How Brunei Currency is a legal tender in Singapore…

Superb article on the topic (HT: JP Koning).

In 1967, Singapore, Maalysia and Brunei (all three British colonies) signed an agreement. It allowed the currencies of the three economies to be used freely as legal tender in their respective countries. In 1973, Malaysis opted out of the agreement but Singapore and Brunei continued:

Following a colonial-era practice that saw currencies of all three ex-British colonies — Malaysia being the third — interchangeable on par, the first formal agreement, involving Malaysia, was inked on June 12, 1967. It was a sign of the depth of economic links between the three countries, despite the move to issue their own national currencies post-independence.

Malaysia opted out in 1973, given its domestic development imperatives, but Singapore and Brunei soldiered on for five decades, weathering economic challenges such as the 1997 Asian financial crisis and the global financial crisis, and significant structural changes to both countries’ economies, domestic monetary institutions and arrangements.

The agreement was able to withstand the test of time as the exchange rate-centred monetary policies of both these small and open economics kept inflation well in check; bilateral trade and investment also grew progressively, aided by low transaction costs from the fixed exchange rate.

Thus banks here accept from the general public Brunei currency — coins included — at par for deposit, said the MAS on its website. 

The authority also works with the Singapore Tourism Board, National Environment Agency, Housing and Development Board, and relevant trade and business associations every year to remind their stakeholders — including hawkers, retailers and coffee shop owners — of the currency interchangeability agreement.

However, the agreement seems to be forgotten as Brunei Dollars are not being accepted by Singaporeans as easily:

Bruneians have no trouble walking into any shop in Orchard Road and paying for their iPads or Louis Vuitton bags with a wad of Brunei currency notes — no questions asked. This is the perk of a currency interchangeability agreement inked between Singapore and Brunei 50 years ago.

The deal allows the Singapore and Brunei dollars to be used in each other’s country on par, without any extra charges. The currency would be repatriated; in the past three years, the Monetary Authority of Singapore (MAS) told TODAY, it sent some B$1.3 billion annually to its counterpart, Autoriti Monetari Brunei Darussalam.

Beyond the Republic’s shopping belt, however, Bruneians say most Singaporeans seem to have forgotten about the agreement, and tell of their frustration of holding cash that nobody will accept.

Five out of 10 times that Bruneian magazine editor Redzwan Kamarudin hails a taxi here, he will encounter a cabby who refuses to accept his Brunei notes. The 26-year-old’s worst encounter — a cabby shooing him out of the taxi once the former found out he had no local currency.

Mr Redzwan said: “Sometimes it makes me wonder, do we even have our currencies pegged, since so many places don’t tend to accept it any more … At the shops, they either don’t accept it at all or they’re very wary and have to check with their manager.” 

Hmm..

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One Response to “How Brunei Currency is a legal tender in Singapore…”

  1. local stuff to do Says:

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    How Brunei Currency is a legal tender in Singapore

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