Moving forward: Pushing ahead with reforms in pursuit of diversification

The Sultanate has introduced a variety of reforms across all its sectors with the aim of diversifying the economy. The government is focused on making the most of ASEAN’s recent surge in growth by attracting foreign direct investment. To achieve this goal the state has realigned its reforms to improve the country’s ranking on the World Bank’s “Ease of Doing Business” index, by which it is currently ranked 83 worldwide.

ECONOMY: Although the majority of the world is still feeling the effects of the financial downturn, Brunei Darussalam has managed to remain somewhat unaffected by the turmoil in international markets. In 2012 the country maintained its spot at 28 on the World Economic Forum’s “Global Competitiveness Report” with a score of 4.8 out of 7. Bruneians benefit from one of the world’s highest levels of GDP per capita, which currently stands at over $48,000. Free health care and education, heavily subsidised housing and excellent domestic infrastructure are all testaments to the government’s dedication to the populace’s well being. However, to sustain this success the government has realised the need to increase value-added, downstream services within the oil and gas sector while also developing industries outside the energy sector.

DIVERSIFICATION: The government is now working to diversify the economy by maximising the value of its domestic resources and jump-starting the industrial base by encouraging increased productivity and efficiency in all sectors. Emphasis is being placed on leveraging the Sultanate’s natural strengths, and to this end downstream hydrocarbons diversification is proving to be of great importance.

Furthermore, efforts are under way to further develop the information and communications, tourism and finance sectors. The country will also promote international distribution of its range of Halal-certified produce as well as segments such as Islamic finance and tourism for observant Muslims.

POLITICAL SYSTEM: The Sultanate is governed by His Majesty Sultan Haji Hassanal Bolkiah, who is both the head of state and the executive head of government. His Majesty receives consultation and advice from five councils: the religious council, the Privy Council, the Council of Succession, the Council of Ministers and the Legislative Council.

POPULATION: According to estimates from the Department of Economic Planning and Development, the population was 425,000 in 2012. The majority of the population is aged between 15 and 64 years old, making up 70.9% of the country, 25.5% of the population is under 14 years old, with those over the age of 65 making up only 3.5% of the population. Life expectancy at birth is 74 years for men and 79 years for women. The population is becoming increasingly urbanised – at a rate of 2.2% per year – and 76% of Bruneians now live in cities.

Ethnically, the population is divided into three main categories: Malay (67%), Chinese (15%) and other nationalities (12%). The Sultanate is home to a sizeable number of foreign nationals.

LANGUAGE: The main language is Malay (Bahasa Melayu), although English is widely spoken and is the principal language in business. A number of Chinese dialects are spoken by the Chinese community, including Hokkien, Mandarin, Hakka and Cantonese. The country’s local population, including the Murut, Penan and Dusun groups, maintain their own distinct identity and languages.

RELIGION & CULTURE: Islam is the official religion of Brunei Darussalam, although other religions such as Buddhism and Christianity are also practised in the country. The Sultanate’s cultural identity is derived primarily from the Malay civilisation, which has been shaped by a number of various external influences and foreign civilisations.

As a result, the local culture can be traced back to four dominant influences: animism, Hinduism, Islam and the West. Of these, Islam has had the greatest impact. The religion has deeply influenced the culture and continues to play an important role in society.

HISTORY: The Sultanate initially came under Hindu influence through an allegiance with the Javanese Majapahit Kingdom (13th-15th century). Widespread conversion to Islam took place early in the 15th century with the downfall of the Majapahit Kingdom. Brunei Darussalam is home to the longest ruling dynasty in the world, the Sultanate held power over much of the island of Borneo, including the presentday Malaysian states of Sabah, Sarawak and the lower Philippines in the 14th century. Much of its strength emanated from its strategic position on the trading crossroads between southern China, Malacca, Java, India and the Middle East.

In 1521 the country had its first encounter with Europe when Ferdinand Magellan arrived, followed by further encounters with the Portuguese and Spanish during the subsequent years. However, it was the arrival of the British in the 17th and 18th centuries that had the most lasting effects on the county’s future. In 1847 Brunei Darussalam and the UK signed a treaty that led to Brunei becoming a British protectorate in 1888.

The Sultanate’s future changed course when oil was discovered off the coast in 1929 in the Seria River. In 1971 Brunei Darussalam signed a treaty to manage its own domestic affairs. The country acquired full independence from the UK in 1984 and joined the ASEAN bloc. Since then the country has formed strong relationships abroad and is a member of several international organisations.

FLAG & CREST: The Sultanate’s flag, first used in 1906, features a yellow background with two wide diagonal stripes of black and white running from the upper hoist-side corner to the opposite bottom corner. Yellow, a traditionally regal colour in South-east Asia, represents the Sultan, while the black and white stripes symbolise the chief ministers of the state.

The national crest was added to the centre of the flag in 1959. The red crest consists of five components: the flag; the royal umbrella; a wing with four feathers that signify justice, tranquillity, prosperity and peace; the hand that represents the government’s promise to promote welfare, peace and prosperity in the country; and a crescent that symbolises Islam.

“Always in service with God’s guidance” is written on the crescent in Arabic script. Beneath that is a scroll with the official name of the state, Brunei Darussalam, or “Brunei, the abode of peace.”

GEOGRAPHY & CLIMATE: The country is located on the north-west coast of the island of Borneo in the South China Sea, lodged between the Malaysian states of Sabah and Sarawak. It covers a land area of 5765 sq km. It has a tropical climate, with temperatures ranging between 24˚ and 29˚C.

Most of the country is covered by lowland rainforests. The terrain in the western part of the Sultanate is low and hilly, rising up to about 300 metres in the hinterland. The western part of the country is made up of the three districts, Brunei-Muara, Tutong and Belait. The east of the country is characterised by a wide coastal plain, leading up to Mount Pagon in the Temburong District, which is approximately 1841 metres above sea level.

The country does not have well-defined seasons, although it is affected by two monsoon winds, which blow from December to March and June to October.

NATURAL RESOURCES: Brunei Darussalam’s economy has long been driven by its oil and gas revenues, but as these resources are maturing the Sultanate is working to develop alternative revenue streams. Other natural resources and industries are natural gas, timber and aquaculture. The Sultanate is the thirdlargest oil producer in South-east Asia. Revenues from crude oil and natural gas production still account for just over half of the country’s GDP and more than 90% of total exports.

The Sultanate is now gearing up for enhanced secondary and tertiary oil field recovery. To complement these ageing reserves, however, exploration work began on two new, previously unexplored deepwater offshore oil fields in 2011. Re-exploration is also being undertaken on two of the country’s onshore fields.

The country is a pioneer in liquefied natural gas (LNG) production. The Brunei LNG plant delivers the majority of its production to Japan and South Korea under 20-year contracts, most recently renewed in 1993 and up for further renewal in 2013, with serious purchasing interest expressed by other regional powers, most notably India.

EDUCATION: The government provides free education for all Bruneians up to the local university level. The Ministry of Education recently developed a new five year strategic plan (2012-17). Under the new plan, the focus is on improving early childhood care and education, as well as further development of the Brunei Teachers Standards project and the overall quality of the education system.

Tertiary education is provided at the Sultanate’s three universities, polytechnic school and a growing number of private colleges. Education is free, even at private tertiary institutions to which the government now offers full scholarships. However, a large number of Bruneians choose to complete their university studies abroad.