Brunei: Market Profile
Brunei is located on the north coast of the island of Borneo, facing the South China Sea and surrounded by East Malaysia. It gained independence from the UK in 1984. Its economy is heavily resource-dependent, with the oil and gas sector accounting for some 60% of GDP. The country's large foreign reserve assets, low external debt and high import cover reduce overall risks, although a dip in oil-related revenues may place pressure on fiscal revenues. Furthermore, the high standard of living and wealthy population (per capita GDP) provide tailwinds to Brunei's long-term growth.
Sources: World Bank, BMI Research
2. Major Economic/Political Events and Upcoming Elections
Brunei became the first east Asian country to adopt sharia law.
Brunei ratified the Paris global climate agreement.
Source: BBC country profile – Timeline
3. Major Economic Indicators
e = estimate, f = forecast
Sources: IMF, World Bank
4. External Trade
4.1 Merchandise Trade
Sources: WTO, Trade Map, BMI Research
4.2 Trade in Services
5. Trade Policies
- Brunei Darussalam joined the World Trade Organisation (WTO) in January 1995 and has been a member of the General Agreement on Tariffs and Trade (GATT) since December 1993.
- Brunei has an average tariff rate of 2.6%, the fourth-lowest in the East and South East Asia region (out of 18 countries). The Customs Import Duty Order 2012 and Excise Duty Order 2012 were created to facilitate trade and to attract FDI. Basic foodstuffs and goods for numerous industrial uses are exempt from import duties. There is no tax on computers and peripherals. Excise duties are levied on certain goods, including cars at 20%, and 15% for heavy vehicles. Other consumer products, such as perfume, cosmetics, clothes, carpets, shoes, jewellery, office equipment, telephones, television sets, lamps, and cameras are taxed at 5%. Import duties are also 5% for electronically operated industrial machines.
- Brunei is emphasising its halal food industry as one of its key industries in an effort to diversify its economy. The country is promoting its own halal food certification regime, one entirely different from other halal certification organisations, which requires Bruneian inspectors to travel to production facilities in the country of the food exporter, at the exporter’s expense, to inspect the food production process. This requirement places constraints on the ability of international food exporters to enter the Brunei market without complying with requirements that may not be necessary in other markets.
Sources: WTO – Trade Policy Review, BMI Research
6. Trade Agreement
6.1 Multinational Trade Agreements
- The Brunei Darussalam-Japan bilateral Free Trade Agreement and Economic Integration Agreement: The Agreement entered into force in July 2008 and covers trade in goods and services. As of 2016, Japan was Brunei's largest export partner, where Brunei exported 33.7% of its total exports to Japan, with the majority of products being mineral fuels, mineral oils and products of their distillation and bituminous substances.
- ASEAN – members are Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Philippines, Singapore, Malaysia, and Vietnam: ASEAN members have agreed to lower intra-regional trade tariffs through the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area.
Signed (Expected to enter into force on 1 January 2019 the earliest)
ASEAN-Hong Kong, China Free Trade Agreement: The Agreement was signed in November 2017, three years after the negotiations commenced in 2014. According to the Economic Ministers from ASEAN Member States, the ASEAN–Hong Kong Free Trade Agreement is the sixth such agreement between the ASEAN and external partners (China, Korea, Japan, India, and Australia-New Zealand).
Source: WTO Regional Trade Agreements database
7. Investment Policy
7.1 Foreign Direct Investment
7.2 Foreign Direct Investment Policy
- Brunei has an open economy favourable to FDI as the government continues its economic diversification efforts to limit its long reliance on oil & gas exports.
- Brunei encourages FDI in the domestic economy through various investment incentives offered by the Energy and Industry Department, Prime Minister’s Office, and through activities conducted by the Ministry of Foreign and Trade and the Brunei Economic Development Board.
- Brunei amended its laws to make it easier and quicker for entrepreneurs and investors to establish businesses. The Business License Act (Amendment) of 2016 exempts several business activities (eateries, boarding and lodging houses or other places of public resort; street vendors and stalls; motor vehicle dealers; petrol stations including places for storing petrol and inflammable material; timber store and furniture factories; and retail shops and workshops) from needing to obtain a business license. The Miscellaneous License Act (Amendment) of 2015 reduces the wait times for new business registrants to start operations, with low-risk businesses like eateries and shops able to start operations immediately.
- There is no restriction on total foreign ownership of companies incorporated in Brunei. The Companies Act requires locally incorporated companies to have at least one of the two directors - or if more than two directors, at least two of them - to be ordinarily resident in Brunei, but exemptions may be obtained in some circumstances. The rate of corporate income tax is the same whether the company is locally or foreign owned and managed.
Sources: WTO – Trade Policy Review, The International Trade Administration (ITA), US Department of Commerce
7.3 Free Trade Zones and Investment Incentives
|Free Trade Zone/Incentive Programme||Main Incentives Available|
|Pulau Muara Besar export processing zone: In Brunei’s 2017 Legislative Council session, the government announced that a 96 hectare area near Muara Port will be designated to be a Free Trade Zone.||Muara Port is Brunei’s main seaport with an established Free Trade Zone called the Muara Export Zone (MEZ), which was established to promote and develop Brunei as a trade hub of the region. The establishment of the MEZ was an initial step towards developing other Free Trade Zones in the country.|
|General incentives||The basic legislation on investment includes the Investment Incentive Order 2001 and Income Tax (As Amended) Order 2001 Investment Order 2001 supports economic development in strategically important industrial and economic enterprises and through the Energy and Industry Department of the Prime Minister’s Office EIDPMO, offers investment incentives through a favourable tax regime.|
Source: US Department of Commerce
8. Taxation – 2018
- Value Added Tax: N/A
- Corporate Income Tax: 18.5% or 55% for O&G
Source: Deloitte 2018
8.1 Important Updates to Taxation Information
There are no foreign exchange controls in Brunei, although movements of currency are monitored.
8.2 Business Taxes
|Type of Tax||Tax Rate and Base|
|Resident company: corporate tax rates||Standard rate: 18.5%|
Oil and gas companies: 55%
|Interest||15% withholding tax for interest paid to non-resident|
|Social security contributions (All employers)||Social security: 5%|
9. Foreign Worker Requirements
9.1 Foreign Worker Quota
Brunei seeks to increase the number of Bruneians working in the private sector. Brunei’s 2014 Energy White Paper calls for the number of people employed in the energy sector to increase from 20,000 in 2010 to 50,000 in 2035, and for the number of locals employed in the sector to increase from 10,000 to 40,000 during the same period. To advance this goal, all companies competing for a tender in the oil & gas industry are required to have at least half of their employees be Bruneian.
9.2 Visa Selection
Expatriate employment is controlled by a labour quota system administered by the Labour Department and the issuance of employment passes by the Immigration Department. Brunei allows new companies to apply for special approval to expedite the recruitment of expatriate workers in select positions.
Sources: Government websites, BMI Research
10.1 Sovereign Credit Ratings
|Rating (Outlook)||Rating Date|
|Standard & Poor's||N/A||N/A|
Sources: Moody's, Standard & Poor's, Fitch Ratings
10.2 Competitiveness and Efficiency Indicators
|Ease of Doing Business Index ||97/189||72/190||56/190|
|Ease of Paying Taxes Index||16/189||89/190||104/190|
|Logistics Performance Index ||70/160||N/A||N/A|
|Corruption Perception Index||41/176||32/180||N/A|
|IMD World Competitiveness||57/61||61/63||N/A|
Sources: World Bank, IMD, Transparency International
10.3 BMI Risk Indices
|Economic Risk Index Rank||101/202|
|Short-Term Economic Risk Score||43.1||50.6||51.5|
|Long-Term Economic Risk Score||53.8||52.5||52.2|
|Political Risk Index Rank||89/202|
|Short-Term Political Risk Score||90.6||90.8||90.8|
|Long-Term Political Risk Score||63.8||65.1||65.1|
|Operational Risk Index Rank||56/201|
|Operational Risk Score||63.5||59.2||60.2|
Source: BMI Research
10.4 BMI Risk Summary
The country's large foreign reserve assets, low external debt and high import cover reduce overall risks, although a dip in oil-related revenues may place pressure on fiscal revenues. Furthermore, the high standards of living and wealthy population (per capita GDP) provides tailwinds to Brunei's long-term growth.
100 = Lowest risk, 0 = Highest risk
Source: BMI Research Economic and Political Risk Indices
10.5 BMI Operational Risk Index
|Operational Risk||Labour Market Risk||Logistics Risk||Trade and Investment Risk||Crime and Security Risk|
|East and Southeast Asia Average||55.3||56.5||54.4||55.7||54.7|
|East and Southeast Asia Position (out of 18)||7||6||10||8||5|
|Asia Position (out of 35)||7||6||12||8||5|
|Global Position (out of 201)||56||25||81||70||46|
100 = Lowest risk, 0 = Highest risk
Source: BMI Operational Risk Index
|Country||Operational Risk ||Labour Market Risk||Logistics Risk||Trade and Investment Risk||Crime and Security Risk |
|Singapore||82.9||77.8 ||74.7 ||89.9 ||89.3|
|Emerging Markets Averages||46.8||48||45.8||47.5||46.1|
|Global Markets Averages||49.8||49.8||49.3||50||49.9|
100 = Lowest risk, 0 = Highest risk
Source: BMI Research Operational Risk Index
11. Hong Kong Connection
11.1 Hong Kong’s Trade with Brunei
|2017||Growth rate (%)|
|Number of Brunei residents visiting Hong Kong||6,922||-13.5|
Sources: Hong Kong Tourism Board, BMI Research
|2017||Growth rate (%)|
|Number of Asian residents visiting Hong Kong||54,482,538||3.5|
|Number of Asians residing in Hong Kong||2,784,870||N/A|
Sources: Hong Kong Tourism Board, Hong Kong Immigration Department, BMI Research
11.2 Commercial Presence in Hong Kong
|2016||Growth rate (%)|
|Number of Brunei companies in Hong Kong||N/A||N/A|
|- Regional headquarters|
|- Regional offices|
|- Local offices|
Source: Hong Kong Census & Statistics Department
11.3 Treaties and Agreements between Hong Kong and Brunei
Brunei has a double taxation agreements (DTA) with Hong Kong that entered into force in December 2010.
Source: Hong Kong Department of Justice
11.4 Chamber of Commerce (or Related Organisations) in Hong Kong
Brunei Consulate in Hong Kong
Address: Office 05-07, 24/F, Tower 2, Lippo Centre, 89 Queensway, Admiralty, Hong Kong
Hours of Business: 9:30 a.m. - 12:00 p.m.
Honorary Consul: Kamilah Hj Mohd Hanifah
Tel: (852) 2522 3795
Fax: (852) 2522 3715
11.5 Visa Requirements for Hong Kong Residents
HKSAR passport holders do not need a visa to Brunei for a period of up to 14 days.
Source: Visa on Demand