Transparency of the Regulatory System
Brunei’s regulatory system is generally seen as lacking in transparency. There is little to no transparency in lawmaking processes, nor is there any available information on whether impact assessments are made prior to proposing regulations. Each ministry is responsible for coordinating with the Attorney General’s Chambers to draft proposed legislation. Legislation does not receive broad reviews and few outside of the originating ministry are able to provide their input. The Sultan has final authority to approve proposed legislation. Laws and regulations that are in effect are readily available and accessible from the Attorney General’s Chambers.
International Regulatory Considerations
Brunei is an active member of ASEAN, through which it has concluded FTAs with Australia & New Zealand, China, India, Japan and South Korea. Brunei became a WTO member in 1995 and a signatory to the General Agreement on Tariffs and Trade (GATT) in 1993.
Legal System and Judicial Independence
Brunei’s constitution does not specifically provide for judicial independence, but in practice the court system operates without government interference. Brunei’s legal system includes parallel systems; one based on Common Law and the other based on Islamic law. In 2016, Brunei began to recognize the importance of protecting investors’ rights and contracts enforcement, and established a Commercial Court.
In 2014, Brunei implemented Phase one of three of the Sharia Penal Code (SPC), which expanded existing restrictions on minor offenses—such as eating during Ramadan—that are punishable by fines. The second phase of the SPC, which would include amputating the hands of thieves, is not scheduled to come into effect until one year after the publication of a Sharia Courts Criminal Procedure Code (CPC). Phase three of the SPC – which includes punishments, in certain situations, such as stoning to death for rape, adultery, or sodomy, and execution for apostasy, contempt of the Prophet Muhammad, or insult of the Quran – is scheduled to be implemented two years after the publication of the CPC. The punishments included in phases two and three include different standards of proof than the common law-based penal code, such as requiring four pious men to witness personally an act of fornication to support a sentence of stoning. The timing for Phases two and three remain unclear.
Laws and Regulations on Foreign Direct Investment
The basic legislation on investment includes the Investment Incentive Order 2001 and the Income Tax (As Amended) Order 2001. Investment Order 2001 supports economic development in strategically important industrial and economic enterprises and, through the Energy and Industry Department of the Prime Minister’s Office EIDPMO, offers investment incentives through a favorable tax regime. Although Brunei does not have a stock exchange, government plans to establish a securities market are reportedly under way.
Foreign ownership of companies is not restricted, although under the Companies Act, at least one of two directors of a locally incorporated company must be a resident of Brunei, unless granted an exemption from the appropriate authorities.
All businesses in Brunei must be registered with the Registry of Companies and Business Names at the Ministry of Finance. Except for sole proprietorships and partnerships, foreign investors can fully own incorporated companies, foreign company branches, or representative offices. Foreign direct investments by multi-national corporations may not require local partnership in setting up a subsidiary of their parent company in Brunei. However, at least one company director must be a Brunei citizen or permanent resident of Brunei. Brunei’s “one-stop-shop” website for investments and business start-ups can be found here: http://business.gov.bn/.
Competition and Anti-Trust Laws
Brunei does not have any legislation pertaining to the regulation of competition issues. In 2015, Brunei enacted the 2015 Competition Order, to promote and maintain fair and healthy competition to enhance market efficiency and consumer welfare. The Sultan also announced the establishment of the Competition Commission to oversee and act on competition issues that includes adjudicating anti-competitive cases and imposing penalties on companies that violate the 2015 Competition Order. The Order is scheduled to be enforced in phases, starting with the prohibition of anti-competitive agreements and practices.
Expropriation and Compensation
There is no history of expropriation of foreign owned property in Brunei. There have been cases of domestically owned private property being expropriated for infrastructure development. Compensation was provided in such cases, and claimants were provided with due process regarding their disputes.
ICSID Convention and New York Convention
Brunei is a member state to the convention on the International Center for Settlement of Investment Disputes (ICSID Convention) and a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Legislation related to dispute settlement is covered under Brunei’s Arbitration Order 2009.
Investor-State Dispute Settlement
In 2016, Brunei’s Supreme Court announced the establishment of a commercial court to deal with business-related cases. More information about Brunei’s judiciary system is available at through their website: http://www.judiciary.gov.bn/Theme/Home.aspx.
International Commercial Arbitration and Foreign Courts
In May 2016, Brunei’s Attorney General’s Chambers has announced the establishment of the Brunei Darussalam Arbitration Center (BDAC). BDAC delivers services and administration for arbitration and mediation to fulfil the needs of domestic and international users in relation to commercial disputes, as a resolution alternative to court proceedings.
The International Arbitration Order (IAO) which regulates international and domestic arbitrations came into effect in February 2010. More information about Brunei’s Attorney General’s Chambers is available on its website: http://www.agc.gov.bn/Theme/Home.aspx.
In 2012, amendments to Brunei’s Bankruptcy Act increased the minimum threshold for declaring bankruptcy from BND 500 to BND 10,000 (USD 357 to USD 7,133) and enabled the trustee to direct the Controller of Immigration to impound and retain the debtor’s passport, certificate of identity, or travel document to prevent him from leaving the country. The amendment also requires the debtor to deliver all property under his possession to the trustee. Information about Brunei’s bankruptcy laws is available on the judiciary’s website: http://judiciary.gov.bn/SJD%20Images/Bankruptcy%20leaflet.pdf.