As an economy that is dependent on its energy sector, the ongoing global crisis, which has seen oil prices drop significantly, has had a major impact on Brunei Darussalam’s economy. The Sultanate’s dependency on this sector has resulted in the government taking serious steps to look at economic diversification.
In 2015 the government critically analysed the World Bank report on the ease of doing business in Brunei Darussalam, deciding what processes and procedures can be removed or reduced to make setting up a business easier. With great credit to the government of His Majesty Sultan Haji Hassanal Bolkiah, the number of procedures required to start a business has been reduced from 16 to only three. To encourage entrepreneurship, a fixed fee of just B$300 ($213.45) has been imposed for incorporating a company, irrespective of what its authorised capital is, and an online system to handle this process has been introduced. This has resulted in an increase in the number of companies being incorporated.
One of the most recent initiatives announced by the government is the setting up of a new statutory body, known as the Darussalam Enterprises (DARe). This body, with more than 80% of its board members representing the private sector, aims to monitor and nurture the development of small and medium-sized enterprises (SMEs). DARe has been very active in its drive to help such businesses in every aspect, including building capacity, cutting down red tape and encouraging financial literacy. The private sector now has a one-stop body to assist them with whatever issues they may have. DARe is results driven and, although its aim is to assist local SMEs, it will also provide assistance to foreign investors who are interested in setting up businesses in Brunei Darussalam. This will increase the confidence of foreign investors in forming business partnerships with the Sultanate.
Foreign investors look at political stability, transparent government policies, good physical and legal infrastructure, and tax incentives when investing in a particular country. Brunei Darussalam can offer all of these things, as well as a safe environment for bringing up a family, with a good quality of life. The international schools here are of a very high standard and, in addition, are reasonably priced. Furthermore, as we are only a two-hour flight away from most other ASEAN countries, this will give expatriates a good opportunity to explore the region.
Brunei Darussalam also has one of the lowest corporate tax rates in ASEAN and has no personal income tax or indirect taxes. The Investment Incentive Order provides pioneer status for certain industries and products, whereby companies are able to obtain tax holidays for more than five years depending on the level of investments made.
The Record Keeping (Business) Order 2015 was recently introduced to encourage businesses to practise good record-keeping practices and also to provide better internal controls for monitoring their own business development. This is also aimed at improving the financial literacy of entrepreneurs and SMEs. Enhancing the human capacity building of local SMEs will enable them to become joint venture partners of foreign companies starting businesses in this country. Brunei Darussalam may be a small country but, as a member of ASEAN, APEC and the Trans-Pacific Partnership, the market opportunities in the global arena are limitless. The ASEAN Economic Community provides an opportunity for companies in the Sultanate to service a market of more than 600m people.
The business climate in Brunei Darussalam, along with the ease of doing business, has improved greatly in 2015 and continues to improve in 2016. As the government accelerates its drive to diversify away from oil and gas, with low corporate tax rates, fewer procedures for starting a business, a highly educated workforce and a proactive DARe, we are ready to welcome foreign direct investments into the Sultanate.
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