Brunei Economy

Brunei Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

Brunei Darussalam offers investors a stable political environment, very good infrastructure, an educated workforce and a very capital-strong economy open to foreign investment. Traditionally, it also presents itself as the Hub of ASEAN with regard to the aforementioned strengths. The current Strategy Wawasan Brunei 2035 (strongly linked to the UN Agenda 2030) in addition to general development goals (increasing education, quality of life and strengthening the dynamism and sustainability of the economy) sets priority investment areas, i.e.: oil and gas industry, ICT, services, gastronomy and tourism industry. It ranks 66th in the Doing Business ranking, which makes it comparatively better than neighboring Indonesia (73) or the Philippines (95). Nevertheless, Brunei’s economy in 2021 suffered a historic drop in oil revenues in Q3 2021, not repeated since 2016, when the price of a barrel of oil fell to 34.62 USD. In addition, low incomes faced a partial lockdown due to the spread of the delta mutation, which halted even consumption-led growth. Repeated attempts at structural reforms aimed at diversification, which began in the 1990s, basically did not translate into significant factual change. Even compared to other similarly oriented economies, e.g. the UAE, Indonesia, the dependence of the Brunei state budget on oil revenues is significantly greater. Check ebizdir for economical facts of Brunei.

The WB then praises the country for improving the enforceability of contract law through mandatory disclosure of financial results, as well as for improving the insolvency resolution mechanism, where creditors are more involved in insolvency proceedings. The forecast for the coming years points to continued political stability underpinned by the autocratic rule of Sultan Hassanal B. Mu’izzaddin. In economic policy, one can expect a deepening of reforms towards diversification and a shift away from the dominant oil and gas industry. It is the outputs of this industry that will continue to be the basic state income dependent on world commodity prices. A positive factor is the completed Chinese investment in the Hengyi Industries Sdn Bh petrochemical plant. worth USD 3.45 billion, the second phase of which was completed in late 2019 before the onset of the covid crisis. It is thus a leader in the region and advances the technological possibilities of downstream activities in the region. Plant production Hengyi Industries Sdn Bh. In 2020, it even made up 50% of GDP. The Hengyi Industries plant continuously recruits new suppliers and represents export opportunities for Czech exports.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 3.9 2.1 -1.3 2.5 3.1
GDP/population (USD/PPP) 65,340.00 65,233.80 66,120.00 70,610.00 74,620.0
Inflation (%) -0.3 1.9 1.7 1.4 0.9
Unemployment (%) ON ON ON ON ON
Export of goods (billion USD) ON ON ON ON ON
Import of goods (billion USD) ON ON ON ON ON
Trade Balance (Billion USD) 2.2 1.4 2.1 2.4 3.1
Industrial production (% change) ON ON ON ON ON
Population (millions) 0.4 0.4 0.4 0.4 0.4
Competitiveness ON ON ON ON ON
OECD export risk ON ON ON ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -14
Public debt (% of GDP) ON
Current account balance (billion USD) 1.2
Taxes 2022

Brunei operates public finances primarily from sources derived from oil production. However, not all of these profits are recorded as state budget revenues. Surpluses generated by the oil sector were deposited in a special fund in the past. Conversely, in the years when the country was hit by a drop in oil prices, the budget was subsidized from these sources. In parallel, there is the private wealth of the Sultan, which can be understood as another capital component of the state. The country’s domestic production is marginal and the country imports most of its consumer goods. Thanks to oil exports, however, the balance of foreign trade is permanently positive.

Finance Minister Amin Liew presented the 2022 budget with a significantly higher fiscal deficit, which points to an economic slump that cannot be masked even by a significant increase in global oil and gas prices. It is therefore a structural fiscal deficit, mainly as a result of degrading oil and gas deposits and the increase in prices in connection with their further development. The government wants to make up the deficit with revenues from fertilizer processing plants. Two thirds of the income will again come from the primary oil and gas industry. However, the expenditure side of the budget registers USD billion, and the balance of the state budget therefore reaches between -13% and -14%.

Banking system

The role of the central bank is performed by the Monetary Authority of Brunei Darussalam, which was transformed in 2011 from the Brunei Currency and Monetary Board, respectively the Brunei Currency Board, which fulfilled its purpose of administering the transition from the former post-colonial monetary union with Malaysia and Singapore. Brunei continues to maintain currency parity with Singapore.

Brunei’s banking system includes 9 banks, most of which are branches of foreign banks.

List of banks:

  • Baiduri Bank Berhad
  • Islamic Bank of Brunei Berhad
  • Citibank
  • Malayan Banking Berhad
  • Development Bank of Brunei Berhad
  • Overseas Union Bank
  • Hong Kong Bank
  • Standard Chartered Bank
  • Sime Bank Berhad

Tax system

Brunei is a specific economic environment financed by revenues from oil and gas extraction. It does not apply most of the classic taxes known from other countries, i.e. it keeps zero export, sales, production and payroll taxes. Individuals – natural persons, not reporting their income. Likewise, sole proprietors and business partners do not have to pay taxes on their income. However, the temporary macroeconomic difficulties caused by fluctuations in world prices lead to considerations in the country about the possible introduction of some taxes, especially VAT. Only companies, i.e. legal entities registered in Brunei, have to tax their income. Income from operations in the mining industry is subject to special legislation and a higher tax burden. On the contrary, for small and medium-sized enterprises, there are a number of reliefs reducing the tax liability both in the first years after establishment and proportionally according to their profit. Brunei has a double taxation agreement with 19 Commonwealth countries, including Great Britain. Their list states – Ministry of Finance of the Sultanate of Brunei.

Corporate tax is 18.5% and is progressive according to income:

  • 25% of the first BND 100,000 of assessable income is taxed at a basic rate of 18.5%
  • 50% of the first BND 150,000 of assessable income is taxed at 18.5%
  • other assessable income is taxed again at 18.5%
  • all activities in the oil and gas sector are taxed at a rate of 55%

Non-residents (individuals, corporations) also pay a withholding tax of 2.5% on interest, 10% on royalties and 10% on technical services rendered. A tax of 12% is also applied to construction projects except those in Bandar Seri Begawan.

In 2021, a 50% tax discount was temporarily introduced in connection with the demands that COVID-19 placed on business activities. The tax discount could be applied in the following sectors: tourism, gastronomic services, hospitality, transport services (air and sea).

The financial statement and tax return must be properly and timely entered into the STARS electronic system under the threat of a fine or imprisonment within 12 months.

Brunei Economy