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 accessible on the Attorney General’s Chambers website: http://www.agc.gov.bn/Theme/Home.aspx .
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 two parallel systems: one based on common law and the other based on Islamic law. In 2016, recognizing the importance of protecting investors’ rights and contract enforcement, Brunei established a Commercial Court.
In 2014, Brunei implemented the first phase of its Sharia Penal Code (SPC), which expanded existing restrictions on minor offenses—such as eating during Ramadan—that are punishable by fines or imprisonment. On April 3, 2019, Brunei commenced full implementation of the SPC, introducing the possibility of barbaric 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. The punishments require different standards of proof from the common-law-based penal code. For example, four pious men must personally witness an act of fornication to support a sentence of stoning.
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. The Investment Incentive Order 2001 supports economic development in strategically important industrial and economic enterprises and, through the Ministry of Finance and Economy, 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 underway.
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 and Economy. 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: https://business.mofe.gov.bn/SitePages/Home.aspx .
The Business License Act (Amendment) of 2016 exempts several business activities (eateries, boarding and lodging houses or other places of public resort; street vendors and stalls; motor vehicle dealers; petrol stations including places for storing petrol and inflammable materials; timber stores and furniture factories; and retail shops and workshops) from needing to obtain a business license.
Competition and Anti-Trust Laws
Brunei’s Competition Order, published in 2015 to promote and maintain fair and healthy competition to enhance market efficiency and consumer welfare, entered into force on January 1, 2020. The Sultan also announced the establishment of the Competition Commission in 2017 to oversee and act on competition issues that include adjudicating anti-competitive cases and imposing penalties on companies that violate the Competition Order.
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. The government provided compensation in such cases and provided claimants 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 through the judiciary website: http://www.judiciary.gov.bn/Theme/Home.aspx .
International Commercial Arbitration and Foreign Courts
In May 2016, Brunei’s Attorney General’s Chambers announced the establishment of the Brunei Darussalam Arbitration Center (BDAC). BDAC delivers services and administration for arbitration and mediation to fulfill 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 a creditor to present a bankruptcy petition against a debtor from BND 500 to BND 10,000 (USD $350 to USD $7,060) and enabled an appointed bankruptcy trustee to direct the Controller of Immigration to impound and retain the debtor’s passport, certificate of identity, or travel document to prevent the debtor from leaving the country. The amendment also requires the debtor to deliver all property under the debtor’s 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 .