The Heart Of Brunei: Its People And Culture

Brunei is a small yet wealthy country with a population of fewer than 500,000 people. It is situated on the northern shore of the island of Borneo in the South China Sea. Brunei's economy is primarily supported by exports of crude oil and natural gas, which account for over half of its GDP. The country's vast oil and gas reserves have made it one of the richest in Asia, with its leader, Sultan Hassanal Bolkiah, ranked as one of the wealthiest individuals in the world. The profits from the oil and gas industry have funded the development of infrastructure and improved the quality of life for Bruneians, who enjoy benefits such as free healthcare, education, and subsidised housing. However, the country's heavy reliance on this industry makes it vulnerable to market fluctuations, and efforts to diversify the economy into sectors like agriculture, fisheries, and tourism have been made to ensure long-term stability.

Oil and gas reserves

Brunei's economy is almost entirely dependent on its oil and gas reserves. Oil and gas make up more than 80% of the country's exports and over half of its GDP. The discovery of oil in 1929 transformed the country's fortunes, and the subsequent discovery of natural gas a few years later led to the creation of the Brunei LNG (liquefied natural gas) plant in 1973, which is still one of the largest in the world.

Brunei is the third-largest oil producer in Southeast Asia, producing an average of 180,000 barrels per day, and the ninth-largest producer of liquefied natural gas globally. The country's oil production peaked in 1979 at over 240,000 barrels per day, but has since been cut back to extend the life of reserves and improve recovery rates. Today, production averages around 200,000 barrels per day.

The vast majority of the country's petroleum and natural gas is produced from offshore fields, and almost all of it is exported, mainly to Asian countries. A local refinery supplies domestic needs, and the country's energy is generated almost entirely from fossil fuels. Brunei's proven oil and gas reserves are expected to last until at least 2035, but deep-sea exploration may find significant new reserves.

Revenues from oil and gas have allowed Brunei to provide its citizens with a high quality of life, including free healthcare, education, and subsidised housing. Citizens also benefit from low taxes, with no personal income tax, and low-priced petrol. The country has invested its oil profits in impressive infrastructure, such as the national mosques and the Istana Nurul Iman, the world's largest residential palace. It has also been able to preserve its virgin rainforest, with much of its lush interior remaining untouched due to the lack of industry.

However, the country's heavy reliance on a single commodity leaves it vulnerable to market fluctuations, and the government has been working to diversify the economy by developing other sectors, such as agriculture, fisheries, tourism, and financial services. While these sectors have shown some promise, oil and gas still account for most of the country's economic activity.

Healthcare and education

Brunei's citizens benefit from a high quality of life, with the government providing free healthcare and education for all. The country's vast oil and natural gas wealth finance these services, along with most other living expenses.

Healthcare

The government provides all medical services, and subsidises food and housing. Brunei's citizens have access to free healthcare, with a local refinery supplying domestic needs. However, the country's energy is predominantly generated using fossil fuels, with only a small amount of natural gas used for domestic power generation.

Education

Brunei's citizens receive free education through to university level. The country's well-educated population is largely English-speaking. The government covers the costs of education, even at Oxford for those who can pass the entrance exam.

Other Benefits

The government also subsidises housing and provides interest-free loans for home purchases. Additionally, it organises low-cost trips for citizens to make the pilgrimage to Saudi Arabia.

Economic diversification

Brunei's economy is heavily dependent on oil and natural gas, which make up over 80% of its exports and more than half of its GDP. However, the country has been working towards economic diversification to reduce this dependence. Here are some key aspects of Brunei's economic diversification efforts:

Agriculture

Brunei has focused on developing its agricultural sector, particularly in poultry, eggs, and vegetable production. While the sector previously contributed only a small fraction of the GDP, the country has now achieved self-sufficiency in poultry and egg production and is approaching self-sufficiency in vegetable production. The government has also invested in aquaculture to reduce fish imports and promote local fisheries.

Tourism

Brunei has identified tourism as a potential growth sector. The country has promoted itself as a tourist destination, showcasing its modern cities, unique traditions, and lush natural areas like the Ulu Temburong National Park. The construction of the Temburong Bridge, the longest in Southeast Asia, is an example of infrastructure development aimed at boosting tourism.

Financial Services

Brunei has a stable political environment, a well-educated and largely English-speaking population, and excellent infrastructure. These factors, along with its strategic location in Southeast Asia, make it an attractive destination for foreign investment. The country has been working to attract foreign direct investment (FDI) and has put in place various investment incentives. Additionally, the country has a strong financial sector, including several Islamic commercial banks, foreign banks, and offshore banks.

Other Industries

In addition to the sectors mentioned above, Brunei has also identified other areas for economic diversification. These include fisheries, forestry, and the development of a glass-making industry from its silicon resources. The country has also established a national halal branding scheme, "Brunei Halal," to help local manufacturers penetrate lucrative markets with significant Muslim consumers.

Challenges

While Brunei has made progress in diversifying its economy, it continues to face challenges due to its heavy reliance on the oil and gas industry. The country is vulnerable to fluctuations in commodity prices, and a significant decline in oil and gas revenues could impact its economic stability. Additionally, the country needs to address its dependence on imports for most manufactured goods and food items.

Foreign investment

Brunei's central location in Southeast Asia, good telecommunications, and airline connections, no personal income, sales, or export taxes, and a stable political situation make it an attractive prospect for investors. The country also has a low crime rate, good schools, housing, and sports facilities, and low utility costs.

The Brunei Investment Agency (BIA), an arm of the Ministry of Finance and Economy, manages the country's substantial foreign reserves. The BIA's guiding principle is to increase the real value of Brunei's foreign reserves while pursuing a diverse investment strategy, with holdings in the United States, Japan, Western Europe, and the Association of Southeast Asian Nations (ASEAN) countries.

The government has also incentivized foreign investment through projects such as the Temburong Bridge, the longest in Southeast Asia, which was a joint project between Brunei, China, and South Korea.

Brunei dollar

The Brunei dollar (B$ or BND) has been the official currency of the country since 1967. It is divided into 100 cents and issued by the Brunei Darussalam Central Bank. The currency is interchangeable with the Singapore dollar at par, and vice versa, due to a Currency Interchangeability Agreement from 1967.

Brunei's early currency included cowrie shells and bronze teapots, which were used in barter trade. The Spanish-American silver dollar was widely used for international trade from the 16th to the 19th centuries. In the 19th century, the Straits dollar, derived from the Spanish-American silver dollar, was introduced.

In 1967, the Brunei dollar replaced the Malaya and British Borneo dollar, which had been in use since 1953. The new currency was issued in denominations of 1, 5, 10, 20 and 50 cents, with the 1 cent coin made of bronze and the others in cupro-nickel.

In 1984, the Brunei Currency Board ordered four million circulation coins from the Singapore Mint. In 1986, copper-clad steel replaced bronze, and in 2008, the 1 cent coins switched to brass.

Banknotes were introduced in 1967 in denominations of 1, 5, 10, 50 and 100 dollars. In 1979, 500 and 1,000-dollar notes were added, and in 1989, 10,000-dollar notes were introduced. The currency has had five series of notes, with the first three series featuring the portrait of Sultan Omar Ali Saifuddin III, the 28th ruler of Brunei. All subsequent series have featured the current ruler, Sultan Hassanal Bolkiah.

The Brunei dollar is one of the world's most valuable banknotes in circulation, with the 10,000-dollar note worth US$7,375 as of May 2024. However, due to concerns about money laundering, the country has stopped printing and issuing the 10,000-dollar notes and is in the process of withdrawing them from circulation.

Frequently asked questions