Brunei is a small, energy-rich Sultanate on the northern coast of Borneo in Southeast Asia. Brunei boasts a well-educated, largely English-speaking population, excellent infrastructure, and a government intent on attracting foreign investment and projects. In parallel with Brunei’s efforts to attract foreign investment and create an open and transparent investment regime, the country has taken steps to streamline the process for entrepreneurs and investors to establish businesses and has improved its protections for intellectual property rights (IPR).
Despite senior Bruneian leaders’ repeated calls for diversification, Brunei’s economy remains dependent on the income derived from sales of oil and gas, contributing about 60 percent to the country’s GDP. Substantial revenue from overseas investment supplements income from domestic hydrocarbon production. These two revenue streams provide a comfortable quality of life for Brunei’s population. Citizens are not required to pay taxes and have access to free education through the university level, free medical care, and subsidized housing and car fuel.
Brunei has a stable political climate and is generally sheltered from natural disasters. Brunei’s central location in Southeast Asia, with good telecommunications, numerous airline connections, business tax credits in specified sectors, and no income, sales, or export taxes, offers a welcoming climate for potential investors. Sectors offering U.S. business opportunities in Brunei include aerospace and defense, agribusiness, construction, petrochemicals, energy and mining, environmental technologies, food processing and packaging, franchising, health technologies, information and communication, Islamic finance, and services.
In 2014, Brunei began implementing sections of its Sharia Penal Code (SPC) that expanded preexisting restrictions on activities such as alcohol consumption, eating in public during the fasting hours in the month of Ramadan, and indecent behavior, with possible punishments including fines and imprisonment. The SPC functions in parallel with Brunei’s common law-based civil penal code. The government commenced full implementation of the SPC on April 3, 2019, introducing the possibility of corporal and capital punishments including, under certain evidentiary circumstances, amputation for theft and death by stoning for offenses including sodomy, adultery, and blasphemy. Government officials emphasize that sentencing to the most severe punishments is highly improbable due to the very high standard of proof required by the SPC. While the SPC does not specifically address business-related matters, potential investors should be aware that there is controversy surrounding the SPC issue. Thus far there have been no recorded incidents of U.S. citizens or U.S. investments directly affected by sharia law.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||31 of 180||https://www.transparency.org/cpi2018|
|World Bank’s Doing Business Report||2019||55 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||67 of 126||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$19||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2017||$29,600||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|