The Report: Brunei Darussalam 2016
Commanding the second-highest GDP per capita of all ASEAN nations, at $40,979 in 2014, Brunei Darussalam remains one of the most advanced economies in the South-east Asian region. This is in large part due to the Sultanate’s well-developed energy sector; however, with oil and gas prices falling substantially from mid-2014, new efforts are being made to increase the efficiency of production and diversify the economy to ensure future stability and sustainability.
Country Profile
While both 2015 and 2016 have held numerous important changes for Brunei Darussalam, the nation has long maintained its unique balance of tradition and modernity. Classified as a unitary Islamic monarchy, the Sultanate has maintained a stable form of government since its independence in 1984. Historically, the oil and gas industry has dominated the Bruneian economy and has allowed the Sultanate to accumulate its considerable wealth. However, the nation is making earnest efforts to diversify its economy in order to ensure future economic stability and sustainability. This chapter contains an interview with Le Luong Minh, Secretary-General, ASEAN.
Explore chapterEconomy
A high-income country with vast petroleum wealth, robust fiscal reserves and a small, highly- educated population, Brunei Darussalam is unique among the ASEAN community. Oil and gas resources have generated high per-capita income, although the economy has contracted in recent years as a result of falling oil and gas prices, which account for more than 90% of export revenues. Although historically high energy prices and prudent policy making have left the Sultanate well-positioned to weather short-term market shocks, productivity has been sluggish and the economy’s dependency on oil and gas production is a concern for the government. As such, Brunei Darussalam has launched a number of reforms in recent years aimed at attracting new foreign direct investment; developing the high-tech, agricultural and manufacturing industries; supporting small and medium-sized enterprises; and encouraging private sector growth. This chapter contains an interview with Mohd Amin Liew Abdullah, Deputy Minister, Ministry of Finance and Chairman, Brunei Economic Development Board (BEBD); and a viewpoint from Andrew Robb, the Australian Government’s Special Envoy for Trade.
Explore chapterTrade & Investment
One of the largest exporters of oil and gas in South-east Asia, Brunei Darussalam has long benefitted from its strong trade relationships with Japan, China and its ASEAN neighbours, building a robust trade surplus in the years to 2014 on the back of rising exports and elevated petroleum prices. The oil market’s mid-2014 turnaround has had a dramatic impact on the Sultanate’s trade balance, however, with export revenues tumbling after oil lost two-thirds of its value on global markets between June 2014 and February 2016. Although Brunei Darussalam maintains a trade surplus, exports contracted significantly in 2015, and the outlook for 2016 is subdued as a result of a rising global oil glut. This has underscored efforts to reduce oil export dependency through new diversification measures, which should see manufacturing and industrial exports continue increasing their contribution to total trade in the coming years. This chapter contains an interview with Cecilia Malmström, European Commissioner for Trade.
Explore chapterEnergy
A powerhouse regional oil and gas producer, Brunei Darussalam has benefited significantly from a long history of hydrocarbons production in partnership with international oil companies. The energy sector continues to dominate the economy today, accounting for the majority of government revenues, GDP and exports. However, the sector is facing a host of concurrent challenges – production at Brunei Darussalam’s mature fields has been in decline for a decade, while oil and gas prices have fallen rapidly since mid-2014 – putting a significant strain on expenditure, investment and economic growth. Although the near-term forecast for energy sector growth is subdued, there have been a number of positive developments in recent years that will support long-term expansion.
Explore chapterIndustry
With the recent descent of oil and gas prices on international markets, the role and future direction of the Sultanate’s industrial sector has never been of greater importance to Brunei Darussalam’s economy. Indeed, diversification away from hydrocarbons production is greatly contingent on industry taking a larger share of the country’s GDP. This necessary shift towards more knowledge-based, value-added economic activities has also long been central to the development goals of the government. A series of plans and programmes have thus been launched over the years with this objective in mind. These now add up to a robust framework that provides investors and enterprises with many opportunities and incentives to do business in the Sultanate.
Explore chapterBanking
The Sultanate’s small but solid banking sector has been going through some significant changes in recent times. Consolidation has led to fewer lenders, a process that is likely to continue, while at the same time those banks that do remain are some of the best resourced in the region. Indeed, Brunei Darussalam’s banks have high levels of liquidity, good capital adequacy ratios and well-managed levels of non-performing loans. The sector includes both Islamic and conventional banks, with the former being dominant – a feature that makes the Sultanate unique in Asian banking. This chapter contains interviews with Yusof bin Haji Abdul Rahman, Managing Director, Autoriti Monetari Brunei Darussalam (AMBD); Pierre Imhof, CEO, Baiduri Bank; and Ajay Kanwal, Regional CEO, ASEAN and South Asia, Standard Chartered.
Explore chapterIslamic Financial Services
With a strong Islamic banking sector, a growing Islamic insurance (takaful) industry and an expanding market for Islamic bonds (sukuk), Brunei Darussalam has recently been drawing much attention internationally as a center for Islamic financial services (IFS). Indeed, Brunei Darusslam is now amongst the nine countries worldwide where Islamic finance has reached systemic importance – places where more than 15% of total domestic banking assets belong to the sector. Located in the heart of a region that contains five of the 10 largest Muslim countries by population, Brunei Darussalam is also well placed to capitalize on the fast-growing role Asian Islamic finance is taking in this robust global industry. With some two-thirds of the world’s Muslims living in Asia, many of them in seriously under-banked markets, such as Indonesia, the region continues to hold strong potential for the industry. This chapter contains an interview with Javed Ahmad, Former Managing Director, and Bank Islam Brunei Darussalam (BIBD).
Explore chapterInsurance
Consisting of both Islamic and conventional insurers, the Sultanate’s insurance sector has held steady in recent times, despite strong external pressures on Brunei Darussalam’s economy. Non-life remains a dynamic segment, with Islamic takaful products making up the bulk of these general insurance premiums. This pattern looks set to continue in the year ahead, too, with the next 12 months also promising to be one of further professionalization of the sector’s distribution channels, in response to increased globalization and liberalization as the ASEAN Economic Community takes hold. The potential future impact of the Trans-Pacific Partnership agreement on the sector is also now a subject of debate by industry players. This chapter contains an interview with Osman Jair, Managing Director, Insurans Islam TAIB; and Chairman, Brunei Insurance and Takaful Association (BITA).
Explore chapterICT
The government of Brunei Darussalam has taken the initiative with regards to fostering a strong ICT sector in the Sultanate. The government is mindful of technology’s potential to create value for the country’s economy and to ensure social development for its citizens. To date, government officials, in concert with the private sector, have initiated various strategic ICT infrastructure projects and pursued the development of a comprehensive e-government system.These undertakings are fully aligned with the goals set out in the country’s long-term strategic vision, Wawasan Brunei 2035, which charts a course toward a “smart society” composed of an educated, highly skilled work force, with its people enjoying a high quality of life in a country where there is dynamic and sustainable economic growth. This chapter contains an interview with Pengriran Zain, Chief Executive, and Authority for the Info-communications Technology Industry (AITI).
Explore chapterTransport
As Brunei Darussalam prepares to diversify its economy away from oil and gas, it is looking toward other sectors to contribute further to GDP. The transport industry has thus found itself in the spotlight, with expectations of the sector’s economic and strategic potential running high. The extent to which the various transport- and logistics-related initiatives are successful remains to be seen; however, the government appears to be taking the challenge of transforming the sector into a regional powerhouse seriously. Foreign investors and the private sector are also beginning to recognize that transport and logistics are now ripe for investment. If all goes according to plan, mega-projects like Temburong Bridge – which will connect Brunei Darussalam’s western and eastern halves – could catalyze greater economic efficiency for the entire Sultanate. This chapter contains an interview with Dermot Mannion, Former Deputy Chairman, Royal Brunei Airlines.
Explore chapterConstruction & Real Estate
A number of large-scale infrastructure projects are currently being rolled out in Brunei Darussalam that look set to make a significant contribution to the national economy, greatly facilitating the Sultanate’s connectivity and potentially leading to further construction opportunities. In addition, several small-sized projects are under way, which promise to add to the Sultanate’s attractiveness as an investment destination and undergird its growth as a logistics and processing hub. Meanwhile, the real estate sector has gone through a series of transformations in the past few years that have altered the landscape considerably for buyers and sellers alike. These developments encompass changes to title law, loan regulations, ownership and the market itself in terms of demand and the type of housing being built to supply that demand. This chapter contains an interview with Bobby Chua, Vice-Chairman, Swee.
Explore chapterAgriculture
In 2007-08 South-east Asia was hit by an unprecedented shortage of staple food products. A number of factors have been blamed for this event, including droughts, a surge in costs, low stockpiles, increasing demand from growing middle-class populations and speculation over commodity prices. In response, the governments of many countries in the region embarked on efforts to ensure that they would not be caught out by food shortages again. Brunei Darussalam was no exception to this, with the Sultanate moving quickly to priorities food security and increased self-sufficiency as key aims of its economic development plans. Since then, agriculture and fisheries, agri-business, aquaculture, and food research and development (R&D) have all been prioritized, with impressive results in some sub sectors. At the same time, Brunei Darussalam has also been working to make a name for itself globally as a key halal food center, bringing a rigorous examination and certification program to the international halal table. This chapter contains an interview with Dato Ali Apong, Minister of Primary Resources and Tourism.
Explore chapterTourism & Culture
Tourism operators in the Sultanate have experienced an eventful few years. A government reshuffle in late 2015 seemed aimed at increasing the focus on the tourism sector, lending hope to many private sector operators that the government would increase support for the growth and expansion of the industry. In tandem with this, however, the appreciation of the Sultanate’s dollar, which is pegged to the Singapore dollar, has seen many potential visitors taking their business to Malaysia instead of Brunei Darussalam. However, bright spots remain for the Sultanate’s tourism operators. As low oil prices continue to weigh on the government’s budget and reserves, many eyes are looking to the tourism sector to add vibrancy to the non-oil economy. This chapter contains an interview with Mario Hardy, CEO, Pacific Asia Travel Association (PATA)
Explore chapterTax
This chapter explores Brunei Darussalam’s tax regime, focusing on key areas that include tax breaks for businesses, incentives, the withholding tax regime and deductible expenses. It also contains a viewpoint from Shazali Sulaiman, Partner, KPMG Brunei Darussalam; and Chairman, Brunei Darussalam International Chambers of Commerce and Industry.
Explore chapterLegal Framework
This chapter provides a guide to the Sultanate’s regulatory structure, focusing on key areas including property laws, IP rights and the sharia system. It also contains a viewpoint from Colin Ong, Managing Partner, Dr Colin Ong Legal Services; and President, Arbitration Association Brunei Darussalam (AABD).
Explore chapterThe Guide
This chapter contains a guide to the Sultanate’s best hotels and apartments, telephone numbers for ministries, embassies and other important institutions, and useful information for first-time visitors to the country.
Explore chapterTable of Contents
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