Merchandise Trade

• Brunei joined the World Trade Organization (WTO) in January 1995 and has been a member of the General Agreement on Tariffs and Trade (GATT) since December 1993.


• The Customs Import Duty Order 2012 and Excise Duty Order 2012 were created to facilitate trade and to attract foreign direct investment. 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 views free trade agreements (FTAs) as a vital part of its foreign trade policy. To date, Brunei, through the Association of South East Asian Nations (ASEAN), has concluded FTAs with Australia, New Zealand, mainland China, India, Japan and South Korea.


• Bilaterally, Brunei has concluded an Economic Partnership Agreement (EPA) with Japan (the Brunei-Japan EPA) and a multilateral agreement with Chile, New Zealand and Singapore (the Trans-Pacific Strategic EPA) (TPSEP).


• As the signatories to the TPSEP, Brunei is involved in the negotiations for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).


• 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 that is 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.

Sources: WTO – Trade Policy Review, Fitch Solutions

Multinational Trade Agreements

Active

1. Association of Southeast Asian Nations (ASEAN)-Mainland China: The ASEAN-Mainland China FTA covers goods and services. The FTA for goods came into force on January 1, 2005, and the FTA for services came into force on July 1, 2007. The ASEAN-Mainland China Free Trade Area came into force on January 1, 2010. The FTA aims to eliminate tariffs, encourage investment and address the barriers that impede the flow of goods and services. In August 2019, amendments to the FTA came into force, which simplified the rules for trade and investment between the two parties. In 2018, the total volume of trade between Mainland China and ASEAN hit a record high of USD587.87 billion, up 14.1% from 2017, overtaking the United States for the first time since 1997.


2. ASEAN-India: The ASEAN-India trade in goods agreement came into force on January 1, 2010 for goods and on July 1, 2015 for services with the aim of minimising barriers and deepening economic linkages between the parties. The agreement will lead to the progressive elimination of tariffs on all goods. ASEAN accounted for 10.2% of India's imports and 12% of India's total exports in 2017.


3. ASEAN-South Korea: The ASEAN-South Korea FTA (AKFTA) came into force in June 2007 and May 2009 for goods and services respectively. The investment agreement entered into force in June 2009. AKFTA aims to create more liberal, facilitative market access and investment regimes between South Korea and ASEAN. A business council was set up in December 2014 to enhance economic cooperation between the parties and boost total trade to USD200 billion by 2020. ASEAN was the recipient of 11.2% of South Korea's exports in 2017 and the source for 16.6% of imports. Total trade between ASEAN and South Korea grew by 68% between 2007 and 2017.


4. ASEAN-Japan FTA: Japan provides a huge market for a wide range of goods, with tariff-free trade. This benefits a number of important sectors, including manufacturing, agriculture, mining and chemicals production.


5. ASEAN-Australia-New Zealand: The ASEAN-Australia-New Zealand FTA and Economic Integration Agreement for goods and services came into force on January 1, 2010.


6. ASEAN-Hong Kong FTA (AHKFTA): Hong Kong and ASEAN commenced negotiations on the creation of of an FTA and an Investment Agreement in July 2014. After 10 rounds of negotiations, Hong Kong and ASEAN announced the conclusion of the negotiations in September 2017 and drafted the agreements on November 12, 2017. The agreements are comprehensive in scope, encompassing trade in goods and services, investment, economic and technical co-operation, dispute settlement mechanism and other related areas. The agreements will bring legal certainty, better market access and fair and equitable treatment in trade and investment, thus creating new business opportunities and further enhancing trade and investment flows between Hong Kong and ASEAN. The agreements will also extend Hong Kong's FTA and Investment Agreement network to cover all major economies in South East Asia. The agreement came into force on January 1, 2019, but it will take time for all members of ASEAN to comply as implementation is subject to completion of the necessary procedures. Hong Kong is a key export market and the reduction of tariffs will ease the trading process; Hong Kong's potential as a key export market increases the importance of AHKFTA.

Not Yet In Force

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): The agreement was signed in March 2018, with seven of the 11 participating countries so far (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) having entered into the agreement.

Sources: WTO Regional Trade Agreements database, Ministry of Foreign Affairs (Brunei), Fitch Solutions

Foreign Direct Investment

• Value Added Tax: 0%
• Corporate Income Tax: 18.5%

Sources: OECD, Brunei Darussalam Ministry of Finance and Economy

Foreign Worker Permits

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 and gas industry are required to have at least half of their employees be Bruneian.

The authorities in Brunei have introduced a foreign worker licence – or Lesen Pekeria Asing. Before applying for the licence, employers need clearance from JobCentre Brunei and must obtain an endorsement from the Employees Trust Fund (Lesen Pekerja Asing).

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 selected positions.

Foreigners coming to Brunei for employment purposes need a valid employment visa and employment pass before entering the country. However, there are some exceptions to this rule, with residents from certain countries (Cambodia, Canada, Indonesia, Japan, Laos, Liechtenstein, Maldives, Myanmar, Norway, mainland China, the Philippines, Peru, Qatar, Switzerland, Thailand and Vietnam) able to visit Brunei without an employment visa for a period of 14 days. Citizens of Australia, Iceland, Malaysia, New Zealand, Norway, Oman, Singapore, South Korea, the United Arab Emirates and Ukraine may travel without an employment visa for a maximum period of 30 days. Citizens of the United States and the European Union are allowed a visa-free business visit for 90 days.

Sources: Government websites, ASEAN Briefing, Fitch Solutions

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings

Competitiveness and Efficiency Indicators

Sources: World Bank, IMD, Transparency International

Fitch Solutions Risk Indices

Source: Fitch Solutions
Date last reviewed: May 31, 2020

Hong Kong’s Trade with Brunei