2012 Investment Climate Statement - Brunei

2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012

The Government of Brunei continues its economic diversification efforts, seeking to move away from its long reliance on oil and gas exports. Brunei encourages foreign investment in the domestic economy through various investment incentives offered by the Brunei Economic Development Board and the Ministry of Industry and Primary Resources.

Set up in 2001, the Brunei Economic Development Board (BEDB) aims to be the major economic development agency in Brunei, marketing Brunei as an opportunity for investors in new industries and economic activities. BEDB offers investment opportunities in three major industrial areas – petrochemical industries at the Sungai Liang Industrial Park, oil refinery and storage capabilities at the deepwater port of Pulau Muara Besar, and info-communication technology at the iCenter.

The Ministry of Industry and Primary Resources (MIPR) is responsible for promoting and facilitating industrial development in Brunei mainly in the manufacturing, tourism, agriculture, fisheries, and forestry sectors. MIPR has achieved a steady flow of investments from within Brunei, ASEAN and other countries.

Brunei ranked 83 out of 183 countries in the World Bank’s "Ease of Doing Business" 2012.

Openness to Foreign Investment

Brunei offers generous tax incentives to foreign investors, with the production of foreign goods and services benefiting from indefinite tax breaks. The Investment Incentives Order 2001 provides guidelines for granting pioneer status to certain industries and tax relief for foreign and local investment, as well as the possibility of extending tax relief periods.

Regulations relating to foreign participation in equity are flexible. In many instances there can be 100 percent foreign ownership, except for sectors involving natural resources and national food security, where FDI is capped at 70 percent equity.

Only Brunei citizens are allowed to purchase land. Foreign firms need a local partner to purchase land. Foreign firms can apply for a long term lease, which must be approved by the Prime Minister’s Office.

Introduced in July 2009, the Strata Title Act allows non-citizens to own property in accordance with the terms of a 99 year lease. The Strata Act only applies to properties more than two stories high and townhouses.




TI Corruption Index


5.2 / 44 of 183

Heritage Economic Freedom


Not rated

World Bank Doing Business



MCC Gov’t Effectiveness


Not rated

MCC Rule of Law


Not rated

MCC Control of Corruption


Not rated

MCC Fiscal Policy


Not rated

MCC Trade Policy


Not rated

MCC Regulatory Quality


Not rated

MCC Business Start Up


Not rated

MCC Land Rights Access


Not rated

MCC Natural Resource Mgmt


Not rated

Conversion and Transfer Policies

There are no foreign exchange controls, but exchanges are monitored. Banks permit non-resident accounts. There is no restriction on borrowing by non-residents.

Expropriation and Compensation

There is no history of expropriation in Brunei.

Dispute Settlement

Brunei signed the U.N.-sponsored Convention on the Settlement of Investment Disputes in 2002. At the regional level, Brunei Darussalam is a member of the ASEAN Protocol on Enhanced Dispute Settlement Mechanism (2004), and the Agreement among the Government of Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand for the Promotion and Protection of Investment, 1987. The former regulates settlement of disputes on economic agreements between ASEAN Members and the latter provides for the promotion and protection of investments, which includes settlement of related disputes. The International Arbitration Order was enacted in 2009, but has yet to be ratified and legally enforced. The court system is generally transparent and fair.

Performance Requirements and Incentives

Companies producing goods and services for export can apply for a renewable 10-year tax exemption. Corporate tax relief of up to 5 years is available for companies that invest between B$500,000 to B$2.5 million (USD385,000 to USD1.9million) and up to 8 years for amounts exceeding B$2.5million (USD1.9 million) in approved ventures. An 11-year tax break is offered if the venture is located in a high-tech industrial park. Businesses wishing to compete in domestic markets can qualify for tax breaks for up to eight years. Sole proprietorships and partnerships are not subject to tax. Individuals do not pay any capital gains tax and profits arising from the sale of capital assets are not taxable. Brunei has double-taxation agreements with Britain, Indonesia, China, Singapore, Vietnam, Bahrain, Oman, Japan, and Pakistan. Tax on petroleum operations is codified in the 1960 Income Tax enactment, which is similar to tax policies in other oil-producing nations.

Right to Private Ownership and Establishment

All businesses in Brunei must be registered with the Registrar of Companies within the Attorney General’s Chambers. Except for sole proprietorships, foreign investors can fully own incorporated companies, foreign company branches or representative offices. Partnerships generally require the participation of citizens.

Protection of Property Rights

Trademarks can be registered with relative ease under the Brunei Trademarks Act. Once registered, trademarks last ten years and are renewable for ten more years. Enforcement requires direct copyright holder action.

Brunei’s local IPR law is TRIPS-consistent. However, the law is complaint based. The Criminal Justice Division at the Attorney General’s Chambers (AGC) rarely takes action against pirates or stores that sell pirated discs on its own initiative. The right holder must appeal / take action with the government, which then begins enforcement actions.

Under the Emergency Order (Copyright) 1999, Section 204, anyone who is caught infringing copyright, selling, smuggling, or distributing goods, except for personal use and domestic purposes, is liable to a fine, an imprisonment for a period not exceeding two years, or both. However, pirated and fake goods originating in neighboring countries are widely sold due to a perceived lack of right holder’s complaints. Music piracy has been significantly reduced, but movie and software entertainment piracy is still rampant.

Brunei Darussalam is a full member of the Paris Convention, the Berne Convention, the WTO-TRIPS and the World Intellectual Property Organization (WIPO). It has also signed the ASEAN Framework Agreement on Intellectual Property Cooperation.

In accordance with the 2011 Patents Order, the Brunei Government opened its Patent Registry Office on January 2, 2012. The office has already begun processing applications.

Transparency of the Regulatory System

Brunei has a transparent regulatory system.

Competition from State Owned Enterprises

Semaun Holdings, incorporated as a private limited company, is wholly owned by the Brunei Government. Its emphasis is on joint ventures with foreign investors, mainly in aquaculture, food processing, glass crystal, and hi-tech manufacturing industries which are currently not open for 100% foreign ownership.

Under the Telecommunications Order 2001, the Authority for Info-communications Technology Industry (AiTi) regulates the licensing of the telecommunications industry. The establishment, installation, maintenance, provision or operation of unlicensed telecommunication systems or services within Brunei is a punishable offence, resulting in imprisonment, and large fines. AiTi has not opened up the telecommunications industry for foreign participation. The telecommunications industry is dominated by Telekom Brunei (TelBru) and Data Stream Technologies (DST) Communications, both privatized state companies. Telbru is the sole provider of fixed lines. Its subsidiary company, B-mobile, provides 3G mobile services together with DST. DST is also the sole GSM and pay-television service provider.

The Brunei Investment Agency (BIA) manages the Government of Brunei's General Reserve Fund, and their external assets. Established in 1983, its assets are reportedly worth USD$30 billion. It has holdings in corporations, real estate, & currencies. BIA’s activities are not publicly disclosed. It is ranked the lowest in transparency ratings by The Sovereign Wealth Fund Institute.

Political Violence

There have been no cases of political violence in Brunei’s 28 years of independence.


The Anti-Corruption Bureau (ACB) strives to ensure a corruption-free public service. Corrupt practices are punishable under the Prevention of Corruption Act. The Act also applies to Brunei citizens abroad. There are perceptions that corruption in the private sector is higher compared to the public sector, which has prompted the ACB to focus on the private sector, seeing that the sector plays a critical role in Brunei’s economic diversification.

In the Transparency International's Corruption Perception Index (CPI) 2011, Brunei is ranked 44th out of 183 countries, and 2nd in ASEAN, with a slight improvement in its CPI points – 5.2 out of 10 – compared to its previous score of 5.5.

Bilateral Investment Agreements

Brunei is a member of the Association of Southeast Asian Nations (ASEAN), which has FTAs with Australia and New Zealand, China, India and South Korea, and a Comprehensive Economic Partnership Agreement with Japan. Brunei is also a party to the Transpacific Strategic Economic Partnership Agreement. Brunei currently has Bilateral Investment Treaties with Oman, Germany, China, Korea, and Ukraine.


Brunei relies heavily on foreign labor in lower-skill and/or lower-paying positions, with approximately 87,800 guest workers brought in to fulfill specific contracts. Brunei citizens often prefer to work for the government rather than the private sector because of better benefits such as bonuses, education allowance, interest-free loans, housing allowance, and other benefits. Approximately 25% of the total workforce is employed in the public sector.

Matters relating to labor conditions are covered under the Labor Act, Employment Order 2009 and Workmen’s Compensation Act.

Foreign Direct Investment Statistics

Latest statistics (mid-2011) indicate that Foreign Direct Investment stood at USD510 million, with the largest FDI from the European Union at 85%. However, FDI in the petroleum industry remained the largest, with Wholesale and Retail Trade industry as the second largest sector.

Foreign Direct Investment By Country Of Origin

Country (2010) (2011 1st Half)

JAPAN 49.92 6.71

NORTH AMERICA 35.0 18.31

USA 35.0 18.31

Canada 0.0 0.0

EUROPE: 470.15 434.5

Switzerland 0.15

European Union: 470.0 434.5

Germany 9.0 7.8

Netherlands 90.5 106.81

United Kingdom 370.5 319.9

ASIA: 3.41 0.83

China 0.0 0.0

India 1.46 0.22

Pakistan 0.0 0.0

South Korea (ROK) 0.0 0.0

Hong Kong 1.84 0.52

Taiwan (ROC) 0.15 0.10

ASEAN 93.97 48.3

Cambodia 0.0 0.0

Indonesia 0.69 0.0

Lao PDR 0.0 0.0

Malaysia 47.07 23.72

Myanmar 0.0 0.0

Philippines 0.38 0.1

Singapore 45.76 23.72

Thailand 0.07 0.0

Viet Nam 0.0 0.0


Australia 2.61 1.15

New Zealand 0.07 0.08


OTHERS: 1.1 0.4

Bermuda 0.0 0.0

British Virgin Island 1.3 0.4

Cayman Island -0.2 0.0




TOTAL 656.23 510.3

Foreign Direct Investment by Economic Activity

(USD Million)

Industrial Sector (2010)  (2011 1st Half)

Mining and Quarrying 506.31 415.55

Manufacturing 28.15 9.16

Construction 15.92 11.83

Wholesale and retail trades; repair of motor vehicles and motorcycles 92.15 68.12

Transport and Storage 2 0.25

Accommodation and Food Services Activities 0 0.0

Information and Communication 0.7 0.18

Financial and Insurance Activities 3.23 1.9

Real Estate Activities 0.62 0.0

Professional, Scientific and Technical Activities 1.46 1.27

Administrative and Support Service Activities 5.46 2.03

Education 0.23 0.01

Other Services Activities 0.0 0.0


TOTAL 656.23 510.30

Source: Department of Statistics, Department of Economic Planning and Development, Prime Minister’s Office.