Opening A Franchise In Brunei: A Comprehensive Guide

Brunei is an attractive prospect for franchise businesses, with its low cost of living, supportive government, high quality of life, and stable political structure. The country's thriving economy is largely supported by exports of crude oil and natural gas, and the government is actively working to diversify the economy away from this over-reliance on natural resources. Brunei offers a favourable investment climate, with the least number of taxes in the region, modern infrastructure, a strategic location, a well-educated population, and political stability. The country's small but wealthy economy has a high per capita GDP, and Bruneian citizens pay no personal income tax. The country's best commercial sectors with promising opportunities for investment include commercial aviation, construction, defence equipment, medical equipment, information and communications technology, and food and beverage franchises.

Choosing a business structure

When choosing a business structure for your franchise in Brunei, there are a few key things to keep in mind. Firstly, it is important to understand the different types of business structures available. In Brunei, there are three main legal structures to choose from: sole proprietorship, partnership, and company. However, it is important to note that only the formation of a company structure is allowed for foreigners.

Let's go through each of these structures in detail:

Sole Proprietorship:

A sole proprietorship is the most common form of business structure in Brunei. In this structure, the owner and the business are considered the same entity. This means that the owner has unlimited liability and is responsible for all profits, losses, and legal actions against the business. The registration fee for a sole proprietorship is $30. However, it is important to note that this structure is not allowed for non-residents who are not Brunei citizens or permanent residents.

Partnership:

A partnership business structure consists of two or more partners, similar to a sole proprietorship, where the partners have unlimited liability. Under the Registry of Companies and Business Names (ROCBN) regulations, a generic partnership should have a maximum of 20 partners. If the number of partners exceeds 20, the business must be incorporated, and the organization should file for a company instead. Like sole proprietorships, partnership structures are not allowed for foreigners who are not Brunei citizens or permanent residents. The registration fee for a partnership is also $30.

Company:

The company business structure is a separate legal entity from its directors and shareholders. To start a company, a minimum of two shareholders and two directors are required, with at least one director being an ordinary resident of Brunei Darussalam. This structure allows for private or public ownership. The registration fee for a company in Brunei is $300. After registration, you will need to create an account with the Ministry of Finance and Economy through their One Common Portal (OCP), which will guide you through the registration process.

When choosing a business structure, consider factors such as the size and complexity of your franchise business, the level of liability you are comfortable with, and the residency status of the owners or shareholders. It is important to carefully review the requirements and restrictions of each business structure before making a decision.

Registering your business

Company Business Structure

Firstly, you must choose the business structure that best fits your business plan. In Brunei, there are three different legal structures to choose from, but only the formation of a company structure is allowed for foreigners.

The first is a sole proprietorship, where the owner and the business are considered one and the same, meaning the owner has unlimited liability. This structure is not permitted for non-residents unless they are a Brunei citizen or permanent resident. A registration fee of $30 will be charged.

The second is a partnership, which consists of two or more partners, all of whom are subject to unlimited liability. Under the regulations set by the Registry of Companies and Business Names (ROCBN), a generic partnership should only hold a maximum of 20 partners. Anything exceeding this number must be incorporated, and the business firm or organisation should file for a company instead. Like sole proprietorships, partnerships are not allowed to be opened by foreigners unless they are a Brunei citizen or permanent resident. A registration fee of $30 will be charged.

The third option is a company business structure, which is a separate legal entity from its directors and shareholders. A minimum of two shareholders and two directors are required, one of whom must be an ordinary resident of Brunei Darussalam. A registration fee of $300 will be charged.

Choosing and Registering Your Business Name

After creating your ROC account, you will need to complete the various necessary steps and provide due diligence information to the One Common Portal (OCP) of the Ministry of Finance and Economy. Under Brunei’s business name act, you are not allowed to use exact or resembling business names of existing firms. Additionally, the following words will not be permitted: “Royal”, “Diraja”, “Brunei”, “Co-operative”, “Savings” or “Trust/Trustee”. This is to prevent any untrue relations or patronage with the Sultan or the government of Brunei. If your business name is approved, you will be prompted to pay a registration fee of $300 for foreigners. Once you have paid, an official business/company registration certificate will be sent to your email. Your business will be automatically registered with Tabung Amanah Perkejah (TAP), which is a compulsory employee trust fund that the government of Brunei will use to invest and make returns.

Corporate Bank Account Opening

The final step is to set up your corporate bank account with proof of your company registration.

Opening a corporate bank account

Choosing a Bank

There are seven banks licensed to operate in Brunei, with the three major banks being Perbadanan Tabung Amanah Islam Brunei (TAIB), Baiduri Bank, and Bank Islam Brunei Darussalam. Four other banks have international ownership: RHB Bank, Maybank, Standard Chartered Bank Brunei, and CIMB Brunei.

Requirements and Documentation

To open a corporate bank account in Brunei, you will need to visit a local branch of your chosen bank. You can start the application process online, but supporting documents must be presented in person. Most bank branches have English-speaking staff. It is recommended to book an appointment rather than just dropping in.

The following documents are typically required to open a corporate bank account in Brunei:

• Passport
• Visa
• Rental agreement
• Financial history
• Three months of bank statements
• Employment contract
• Business registration documents
• Corporate seal/stamp
• Memorandum and Articles of Association
• Board resolution authorizing the opening of the account
• Certificate of Incorporation

Fees and Charges

Most bank accounts in Brunei require an initial financial outlay to secure account opening. This value differs between banks and depends on variable rates of currency exchange. Be sure to understand the interest and growth rates associated with any potential corporate bank account to maximize earnings and minimize risk.

Operating Procedures

Banking hours in Brunei vary, with each branch having its own operating hours. Typically, they are open between 9 am and 4 pm, Monday to Friday. However, on Friday afternoons between 12 pm and 2 pm, all businesses, including banks, will close for prayers.

Expert Advice

Given the specific requirements and potential complexities of opening a corporate bank account in Brunei, it is advisable to enlist the help of international experts in finance and economics to guide you through the process and ensure compliance with legal and financial regulations.

Understanding the tax implications

One of the main benefits of doing franchise business in Brunei is the country's favourable tax environment. In fact, Brunei boasts the least number of taxes in the region, making it an attractive prospect for investors.

When it comes to specific tax implications for opening a franchise in Brunei, there are a few key things to keep in mind. Firstly, as a franchise owner, you will need to understand the country's corporate tax structure. Brunei operates a territorial system of taxation, which means that income tax is imposed only on income sourced within the country. This can be beneficial for businesses operating within Brunei, as it can result in lower effective tax rates. The corporate income tax rate in Brunei is currently 18.5%, which is relatively low compared to other countries in the region.

Additionally, as a franchise owner, you may be subject to other taxes and duties, such as goods and services tax (GST), which is levied on most goods and services supplied in Brunei. The standard rate for GST is currently 7%. There are also other taxes to consider, such as excise duties, stamp duties, and property taxes, depending on the nature of your business and the goods or services you are providing.

It is important to note that the tax landscape in Brunei can be complex, and it is always recommended to seek professional advice from a qualified accountant or tax advisor to ensure you are complying with all relevant laws and regulations. They can help you navigate the specific tax obligations and incentives that may apply to your franchise business, ensuring you are meeting your tax obligations while also taking advantage of any applicable tax benefits.

By understanding the tax implications and seeking expert advice, you can make informed decisions about opening a franchise business in Brunei and maximise your chances of success in this promising market.

Marketing your business

Marketing your franchise business in Brunei

Marketing is a crucial aspect of establishing a successful franchise business in Brunei. Here are some strategies and considerations to help you effectively market your business:

• Create a website: Building a website for your business is essential for establishing an online presence and reaching a wider audience. Ensure that your website is well-designed, user-friendly, and optimised for search engines to improve its visibility.
• Advertising campaigns: Develop strategic advertising campaigns to promote your products or services. Reach out to local media outlets, such as newspapers and magazines, and utilise social media platforms like Twitter and Facebook to connect with potential customers in Brunei.
• Local business events: Attend local business events, networking opportunities, and industry conferences to meet potential customers, partners, and investors. These events provide valuable face-to-face interactions and help establish your presence in the Bruneian market.
• Leverage local connections: Brunei has strong regional connections, especially within the Association of Southeast Asian Nations (ASEAN). Explore opportunities to collaborate with local businesses or tap into existing supply chains to expand your reach.
• Target the right sectors: Identify the sectors with the most potential for your franchise business. Brunei's economy is largely driven by the oil and gas industry, but the government is actively diversifying into other sectors, including information and communications technology, food and beverage, and halal manufacturing.
• Understand cultural considerations: When marketing your franchise business in Brunei, it's important to be mindful of the unique cultural and religious context. Respect local customs and traditions in your marketing materials and strategies to ensure that your business is well-received by the Bruneian community.
• Embrace digital marketing: With a high proportion of English speakers and a modern infrastructure, Brunei offers a favourable environment for digital marketing. Utilise online tools, social media campaigns, and search engine optimisation to reach your target audience effectively.
• Highlight the benefits of your franchise: When marketing your franchise business, emphasise the advantages of investing in a franchise rather than starting an independent business. This includes the established brand recognition, proven business model, and support network that comes with a franchise system.
• Translate features and benefits into value: When promoting your products or services, focus on how they meet the needs and aspirations of your target market. Highlight how your offerings can enhance their quality of life, provide convenience, or address specific pain points they may have.
• Build relationships with influencers: Identify local influencers or micro-influencers in Brunei who have a strong following in your target market. Collaborating with them can help expand your reach and establish credibility for your franchise business.

Remember, marketing your franchise business in Brunei requires a tailored approach that considers the unique cultural, economic, and social context of the country. By combining digital strategies with local connections and a strong understanding of your target market, you can effectively promote your franchise and establish a successful presence in Brunei.

Frequently asked questions