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Background Notes: Brunei, October 1998 Released by the Bureau of East Asian and Pacific Affairs U.S. Department of State

OFFICIAL NAME: Brunei Darussalam

PROFILE

Geography

Area: 5,769 sq. km. (2,227 sq. mi.), slightly larger than Delaware.
Cities: Capital--Bandar Seri Begawan.
Terrain: East--flat coastal plains with beaches; west--hilly with a few mountain ridges.
Climate: Equatorial; high temperatures, humidity, and rainfall.

People

Nationality: Noun and adjective--Bruneian(s).
Population (1998 est.): 320,000.
Annual growth rate: 2.5%.
Ethnic groups: Malay, Chinese, other indigenous.
Religion: Islam.
Languages: Malay, English, Chinese; Iban and other indigenous dialects.
Education: Years compulsory--9. Literacy--90%. (1996)
Health: Life expectancy--74 years. Infant mortality rate (1996)--6.9/1,000.

Government

Type: Sultanate.
Independence: January 1, 1984.
Constitution: 1959.
Branches: Executive--Sultan is both head of state and prime minister, presiding over an 11-member cabinet. Judicial (based on Indian penal code and English common law)--magistrate's courts, High Court, Court of Appeals, Judicial Committee of the Privy Council (sits in London).
Subdivisions: Four districts--Brunei-Muara, Belait, Tutong, and Temburong.

Economy

GDP (1997): $4.9 billion.
Natural resources: Oil and natural gas.
Trade: Exports--oil, liquefied natural gas, petroleum products, garments. Major markets--Japan, U.S., Korea. Imports--machinery and transport equipment,manufactured goods. Major suppliers--Singapore, Japan, Malaysia, U.S.

PEOPLE

Many cultural and linguistic differences make Brunei Malays distinct from the larger Malay populations in nearby Malaysia and Indonesia, even though they are ethnically related and share the Muslim religion.

Brunei has a hereditary nobility with the title Pengiran. The Sultan can award to commoners the title Pehin, the equivalent of a life peerage awarded in the United Kingdom. The Sultan also can award his subjects the Dato, the equivalent of a knighthood in the United Kingdom, and Datin, the equivalent of a damehood.

Bruneians adhere to the practice of using complete full names with all titles, including the title Haji (for men) or Hajjah (for women) for those who have made the Haj pilgrimage to Mecca. Many Brunei Malay women wear the tudong, a traditional head covering. Men wear the songkok, a traditional Malay cap. Men who have completed the Haj wear a white songkok.

The requirements to attain Brunei citizenship include passing tests in Malay culture, customs, and language. Stateless permanent residents of Brunei are given International Certificates of Identity, which allow them to travel overseas. The majority of Brunei's Chinese are permanent residents, and many are stateless.

Oil wealth allows the Brunei Government to provide the population with one of Asia's finest health care systems free of charge. The Brunei Medical and Health Department introduced the region's first government "flying doctor service" in early 1965. Malaria has been eradicated, and cholera is virtually non-existent. There is one general hospital in Bandar Seri Begawan and another in Kuala Belait.

Education starts at Malay preschools and may end after 9 years of elementary school. Most of Brunei's college students attend universities and other institutions abroad, but more than 900 study at the University of Brunei Darussalam. Opened in 1985, the university has a faculty of 169 instructors and is located in temporary quarters in Bandar Seri Begawan.

The official language is Malay, but English is widely understood and used in business. Other languages spoken are Chinese, Iban, and a number of native dialects. Islam is the official religion, but religious freedom is guaranteed under the constitution.

HISTORY

Historians believe there was a forerunner to the present Brunei Sultanate which the Chinese called Po-ni. Chinese and Arabic records indicate that this ancient trading kingdom existed at the mouth of the Brunei River as early as the seventh or eighth century A.D. This early kingdom was apparently conquered by the Sumatran empire of Srivijaya in the early ninth century and later controlled northern Borneo and the Philippines. It was subjugated briefly by the Java-based Majapahit Empire but soon regained its independence and once again rose to prominence.

The Brunei Empire had its golden age from the 15th to the 17th centuries, when its control extended over the entire island of Borneo and north into the Philippines. Brunei was particularly powerful under the fifth sultan, Bolkiah (1473-1521), who was famed for his sea exploits and even briefly captured Manila; and under the ninth sultan, Hassan (1605-19), who fully developed an elaborate Royal Court structure, elements of which remain.

After Sultan Hassan, Brunei entered a period of decline, due to internal battles over royal succession as well as the rising influences of European colonial powers in the region, that, among other things, disrupted traditional trading patterns, destroying the economic base of Brunei and many other Southeast Asia sultanates. In 1839, the English adventurer James Brooke arrived in Borneo and helped the Sultan put down a rebellion. As a reward, he became governor and later "Rajah" of Sarawak in northwest Borneo and gradually expanded the territory under his control.

Meanwhile, the British North Borneo Company was expanding its control over territory in northeast Borneo. In 1888, Brunei became a protectorate of the British Government, retaining internal independence but with British control over external affairs. In 1906, Brunei accepted a further measure of British control when executive power was transferred to a British resident, who advised the ruler on all matters except those concerning local custom and religion.

In 1959, a new constitution was written declaring Brunei a self-governing state, while its foreign affairs, security, and defense remained the responsibility of the United Kingdom. An attempt in 1962 to introduce a partially elected legislative body with limited powers was abandoned after the opposition political party, Partai Rakyat Brunei, launched an armed uprising, which the government put down with the help of British forces. In the late 1950s and early 1960s, the government also resisted pressures to join neighboring Sabah and Sarawak in the newly formed Malaysia. The Sultan eventually decided that Brunei would remain an independent state.

In 1967, Sultan Omar abdicated in favor of his eldest son, Hassanal Bolkiah, who became the 29th ruler. The former Sultan remained as Defense Minister and assumed the royal title Seri Begawan. In 1970, the national capital, Brunei Town, was renamed Bandar Seri Begawan in his honor. The Seri Begawan died in 1986.

On January 4, 1979, Brunei and the United Kingdom signed a new treaty of friendship and cooperation. On January 1, 1984, Brunei Darussalam became a fully independent state.

GOVERNMENT AND POLITICAL CONDITIONS

Under Brunei's 1959 constitution, the Sultan is the head of state with full executive authority, including emergency powers since 1962. The Sultan is assisted and advised by five councils, which he appoints. An 11-member Council of Ministers, or cabinet, assists in the administration of the government. The Sultan presides over the cabinet as prime minister and also holds the position of minister of defense. One of the Sultan's brothers serves as minister of foreign affairs.

Brunei's legal system is based on English common law, with an independent judiciary, a body of written common law judgments and statutes, and legislation enacted by the sultan. Most cases are tried by the local magistrate's courts. More serious cases go before the High Court, which sits for about 2 weeks every few months. Brunei has an arrangement with Hong Kong whereby Hong Kong judges are appointed as the judges for Brunei's High Court and Court of Appeal. Final appeal can be made to the Judicial Committee of the Privy Council in London in civil but not criminal cases.

The Government of Brunei assures continuing public support for the current form of government by providing economic benefits such as subsidized food, fuel and housing, free education and medical care, and low-interest loans for government employees. The Sultan said in a 1989 interview that he intends to proceed, with prudence, to establish more liberal institutions in the country and that he will reintroduce elections and a legislature when he "can see evidence of a genuine interest in politics on the part of a responsible majority of Bruneians." In 1994, a constitutional review committee submitted its findings to the Sultan, but these have not been made public.

A tiny country with enormous oil and gas reserves--the economy is almost totally supported by exports of crude oil and natural gas--Brunei's financial reserves are reportedly more than $30 billion. The country's wealth, coupled with its membership in the Association of Southeast Asian Nations (ASEAN), give it influence in the world disproportionate to its size.

Principal Government Officials

Sultan and Yang di-Pertuan, Prime Minister, Minister of Defense, and Minister of Finance--His Majesty Sultan Hassanal Bolkiah
Minister of Foreign Affairs--His Royal Highness Prince Mohamed Bolkiah
Ambassador to the United States--Pengiran Anak Dato Haji Puteh
Ambassador to the UN--Pengiran Maidin Hashim

Brunei Darussalam maintains an embassy in the United States at 2600 Virginia Ave., NW, Washington, DC 20037; tel. 202-342-0159.

ECONOMY

The ongoing region-wide Asian financial crisis, which began in 1997, has created uncertainty and instability in Brunei's economy.

Brunei's gross domestic product (GDP) soared with the petroleum price increases of the 1970s to a peak of $5.7 billion in 1980. It declined slightly in each of the next 5 years, then fell by almost 30% in 1986. This drop was caused by a combination of sharply lower petroleum prices in world markets and voluntary production cuts in Brunei. The GDP has recovered somewhat since 1986, growing by 12% in 1987, 1% in 1988, and 9% in 1989. However the 1997 GDP was still only about $4.5 billion, well below the 1980 peak.

In the 1970s, Brunei invested sharply increasing revenues from petroleum exports and maintained government spending at a low and constant rate. Consequently, accumulated foreign reserves now are estimated at $30 billion. These reserves and the interest income are saved for future generations and generally excluded from revenues available for current expenditures.

Since 1986, however, petroleum revenues have decreased, and government spending has increased. By 1989, available government revenues barely were sufficient to cover expenditures, and the government has been running a budget deficit since 1988. The disappearance of the revenue surplus has made Brunei's economy more vulnerable to petroleum price fluctuations.

Brunei Shell Petroleum (BSP), a joint venture owned in equal shares by the Brunei Government and the Royal Dutch/Shell group of companies, is currently the only oil and gas production company in Brunei. It also operates the country's only refinery. BSP and four sister companies constitute the largest employer in Brunei after the government. BSP also operates a small refinery with a distillation capacity of 10,000 barrels per day. This satisfies domestic demand for most petroleum products.

A second joint venture, between the locally owned company Jasra International Petroleum and the French oil company ELF Aquitaine, became active in petroleum exploration in Brunei in the 1980s. The Jasra Elf Joint Venture, known as Jasra-Elf, has discovered commercially exploitable quantities of oil and gas in three of the four wells drilled since 1987, including a particularly promising discovery announced in early 1990.

Brunei's oil production peaked in 1979 at over 240,000 barrels per day. Since then it has been deliberately cut back, to extend the life of oil reserves and improve recovery rates. Petroleum production is currently over 160,000 barrels per day. Japan has traditionally been the main customer for Brunei's oil exports, but its share dropped from 45% of the total in 1982 to 26% in 1997. In contrast, oil exports to South Korea increased from only 8% of the total in 1982 to 28%. Other major customers include Taiwan (4%), New Zealand (3%) and the countries of ASEAN (39%). Brunei's oil exports to the United States accounted for 23% of the total in 1982 but have since dropped to negligible amounts.

Almost all of Brunei's natural gas is liquefied at Brunei Shell's Liquefied Nitrogen Gas (LNG) plant, which opened in 1972 and is one of the largest LNG plants in the world. Over 82% of Brunei's LNG produced is sold to Japan under a long-term agreement renewed in 1993. The agreement calls for Brunei to provide over 5 million tons of LNG per year to three Japanese utilities. The Japanese company Mitsubishi is a joint venture partner with Shell and the Brunei Government in Brunei LNG, Brunei Coldgas, and Brunei Shell Tankers, which together produce the LNG and supply it to Japan. Since 1995, Brunei has supplied approximately 700,000 tons of LNG to the Korea Gas Corporation as well. In 1997, Brunei's natural gas production reached 31 million cubic meters per day. A small amount of natural gas is used for domestic power generation. Brunei is the fourth-largest exporter of LNG, after Indonesia, Algeria, and Malaysia.

Brunei's oil reserves are sufficient for at least 30 more years, and gas reserves are sufficient for at least 40 more years at current production rates.

Over the years, the government has undertaken a succession of 5-year national development plans. The stated aim under the 1996-2000 plan is "balanced socio-economic development," specifically focusing on economic diversification and sustained growth. The plan allocates almost USD4.4 billion for such development over the 5-year period. Emphasis on the need for economic diversification began in January 1989, with the formation of a new Ministry of Industry and Primary Resources, tasked with developing a strong, export-led private sector.

Labor shortages in almost all job categories constrain Brunei's industrial development. The government regulates the immigration of foreign labor for fear it might disrupt Brunei's society. Work permits for foreigners are issued only for short periods and must be continually renewed. Despite these restriction, foreigners make up about one-third of the work force.

Oil and natural gas account for almost all exports. Since only a few products other than petroleum are produced locally, a wide variety of items must be imported. Brunei statistics show Singapore as the largest point of origin of imports, accounting for 25% in 1997. However, this figure includes some transshipments, since most of Brunei's imports transit Singapore. Japan and Malaysia were the second-largest suppliers in 1997, with an 11% share each. As in many other countries, Japanese products dominate local markets for motor vehicles, construction equipment, electronic goods, and household appliances. The United States was the fourth-largest supplier of imports to Brunei in 1997.

Brunei's substantial foreign reserves are managed by the Brunei Investment Agency (BIA), an arm of the Ministry of Finance. BIA's guiding principle is to increase the real value of Brunei's foreign reserves while pursuing a diverse investment strategy, with holdings in the United States, Japan, Western Europe, and the Association of South East Asian Nations (ASEAN) countries. A clear separation is maintained between the financial assets of the government, managed by BIA, and those of the Sultan and the Royal Family.

The Brunei Government actively encourages more foreign investment. New enterprises which meet certain criteria can receive pioneer status, exempting profits from income tax for up to 5 years, depending on the amount of capital invested. The normal corporate income tax rate is 30%. There is no personal income tax or capital gains tax.

One of the government's most important priorities is to encourage the development of Brunei Malays as leaders of industry and commerce. There are no specific restrictions of foreign equity ownership, but local participation, both shared capital and management, is encouraged. Such participation helps when tendering for contracts with the government or Brunei Shell Petroleum.

Companies in Brunei must either be incorporated locally or registered as a branch of a foreign company and must be registered with the Registrar of Companies. Public companies must have a minimum of seven shareholders. Private companies must have a minimum of two but not more than 50 shareholders. At least half of the directors in a company must be residents of Brunei.

The government owns a cattle farm in Australia which supplies most of the country's beef. At 2,262 square miles, this ranch is larger than Brunei itself. Eggs and chickens are largely produced locally, but most of Brunei's other food needs must be imported. Agriculture and fisheries are among the industrial sectors which the government has selected for highest priority in its efforts to diversify the economy.

DEFENSE

The Sultan is both Minister of Defense and Supreme Commander of the Armed Forces (RBAF). All infantry, naval, and air combat units are made up of volunteers. There are two infantry brigades, equipped with armored reconnaissance vehicles and armored personnel carriers and supported by Rapier air defense missiles and a flotilla of coastal patrol vessels armed with surface-to-surface missiles. Brunei has a defense agreement with the United Kingdom, under which a British Armed Forces Ghurka battalion from Hong Kong is permanently stationed in Seria, near the center of Brunei's oil industry. The RBAF has joint exercises, training programs, and other military cooperation with the United Kingdom and many other countries, including the United States.

FOREIGN RELATIONS

Brunei joined ASEAN on January 7, 1984--1 week after resuming full independence--and gives its ASEAN membership the highest priority in its foreign relations. Brunei joined the UN in September 1984. It also is a member of the Organization of the Islamic Conference (OIC) and of the Asia-Pacific Economic Cooperation (APEC) forum. Brunei will host APEC's leaders' summit in 2000.

U.S.-BRUNEI RELATIONS

Relations between the United States and Brunei date from the last century. On April 6, 1845, the U.S.S. Constitution visited Brunei. The two countries concluded a Treaty of Peace, Friendship, Commerce and Navigation in 1850, which remains in force today. The United States maintained a consulate in Brunei from 1865 to 1867.

The U.S. welcomed Brunei Darussalam's receipt of full independence from the United Kingdom on January 1, 1984, and opened an embassy in Bandar Seri Begawan on that date. Brunei opened its embassy in Washington in March 1984. Brunei's armed forces engage in joint exercises, training programs, and other military cooperation with the U.S. A memorandum of understanding on defense cooperation was signed on November 29, 1994.

Principal U.S. Embassy Officials

Ambassador--Glen R. Rase
Economic/Political/Commercial Officer--Georgia T. Wright
Administrative/Consular Officer--George Novinger

The U.S. embassy in Bandar Seri Begawan is located on the third floor of Teck Guan Plaza, at the corner of Jalan Sultan and Jalan MacArthur; tel. 673-2-229670, 220384, 229785, 229786, 241645, or 235254; fax 673-2-225293.

TRAVEL AND BUSINESS INFORMATION

The U.S. Department of State's Consular Information Program provides Travel Warnings and Consular Information Sheets. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country. Consular Information Sheets exist for all countries and include information on immigration practices, currency regulations, health conditions, areas of instability, crime and security, political disturbances, and the addresses of the U.S. posts in the country. Public Announcements are issued as a means to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas which pose significant risks to the security of American travelers. Free copies of this information are available by calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-on-demand system: 202-647-3000. Travel Warnings and Consular Information Sheets also are available on the Consular Affairs Internet home page: http://travel.state.gov and the Consular Affairs Bulletin Board (CABB). To access CABB, dial the modem number: 301-946-4400 (it will accommodate up to 33,600 bps), set terminal communications program to N-8-1(no parity, 8 bits, 1 stop bit); and terminal emulation to VT100. The login is travel and the password is info.(Note: Lower case is required). The CABB also carries international security information from the Overseas Security Advisory Council and Department's Bureau of Diplomatic Security. Consular Affairs Trips for Travelers publication series, which contain information on obtaining passports and planning a safe trip abroad, can be purchased from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954; telephone: 202-512-1800; fax 202-512-2250.

Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000.

Passport Services information can be obtained by calling the 24-hour, 7-day a week automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648).

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at (404) 332-4559 gives the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a country's embassy and/or consulates in the U.S. (for this country, see "Principal Government Officials" listing in this publication).

U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register at the U.S. embassy upon arrival in a country (see "Principal U.S. Embassy Officials" listing in this publication). This may help family members contact you in case of an emergency.

Further Electronic Information

Department of State Foreign Affairs Network. Available on the Internet, DOSFAN provides timely, global access to official U.S. foreign policy information. Updated daily, DOSFAN includes Background Notes; Dispatch, the official magazine of U.S. foreign policy; daily press briefings; Country Commercial Guides; directories of key officers of foreign service posts; etc. DOSFAN's World Wide Web site is at http://www.state.gov.

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National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce, the NTDB contains a wealth of trade-related information. It is available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the NTDB Help-Line at (202) 482-1986 for more information.

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