company.
• British investments encompassed agriculture, timber logging, and oil exploration.

6.4.6. Sarawak—White Rajah and Crown Colony:

• Sarawak was administered by the White Rajah Brooke family from 1841 to 1946 before becoming a British Crown Colony.
• Investments in Sarawak included oil and gas, with oil installations at Miri and Lutong.

6.4.7 Federation of Malaysia: 

• In 1963, British North Borneo achieved self-government, followed by the formation of the Federation of Malaysia in September 1963.
• Key investments in the region have been in agriculture, timber logging, tourism, and petroleum.

6.4.8 Dutch Borneo:

• Bataafsche Petroleum played a dominant role in the oil industry in Dutch Borneo since the 1900s.

 6.4.9 Chinese Gold miners:

• Chinese gold miners established the Kongsi system near Pontianak in the mid-eighteenth century. 

6.4.10 Japanese Investment:

• Japanese investments in Borneo included rubber estates, timber industry, and oil operations.

6.4.11 Indonesia Investment in Kalimantan:

• Major investments in Kalimantan (Indonesian Borneo) are in the mining and agricultural industries.
• Indonesia’s plan to move its new capital to Kalimantan is expected to generate substantial investment in infrastructure and property development, amounting to US$30 billion.

Borneo’s history of foreign investment reflects its diverse economic potential and the contributions of various nations to its development.

7.0 Borneo competitive advantages

Borneo possesses a range of competitive advantages that make it an attractive destination for investment and development.

7.1 Attributes:

• Climate: Located at 5-7 degrees north and south of the equator, Borneo boasts an ideal climate for agricultural plantations with consistent rainfall and ample sunshine.
• Location: Positioned as a central hub in the Asia Pacific region, Borneo offers strategic access to various markets.
• Land: Vast expanses of frontier land provide opportunities for expansion and development.
• Resources: The island is rich in natural resources, including mineral ores (such as nickel, coal, diamond, and gold) and petroleum reserves.
• Maritime: With over 6,000 kilometers of coastlines, Borneo is well-suited for the establishment of new seaports, aquaculture, and maritime activities.
• Nature: Borneo boasts pristine rainforests, a pristine coral sea, and abundant wildlife.
• Calm: Referred to as the “Land Below The Wind,” Borneo is not exposed to the threat of typhoons or volcanic activities.

7.2 Benefits:

• Market: Borneo has access to substantial markets, with Brunei, Malaysia, and Indonesia combined having a population of 267 million. The broader Asian market includes 4.6 billion people.
• Energy: The island offers access to a cost-effective energy source, enhancing industrial and commercial operations.
• Distance: Borneo’s central location enables quick access, with flights to major Asian cities within 3-6 hours.
• Frontier: The island presents unexplored opportunities in tourism, resource extraction, and infrastructure development.
• Cultural: Historical ties to the western legal framework provide a familiar legal and business environment.
• Stable: Borneo enjoys a stable political structure with no regional conflicts or wars.

7.3 Competitive Advantages:

• Demand: Indonesia’s plans for capital relocation to Borneo will generate numerous opportunities for new investments and development.
• Cost: Borneo offers a competitive advantage in terms of land, labour, and cost structures, making it an economically attractive location for businesses.
• Early Mover Advantage: Borneo currently lacks extensive investment funding, sophisticated management, and international expertise. Early movers into the market stand to benefit from advantages such as favourable site selection, government support, and the potential for rapid market penetration.

8. Emerging Market

8.1 Overview of the World Economic Outlook – 2023 projections

The global economic landscape in 2023 is characterized by variations in growth rates among different regions:

Advanced economies: (e.g., USA, Europe Japan, UK Canada and others):

• Projections range from 1.3% to 3.3%.

Emerging and Developing Asia:

• China: Expected to grow at 5.1%.
• India: Projections indicate growth of 6.9%.
• ASEAN (Association of Southeast Asian Nations): Anticipated to grow at 5.9%.

(Source: IMF. World Economic Outlook 2022)

8.2 Emerging Markets Attributes:

Emerging markets share several key attributes that make them attractive for investment and development:

• Large Population: These markets often have sizable populations, representing a significant consumer base and labour force.
• Increasing Middle-Class Demand: Rising incomes and an expanding middle class in emerging markets drive increased consumer demand for goods and services.
• Unexplored Resources: Many emerging markets possess untapped natural resources, creating opportunities for resource extraction and development.
• Vast Land: These markets often feature extensive land areas suitable for agriculture, infrastructure development, and more.
• Competitive Labour: Emerging markets frequently offer a competitive labor force, making them appealing for labor-intensive industries.

8.3 Emerging Markets Benefits:

Investing in emerging markets can offer various advantages:

• High Growth: These markets typically experience higher growth rates compared to mature economies.
• Portfolio Diversification: Emerging markets provide diversification opportunities for investors seeking to balance their portfolios.
• Early Mover Advantage: Being among the first to enter these markets can result in competitive advantages, including brand recognition and market share.
• High Needs for Funding: Emerging markets often require significant funding, international management expertise, and access to global business networks.
• High Demand for Infrastructure Services: Growing populations and urbanization in these markets drive demand for infrastructure development and related services.

8.4 Key Success Factors:

Succeeding in emerging markets requires careful planning and execution:

• Strong Team: Assemble a diverse team that includes industry leaders, fund managers, local stakeholders, target market experts, and government representatives.
• Diverse Corporate Culture: Foster a corporate culture that embraces diversity and respects local customs and practices.
• Long-Term Strategic Plan: Develop a comprehensive and flexible long-term strategic plan that accounts for market dynamics and changing conditions.
• Quality Assurance Program (QAP): Implement rigorous quality assurance programs to maintain high standards and build trust with customers and partners.
• Financial and Tax Incentives: Explore financial and tax incentives offered by local governments to reduce costs and enhance profitability.

Navigating emerging markets requires adaptability, patience, and a commitment to building strong relationships with local partners and communities. Success is often driven by a combination of factors, including market knowledge, cultural sensitivity, and a forward-thinking approach.

8.5 Key Emerging Market Investors:

Abrdn
Acadian Asset Management
Actis Capital
Adams Street Partners
Advent International
Agroempresa Forestal
Alliance Bernstein
Allianz
AMG
Apax Partner
Ardian
Artisan Partners
Aubrey Capital
Bain Capital
Baillie Gifford
Baring Private Equity Asia
BlackRock
Blackstone
BlueBay
BNP Paribas Asset Management
Brown Advisory
Capital Group
Carlyle Group
CDH Investments
China Merchant Capital
CITIC Capital
Colchester
Columbia Threadneedle
CPE Capital
Creador
CVC Capital Partners
Danske Asset Management
Deutsche Bank
Dimensional Fund Advisors
Driehaus Capital Management
Dymon Asia Private Equity
Eaton Vance
ECP Investment
Emso
EQT Partners
Federated Hermes
Fidelity
Fiera Capital
First Sentier
FountainVest Partners
Franklin Templeton
GEM
GAM Investments
GIC
Global Emerging Markets
Global Evolution
GMO
Goldman Sachs
GQG Partners
Hillhouse Capital
Hong Kong Monetary Authority
HSBC Global Asset Management 
idi EM Partners
IFM Investors
Invesco
KKR
Lazard Asset Management
Manulife Investment Management
Matthews Asia
Mobius Capital Partners
Morgan Stanley
Navis Capital
Neuberger Berman
NinetyOne
Nordea
Oaktree Capital
PAG
PGIM Wadhwani Investments
PineBridge
Primavera Capital Group
Redwheel
Riverside Company
Robeco
Russell Investments
Schroders
State Street Global Advisors
TA Associates
Franklin Templeton
TPG Capital
T. Rowe Price
Union Bancaire Privee (UBP)
UBS Asset Management
Utilico Emerging Markets Trust
VanEck
Vanguard
Warburg Pincus
WCM
Wellington Management
William Blair

8.6 Key Emerging Market Consultants:

Ameriprise Financial
BCG Group
Cambridge Judge Business School
Consimllc Investment
Cornell Emerging Markets Institute
Corporate Finance Institute
Deloitte
Emerging Markets Investors Alliance (EMIA)
Ernst & Young
Fibonatix
Forbes
FundComb
IMF
International Journal of Emerging Markets
Investopedia
KPMG
McKinsey & Company
Morningstar
MSCI
OECD
Oxford Business Group
PitchBook
Preqin
PWC
Seeking Alpha
SIS International Research
The Balance
The Emerging Markets Shared Interest Group (EM-SIG)
The Global Treasurer
Velocity Global