Country Profile:
Brunei Darussalam
Brunei Darussalam
The Sultanate of Brunei Darussalam (the Abode of Peace) is located in the north-western coast of Borneo and borders the Malaysian state of Sarawak and the South China Sea. The country’s well-developed hydrocarbons reserves form the backbone of the economy, accounting for 70% of GDP and 78% of exports. Careful management of these resources enables Bruneians to enjoy a standard of living that is among the highest in the world in terms of per capita GDP. As a result, Brunei Darussalam is ranked first in macroeconomic stability by international ranking agencies. To sustain these successes, the nation has recognised the need to diversify the local oil and gas industry and the broader economy as well. The government is using a multifaceted approach to maximise the value of domestic resources and jump-start the country’s industrial base to increase non-hydrocarbons activity and exports.
ISBN: 9781907065095
ISSN (Online): 1755-389x
ISSN (Print): 1755-3903
TABLE OF CONTENTS
COUNTRY PROFILE
This section provides an overview of the country, its population, languages, natural resources, geography, climate, religion and history.
POLITICS
The Sultanate is a monarchy, with His Majesty the Sultan taking on the role of head of state, head of government, head of state finances and head of the armed forces. The royal family also plays an important role in running the Sultanate, both in the political and economic spheres. Royal custom and tradition are key parts of the way Brunei Darussalam works. His Majesty’s brother, His Royal Highness Prince Mohamed Bolkiah, is currently the foreign minister. Other key ministers include the minister of industry and primary resources, the minister of home affairs, the minister of energy and the senior minister at the Prime Minister’s Office. Since amendments to the Constitution in 1986, the cabinet has also included a number of deputy ministers. The Sultan retains complete power over the Council of Ministers in terms of both appointments and dismissals. The Sultan is committed to keeping up the pace of economic development while also working to maintain the strong traditions and customs of the nation. This requires a challenging balancing act at times, as the pressures of the outside world make themselves as felt in the Sultanate as elsewhere. Brunei Darussalam is highly fortunate in that it has been able to maintain a sense of continuity with its past while at the same time embracing the present, ensuring a high standard of living for all its citizens and a sense of stability that is sometimes the envy of its neighbours.
This chapter provides interviews with His Majesty Sultan Haji Hassanal Bolkiah; HRH Prince Mohamed Bolkiah, the Minister of Foreign Affairs and Trade; HRH Prince Charles, the Prince of Wales; and Simon Crean, the Australian Minister for Trade.
THE ECONOMY
A decade of conservative fiscal policy, high levels of budgetary surpluses and limited foreign exposure are some of the key macro factors that underpin the Sultanate’s solid economic fundamentals. Even though measured at constant prices GDP contracted by 1.9% in 2008, Brunei Darussalam continues to enjoy one of the highest levels of per capita GDP in Asia. In contrast to the Asian financial crisis a decade ago, the global credit crisis in 2008 and 2009 has enhanced the country’s economic reputation, while improving its regional competitive standing. Compared to its neighbours, Brunei Darussalam finds itself in a better position to roll out long-term development plans to keep the economy growing in a sustainable fashion. The government has the funding base, clearly formulated investment plans, and most importantly, the political will to follow through with their expenditure programmes.
This chapter provides interviews with Pehin Adanan Yusof, the Minister of Home Affairs; Pehin Abdul Rahman, the Minister of Finance II; Dato Timothy Ong, the acting chairman of the Brunei Economic Development Board; and Ahmed Abdulnabi Macki, the Minister of National Economy in Oman.
BANKING
With abundant liquidity, healthy profits and limited foreign exposure, the local finance sector is far removed from the challenges afflicting the broader global financial system. There has been a slowdown in lending for automobile purchases and some movement to high quality assets, but for the most part it has been business as usual for domestic lenders. According to statistics from the Department of Economic Planning and Development the financial sector has outperformed the overall economy, posting 2.5% growth in 2008 compared to an overall GDP contraction of 1.9% at constant prices. Finance is also one of the fastest growing private sectors, outpaced only by transport and communications, which together recorded 6.3% growth in 2008. The Sultanate’s eight banks, six of which are branches of foreign banks, benefit from the country’s strong fiscal position, as well as a blanket government guarantee on all deposits, which expires on December 31, 2010. The stable public sector, which employs most of the population, ensures that income levels among retail borrowers remain steady and predictable. Retail lending remains the most attractive segment of the banking business, offering high interest rate margins and profits. However, due to regulatory pressure since 2005, the banks have been forced to rein in their exposure to individual lending, which has significantly reduced the number of bankable customers and shifted the focus towards savings products.
This chapter provides interviews with Dato Paduka Ali Apong, the former permanent secretary in the Ministry of Finance and Pierre Imhof, the general manager of Baiduri Bank.
INSURANCE
The most distinct feature of the insurance sector has been consolidation and the rise of sharia-compliant takaful (Islamic insurance) operators, which have come to dominate the motor insurance segment. Although they are outnumbered by conventional operators, the contribution of three takaful operators to total non-life insurance premiums expanded by approximately 24% between 2005 and 2008, reaching approximately BN$49m ($33.64m) at the end of the period, according to the financial institutions division at the Ministry of Finance, the sector’s official regulator. Meanwhile, nine conventional insurance companies, five of them branches of foreign insurance groups, have found themselves under significant competitive pressure from takaful certificate issuers. In response, they have adopted a defensive and niche-based approach, focusing on segments such as property, workmen’s compensation and, most successfully, life insurance products.
This chapter provides a roundtable interview with Hajah Lily binti Haji Kula, the acting managing director of Takaful IBB and Osman Jair, the managing director of Insurans Islam TAIB.
ISLAMIC FINANCIAL SERVICES
The global financial crisis has strengthened the reputation of Islamic financial institutions, even though some of them became victims of the liquidity crunch as investors left the money markets. Brunei Darussalam is fortunate to have access to ample liquidity, with local Islamic banks shielded from external turbulence. The main challenge for them is developmental rather than systemic. The local banks need to improve the sophistication of their financial products and technology to be able to compete for lending opportunities with more established foreign players that can access the know-how of their parent companies.
This chapter provides interviews with Javed Ahmad, the acting managing director of the Bank Islam Brunei Darussalam; Abdul Aziz Al Hinai, the vice-president of the Islamic Development Bank; and Pengiran Haji Abdul Rahman the acting managing director of TAIB.
ENERGY
According to data from the BP Statistical Review of World Energy 2009, Brunei Darussalam had proven oil reserves of 1.1bn barrels at the end of 2008. This was around 0.1% of the world’s total oil reserves – roughly the same as in 2007. Oil production, meanwhile, was around 174,065 barrels per day (bpd) in 2008, according to the Department of Economic Planning and Development, which was a decrease from the 193,832 bpd recorded in 2007. Overall, the figures give a reserves-to-production ratio of 17 years, meaning that at 2008 production levels, if no new reserves are found, oil will likely run out in 2025. Over the years the Sultanate has been the venue for some major new innovations in oil and gas, with one of the world’s first commercial liquefied natural gas plants starting up not far from the Seria monument in 1972. Some of the most sophisticated drilling techniques in the world are currently being used offshore of Brunei Darussalam to extract oil and gas from deep beneath the ocean’s surface. The sector has faced some tough times recently, with old reserves waning and the need to bring new resources on-stream. Exploration both on and offshore holds much promise, although is not without its challenges, both geological and diplomatic. Meanwhile, energy efficiency and conservation are the new buzzwords, and there is a growing interest in renewables, such as solar power, which has driven research and development. The Sultanate is also trying to expand value-added industries in the sector by boosting its downstream side, both in refining and petrochemicals. At the same time, it is encouraging growth in its strong services sector and continuing local recruitment policies aimed at deepening human resources.
This chapter provides interviews with Pehin Mohammad Daud, the Minister of Energy; Louis Heuzé, the general manager of Total E & P Deep Offshore Borneo; and Dr Grahaeme Henderson, the managing director of Brunei Shell Petroleum.
INDUSTRY & PRIMARY RESOURCES
Brunei Darussalam has ambitious plans for developing its non-hydrocarbons industrial sector, with moves under way to strengthen its petrochemicals, food processing and small and medium-sized enterprise (SME) segments. The government’s long-term development plan, Wawasan Brunei 2035, puts a strong emphasis on industrial expansion and calls for the promotion of investment, both domestic and foreign, in “downstream industries as well as in economic clusters beyond the oil and gas industry”. Another key element of the plan is the development of local SMEs, by enabling more Bruneians to develop their competitive and entrepreneurial strengths. The long-term vision of Wawasan Brunei 2035 is broken down into shorter, five-year schemes known as the national development plans (RKNs), with the current scheme covering 2007-12. This builds on the achievements of RKN 2001-05, during which the state boosted downstream industries with the signing of a memorandum of understanding for the Brunei Methanol Company’s plant at SPARK, an achievement to be brought to fruition during RKN 2007-12.The implementation of major new developments, such as SPARK and PMB, will also have a significant impact on growth. Brunei Darussalam is fortunate in that it has been sheltered to a large extent from the global economic downturn. Mobilising these advantages to its benefit will be a challenge, however, particularly with Asia regaining some of its steam in the latter half of 2009. Diversification will allow the Sultanate to branch out from its traditional areas of activity, strengthening it against future market volatility.
This chapter provides interviews with Pehin Yahya Bakar, the Minister of Industry and Primary Resources; Pengiran Kerma Raja Pengiran Kamarulzaman, the chairman of Sungai Liang Authority; Vincent Cheong, the CEO of the Brunei Economic Development Board; and Noel Shield, the CEO of the Ghanim International Food Corporation.
AGRICULTURE
While agriculture has traditionally made only a modest contribution to Brunei Darussalam’s GDP, in recent years it has become the focus for several of the country’s key economic initiatives. Consequently, the promotion of Brunei Darussalam’s own halal brand of food products and a drive towards self-sufficiency in rice production have captured headlines across the region. At the same time, the country has been taking some important steps towards developing a domestic food technology niche, with plans to build an agro-technology park and to become a centre for aquaculture. If carried out to plan, these initiatives could result in a major expansion in the Sultanate’s agricultural sector.
This chapter provides an interview with Dato Hamid Jaafar, the permanent secretary of the Ministry of Industry and Primary Resources.
TOURISM
So far 2009 has been a slow period for the global travel industry. Brunei Darussalam has seen lower-than-expected visitor numbers throughout the year. Swine flu served another blow to the sector, as people became more wary of foreign travel. However, this has helped to boost domestic travel, with more Bruneians choosing to enjoy local resort and hospitality facilities. Nearby destinations such as Singapore continue to hold up well thanks to good connectivity and attractive promotions. Demand is expected to pick up in 2010, with South-east Asia and Borneo once again benefitting from growth in Asian travel. The long-term challenge for Brunei Darussalam is to capture the top end of the expanding travel market by increasing visit length and spending without sacrificing its adherence to environmental standards and cultural values.
This chapter provides an interview with Sheikh Jamaluddin Sheikh Mohamed, the CEO of the Brunei Tourism Board.
CONSTRUCTION & REAL ESTATE
With major house-building projects under way, alongside changes in the law aimed at boosting private investment in bricks and mortar, the real estate sector is primed to see a rise in production. The Sultanate has managed to avoid the kind of major economic downturn that has affected housing markets in a variety of other markets around the world, while remaining reasonably priced. This, many hope, combined with new housing regulations, may make Brunei Darussalam a more attractive destination for foreign buyers in the years ahead. Though it is now a decade on from the heady days of the late 1990s, when business was surging thanks to a string of major projects, construction growth is currently more modest, with the sector still highly dependent on state contracts. The potential is there for another surge, with major housing and infrastructure projects on the way, including the development of an entirely new port. The Ministry of Development, the government body responsible for physical infrastructure, land use and national housing in the country, also remains committed under the national development strategy to improving and expanding the Sultanate’s infrastructure and to supporting local contractors and suppliers.
This chapter provides an interview with Lim Beng Thai, the CEO of Lim Teck Hoo Holdings.
TRANSPORT
For many centuries, Brunei Darussalam has been deeply connected into both international and regional trade and transport routes. In medieval times, merchants from China, the Middle East and, later, Europe were frequent visitors, anxious to bargain for the Sultanate’s resins, sandalwood and silks. Later, the oil and gas trade led the way in establishing new links from Brunei Darussalam to markets around the world. Brunei Darussalam has thus long been a regional centre for trade, providing a gateway to Borneo, the world’s third-largest island and one of its most resource-rich. Today the Sultanate is keen to expand on that role, seeing itself as a natural entrepôt for goods travelling within South-east Asia and beyond. Brunei Darussalam is well placed strategically, within Borneo and the Association of South-East Asian Nations-China area to boost its role as a transit and trans-shipment centre. Achieving this on an international level will be a challenge, however, taking into account the existing Asian centres in Singapore, Kuala Lumpur, Jakarta and Bangkok. That said, Brunei Darussalam might be able to carve out a niche in its neighbourhood, as the removal of barriers within the region is likely to benefit the Sultanate greatly.
IT & TELECOMS
The Sultanate’s information and communications technology (ICT) sector finds itself on a stable footing in 2009 and enjoys considerable and ongoing support from a number of major public institutions, but recently it has been under increasing pressure to find new growth opportunities and increase its weight in the overall economy. With additional infrastructure investment in broadband connectivity in the works, the majority of Bruneian homes are going to enjoy access to fast data services in the foreseeable future. The launch of AAG cable should open up a host of new opportunities in IP-based voice telephony and video streaming content. With modern infrastructure and high mobile penetration levels, the ICT sector is poised to roll out new value- added services, focusing increasingly on commercialising local innovations in order to diversify the Sultanate’s economy. Although the sector’s current contribution to GDP is estimated to be around 2%, the government target is set at 10% by 2024, according to the plan maintained by the Ministry of Communications. The ICT sector is consequently expected to play an important role in reducing Brunei Darussalam’s dependence on hydrocarbons and providing private sector employment.
This chapter provides interviews with Haslina Taib, the CEO of BAG Networks; and a roundtable interview with Song Kin Koi, the managing director of Telekom Brunei and Suhaimi Hussain, the group information officer of the DST Group.
DEFENCE
Charged with defending the territorial integrity and sovereignty of the Sultanate – and upholding the Constitution and the guiding philosophy of the Malay Muslim Monarchy – today, the Royal Brunei Armed Forces (RBAF) faces multiple challenges. It was always thus, however, and as the RBAF approaches its 50th anniversary in 2011, it is keenly aware that while the need for security may be a constant, the nature of challenges and threats to that security is ever evolving. The RBAF has thus taken a dynamic approach to defence policy, with this requiring regular review. In consequence, a series of defence white papers and updates has outlined the Sultanate’s strategic thinking. An initial white paper in 2005 was followed by an update in 2007, with the defence community now eagerly awaiting a new white paper, set to be released in 2011. These reviews have addressed shifts in the military balance within the region, as well as the changing nature of the military’s role. In recent times, South-east Asia has experienced several armed conflicts, along with the asymmetric threat posed by both local and international terrorist activity. At the same time, the importance of disaster relief and humanitarian assistance has been heavily – and tragically – underscored in recent years, with the 2004 Asian tsunami, followed by major earthquakes in Indonesia, cyclones in Myanmar, and most recently, typhoons in the Philippines.
This chapter provides an interview with Pehin Colonel (Ret.) Dato Mohammad Yasmin Umar, the deputy minister of defence.
HEALTH
According to a 2007 World Health Organisation (WHO) global survey of health services, Brunei Darussalam ranked 40th out of 190 countries. The survey also placed it second within the Association of South-east Asian Nations (ASEAN), after Singapore, and fourth within the Western Pacific region. In 2008 the Sultanate achieved a ratio of one doctor to every 706 inhabitants and one nurse to every 204. In total there were 564 doctors and 1941 nurses employed in Brunei Darussalam’s public and private health care sectors combined. The citizens of Brunei Darussalam are blessed with excellent health services, which provide universal access virtually free due to the generosity of the state government. In recent years, there has been a move towards more private sector involvement in the sector, as Bruneians exercise greater choice over health provision. There has also been growing momentum in the private sector to introduce additional specializations and to create centres of excellence. The idea is that this will help establish Brunei Darussalam’s name on the international health travel and tourism map, as well as provide the Sultanate’s citizens with the very best in medical care.
This chapter provides interviews with Pehin Suyoi Osman, the Minister of Health, and Tan Seang Teak, the general manager of the Jerudong Park Medical Centre.
EDUCATION
The Sultanate has one of the most highly educated populations in Asia, a fact recognised in the September 2009 Global Competitiveness Index (GCI) released by the World Economic Forum. In 2009 Brunei Darussalam moved up some seven places overall from its 2008 performance, with health and primary education, training and higher education singled out as outperforming pillars of the GCI for the Sultanate. This improvement helped Brunei Darussalam rise in the rankings from fourth to third position overall among Association of South-East Asian Nations member states. Literacy rates are in the high 90% range, and in 2008, there were 110,182 students enrolled in education at all levels, out of a total population of 398,000, according to figures from the Department of Statistics. Some 5235 students were enrolled in higher education institutions, with the bulk of the remainder at the primary and secondary levels: 45,125 and 38,693 students, respectively.
This chapter provides interviews with Pehin Abdul Rahman Taib, the Minister of Education, and Zulkarnain Hanafi, the Vice-Chancellor at the Universiti Brunei Darussalam.
RELIGIOUS AFFAIRS
Although Brunei Darussalam is known in the Islamic world as a devout nation with a historically strong tradition in Muslim scholarship, architecture and application of sharia law, the distinguishing characteristic of its faith lies in its tolerance and acceptance of the other religions that are practiced freely on its soil. In fact, these religious freedoms are enshrined in the Sultanate’s Constitution, which states, “The religion of Brunei Darussalam shall be the Muslim religion according to the Shafi’i sect of that religion, provided that all other religions may be practiced in peace and harmony by the person professing them in any part of Brunei Darussalam.”
This chapter provides an interview with Pehin Dato Haji Mohamad Zain bin Haji Serudin, the Minister of Religious Affairs.
CULTURE, YOUTH & SPORT
While the “abode of peace” aspect of Brunei Darussalam is often attributed to political consensus, it is in fact a carefully managed equilibrium that is sustained by the country’s economic wealth, social development programmes and distinct culture. The Sultanate’s social stability and the prolonged absence of political tensions is first and foremost enabled by the generous welfare system. The most visible elements of this are government food and fuel subsidies, housing schemes, and free health care and education. An equally important role, which is sometimes overlooked, is played by the Sultanate’s social development institutions, which have been helping to forge a common national identity through community programmes and by preventing socially vulnerable groups from sliding into poverty.
This chapter provides an interview with Dato Paduka Haji Jemat bin Haji Ampal, the Permanent Secretary of the Ministry of Culture, Youth and Sports.
BUSINESS GUIDE
In conjunction with Deloitte, OBG explores the taxation system, examining the environment for investors. It also features a viewpoint by Pengiran Haji Moksin, the president of the Association of South-East Asian Nations Federation of Accountants and the Brunei Darussalam Institute of Certified Public Accountants, and a partner with Deloitte.OBG also introduces the reader to the different aspects of the legal system in Brunei Darussalam, in partnership with Dr Colin Ong Legal Services. The legal coverage provides a viewpoint with Colin Ong, the managing partner of Dr Colin Ong Legal Services.
THE GUIDE
This section includes hotel, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.
