Guidance

Overseas business risk: Brunei

Updated 3 August 2023

General overview

Brunei Darussalam is an oil and gas-rich sultanate of approximately 445,000 people. Located on the northeast coast of Borneo, it is one of the ten Member States of the Association of Southeast Asian Nations (ASEAN). It shares a land border with Malaysia, a sea border in the South China Sea (SCS), and is conveniently located at the centre of one of the world’s fastest-growing economic regions.

Brunei has a well-educated population, most who speak both Malay and English. As a Commonwealth country, Brunei has close links with the UK. Many Bruneians, including most ministers, have studied in the UK. There are many UK expats as well as migrant workers in the country.

Brunei enjoys a stable government and well-developed infrastructure. It has well-developed regional and international transport links. Standards of living are high. Brunei is a welfare state providing its citizens free health services and education. There is no personal income tax. Citizens enjoy heavy subsidies on fuel, electricity, water, rice, sugar and other staple foods.

Political

Since gaining independence from the United Kingdom in 1984, Brunei has been governed as an absolute monarchy under the Sultan. It has enjoyed a long period of stability and the monarchy highly revered by Bruneians. Brunei is an Islamic country, with approximately 80% of its population being Muslim.

Brunei operates two legal systems. A Common Law system has its origins in the English system and a Sharia Penal Code, running in parallel with the Common Law system. It specifies severe punishments for certain crimes, including acts that are not illegal in the UK, though to date it has primarily been used for some family law cases. Please see FCDO Travel Advice for more information on local laws and customs.

Brunei is a member of a number of international and regional bodies. As well as being a member of ASEAN, Brunei is a member of the UN, Asia Pacific Economic Cooperation (APEC) and the Asia-Europe Meeting (ASEM).

Economic

Brunei’s economy is heavily reliant on oil and gas production, which represents 53% of GDP and 95% of exports. With a GDP in 2022 of BND 20bn (GBP 12bn) and a small population, this gives Brunei the second highest GDP per capita in ASEAN, after Singapore.

Despite rising oil and gas prices, unscheduled maintenance of the oil and gas wells lowered economic output in 2022, with GDP lower by 1.6% for the year against 2021. However, it is expected to bounce back to a positive 2.8% in 2023 according to ASEAN+3 Macroeconomic Research Office Paper (AMRO)

Brunei is one of the few countries in the world which does not have any external debt. Since 1967, the Brunei Dollar (BND) has been pegged at par to the Singapore Dollar via the Currency Interchangability Agreement. This has provided the country with prudent monetary policy management from Singapore’s Monetary Authority of Singapore. This, together with generous fuel and energy subsidies domestically has helped to keep inflation relatively under control, reaching 3.7% in 2022, and is expected to lower to 2.5% in 2023.

A top priority for Brunei’s government is diversifying the economy beyond from oil and gas. The government published its Economic Blueprint in 2021, as part of the broader Brunei Vision 2035 strategy. This seeks to increase foreign investment and develop the following sectors: Downstream Oil and Gas; Halal Food; Tourism; Info-Communications and Technology; and Services, including Islamic Finance and Technical and Vocational Education and Training (TVET).

Brunei is a member of the Regional Comprehensive Economic Partnership trade agreement (RCEP) and since July 2023, is a fully ratified member of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP).

Brunei is receptive to engagement with foreign businesses. UK companies operating in Brunei include Shell, Standard Chartered and KPMG. Visit World Bank pages for the latest Ease of Doing Business rankings.

Brunei’s unemployment rate is 4.9% based on latest government published numbers (here)

Tax

Corporate Income Tax in Brunei is set at 18.5%, which is the second lowest in the region. Incoming companies are able to apply for tax exemption as a ‘Pioneer Service company’. Further details on the tax exemption period is here. If granted, the company would be exempt from paying Brunei’s Corporate Income Tax for the specified tax exemption period. However, companies with Pioneer Status are not exempt from excise duty.

Brunei does not impose tax on personal income, sales, capital gains and manufacturing. If you are registered for VAT in the UK, it may be possible to zero-rate the goods you export to Brunei, provided certain conditions are met. There is no VAT or any other consumption-based taxes in Brunei. Further information on UK and Brunei’s double taxation agreement can be found here https://www.mofe.gov.bn

Technical services, along with scientific, technical, industrial or commercial knowledge or information, are subject to a 10% withholding tax. Brunei does not levy withholding tax on dividends that have been assessed to tax, regardless of whether they are paid to a resident or a non-resident.

Regulations

Brunei is an Islamic country and prohibits the sale of alcohol and tobacco. All businesses, including shops and restaurants, close between 12pm and 2pm every Friday. The working week for the Brunei government is Monday to Thursday and Saturday. For the private sector, the working week is Monday to Friday, though all businesses close from 1200-1400 on Fridays.

Trade barriers

Check for any reported barriers to trading with Brunei.

Report any trade barriers that are affecting your business so we can help fix them.

Human rights

Brunei is an absolute monarchy and there are no real democratic institutions or political parties. Social and political norms are different from those practiced in the UK and there are some restrictions on freedom of speech and assembly. The State of Emergency declared in 1962 is still in effect. The Internal Security Act of 1982 allows the authorities to arrest and detain suspects without trial and without the presumption of innocence. Brunei’s Sedition Act criminalises criticism of the Malay Islamic Monarchy philosophy.

The official religion in Brunei is the Shafi’i school of Sunni Islam. A Sharia Penal Code operates in parallel with the Common Law and applies to both Muslims and non-Muslims (with certain exceptions). It specifies hudud punishments and fines for certain crimes, including acts that are not illegal in the UK such as propagating religions other than Islam, eating in public during the fasting hours of Ramadan, and cross-dressing.

Please see FCDO Travel Advice for more information on local laws and customs.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Within Brunei the law provides criminal penalties for corruption by officials, and these laws are generally implemented effectively.

Visit Transparency International’s corruption perception index (CPI).

Terrorism Threat

Please see FCDO Travel Advice for more information.

Protective Security Advice

Please see FCDO Travel Advice for more information.

Intellectual property

Intellectual Property (IP) rights are territorial, that is they only give protection in jurisdictions where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets. Specific advice should be sought from qualified professionals either in the UK or overseas.

Brunei’s IP system is in compliance with international standards and has a legal framework that provide rights holders with protection for the basic IP rights including patents, copyright trademarks and industrial design. There is no specific legislation currently protecting other IP areas such as trade secrets or geographical indicators.

Brunei is a signatory to several international conventions on IP. Its legislative and administrative regime for IP rights is generally compliant with the World Trade Organisation’s agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

The Brunei Darussalam Intellectual Property Office (BruIPO) is the government department responsible for registration of trade marks, patents, designs and plant varieties as well as copyright policy. Royal Customer and Excise are tasked, upon request by IP right owners, with monitoring infringing goods entering and leaving Brunei country and can be contacted in the event of infringing shipments.

There is no system to register IP rights with customs in Brunei and the rights holder must establish ownership of the IP as well as provide details of the infringement and expected shipment to customs. Civil litigation and criminal prosecution are also available enforcement routes.

Brunei Darussalam operates under a ‘first-to-file’ system, meaning that with some exceptions, the first person or entity to file an IP right in the jurisdiction will own that right once the application is granted.

UK companies based in or planning to export to Brunei are generally advised to register their IP in Brunei and any other jurisdictions where they may want to expand their products and services in future.

Useful information can also be found at the following:

Intellectual Property Office - a UK Government agency providing free and impartial advice on protecting and registering your IP in the UK and abroad.

Contact

Contact the UK-ASEAN Business Council for more information and advice on opportunities for doing business in Brunei.