Brunei

Politics:

• Analysis

  Brunei politics: Quick View - Sultan affirms strong ties with the US

  Event

  On March 12th Brunei's sultan, Hassanal Bolkiah Mu'izzaddin, had a meeting in the US capital, Washington, with the American president, Barack Obama.

  Analysis

  Despite Brunei's small population, the country will play a key role in international diplomacy this year, as in October it is to host the East Asia Summit and also the first ever formal leaders' summit between the Association of South-East Asian Nations (ASEAN) and the US. This is happening against the backdrop of the US "pivot" of its foreign policy back towards Asia, and also concerns about tensions between China and South-east Asian countries over competing territorial claims in the South China Sea. Brunei is one of the claimants to part of the disputed area, but it will be keen to ensure that the issue is deftly handled in October.

  During the sultan's meeting with Mr Obama, the US president indicated that the US would focus on the issue of maritime territorial claims during the October summits, which Mr Obama will attend. Other issues mentioned as likely to be dealt with during the October gatherings included energy and climate change issues, and also the expansion of trade in the Pacific region via the Trans-Pacific Partnership, an 11-strong grouping including Brunei and the US that is working towards the elimination of tariffs.

  The absence of democracy in Brunei was not mentioned during the meeting. Although US foreign policy often aims to promote democracy, the sultanate is politically stable, with little in the way of serious violations of human rights, and the US therefore seems to be prepared to accept its unique constitutional arrangements for the time being. Mr Obama described the sultan as a key leader in South-east Asia and a man who is respected throughout the world.

  March 13, 2013

• 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

  March 22, 2013

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	1.5
  Consumer price inflation (av; %)	2.1	1.1	0.4	2.1	0.5
  Population (m)	0.4	0.4	0.4	0.4	0.4
  Current-account balance (US$ m)	6,938.9	3,977.4	–	–	–
  Foreign-exchange reserves excl gold (US$ m)	710.5	996.7	1,208.9	2,133.5	–
  Exchange rate (av) Br$:US$	1.42	1.45	1.36	1.26	1.25
  a Actual. b The 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)

  March 22, 2013

• Outlook

  Brunei: Country outlook

  Brunei: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: No change is expected in the political scene in Brunei over the 2013-14 forecast period, with Sultan Hassanal Bolkiah Mu'izzaddin remaining in control of government. 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 affairs, as a function of its membership of the Association of South-East Asian Nations (ASEAN)-which it is chairing this year-and its links with other Islamic states. Real GDP growth is forecast to average 2% a year in 2013-14, slightly higher than the estimated gain of 1.5% in 2012. Growth will be underpinned by gradual output increases in the energy sector. High global oil and gas prices will support the maintenance of large budget and trade surpluses in the forecast period. The Brunei dollar will remain fixed at parity to the Singapore dollar. 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 the forecast period.

  DOMESTIC POLITICS: Brunei will remain an autocracy dominated by the sultan. Party politics does not exist in the sultanate, and there are no signs of its imminent emergence. Some years ago the sultan indicated that he planned to introduce partial democratisation, but he has made no attempt to flesh out a schedule, possibly reflecting the lack of domestic pressure on the issue. He sent signals of a political liberalisation of sorts by appointing an ethnic-Chinese minister in 2005 and selecting a female minister in 2010. More recently, in June 2011, he appointed the first female members to the Legco, which meets for a few days each year. These are, however, token moves in the absence of popular representation in government, particularly as the Legco fails to challenge the political set-up in the sultanate. A cabinet reorganisation in 2010 institutionalised regular five-yearly reshuffles, as originally announced in 2005, but it did not involve the deletion of the names of the sultan, his son or his brother from the cabinet list. Further cabinet changes are not expected in the forecast period. 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 back-burner. 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 the Legco meeting in March 2012 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. Unlike previous years, however, a meeting between lawmakers from the Legco and members of the mukim (subdistrict) and village councils was held in January 2013. The meeting suggests that there is now an appetite in the country for more meaningful participation in legislative affairs, but until the Legco is allowed to convene over a longer period, we do not expect a significant opening up of the political scene. 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 time frame for such developments is well beyond the end of the forecast period.

  INTERNATIONAL RELATIONS: In the forecast period 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 this year, Brunei will face the diplomatic challenge of attempting to overcome differences within the regional grouping over how to tackle maritime disputes 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 sultan has already raised this issue with the American president, Barack Obama, when the two leaders met in March. The sultanate will host a series of important regional forums later this year, including the East Asia Summit and the ASEAN-US leaders summit in October. 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 Japanese-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 (ICT) sector. Along with improved education and training, investment in ICT is seen as an important way of boosting productivity. As part of this initiative, the authorities have allocated Br$230m (US$190m) 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: Brunei's economy will continue to grow at a fairly steady pace: after expanding by an estimated 1.5% in 2012, we expect real GDP to grow by 1.8% in 2013 and by 2.1% in 2014. The energy sector will continue to account for the bulk of GDP in the forecast period. Real GDP growth came in at only 2.2% in 2011 and slowed to 1% year on year in the second quarter of 2012, owing to a dip in oil and gas output. The situation did not improve in the third quarter, when the economy expanded by just 0.1%. As the authorities have taken a deliberate decision to exploit hydrocarbon reserves only gradually over the next few decades, there is no prospect of a sudden surge in the volume of oil and gas output. Although global oil and gas prices are expected to decline in 2013-14, 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 so 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 during the forecast period 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 second phase of which is scheduled to begin later this year. The government believes that the new facility will lead to increased trade flows and that it could facilitate investment by companies not seeking to tap the small local market. 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 doubling the number of tourist arrivals from around 240,000 currently to 400,000 by 2016. It is highly likely that more oil reserves will be found in Bruneian waters in 2013-14. The period will see exploration in two offshore zones, in line with the sultanate's agreement on maritime borders with Malaysia, which was signed in 2010. Brunei does not wish to see its hydrocarbon reserves depleted too rapidly, and the agreement specifies co-operation with the Malaysian government in matters relating to oil and gas production over a 40-year period. Any oil discovered in the zones would be likely to be brought into production in 2016 or 2017. Other sectors of interest to the government are information technology, Islamic banking and renewable energy. Food-processing, especially in the halal sector, 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 Brunei's employment prospects. Bigger investments may be needed to fill the gap left by the retreat of the fossil-fuel sector in the coming decades, and the government's plans to privatise some public services may result in job losses. However, the government is likely to proceed only gradually with this agenda, allowing a slow shift of focus away from the energy sector to non-energy activities.

  EXTERNAL ACCOUNT: Brunei will continue to record large surpluses on its trade and current accounts. A substantial trade surplus was recorded in 2011 as a result of elevated energy prices. The latest official trade figures, covering the first three quarters of 2012, indicate a further increase in the trade surplus, although the improvement may have largely been attributable to subdued import growth. In the third quarter merchandise exports fell by 2.5% year on year, while imports grew by just 1.5%. A number of factors will influence global oil prices in the forecast period, not the least of them being the performance of the world economy. On the back of a modest recovery in the global economy, which we expect to expand by 2.3% in 2013, up from 2.1% in 2012, international oil prices (dated Brent Blend) are forecast to increase slightly this year, to US$104.5/barrel, and then to US$104.8/b in 2014. These global price levels will result in a widening of the sultanate's merchandise trade surplus throughout 2013-14. Crude oil and liquefied natural gas will continue to account for the lion's share of exports, while Brunei will remain dependent on a range of consumer and capital goods imports to meet its domestic needs.

  March 26, 2013

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