Economical overview
Brunei is a rich country thanks to large
resources of oil and natural gas. Revenues from oil and
gas extraction dominate the entire economy. They have
also enabled the Sultan to build a welfare state with
low taxes and generous government grants.
Ninety percent of Brunei's export income comes from
gas and oil production, which also accounts for 80
percent of the state's revenue. It contributes just over
half of the country's GDP, while only a few percent of
the workforce is found in the oil and gas sector.
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Countryaah.com:
Major imports by Brunei, covering a full list of top products imported by the country and trade value for each product category.
The oil industry is dominated by the company Brunei
Shell Petroleum, which is jointly owned by the state and
the oil company Shell. The natural gas is processed and
exported in collaboration with Japanese companies. It is
exported in liquid form (LNG) to Japan and South Korea.
Parts of the profits abroad are invested through the
government agency Brunei Investment Agency (BIA).
Looking for new sources of income
The oil money has meant that other industries have
remained poorly developed, despite the government trying
to get away from the dependence on oil and natural gas
since the 1980s. In order to broaden the country's
economic base, in 2001 the department BEDB (Brunei
Economic Development Board) was established for business
development.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including BRN which represents the country of Brunei.
Fish processing is an industry that has grown
relatively much. Extraction of silica sand for glass
production has begun, as has methanol production from
natural gas. The government markets Brunei as a
financial and business center, a hub for transport and
logistics as well as a destination for ecotourism.
The Muslim Brunei is also investing in offering halal-labeled
goods (that is, Muslim approved goods). Traditionally,
halal is about food, but there are also medicines and
cosmetics that are halal-labeled.
The government is trying to attract foreign companies
to Brunei with low taxes during the establishment
period. Some companies can be completely exempt from tax
if they are deemed to have "pioneer status". Both the
financial operations, including foreign banks and
companies, and tourism have increased since the turn of
the millennium, but there is no economic sector that, in
the foreseeable future, looks to be able to replace oil
and gas revenues. Since 2009 there has been a
"sustainability fund" to safeguard Brunei's finances in
the long term.
Sultan family costs
Sultan Hassanal Bolkiah is usually referred to as one
of the world's richest men, but few know what really
belongs to him personally and what belongs to the state.
On the state's expenditure side, there are several large
fuzzy items with "other expenses", and it is unclear how
much of the state budget goes to the sultan family's
luxury life. The only budgetary control that takes place
is that Parliament is allowed to listen when the
government presents the year's budget and then approves
it.
Despite large imports of machinery, vehicles and
food, in particular, Brunei has a substantial surplus in
the trade balance with foreign countries, thanks to the
export of oil and natural gas. In addition, clothing is
the only significant export product.
Brunei and other Asian countries have entered into
free trade agreements with China. The country also has a
bilateral free trade agreement Japan. Brunei was
included when twelve countries around the Pacific signed
the Free Trade Agreement TPP (Trans-Pacific Partnership)
in 2016. One purpose of the agreement was to
counterbalance China's dominance in Asia. In its
original form, the TPP would have covered 40 percent of
the world economy, but it failed before it came into
force when the United States withdrew after President
Trump took office.
The remaining eleven countries, which together
account for about 14 percent of the world economy,
decided to stick to the agreement. After some
adjustments, they signed in March 2018 under the TPP-11,
or CPTPP (Comprehensive and Progressive Agreement for
Trans-Pacific Parthership), which includes economic
heavyweights such as Japan, Canada and Australia.
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