By Doaa Hussein
A small country with a huge wealth hosts one of the richest few monarchs on the earth, and a tiny, however, prosperous population. These words can only fit Brunei. Brunei possesses a remarkable location on the world map; perched on the northern coast of the island of Borneo, surrounded landward by Malaysia, known for marvellous beaches, and adventurous bio-diverse rainforest.
The Muslim country was announced independent from Britain only in 1984, after more than a century of conquest. Brunei has chosen, earlier in 1960, not to be part of the Malaysian territory. The small coastal country has one of the highest standards of living, with many generous state handouts given to Bruneians every year, leaving some in no need for work.
The God given huge glut of oil blessing to the 420,000 Bruneian population, discovered in 1920, made them the fourth most wealthy people in Asia. The country also enjoys a cushion of 400,000 Brunei dollars from ASEAN, the ten-member Association of South-East Asian Nations.
Bruneians are considered the government’s spoiled children; they do not pay income tax, enjoy free education and have access to cheap home loans and social housing. Regarding work, many men find comfortable jobs in the government, however, attendance of Friday prayers and royal ceremonies are compulsory.
This makes the capital, Bandar Seri Begawan, a comfortable, quiet place to live in, accompanied with content residents. But, everything may come to an end; the country’s reserves of hydrocarbons are dwindling, leading to a shrink of three years in a row, harmed by the tumbling oil prices worldwide, in spite of the government’s attempts to detach from the rest of the globe.
The IMF (International Monetary Fund) expected the third-largest oil producer in Southeast Asia (180,000 barrels per day) to face a budget deficit of 16 per cent of GDP last year.
A report by BP, an oil company, warned that without discovering new gas and oil fields, the country’s reserves will fade out in 24 years only, leading it into bankruptcy.
On a different note, Marie-Sybille de Vienne, a French academic, speculates that Brunei possesses assets of at least $170bn, equivalent to roughly ten times its GDP. Yet, she calculates that by 2030 cash from those investments will be able to contribute 27 to 45 per cent of GDP, in other words, perhaps considerably less than the 54 per cent contribution to GDP made by oil and gas in the ten years to 2010.
As a response, the country witnessed attempts of diversifying the economy away from oil and gas production. (Agriculture shapes 0.6 per cent, while services constitute 27.7 per cent of GDP)
Despite being closed, the government opened its doors wider for the first time to foreign investors from its largest contributing countries including: Japan, Malaysia, Singapore, and the US, especially after serving as chairman for the 2000 APEC (Asian Pacific Economic Cooperation) forum.
Thus, the government started to attract investments in its roads, bridges, and power projects, as well as, encourage manufacturing. It also, sees opportunities in Islamic finance. It wants to make Brunei a research, certification and export hub for halal food, drugs and cosmetics.
Companies in Brunei must be registered with the Registrar of Companies as a local incorporation or a branch of a foreign company. Public companies must have a minimum of seven shareholders, while private companies must have a minimum of two but not more than 50 shareholders. At least half of the directors in a company must be residents of Brunei as well.
Gradual progress:
With 5 per cent lower than the state’s forecast, Brunei marked only 1 per cent annual growth till 2014. Brunei’s dogmatic plans curb many foreign investors from contributing to its economy.
However, the country’s PPP (Power Parity Purchase) is still high, with the US dollar being exchanged at 1.52 Bruneian dollars only. Unemployment rate is relatively low at 3.7 per cent in 2010, in addition to an inflation of only 1.2 per cent in the same year.
No doubt, after 31 years of independence, Sultan Hassanal Bolkiah has built up a wealthy, highly devout country that is large in value, however, tiny in size.
