Brunei

Politics:

• Analysis

  Brunei politics: Quick View - Brunei takes over ASEAN chair in 2013

  Event

  Brunei will take over the chairmanship of the Association of South-East Asian Nations (ASEAN) on January 1st 2013.

  Analysis

  Despite its tiny population, the sultanate will play an important geopolitical role in 2013, taking its turn as chair of ASEAN. There are a number of key challenges for Brunei, not least to ensure that progress continues to be made on ASEAN's plans to forge an economic community by the start of 2015. The sultanate is one of the most prosperous members of ASEAN, and so its small size belies a greater importance to the grouping. Yet it is difficult to deny that Singapore or Malaysia may have been more logical drivers of the economic integration agenda.

  ASEAN is also facing both regional and external questions relating to territorial disputes over the South China Sea, in which Brunei is one of the claimants. In 2012 Cambodia, which currently chairs ASEAN, appeared to oppose the issuing of communiques that showed a rift between the bloc and China on the issue, which will continue to be a high-profile dispute, and Brunei's stance on the matter will be the subject of scrutiny. However, the sultanate's size may hinder its attempts to lead a coherent response to China.

  Brunei will host ASEAN Summits in April and November 2013, with an upgraded airport terminal expected to be ready for the second summit, which will be accompanied by the East Asia Summit, attended by representatives from the US, China and Russia in a level of international interaction that will challenge the small country. The US president, Barack Obama, will also attend the first annual meeting of US and ASEAN leaders in Brunei in November next year, after a recent decision to make such meetings a regular and annual affair.

  Despite the challenges faced by Brunei over the upcoming year, chairmanship of ASEAN is an important validation of the sultanate, both domestically and internationally. Despite Brunei's autocratic political system, the sultanate will play a key role in steering the direction of ASEAN policy, which may underpin support for the country. Internationally, Brunei's lack of democracy will not be seen as a barrier to taking on the leadership role.

  December 18, 2012

• Background

  Brunei: Key figures

  Sultan Hassanal Bolkiah

  The sultan, prime minister, and minister of defence and finance. The sultan received his early education in Brunei Darussalam and the Malaysian capital, Kuala Lumpur, and trained as an officer at the Royal Military Academy, Sandhurst, UK, in 1966-67. He became crown prince in 1961 at the age of 15 and was installed as sultan on October 5th 1967. The sultan is said to be one of the world's richest men. The sultan makes frequent inspection visits around the sultanate to reinforce his pro-active governance.

  Crown Prince Al-Muhtadee Billah Bolkiah

  The eldest son of the sultan, named as heir to the throne in 1998. The crown prince married in September 2004. He was made a general in the Brunei armed forces in 2004 (although his education was academic rather than military) and deputy inspector-general of police in 2005. In May 2005 he was also appointed senior minister in the prime minister's office, making him the second-highest-ranking cabinet member and strengthening his claim to be the sultan's eventual successor.

  Prince Mohamed Bolkiah

  Brother of the sultan and the minister of foreign affairs. He received his early education in Brunei Darussalam and Kuala Lumpur, and trained as an officer at Sandhurst in 1965-67.

  Prince Jefri Bolkiah

  The youngest brother of the sultan and a former minister of finance and head of the Brunei Investment Agency (BIA). He was disgraced after it was discovered that he had embezzled US$14.8bn from the government through his flagship company, Amedeo Development Corporation, which collapsed in 1998. Considered an embarrassment to the family, he is now abroad.

  The judiciary

  Judges are appointed by the sultan for three-year terms. The courts appear independent, but any case involving the sultan is unlikely to be successful in the Brunei courts. Litigants in civil cases can make a final appeal to the Privy Council, based in London. Islamic courts exist for Muslims and apply shariah law.

  The legislature

  The Legco was reconvened in September 2004, but has only limited powers to approve legislation. However, the body is largely appointed, with the sole exception of the inclusion since September 2005 of some indirectly elected members to represent village councils. While the government has vague plans to move towards a one-third popularly elected Legco, the government is not in a hurry to implement even such limited democratic reforms. The Legco meets for a few days each year and hears presentations on the government budget and some policy issues.

  Media services

  Brunei has newspapers in both English and Malay, some of which are published by the government. The Brunei Darussalam Newsletter is published every fortnight in English by the government's Information Department, which also publishes a Daily News Digest. There is a daily Malay-language tabloid, Media Permata, which has been published since 1995. The English-language Borneo Bulletin dates from 1953 and has been published daily on weekdays since 1990; in March 2000 the Sunday Borneo Bulletin was launched. However, the press, including Internet sites published from Brunei, is subject to strict government censorship. In 2001 the government issued restrictive new laws giving it the right to close newspapers and ban foreign publications that it deemed detrimental to public morality or domestic security. Coverage of the government's activities and the royal family is uncritical and remains highly deferential.

  Radio Brunei has six channels broadcasting in Malay, English and Chinese. An Islamic radio channel started operations in May 1997. The British Forces Broadcasting Service (BFBS) also broadcasts from Seria. The government television network, broadcasting in Malay and English, was the sole television operator until 1999, when Brunei's first commercial cable television channel, Kristal, began broadcasting.

  May 29, 2008

• Structure

  Brunei: Political structure

  Official name

  Negara Brunei Darussalam

  Form of state

  Sultanate

  The executive

  The sultan is advised on policy matters by four councils: the Religious Council, the Privy Council, the Council of Succession and the Council of Cabinet Ministers

  Head of state

  HM Sultan Hassanal Bolkiah Mu'izzaddin

  National legislature

  The appointed legislature, which had been suspended since 1984, was briefly reconvened in 2004. A new legislature with five indirectly elected members, the Legislative Council (Legco), was convened in 2005 and has met periodically since then. Plans were unveiled some time ago to introduce a new legislature of 45 members, 15 of whom would be elected by popular vote, but no timetable for an election has since been announced

  Legal system

  Courts of first instance exist on a local and religious basis; appeals go to the Religious Council in religious cases, and to the High Court and thence to the Court of Appeal in other cases. All major judicial posts are filled by the sultan's appointees

  National elections

  The last election was held in 1962; no date has yet been set for the planned election to a partly democratic Legco

  National government

  The sultan, his close family members and his appointees control all organs of state power, including the Council of Cabinet Ministers, under the state of emergency that has been in force since 1962

  Main political organisations

  There is currently only one legal political party, the Parti Pembangunan (PP, National Development Party), which was legalised in 2005. The other two parties, the Parti Kesedaran Rakyat (PAKAR, People's Awareness Party) and the Parti Perpaduan Kebangsaan Brunei (PPKB, Brunei National Solidarity Party), were deregistered by the government in 2007-08. Brunei's political parties are only intermittently active. Promotion of the national ideology of Melayu Islam Beraja (Malay Islamic Monarchy) has intensified since 1990

  Key ministers

  Sultan, prime minister, minister of finance & defence: Sultan Hassanal Bolkiah Mu'izzaddin

  Senior minister, heir to the throne, head of monetary authority: Crown Prince Billah Bolkiah

  Attorney-general: Hayati Mohd Salleh

  Communications: Abdullah Bakar

  Culture, youth & sports: Hazair Abdullah

  Development: Suyoi Osman

  Education: Abu Bakar Apong

  Energy: Mohammad Yasmin Umar

  Finance (second minister): Abdul Rahman Ibrahim

  Foreign affairs & trade: Prince Mohamed Bolkiah

  Foreign affairs & trade (second minister): Lim Jock Seng

  Health: Adanan Mohd Yusof

  Home affairs: Badaruddin Othman

  Industry & primary resources: Yahya Bakar

  Religious affairs: Mohamed Abd Rahman

  December 04, 2012

Economy:

• Background

  Brunei: Economic background

  Gross domestic product by sector
  (% real change)
  	2002	2003	2004	2005	2006
  Oil & gas sector	3.2	4.5	-1.0	-2.6	5.7
  Non-oil sector	4.8	0.9	2.5	4.1	4.5
  Total GDP	3.9	2.9	0.5	0.4	5.1
  Sources: IMF, Country Report Statistical Appendix, 2008.

  Download text file (csv format)

  May 29, 2008

• Structure

  Brunei: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (Br$ bn)	20.4	15.6	16.9	20.6	20.7
  GDP (US$ bn)	14.4	10.7	12.4	16.4	16.6
  Real GDP growth (%)	-1.9	-1.8	2.6	2.2	1.0
  Consumer price inflation (av; %)	2.1	1.1	0.4	2.0	0.5
  Population (m)	0.4	0.4	0.4	0.4	0.4
  Foreign-exchange reserves excl gold (US$ m)	710.5	996.7	1,208.9	2,133.5	2,650.1
  Exchange rate (av) Br$:US$	1.42	1.45	1.36	1.26	1.25
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2011	% of total	Components of gross domestic product 2011	% of total
  Oil & gas sector	67.7	Private consumption	19.5
  Non-energy sector	32.3	Government consumption	17.3
  		Gross fixed investment	13.4
  		Exports of goods & services	79.4
  		Imports of goods & services	-29.1
  Principal exports 2011	Br$ m	Principal imports 2011	Br$ m
  Crude petroleum	7,957.0	Machinery & transport equipment	1,131.0
  Natural gas	7,006.4	Manufactured goods	857.4
  Methanol	231.8	Food	559.9
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  Japan	45.2	Singapore	27.4
  South Korea	15.9	China	12.8
  Australia	11.4	Malaysia	9.4
  Indonesia	8.1	US	3.2

  Download the numbers in Excel

  Download text file (csv format)

  December 04, 2012

• Outlook

  Brunei: Country outlook

  Brunei: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: No change is expected in Brunei's political scene in the 2013-14 forecast period, with Sultan Hassanal Bolkiah Mu'izzaddin remaining in control of government. Only token moves will be made towards the development of party politics. The Legislative Council (Legco) is mainly appointed and will continue to meet for only a few days each year. Brunei will be actively engaged in international relations, as a function of its membership of the Association of South-East Asian Nations (ASEAN)-which it is due to chair in 2013-and its links with other Islamic states. Real GDP growth in 2013-14 will be sluggish, as the government maintains its policy that the exploitation of hydrocarbon reserves should occur only gradually and encourages the steady development of the non-energy sector. High global oil and gas prices will support the maintenance of large budget and trade surpluses in 2013-14. The Brunei dollar will remain fixed at parity to the Singapore dollar, thereby aligning monetary policy to the well-managed economy of Singapore. The currency peg, together with the government's policy of subsidising key goods and services, will help to keep a lid on inflation, which the Economist Intelligence Unit expects to average 1.1% a year over 2013-14.

  DOMESTIC POLITICS: Brunei will remain an autocracy dominated by the sultan in 2013-14. Party politics does not exist in the sultanate, and there are no signs of its imminent emergence. The sultan sent signals of a political liberalisation of sorts by appointing an ethnic-Chinese minister in 2005 and selecting a female minister in 2010. In June 2011, he appointed the first female members to Legco, which meets for a few days each year. These are, however, token moves in the absence of popular representation in government, particularly as Legco fails to challenge the political set-up in the sultanate. Further cabinet changes are not expected in the next two years. The sultan is his own prime minister, defence minister and finance minister, and several other portfolios are held by members of the royal family. On a visit to Indonesia in November 2012 to attend the Bali Democracy Forum, the sultan implicitly defended Brunei's autocratic political system by suggesting that democracy needs to be viewed against the cultural norms of each society. In addition, he noted that democratic principles should not be allowed to lead to divisions that could undermine social cohesion-reinforcing the impression that any plans that he might have had for greater democratisation have been placed firmly on the backburner. Religious conservatism is a vital prop to the ruling family's legitimacy, and apparent modernising measures can go hand in hand with attempts to appeal to religious conservatives, such as the announcement at a recent Legco meeting in March that a law controlling "immoral activity" was being considered as part of the draft version of an Islamic criminal code. The fact that this is an issue illustrates how far Brunei is from being a liberal democracy. In the absence of elections and political parties, no genuine political debate can occur in Brunei, and the political scene, such as it is, will consist of royal visits to hospitals and other public places, peppered with worthy-sounding but essentially meaningless speeches. At present all Bruneians benefit from the country's oil wealth, albeit not equally. Oil and gas revenue funds public-sector jobs, education and healthcare, and the energy sector is the ultimate source of the ruling family's wealth. But Brunei's oil and gas wealth will not last forever, and the royal family needs to prepare for a time when the state cannot continue to provide the panoply of benefits that it currently makes available to the population without levying income tax. Moves in this direction may prompt calls for greater accountability and, potentially, democratisation. However, the timeframe for such developments would be well beyond the end of 2014.

  INTERNATIONAL RELATIONS: Brunei will remain surprisingly, actively engaged in international relations, mainly as a function of its ASEAN membership-which it is due to chair in 2013-and its maintenance of links with other Islamic states. In 2013-14 Brunei and Malaysia will proceed with planned hydrocarbon production-sharing in previously disputed maritime areas; the two countries have also agreed to demarcate their land border. Brunei has yet to reach agreement with China on territorial claims in the South China Sea, and the two sides are unlikely to finalise a deal on joint exploration in 2013-14. Brunei is not expected to become actively involved in any wider confrontation in the South China Sea, where China's claims are disputed by a number of countries. However, as chair of ASEAN in 2013, it will face the diplomatic challenge of attempting to overcome differences within the grouping over how to tackle the maritime quarrels with China; some ASEAN members, such as the Philippines, favour greater US involvement, while others, including Cambodia and Laos, are opposed to US participation. The sultanate continues to play a peacekeeping role internationally, contributing troops to UN forces in the Philippines and Lebanon.

  POLICY TRENDS: Brunei will continue to record substantial trade and budget surpluses in 2013-14. It also has huge overseas assets, as much of its oil wealth is channelled into investments abroad. What will be crucial to the country's long-term prospects is diversification away from the energy industry into non-energy sectors as its oil reserves are gradually depleted. The government has the financial resources to attract foreign investment, but progress in developing the non-energy economy has been slow. The sultanate's most obvious success to date is a methanol facility funded partly by Mitsubishi Gas Chemical Company of Japan, based in the Sungai Liang industrial park, which took six years to progress from inception to completion. A mooted oil refinery involving Chinese investment would represent another important step forwards, but progress on this project is unlikely to be rapid. Work on a Japan-backed ammonia plant may begin in 2013. The small size of the domestic market deters many investors from setting up operations in Brunei, despite the investment incentives that the government offers. The authorities will continue to encourage the development of agriculture, fisheries and agro-processing, not only to enhance food security but also in order to create jobs and reduce the country's import bill. The government is also placing a strong emphasis on the development of the information and communications technology sector, along with improved education and training, to pave the way for a knowledge-based economy. As part of this initiative, the authorities have allocated Br$230m (US$185m) for the development of a high-speed, fibre-to-the-home broadband network that is intended to cover 85% of the population by 2017.

  ECONOMIC GROWTH: The energy sector will continue to account for the bulk of GDP in 2013-14. Real GDP growth came in at only 2.2% in 2011 and slowed to 0.7% year on year in the first quarter of 2012, owing to a dip in oil and gas output. There was a slight pick-up in growth in the second quarter, to 1%, helped by a faster expansion in the non-energy sector; the hydrocarbons sector continued to contract, however. The economy will continue to grow at a sedate pace: after expanding by an estimated 1% in 2012, we expect real GDP to grow by 1.8% in 2013 and by 2.3% in 2014. As the authorities have taken a deliberate decision to exploit hydrocarbon reserves only gradually over the next few decades, there is no likelihood of a sudden surge in the volume of oil and gas output. Although global oil and gas prices are expected to decline in 2013 and remain broadly stable in 2014, average prices will remain at a high level in historical terms. As a result, the revenue from hydrocarbons exports will remain sizeable, providing the government with ample funding for the development of the non-energy sector. In Bruneian terms, an annual GDP growth rate of around 1.5-2.5% is adequate as long as progress is being made in developing and diversifying non-energy sectors. These will form the backbone of the sultanate's economy when oil and gas reserves run out. Economic activity will be underpinned by a number of factors. Output from a methanol plant, which came on stream in mid-2010, will continue to support GDP growth. Building work is continuing on the Pulau Muara Besar port, the first phase of which will be completed by end-2012, while the construction of an ammonia plant is expected to begin in 2013. The power-transmission lines will be upgraded by the start of 2015. The ongoing expansion of the sultanate's international airport is scheduled for completion in November 2014, and will lead to a doubling in handling capacity from 1.5m passengers annually at present to 3m per year. The airport expansion also ties in with the government's aim of boosting the number of tourist arrivals from 242,000 in 2011 to 400,000 by 2016. Despite these developments, however, the pace of GDP growth in Brunei will lag behind that of other countries in the region. It is highly likely that more oil reserves will be found in Bruneian waters in 2013-14. Other sectors of interest to the government are information technology, Islamic banking and renewable energy. Food-processing may create jobs; the government is seeking to increase the sultanate's food security, and additional funds have been set aside for this purpose. The country's population is very small, and there are only a few thousand unemployed workers in the sultanate. Consequently, only one or two large investments in these sectors would do much to improve employment prospects.

  EXTERNAL ACCOUNT: Brunei will continue to record large surpluses on its trade and current accounts. An especially substantial trade surplus was recorded in 2011 as a result of elevated energy prices. The latest official trade figures, covering the first half of 2012, indicate a further increase in the trade surplus; however, judging by the second-quarter data (which revealed continued rapid import growth) the improvement is unlikely to have been sustained over the year as a whole. A number of factors will influence global oil prices in 2013-14, not the least of them being the performance of the world economy. Given our forecast for continued sluggish global GDP expansion, we expect oil prices (dated Brent Blend) to dip by 7.2% in annual average terms in 2013, to US$103.8/barrel, before recovering slightly to an average of US$104.5/b in 2014. Global energy prices will therefore remain at a high level by historical standards, supporting a large merchandise trade surplus throughout 2013-14. Crude oil and liquefied natural gas will continue to account for the lion's share of exports, while the country will remain dependent on a range of consumer and capital goods imports to meet its domestic needs.

  December 05, 2012

View detailed map

Country Briefing

Land area

5,765 sq km

Population

422,700 (2011 estimate)

Main towns

Bandar Seri Begawan (capital; population 27,285, 2001 census)

Climate

Tropical

Weather in Bandar Seri Begawan (altitude 300 metres)

Hottest month, August, 24-33°C (average daily minimum and maximum); coldest month, January, 24-30°C; driest months, February and August, 100 mm average rainfall; wettest months, January and November, 3,000 mm average rainfall

Languages

Malay; Chinese and English are also used

Measures

The metric system. Local measures include:

1 pikul = 25 gantang = 100 katis = 60.48 kg

1 koyan = 40 pikul = 2.419 tonnes

Currency

Brunei dollar or Brunei ringgit (Br$); Br$1 = 100 sen (cents). The currency is interchangeable with the Singapore dollar. Average exchange rate in 2011: Br$1.26:US$1

Fiscal year

April-March

Time

8 hours ahead of GMT

Public holidays in 2012

January 2nd (New Year's Day observance), 23rd (Chinese New Year); February 6th (Prophet Mohammed's birthday), 23rd (National Day); May 31st (Royal Brunei Armed Forces Day); June 18th (Israk Mikraj, Ascension of the Prophet observance); July 16th (sultan's birthday observance), July 21st (beginning of Ramadan); August 20th (Hari Raya Aidil Fitri observance, end of Ramadan); October 27th (Hari Raya Aidil Adha, Feast of the Sacrifice); November 15th (Islamic New Year observance); December 25th (Christmas holiday). Note: Islamic holidays are based on lunar sightings

March 01, 2012