12 Feb 2018
A Practical Guide to Doing Business in Brunei
Brunei, the smallest populated country in ASEAN, has the second highest per capita income after Singapore in Southeast Asia. The bulk of Brunei’s wealth originates from its abundant natural resources, with crude oil and natural gas production accounting for 60% of GDP and more than 90% of export and fiscal receipts. This strong reliance on oil and gas production has recently created problems for Brunei, with lower prices of oil stifling the economy. Indeed, Brunei has experienced one of the lowest growths in the region with negative growth over the past four years as reported in the IMF’s World Economic Outlook, October 2017. The IMF projects Brunei to emerge from recession in 2017 with growth quickening in the lead up to 2022. Meanwhile, the Brunei government recognises the country’s overwhelming dependence on the oil and gas sectors and is adopting measures to diversify the economy into new sectors, as outlined in the Vision Brunei 2035. This long-term economic plan stresses the priority in developing education, institutional development, local business development and infrastructure. To foster long-run economic stability, the visionary blueprint indicates that the government will step up efforts to promote tourism, Islamic banking and manufacturing.
Brunei is considered an easy country to do business in among ASEAN countries. The World Economic Forum’s Global Competitiveness Report 2017-18 ranks it 45th out of 138 economies, with the country making into the top five most competitive ASEAN economies. While reporting the biggest ranking jump within ASEAN, Brunei made strong gains in infrastructure, institutions, health and primary education. In the World Bank’s Doing Business 2018 report, Brunei is ranked 56th out of 190 economies, with improved rankings highlighting the country’s recent efforts in improving its business regulations. Nonetheless, foreign companies will likely experience challenges in the following areas:
- Inefficient government bureaucracy
- Limited access to financing
- A small labour force with narrow skill sets that are geared primarily to the oil and gas sector. Regulations are relatively restrictive regarding the employment of foreign workers, while ethics in national labour force are noted to be poor
Despite these challenges, Brunei remains attractive as far as foreign investment is concerned, not least it is a country which levies no tax on personal income or capital gain and there is currently no sales tax, along with the improvement in ease of doing business in the country. With the Brunei government now looking to diversify the economy and promote tourism and manufacturing, Hong Kong companies capable of assisting Brunei in achieving this long-term goal may do well in investing in the country. This business guide provides practical information for Hong Kong companies on investing and doing business in Brunei.
- Regulatory Environment
- Establishing a Presence
- Intellectual Property Protection
- Staff Recruitment
- Tax Considerations
- Import/Export Procedures
- Further Information