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Country Profile 2006 Brunei This Country Profile is a reference work, analysing the country’s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit’s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at www.eiu.com/schedule The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom
The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 26 Red Lion Square The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road WC1R 4HQ New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8500 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: london@eiu.com E-mail: newyork@eiu.com E-mail: hongkong@eiu.com Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2006 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1741-010X Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.
Comparative economic indicators, 2005
Gross domestic product Gross domestic product per head
(US$ bn) (US$ ’000)
South Korea Singapore
Taiwan Hong Kong
Indonesia South Korea
Hong Kong Taiwan
Thailand Brunei(a)
Malaysia Malaysia
Singapore Thailand
Philippines Indonesia
Vietnam Philippines
Brunei(a) Vietnam
0 200 400 600 800 0 5 10 15 20 25 30
(a) 2004. (a) 2004.
Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources.
Gross domestic product Consumer prices
(% change, year on year) (% change, year on year)
Vietnam Indonesia
Hong Kong Vietnam
Singapore Philippines
Indonesia Thailand
Malaysia Malaysia
Philippines South Korea
Thailand Taiwan
Taiwan Hong Kong
South Korea Brunei(a)
Brunei(a) Singapore
0 2 4 6 8 10 0 2 4 6 8 10 12
(a) 2004. (a) 2004.
Sources: Economist Intelligence Unit estimates; national sources. Sources: Economist Intelligence Unit estimates; national sources.
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 1
Contents
Brunei
3 Basic data
4 Politics
4 Political background
4 Recent political developments
5 Constitution, institutions and administration
6 Political forces
8 International relations and defence
9 Resources and infrastructure
9 Population
10 Education
10 Health
11 Natural resources and the environment
11 Transport, communications and the Internet
13 Energy provision
13 The economy
13 Economic structure
13 Economic policy
14 Economic performance
15 Regional trends
15 Economic sectors
15 Agriculture
16 Mining and semi-processing
17 Manufacturing
17 Construction
17 Financial services
18 Other services
18 The external sector
18 Trade in goods
19 Invisibles and the current account
20 Capital flows and foreign debt
20 Foreign reserves and the exchange rate
21 Regional overview
21 Membership of organisations
23 Appendices
23 Sources of information
24 Reference tables
24 Population
24 National energy statistics
24 Government finances
24 Money supply
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 20062 Brunei
25 Gross domestic product
25 Gross domestic product by sector
25 Agricultural production
25 Oil and natural gas production and prices
25 Balance of trade
26 Main exports
26 Main imports
26 Main trading partners
27 Balance of payments, national series
27 Exchange rates
27 International reserves
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 3
Brunei
Basic data
Land area 5,765 sq km
Population 357,800 (2004 government estimates)
Main towns Bandar Seri Begawan (capital; population 27,285, 2001 census)
Climate Tropical
Weather in Bandar Seri Hottest month, August, 24-33°C (average daily minimum and maximum);
Begawan (altitude 300 metres) coldest month, January, 24-30°C; driest months, February and August, 100 mm
average rainfall; wettest months, January and November, 3,000 mm average
rainfall
Languages Malay; Chinese and English are also used
Measures The metric system. Local measures include:
1 pikul=25 gantang=100 katis=60.48 kg
1 koyan=40 pikul=2.419 tonnes
Currency Brunei dollar or ringgit (Br$)=100 sen (cents). The currency is interchangeable
with the Singapore dollar. Average exchange rate in 2005: Br$1.6644:US$1.
Exchange rate on April 18th 2006: Br$1.6008:US$1
Time 8 hours ahead of GMT
Public holidays (2006) January 1st (New Year’s Day), 10th (Hari Raya Aidiladha, Feast of the Sacrifice),
29th (Chinese New Year), 31st (Islamic New Year); February 23rd (National Day);
April 11th (Prophet Mohammed’s birthday); May 31st (Royal Brunei Armed
Forces Day); July 15th (sultan’s birthday); August 21st (Israk Mikraj, Ascension of
the Prophet); September 25th (beginning of Ramadan), October 10th,
Anniversary of the Revelation of the Quran, 24th-25th (Hari Raya Aidilfitri, end
of Ramadan); December 25th (Christmas Day), 31st (Hari Raya Aidiladha, Feast
of the Sacrifice). Islamic holidays are based on lunar sightings.
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 20064 Brunei
Politics
Brunei Darussalam, or Brunei Abode of Peace, is a small autocratic sultanate
located on the north-west coast of Borneo. It is surrounded by the Malaysian
state of Sarawak. The Malaysian state of Sabah and the Indonesian state of
Kalimantan are close neighbours. The sultan, Hassanal Bolkiah, is also the
prime minister, minister of finance and minister of defence. There is a
hereditary aristocracy and the checks on excessive executive power are few. The
oil and gas industry has made the small state of Brunei one of the richest in the
world. But recent GDP growth rates have been steady rather than spectacular
and unemployment remains a problem.
Political background
Colonialism and decline The Brunei sultanate rose to prominence in the 15th and 16th centuries, when it
controlled coastal areas of north-west Borneo, parts of Kalimantan and also the
southern Philippines. The expansion of European colonialism signalled the
beginning of a long period of decline. In the 19th century internal strife
hastened this decline and most of Brunei’s remaining Borneo territory was lost
to Sir James Brooke, the so-called White Rajah of Sarawak, who had acquired
Sarawak in 1841. Rather than be absorbed by Sarawak, Brunei voluntarily
became a British protectorate in 1888. The Limbang district was lost to Sarawak
in 1890, splitting the country in two. In 1906 a treaty was signed between the
UK and Brunei, making Brunei a full protectorate. In 1929 oil was discovered in
Seria. Oil and gas continue to be the basis of Brunei’s wealth.
Moves to independence The present sultan’s father, Omar Ali Saifuddien, who ascended the throne in
1950, was keen to maintain a separate Brunei identity and control its oil wealth,
and consequently resisted British proposals to merge Brunei with Sarawak and
British North Borneo (Sabah). In 1959 a written constitution was introduced
giving Brunei internal self-rule under British protection. An election for a
Legislative Council was held in 1962, which the Parti Rakyat Brunei (Brunei
People’s Party, or PRB) won in a landslide victory. When the PRB was prevented
from forming a government, it staged an armed rebellion, which was
suppressed by Gurkha units of the British army. A state of emergency was
subsequently declared. In October 1967 Sultan Omar Ali Saifuddien was
succeeded by his eldest son, Hassanal Bolkiah, who is the present sultan.
Brunei became a fully independent, sovereign state on January 1st 1984.
Recent political developments
Political parties are barely Political activity and criticism of the system have been deterred by the lack of
active elections, the banning of the PRB, media controls and censorship and the
influence of the national ideology, Malay Islamic Monarchy. However, there are
now signs that the sultan is prepared to move incrementally towards a
managed partial democracy. Only three political parties exist, and they are
barely active. The Parti Perpaduan Kebangsaan Brunei (the Brunei National
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Solidarity Party, or PPKB) is allied with the government, but its activities remain
circumscribed and the party has little influence. The Parti Kesederan Rakyat
Brunei (Brunei People’s Awareness Party, or PAKAR) is likewise outwardly
supportive of the government. These were joined on August 31st 2005 by a
third legal political party, the Parti Pembangunan (National Development Party).
This is significant because it is led by Muhamad Yasin, the former leader of the
PRB, closing an unfortunate chapter in Brunei’s history. All parties proclaim
their loyalty to the monarchy.
Constitutional amendments The 1959 constitution initially provided for an elected legislature. However,
prepare for an elected Legco following the annulment of the results of Brunei’s first election in 1962, no
legislature has ever actually been elected. Recent reforms look set to pave the
way for change; in September 2004 a temporary appointed Legislative Council
(Legco) amended the constitution to allow for a 45-seat Legco, one-third of
which would be directly elected. The amendments also clarified the sultan’s
position as head of the state, government and judiciary. Following the reforms,
a 30-member interim Legco was convened in September 2005, five of whose
representatives were indirectly elected by village councils. No date for a direct
Legco election has been announced. Progress on democratisation is likely to
proceed at a very slow pace. The appointment of Lim Jock Seng as second
foreign affairs minister in 2005 represented a recognition that wider political
participation will have to include the non-Muslim Chinese community.
NGOs are few in number Brunei has few non-governmental organisations (NGOs), none of which engage
in political or human rights issues. The Consumers’ Association of Brunei
(CAB), established in March 2002, publicised alleged abuses of foreign workers
and was accused by the police of overstepping its role. Members of the CAB
claim regularly that they have been subject to police surveillance.
Sluggish economic growth Bruneians have become increasingly frustrated by the government’s failure to
increases social tensions bring about promised economic reforms. Since 2000—when the government
issued a landmark report acknowledging the country’s serious economic
difficulties—a series of highly publicised plans to decrease unemployment,
attract new foreign investment and restructure the economy away from
overdependence on limited petroleum reserves have failed to achieve
significant change in the lives of the country’s citizens. Discontent with the
government has grown, although strict political surveillance and a self-
censoring media have ensured that the sultan’s absolute power remains intact.
Bruneians have traditionally been politically complacent as long as they
enjoyed relative wealth and extensive social services. The government’s
recognition that the sultanate’s oil wealth will not last indefinitely lies behind
the slow political relaxation currently under way.
Constitution, institutions and administration
The state of emergency The constitution states that the sultan is head of state with full executive
continues authority. He is assisted and advised by, in theory, five councils: the Religious
Council, the Privy Council, the Council of Ministers (the cabinet), the Legco and
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 20066 Brunei
the Council of Succession. The Religious Council is responsible for advising the
sultan on matters relating to Islam; the Privy Council on the award of honours;
and the Council of Succession determines the succession to the throne in the
event of a dispute. The Legco, first established in 1970, was suspended in 1984,
and the sultan has since ruled by emergency decree. The Council of Ministers
became the cabinet in 1984. The sultan is the prime minister, finance minister
and minister of defence. His brother, Prince Mohamed Bolkiah, is minister of
foreign affairs.
Despite the moves towards a partly elected Legco, it remains true that the sultan
and government do not see any place for liberal democracy in Brunei—most
representatives on the forthcoming Legco will be appointed. In 1993 the Mukim
(district) and Kampong (village) Consultative Council was established, and its
first general assembly was held in 1996. These elected officials are said to be the
most appropriate means of consultation between government and people, and
five district representatives were granted seats on the interim Legco convened in
September 2005.
Political forces
A national ideology of ethnic With the Legislative Council suspended and political parties proscribed, the
identity and Islam sultan and his government espouse a national ideology, Melayu Islam Beraja
(Malay Islamic Monarchy, or MIB) that seeks to justify absolute monarchy by
invoking Brunei’s history and Islam in support of the sultanate. MIB, a fusion of
Islamic values and Brunei Malay culture, presided over by the sultan as the
defender of race and faith, has become the touchstone of loyalty in the country.
In the small, hierarchical society of Brunei, it remains unacceptable for any
Malay to question any aspect of MIB, whether it be the pre-eminence of the
Malays in Brunei, the piety and authority of the sultan or the “Islamisation” of
government policy and of society at large. In May 2005, during the first cabinet
reshuffle since 1988, the minister for education, Abdul Aziz, was replaced.
During the preceding two decades, under Mr Aziz, the education syllabus had
become increasingly focused on religion. His replacement, by a former industry
minister, Abdul Rahman Mohamed, indicates both a shift towards a more
secular approach and a greater emphasis on science and technology. Raising
standards in these two areas is seen as crucial if Brunei is to improve its long-
term economic prospects.
Minorities have less influence The ethnic-Chinese minority, which numbered around 40,000 in 2004 (the
in the political sphere government probably underestimates the real figure), has considerable
economic influence and expertise. Historically, its role in politics has been
negligible, but in May 2005 an ethnic-Chinese Bruneian, Lim Jock Seng, was
appointed as second foreign affairs minister, which may herald further, gradual
change in the composition of the cabinet at least. MIB focuses exclusively on
the Malay majority, something that merely contributes to the existing level of
discrimination against the ethnic Chinese and other non-Muslims. Non-Islamic
worship is restricted: schools are banned from teaching religions other than
Islam, the import of Christian religious material is controlled, and the building
of churches and temples is limited. Calls to increase Malay participation in the
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 7
economy have grown more frequent and popular, as unemployment among
Bruneians remains high. Workers from the Indian subcontinent and the
Philippines, although important to the economy, are also targets for resentment.
In 2001 and 2002 guest workers at several factories engaged in strikes,
protesting about poor treatment by Bruneian bosses. Indigenous groups,
although recognised, tend to remain on the fringes of society unless they
convert to Islam and intermarry with Malays.
The sultanate carefully Although the sultan has grown noticeably more pious since the 1980s and has
controls religion expanded the role of Islam in civic life, he is wary of Islamist resurgence across
urban South-east Asia, which could undermine his claim to absolute rule, and
concerned about the potential of Islam-related terrorism. Any Islamic teachings
that challenge the national ideology of MIB are banned, and in early 2002 all
private religious schools were placed under the control of the public education
system. Nevertheless, with around 25% of school-leavers unable to find jobs,
social discontent among the young has the potential to spark the rise of a more
militant Islamism in Brunei. However, the risk of Islamist opposition to the
sultanate is rather low, as Brunei appears willing to use the legal and military
powers granted to the sultan under the state of emergency to suppress any
challenges to his rule.
Key political figures
Sultan Hassanal Bolkiah
The sultan, prime minister, defence and finance minister. The sultan received his
early education in Brunei Darussalam and Kuala Lumpur, Malaysia, and trained as
an officer at the Royal Military Academy, Sandhurst, UK, in 1966-67. He became
crown prince in 1961 at the age of 15 and was installed as sultan on October 5th 1967.
The sultan is said to be one of the world’s richest men.
Crown Prince Al-Muhtadee Billah Bolkiah
The eldest son of the sultan, named as heir to the throne in 1998. The crown prince
married in September 2004. He was made a general in the Brunei armed forces in
2004 (although his education was academic rather than military) and deputy
inspector-general of police in 2005. In May 2005 he was also appointed senior
minister in the prime minister’s office, making him the second-highest-ranking
cabinet member and strengthening his claim to be the sultan’s eventual successor.
Prince Mohamed Bolkiah
The minister of foreign affairs and brother of the sultan. He received his early
education in Brunei Darussalam and Kuala Lumpur, Malaysia, and trained as an
officer at Sandhurst in 1965-67.
Prince Jefri Bolkiah
The youngest brother of the sultan, former finance minister and head of the Brunei
Investment Agency. He was disgraced after it was discovered that he had embezzled
US$14.8bn from the government through his flagship company, Amedeo
Development Corporation, which collapsed in 1998. Considered an embarrassment
to the family, he is now living overseas.
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 20068 Brunei
International relations and defence
The importance of ASEAN Brunei is a member of the UN, the Organisation of the Islamic Conference and
the Non-Aligned Movement. Of particular importance is its membership of the
Association of South-East Asian Nations (ASEAN), which the country joined in
1984. ASEAN provides Brunei with a framework for dealing with affairs in the
region and worldwide, and membership has helped to improve relations
between Brunei and fellow members Malaysia and Indonesia. Brunei lays
claim to part of the South China Sea, as do several of its partners in ASEAN,
and China and Taiwan. Brunei is too small to play a significant diplomatic role
on its own, although it has recently improved relations with China (for
example, by offering to fund educational exchanges).
The armed forces and In 1991 the Royal Brunei Armed Forces (RBAF) were reorganised into five
defence links separate services: land, navy and air forces, the armed forces services and the
armed forces training centre. In 2003 the total number of armed forces was
7,000 active personnel and 700 reserves. The army numbered 4,900, the navy
1,000 and the air force 1,100. A large proportion of the defence budget is spent
on acquiring military hardware, mainly from the UK. Expansion of the armed
forces is limited more by a lack of volunteers than by a lack of funds.
The RBAF is not perceived to be a threat to the government. However, the
sultan prefers to entrust his personal security and that of the arsenal of the
RBAF to his Gurkha Reserve Unit (the GRU, totalling more than 2,500
personnel), whose presence, along with that of the British Gurkhas (800
Gurkhas and 200 UK support forces based in Seria to protect the oil facilities),
reduces the chance that the RBAF will turn against the sultan. Brunei pays for
the GRU, which is led by retired British officers, and provides substantial
financial support for the maintenance of the British forces. The UK uses jungle-
training facilities in Temburong district and participates in joint military
exercises with Brunei. There have also been defence ties with Singapore since
the 1970s. In addition, the US and Japan have participated in joint military
exercises with Brunei. Ties with Japan have been focused on anti-piracy efforts.
Brunei has sent troops to help to keep the peace between the government and
the rebel Moro Islamic Liberation Front (MILF) in the Philippines, a project set
to run to October 2006. It has also taken part in peacekeeping activities in
Indonesia’s Aceh province.
Territorial disputes strain In 2003 a dispute between Brunei and Malaysia regarding sovereignty over
relations with Malaysia offshore territories put a halt to energy sector co-operation in the contested
areas. (The dispute first surfaced when the oil industry learned that Malaysia
had awarded drilling rights in areas also claimed by Brunei.) The dispute has
remained unsettled, despite face-to-face meetings between the Malaysian prime
minister, Abdullah Badawi, and the sultan during the former’s visit to Brunei in
2004. There has been much talk of agreeing on a “formula” and a “win-win”
situation for both countries, but no details have been forthcoming. In March
2004 the discovery by Shell Malaysia of deepwater oil reserves in the disputed
zone raised the pressure on both participants.
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 9
Brunei and Malaysia have a history of unresolved squabbles over territorial
claims, including a controversy over Limbang, a 3,978-sq-km wedge of
land dividing Brunei in two that was first annexed by Sarawak in 1890.
(Malaysia’s claim to it under international law is more recent.) The dispute over
offshore territories, which have already been contracted for exploration, has
put a damper on Brunei’s plans to reinvigorate its economy by tapping new
oil reserves.
Resources and infrastructure
Population
Population growth is slowing The population in 2004 was 357,800, according to government estimates. The
annual average rate of population increase over the 1990s was around 2.5%,
down from 3.5% in the previous decade. In 2004 average life expectancy at birth
was estimated at 74.4 years for men and 77.4 years for women. In 2004 an
estimated 148,300 persons (41.4%) were below 19 years of age, 201,500 persons
(56.3%) were of working age (19-64 years) and 8,000 persons (2.2%) were over 65
years of age.
Population by district, 2004
Brunei-Muara 247,200
Bandar Seri Begawan 27,285 a
Belait 59,600
Tutong 41,600
Temburong 9,400
Total 357,800
a From 2001 census.
Source: Government of Brunei website.
Malays are in the majority In 2004 an estimated 67% of the population were Malay (a classification that
includes some indigenous groups apart from the Malays) and 11% were ethnic
Chinese (although some Chinese leaders claim that the number is much
higher). Other indigenous groups accounted for 3% of the population. Foreign
workers from elsewhere in the Association of South-East Asian Nations
(ASEAN) and South Asia, and expatriate professionals from ASEAN, the UK and
Australia, make up the remaining 19%.
Most Brunei Malays (bumiputera, or “sons of the soil”) aspire to work in the
civil service, or in the state-owned Brunei Shell Petroleum (BSP), Royal Brunei
Airlines (RBA) or in more prestigious jobs in the private sector, such as in the
banking sector. Bumiputera generally avoid the construction industry,
agriculture and other sectors regarded as having low status. In July 2004 the
government set up a careers centre in Brunei with the aim of finding private-
sector jobs for Bruneians entering the job market. The former deputy minister
of education (now health minister), Suyoi bin Osman, called on Bruneians to
take a positive attitude towards lower-paying private-sector jobs.
The ethnic Chinese play a dominant role in the private sector, particularly as
shopkeepers, in the services industries and in the construction and oil and gas
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200610 Brunei
sectors. Although well over one-half are permanent residents, only a minority
are recognised as citizens and a large number of ethnic Chinese are stateless,
but with travel documents provided by Brunei.
Foreign workers dominate the The total labour force (different from the working-age population) reached an
private sector estimated 160,500 in 2004, and is growing at a rate of about 2.5% per year. The
labour-force participation rate for 2002 was 74.2% for males and 55.5% for
females. It is estimated that just less than one-half of the workforce is employed
in the public sector. Foreign workers made up 41% of the total labour force in
1991, increasing to 45% in 2000, despite a government objective to limit their
participation to 30%. Foreign workers filled 74.9% of jobs in the private sector in
2001. In April 2005 officials released a list of 14 job categories reserved for
Bruneians as part of the ongoing effort to reduce local unemployment (in 2004
punishments for the illegal importing of labour were also increased). The
government estimates that the unemployment rate is 4.5%. However, many
Bruneians claim the rate is almost double that.
Education
Literacy rates are rising In 2005 there were 173 government schools or colleges and 76 non-government
or private schools. Almost one-third of Brunei’s population are students. In
2005, 33,186 children were enrolled in government primary education and a
further 34,254 in government secondary education. A further 30,847 pupils were
enrolled in the non-government education system. There were 2,793 students in
vocational schools and 3,674 students enrolled at Universiti Brunei Darussalam.
The literacy rate (of those aged 15 years and over) stood at 92.7% in 2003,
according to the UN Development Programme’s Human Development Indicators,
up from 89% in 1991.
At the secondary and tertiary level, teaching is mainly in English, although
English-language skills in Brunei vary widely. There have been attempts to
modernise the curriculum and teaching methods; current methods of
instruction (which emphasise rote learning) do not appear to foster creative and
critical thinking skills among students. In 2002 all religious instruction was
placed under the control of the state school system in order to prevent radical
Islamist ideas from gaining a foothold in Brunei.
The two main tertiary institutions are the Universiti Brunei Darussalam and the
Institut Teknologi Brunei. Many Bruneians, however, prefer to send their
offspring to the UK and Australia for secondary and university education, and
the government provides scholarships for this.
Health
Nominal charges for Medical and dental services were provided free to Brunei citizens and to those
healthcare employed in government service and their dependants until 1995. Since then a
nominal fee has been charged for hospital and dental visits. There are ten
doctors for every 10,000 inhabitants, and infant mortality stood at five per
1,000 births in 2003. The central referral hospital is the Raja Isteri Pengiran
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Anak Saleha (RIPAS) Hospital in Bandar Seri Begawan. There are government
hospitals in Kuala Belait, Bangar and Tutong. BSP runs a hospital at Seria.
Community-based outpatient services are provided in health clinics and health
centres throughout the country, as well as by travelling health clinics. For
medical care not available in Brunei, citizens are sent overseas, usually to
Singapore, at government expense.
Natural resources and the environment
Brunei is geographically Brunei has a high level of rainfall and water is in plentiful supply. Poor
divided maintenance of the water infrastructure results in heavy losses owing to
leakage and the occasional interruption of supply. Large parts of the interior are
designated either as national park or as protected forest; logging is restricted.
There is concern about large-scale development along the coast. High-quality
silica sands on the coast could be used in glass manufacture, but have not so far
been exploited.
Transport, communications and the Internet
Roads and motor transport There is continuing development of the road network, which totalled 2,800 km
in 2001. The Eighth National Development Plan (2001-05) recommends
continual expansion and improvement of the road network. The level of
private car ownership is among the highest anywhere in the world, with one
car for every 1.5 people. Car ownership is encouraged by interest-free
government car loans for civil servants, subsidised motor fuel, low road tax and
the poor state of public transport. Car sales dropped substantially during the
Asian economic crisis in 1997-98, but rose sharply after early 2002, when the
government cut import duties from 20-200% to a flat 20%. Growth appears to
have been sustained since then. In 2004 there were 244,727 registered vehicles
in Brunei.
Since 1996 there have been attempts to improve public transport by expanding
taxi and bus services serving Bandar Seri Begawan and its environs, and there
are now six routes in the district. Bus services to other districts are infrequent
and irregular. There are no railways in Brunei.
Ports and shipping The main port is Muara, 29 km from the capital. Under a 25-year agreement, the
Port of Singapore Authority, in a joint venture with a local company, manages
the container terminal at Muara. Bandar Seri Begawan port is primarily used by
passenger vessels serving the Brunei River and Temburong district, as well as
the nearby Malaysian ports of Limbang and Lawas. Labuan and Kota Kinabalu
in Malaysia are now served by passenger ferries departing from the Serasa ferry
terminal, which was opened at Muara port in 1997. More than 20,000
passengers per month use the ferry terminal. The government plans to develop
Pulau Muara Besar, near the existing port, to accommodate a new container
terminal, a cruise-line terminal and an oil-tanker jetty and refinery. The
government’s goal is to make Muara Port a regional transshipment hub, but it is
not clear what comparative advantages this port will have. In 2004 the volume
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200612 Brunei
of cargo going through Muara Port rose by around 25% to just over 100,000
TEUs, driven by a surge in transshipment volumes.
Air transport Brunei International Airport at Bandar Seri Begawan is designed to handle 1.5m
passengers and 50,000 tonnes of cargo a year. Royal Brunei Airlines (RBA)
serves 21 destinations in Asia, Australia, the Middle East and Europe, including
several short-haul destinations in Malaysia and Indonesia. The airline has yet to
record a profit in its three-decade-long history. Code-sharing agreements exist
between the RBA and a number of other regional airlines.
Telecommunications Brunei has a high rate of telecommunications use. As of July 2003 there were
80,000 fixed-line telephones and 164,000 mobile telephones in use (equivalent
to a mobile penetration rate of around 50%). There were also 11,958 “postpaid”
Internet subscribers. Jabatan Telekom Brunei (JTB, or the Brunei Telecoms
Department) is the main provider of telecoms services in Brunei. A private
company, DSTCom, provides cellular mobile services. In 2002 the government
announced plans to privatise JTB under the name Syarikat Telekom Brunei
Berhad (BruTel) in April 2003, but this was postponed. The industry’s regulator
is the Authority for Info-communications Technology Industry.
The telecoms sector accounts for 4-5% of Brunei’s GDP. Brunei has been
connected to the Internet since September 1995 through BruNet, a subsidiary of
the JTB. After complaints of poor service and slow connections, a second,
independent Internet service provider (ISP) was licensed in 2000. Faced with
competition, BruNet cut prices and has been investing in providing upgraded
services and faster Internet access. The government allocated Br$526m
(US$316m at 2005 average exchange rate) to provide basic information
technology (IT) infrastructure under the 2001-05 National Development Plan
(around 7.2% of the total development budget).
Media The government publishes the Government Gazette with legal information. The
Pelita Brunei is a weekly Malay-language news-sheet/court circular, published
by the government. There is a Brunei Darussalam Newsletter, which is published
every fortnight in English by the government’s Information Department, which
also publishes a Daily News Digest. There is a daily Malay-language tabloid,
Media Permata, which has been published since 1995. The English-language
Borneo Bulletin dates from 1953 and has been published daily on weekdays
since 1990; in March 2000 the Sunday Borneo Bulletin was launched. (The
Borneo Bulletin circulates in Brunei, Sarawak and Sabah.) A rival English-
language daily, News Express, was launched in August 1999, but closed in
September 2002. The press, including Internet sites published from Brunei, is
subject to strict government censorship. In 2001 the government issued
restrictive new laws giving it the right to close newspapers and ban foreign
publications that it deemed detrimental to public morality or domestic security.
Radio Brunei has six channels broadcasting in Malay, English and Chinese. An
Islamic radio channel started operations in May 1997. The British Forces
Broadcasting Service (BFBS) also broadcasts from Seria. The government
television network, broadcasting in Malay and English, was the sole television
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 13
operator until 1999, when Brunei’s first commercial cable television channel,
Kristal, began broadcasting.
Energy provision
Electricity output grows Electricity production has grown steadily in recent years, reaching 2.46bn kwh
steadily in 2002, over 50% of which was for household use. Demand growth reflects
increased oil and gas industrial activity, and Brunei has allocated 7.3% of its total
development budget to the electricity sector. Natural gas consumption has
nearly doubled over the last pen years. The government plans to build a new
power plant in the Sungai Liang region to supply a proposed aluminium
smelting plant.
The economy
Economic structure
The oil and gas sector Brunei’s economy is dominated by the oil and gas sector, which accounts for
dominates the economy over 40% of GDP at current prices and yields 75-90% of government revenue. A
report issued in 2000 by the Brunei Darussalam Economic Council (BDEC)
recommended developing other economic sectors, but the oil and gas sector
remains the country’s main economic priority. Although the BDEC has
cautioned against over-reliance on finite oil reserves, continuing private-sector
weakness has led the government to increase oil and gas production levels to
finance development spending.
Main economic indicators, 2004
Real GDP growth (%) a 1.7
Consumer price inflation (av; %) a 0.9
Average exchange rate (Br$:US$) 1.69
Population (‘000)b 357.8
a IMF estimate. b Government estimate.
Sources: Government of Brunei website; IMF, Article IV Consultation 2005; IMF, International Financial Statistics.
Economic policy
Economic development plans Economic policy has been formulated in a series of development plans. The
make slow progress Eighth National Development Plan (2001-05), published in 2001, recommended
boosting annual government expenditure to Br$7.3bn (US$4.1bn), compared
with Br$7.2bn in 1996-2000 and Br$5.5bn in 1991-95. However, only a small part
of the money allocated was actually disbursed. In 2003, for example, only 26%
of allocated funds were spent. In some sectors, the proportion was even lower
(just 2%, in the case of information technology—IT). In the past there have been
some excuses for this underspend, beyond simple bureaucratic inefficiency. But
persistent underspending, even in such relatively straightforward areas such as
public housing, means that government plans are often seen as pipe dreams.
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200614 Brunei
Public finances depends upon Government revenue and transfers, excluding income from international
the oil and gas sector reserves, amounted to Br$6.1bn in 2004, whereas government expenditure
totalled Br$4.9bn, leaving a surplus of Br$1.2bn. The main source of income for
the government is corporate tax, which is set at a rate of 30% and is mostly
collected from the oil and gas sector. Brunei has considered levying an income
tax, but fears that this may lead to public dissent. Transfers from the Brunei
Investment Agency (BIA) make up for any budget shortfalls.
Summary of government finances, 2004
(Br$ m)
Total revenue 6,126
Total expenditure 4,909
Balance 1,217
Source: Department of Economic Planning and Development, Brunei Economic Bulletin.
Plans to strengthen the private Since 2000, when the BDEC issued a landmark assessment of Brunei’s
sector have yet to succeed economy highlighting its many weaknesses, the government has proposed a
series of plans to strengthen the economy. Key areas targeted for improvement
have included streamlining government expenditure and the budgeting system
to emphasise national rather than ministerial priorities; promotion of local
small and medium-sized enterprises (SMEs); expansion of the tax base by
introducing a personal income tax; privatisation of some government functions
and contracting out non-core services to local SMEs; encouraging greater local
and foreign participation in the economy; improving competitiveness in the oil
and gas industry, including the creation of a national oil company;
modernising the legal and regulatory framework; improving national
productivity; reviewing education policies; and relaxing limitations on the
employment of skilled foreigners.
However, many of these goals have yet to be realised. A lack of entrepreneurial
culture among Brunei’s Malays (75% of whom were employed by the
government prior to the 1997-98 regional economic crisis), entrenched
bureaucratic inefficiency, public resistance to privatisation and the prospect of
new taxes, high labour costs and weak domestic and international demand for
Brunei’s non-oil and gas exports have all led to lingering weakness in the
private sector. Despite Brunei’s need to wean itself from reliance on limited oil
and gas reserves, economic policy remains focused on the petroleum industry
as the key to economic success.
Economic performance
Gross domestic product
(real % change, year on year)
Annual average
2004a 2000-04a
GDP 1.7 2.8
a Estimate.
Source: IMF, Article IV Consultation 2005.
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 15
Growth depends on oil The main factor determining the economy’s performance is oil prices. GDP fell
sharply during the 1980s as a result of the world oil glut and the consequent fall
in prices. The performance of the economy was erratic during the 1990s. Real
GDP grew by 4.1% in 1997, but by only 1% in 1998, when the regional economic
crisis, the crash of the Amedeo Development Corporation and plunging oil
prices hit the economy. GDP fell by 0.5% in 1999, but higher oil prices increased
government revenue and boosted growth to an annual average of 2.8% in
2000-04, notwithstanding continued weakness in the private sector.
The recording of a real GDP growth rate of only 1.7% in 2004 reflected the need
to repair and upgrade oil production facilities, which prevented Brunei from
taking full advantage of high global oil prices. The growth rate picked up to an
estimated 3% in 2005. There are signs of a gradual improvement in non-energy
activity, with the non-energy sector expanding by 5.3% in 2004 and an
estimated 5.1% in 2005. However, the economy remains excessively reliant on
oil and gas.
Inflation Brunei’s dependence on imports means that it is affected by global inflation
trends and currency fluctuations, but inflation has now been below 1.5% for five
years. In 2002 there was deflation of 2.3%, owing in large part to lower prices for
cars after the government cut import taxes. Consumer price inflation was 0.3%
in 2003 and just below 1% in 2004, and hovered just above 1% in 2005.
Historically, inflation has been constrained by the imposition of price controls
and subsidies on essential foods and petrol.
Regional trends
Brunei comprises two sections. They are separated by the Limbang River valley, a
3,978-sq-km area that has been claimed by Malaysia since the 1960s as part of its
territory, sovereignty over which was contested by Brunei in early 2003. The
larger, western part of the country consists of the three districts of Brunei—
Muara, including the capital Bandar Seri Begawan, Tutong and Belait. The eastern
part of Brunei, the Temburong district, is sparsely populated and predominantly
forested. Brunei’s 161-km coastline faces the South China Sea. The population is
concentrated along the coast; about three-quarters of the land area is forest.
Economic sectors
Agriculture
Agriculture Agriculture accounts for less than 2% of GDP, and Brunei has to import 80% of
its food. Brunei farmers supply approximately 60% of local demand for
vegetables, and the production of tropical fruit is being encouraged with a view
to creating an export market. Brunei must import approximately 98% of its rice,
the staple foodstuff. The introduction of strict halal regulations (Islamic laws that
require the slaughter of meat in a prescribed way) in 2000 has hampered the
development of the local small-scale food-processing industry. Agricultural
output increased sharply in 2003-04, expanding by 9% in 2003 and an
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200616 Brunei
estimated 10% in 2004. Figures for the first half of 2005, however, showed an
18.1% quarter-on-quarter decline in agricultural output in the first quarter of the
year, followed by a further 1.4% decline in the second quarter.
Forestry Forest exploitation has been limited, no timber is exported and more than 75%
of Brunei is still under forest—60% of the country is under primary forest.
Timber extraction for local consumption is allowed, but only under strict
control by the Forestry Department. However, illegal logging is increasing,
especially near the Malaysian border. Production of round timber reached
115,800 cu metres in 2004, and that for production of bakau poles (used for
scaffolding) reached 124,000 pieces.
Fishing Fish is an important part of the local diet. Brunei’s catch in 2004 was 18,286
tonnes of fresh fish, more than three-quarters of which was caught by small-
scale fishermen. Brunei has set a goal for the industry of 20,000 tonnes per
year and targeted the aquaculture industry, which produced 654 tonnes in 2004,
for development. Full-year figures are not yet available for 2005, but data for the
first half of the year point to a rebound in the fisheries sector.
Mining and semi-processing
Brunei has substantial Brunei’s wealth is based on its hydrocarbon reserves, which (according to the
hydrocarbon reserves US Energy Information Administration—EIA) in 2003 were estimated at
1.35bn barrels of mainly low-sulphur oil, expected to last 25 years. In the first
half of 2005 Brunei produced an average of 199,823 barrels/day of oil and
959bn Btu/day of natural gas. Brunei’s gas reserves have been estimated at
13.8trn cu ft, which should last another 40 years. The government aims to
conserve resources and continue exploration to open new fields, the most
recent of which was the award in early 2006 to a consortium led by Canada’s
Loon Energy of a 2,253-sq-km oil exploration block. A 3,011-sq-km block
covering most of Brunei’s Belait district was also awarded to a consortium
comprising two US companies, China Oil USA and Jana Corporation, and the
UK-registered Valiant International Petroleum. The development of offshore
areas is hampered by a territorial dispute with Malaysia.
Petroleum Brunei Petroleum Brunei is responsible for managing Brunei’s assets in its joint oil and
gas ventures and for regulating the country’s petroleum industry. This state-
owned company took over the roles of the Brunei Oil and Gas Authority and the
Petroleum Unit in early 2002. Brunei Shell Petroleum (BSP) is the major producer
in Brunei, with seven offshore and two onshore oilfields in Brunei. The Brunei
government and Royal Dutch/Shell (Netherlands/UK), are equal shareholders in
the company. A consortium of Total (France) and a local company has been
active in oil exploration since the 1980s. New deepwater blocks were awarded in
2002 to joint ventures between Total, an Australian mining firm, BHP Billiton,
and a US energy company, Amerada Hess (for Block J); and to BSP, Japan’s
Mitsubishi and Conoco Brunei, a unit of US-based ConocoPhillips (for Block K).
The validity of these contracts was challenged in early 2003 by Malaysia, which
claimed sovereignty over parts of the areas. A 10,000 b/d BSP refinery at Seria
has met domestic demand for petroleum products since 1983.
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LNG sales Brunei produced an average of 1,016trn Btu/day of liquefied natural gas (LNG)
in 2004, making it the world’s fourth-largest producer. The tempo of LNG
production moderated slightly in early 2005. The bulk of the LNG is purchased
by three Japanese utility companies under a long-term contract first signed in
1972 and extended for 20 years in 1993. It is hoped that reserves of natural gas
will be nearly doubled and a 4m-tonnes/year liquefaction plant added by 2008.
Brunei is also considering using its natural gas resources to develop domestic
petrochemicals and energy-intensive industries, such as aluminium smelting.
Manufacturing
Manufacturing is slow to The industrial sector, including manufacturing is estimated to have accounted
expand for less than 3% of GDP in 2004. The main large-scale industries are cement
production, garment-making and the production of pre-cast concrete structures.
The garment industry had benefited from a quota agreement with the US, but
this expired at the start of 2005, and sales dropped by 16% year on year in the
first quarter. The sultanate has also targeted the food industry for development,
especially in the case of halal foods.
Bureaucratic obstacles and delays, high labour costs, a shortage of skilled labour,
the small domestic market, an unwillingness on the part of the government to
underwrite risk-taking ventures and the ban on foreigners owning land have all
deterred foreign capital and technology from investing in industry in Brunei.
Fish-processing has been the only fast-growing sector in recent years.
Construction
The construction sector The construction sector expanded by an estimated 3.7% in 2004 after contracting in
contracts real terms for the previous four years. The industry was badly damaged by the
1998 collapse of Prince Jefri Bolkiah’s Amedeo Development Corporation, which
had spent lavishly on construction projects. The government has announced a
number of projects aimed at bolstering the industry, and a rebound in the sector
was reported in the first half of 2005.
Financial services
There is no central bank There is no central bank in Brunei. The functions of the central bank are carried
out by the Treasury’s Department of Financial Services, the Brunei Currency
Board—which is responsible for issuing and managing the currency—and the
Brunei Investment Agency. These bodies all come under the jurisdiction of the
Ministry of Finance.
Six branches of foreign banks operate in Brunei, of which the three largest are
UK-based banks HSBC and Standard Chartered Bank and US-based Citibank.
The foreign institutions include a number of Malaysian banks. There were
originally three locally incorporated banks—the Islamic Bank of Brunei (IBB),
Baiduri Bank and the state-owned Islamic Development Bank of Brunei (IDBB)—
but on February 1st 2006 the Ministry of Finance approved the merger of the IBB
and the IDBB to create the sultanate’s largest bank, the Islamic Bank of Brunei
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200618 Brunei
Darussalam. The bank practises Islamic banking, a niche area that the
government is promoting. Commercial banks’ total assets and liabilities
decreased in the three years to 2002, but climbed by 22% in 2003. There was a
further expansion of bank assets in 2004 and early 2005. The non-performing
loans ratio in the finance industry was reported at 11.2% in June 2005. In July
2000 Brunei opened the Brunei International Financial Centre (BIFC), an
offshore financial centre that has attracted several international firms. Brunei has
updated its legislative and regulatory framework to attract investors to the BIFC.
Other services
The retail sector Since 1995 a more international range of shops has come to Brunei. The retail
sector has, however, been slow to develop. The 1997 Asian economic crisis
and the 1998 collapse of the Brunei-based Amedeo Development Corporation
damaged consumer confidence and increased personal debt, and several stores
have been forced to close. Many Bruneians prefer to shop across the border in
Malaysia, where goods are less expensive.
Tourism Brunei had approximately 1m foreign visitors in 2003, the vast majority arriving
from Malaysia through land-entry points. However, the official Brunei Tourism
agency estimates that only 100,000 were true business or leisure tourists. This
group had a three-day average length of stay. Most of these tourists originated
from the short- and medium-haul markets, although a significant portion
originated from long-haul markets, mainly UK and Germany. The government’s
objective is to increase international tourist arrivals by a minimum average rate
of 7% a year, as well as to increase average length of stay and expenditure.
A range of factors has discouraged tourism in Brunei: limited access to alcohol;
the high cost of accommodation; inadequate accommodation and transport
facilities outside the capital; and the perception that there is little of interest to
see in the country. The large areas of Brunei that are still covered in primary
forest have been earmarked as sites for ecotourism. However, until transport
and accommodation facilities are improved and expanded outside the capital,
the ecotourism market is likely to remain underdeveloped.
The external sector
Trade in goods
Foreign trade, 2004
(US$ m)
Merchandise exports 4,514
Merchandise imports 1,641
Trade balance 2,873
Source: IMF, Direction of Trade Statistics; Department of Economic Planning and Development.
Brunei’s trade surplus rises Brunei’s trade surplus rose sharply in 2001-04 and recorded further increases in
early 2005 owing to increased oil and gas production, rising oil prices and
inconsistent consumer demand within Brunei for imported goods. The
Country Profile 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006Brunei 19
merchandise trade balance reached US$2.9bn in 2004, according to preliminary
data. Exports increased by 2% in 2004 to US$4.5bn, and imports surged by 22%
to US$1.6bn. A trade surplus of Br$3.4bn (US$2bn) was recorded in the first half
of 2005.
Main trading partners, 2004
Imports from: % of total Exports to: % of total
ASEAN 44.6 Japan 36.7
EU 13.4 ASEAN 17.1
US 10.1 South Korea 13.4
Japan 9.7 Australia 13.3
Source: Department of Economic Planning and Development, Brunei Economic Bulletin.
Exports are dominated by petroleum production, with crude oil, partly refined
petroleum and natural gas accounting for over 90% of total exports. By far the
most important export market is Japan, which according to IMF figures took
38% of Brunei’s exports in 2004, followed by South Korea, Australia, the US and
Thailand. Singapore was the largest supplier of imports, followed by Malaysia
and the UK. In the first half of 2005 Japan remained the largest export market,
and the bulk of imports continued to be sourced from members of the
Association of South-East Asian Nations (ASEAN). Trade with China is rising
rapidly, but from a low base. In the second quarter of 2005, 5% of Brunei’s
exports went to China, and 7.1% of imports were sourced from China.
Invisibles and the current account
Current account, 2003
(US$ m)
Goods: exports 4,421
Goods: imports -1,258
Services: receipts 437
Services: payments -1,032
Income: receipts 1,182
Income: payments -214
Transfers: receipts 0
Transfers: payments -290
Current-account balance 3,246
Source: IMF, Country Report Statistical Appendix, 2005.
A substantial services deficit is Brunei’s services deficit has increased from a range of US$150m-175m a year in
offset by an income surplus the early 1990s to US$300m-350m in the late 1990s and to US$450m-600m in
2000-04. The income account, however, registered a surplus of US$890m in
2004 (according to preliminary figures), as a result of oil earnings invested
overseas. The overall current-account surplus for 2003 was US$3.2bn,
according to the IMF. Preliminary IMF data indicate that the surplus rose to
US$3.8bn in 2004.
© The Economist Intelligence Unit Limited 2006 www.eiu.com Country Profile 200620 Brunei
Capital flows and foreign debt
The BIA manages some The sultan, Hassanal Bolkiah, has invested abroad in his own right. Notable
investments acquisitions include the Dorchester Hotel in London, the Ritz Hotel in Paris, the
Beverly Hills Hotel in California and the New York Palace Hotel. Some of these
were subsequently transferred to the Brunei Investment Agency (BIA), as were
properties recovered from Prince Jefri Bolkiah, the sultan’s brother who was
charged in 2000 with misappropriating US$14.8bn in state funds. A number of
Brunei companies, including those with royal connections, have been investing
in Vietnam, China, the Philippines and Thailand.
Foreign reserves and the exchange rate
Brunei holds substantial Brunei’s foreign assets are estimated at US$30bn, down from an estimated
foreign assets US$80bn in the early 1990s. These assets generate a substantial investment
income, which during most years in the 1990s exceeded the combined revenue
from oil and gas. About one-third of the reserves are managed on a day-to-day
basis by the BIA; the management of the remainder is divided between eight
foreign institutions. Up to 80% of the investments are in the form of govern-
ment bonds, and the balance is held in cash, equities, gold and real estate.
The Brunei dollar, or ringgit, is fully interchangeable at par with the Singapore
dollar. A trend of steady appreciation was disrupted by the 1997 regional
economic crisis. The currency has strengthened steadily since 2002, averaging
Br$1.6644US$1 in 2005, and trading at Br$1.6008:US$1 on April 18th 2006.
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