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Brunei Darussalam is still very much dependent on revenues from crude oil and natural gas to finance its development programmes. Aside from this, Brunei Darussalam also receives income from rents, royalties, corporate tax and dividends. Due to the non-renewable nature of oil and gas, economic diversification has been in Brunei Darussalam’s national development agenda. In the current Seventh national Development Plan, 1996-2000, the government has allocated more than $7.2 billion for the implementation of various projects and programmes.
Brunei Darussalam is the third largest oil producer in Southeast Asia and it produced 163,000 barrels per day. It is also the fourth largest producer of liquefied natural gas in the world.
GDP at current prices (Million B$) : 8.051.0 (1997 estm.)
Average annual inflation rate: 2.7 percent
Unemployment rate: 4.9 percent
Although Brunei Darussalam is no giant when it comes to landmass, it has been blessed with rich natural resources and a strategic location within the region. The majority of the country is covered in tropical rainforests teeming with exotic flora and fauna. Anxious to promote the conservation of its lush surroundings, eco-tourism has gained importance in the country’s economic activities.
Human resources are central to the successful transformation of Brunei Darussalam into a diversified industrial economy. As in most developing nations, there is a shortage of skilled workforce in the country. Therefore, greater emphasis is placed upon education. The main areas of interest in human resources development are managerial and industrial skills, with particular emphasis on entrepreneurial skills as well as vocational and technical training.
Brunei Darussalam’s main exports consist of three major commodities – crude oil, petroleum products and liquefied natural gas – sold largely to Japan, the United States and ASEAN countries. The Government’s move to promote non-oil and gas activities has been largely successful with figures showing 64% of GDP in 1996 compared to only 24.3% in 1991.
Various efforts have been made by the government to encourage rice production during the last decade and the yield per acre has increased due to the introduction of better agricultural methods.
Approximately 290 tones of 1 percent of the nation’s rice needs are produced locally from 613 hectares of rice fields scattered around the country.
As a first step towards the attainment of self-sufficiency in rice, the government launched in 1978 an experimental large scale mechanized rice planting project at Kampong Wasan. Covering an area of 400 hectares, the project was a joint undertaking between the Agriculture Department and the Public Works Department.
The Public Works Department was responsible for providing the required infrastructure, clearing the land and giving other basic provisions. The Agriculture Department was responsible for actual planting, maintenance, harvesting and processing. The project is also aimed at planting padi twice a year, from April to September and from October to March.
Fruit farming is largely performed on a small scale. There is a vast range of locally produced tropical fruits, which supply some 11% of domestic requirements of more than 14,000 tones. In 1975, the Agriculture Department initiated a fruit-farming scheme to encourage fruit cultivation in the country. In an effort to increase the production of local fruits, the government through the agricultural stations in Batang Mitus, Tanah Jambu and Lumapas, planted seedlings of various fruit trees including rambutan, durian and oranges.
Locally grown vegetables constitute about 6,700 tones or just over 65 percent of the country’s needs. The amount increases gradually as more people are taking up vegetable farming.
The country produces about 1,000 head of cattle and bufaloes for the market annually at about six percent of its own beef consumption, The Government assists local stock farmers with calves, machinery, feed, seedlings, fertilizers and veterinary care. The country requires 3,000 to 5,000 tones of meat annually, with per capita consumption of betweeen 9 and 17 kg. To meet demand, it has to import an average of between 4,000 and 7,000 head of live cattle from its Wileroo Ranch in the Northern of Australia. Local fresh milk production contributes about 199 thousand litters annually.
Research has been carried out to ascertain the best possible way to increase the buffalo population. Towards this end, the agriculture Department has launched a research project covering 4000 hectares in the Batang Mitus area in the Tutong District. So far, over 200 hectares have already been initiated. The farm’s main aim will be to assess local and imported stock towards producing highbred buffaloes for commercial purposes.
About three quarters of Brunei Darussalam’s total land area are covered by forests. However, their contribution to the economy is minimal. Logging, limited to 100 thousand cubic meters annually, is confined to meeting local needs only.
With the proclamation of the 200 nautical miles Brunei Fisheries Limits in 1983 and the identification of potential areas for fisheries activities, the value of fisheries industry is estimated to be worth more than B$200 million. At the present exploitation and utilization, the fisheries sector of Brunei Darussalam, comprising capture, aqua-culture and seafood processing contributed about 0.5% of the total Gross Domestic Product (GDP), or about B$37.2 million, at current prices. It provides work to more than 1,500 involved in this sector.
With realistic potential for export, however lacking in relevant resources, including associated technology, the development of fisheries industry needs involvement of foreign investment. The government, through the Fisheries Department therefore has been actively promoting suitable foreign involvement, either in the form of joint partnership or other forms of strategic alliances, aimed at developing the fisheries sector towards a competitive, efficient and commercially lucrative venture.
Oil and Gas
Crude oil and liquefied natural gas are the main exports of Brunei Darussalam. From January to June 1998 it exported 134.77 trillion BTU or 88.94 percent to Japan and 16.75 trillion BTU or 11.06 percent to the Republic of Korea.
Under a Sale and Purchase Extension Agreement signed by BLNG and the Japanese Buyers in 1993, the LNG Plant at Lumut exports annually about 5.54 million metric tons of LNG to Japan. In June 1998, a further amendment made known as the Sale and Purchase Extension Agreement Amendment had been signed which increased the sales for an additional 14 cargoes per annum to Japan starting from 1999 till the year 2013.
In October 1997, a sale and purchase agreement had been signed to deliver 0.7 million metric tons of LNG to the Republic of Korea until the year 2013. In total, 200 ‘B’ class LNG cargoes equivalent will be delivered annually to the buyers in Japan and the Republic of Korea from the year 1999 to 2013.
In March 1998, the Government of His Majesty the Sultan and Yang Di-Pertuan of Negara Brunei Darussalam formed a Joint-venture company the Brunei Gas Carriers Sendirian Berhad (BGC) with Shell International Gas and Mitsubishi Corporation.
Currently, Brunei LNG Plant processes natural gas supplied from offshore gas fields owned by the Brunei Shell Petroleum Company Sendirian Berhad. From 1st April, 1999 LNG will receive additional natural gas from a non-Brunei Shell owned Maharajalela Jamalulalam Field.
Oil and Gas accounted for about 36% of the country’s Gross Domestic Product in 1996.
Brunei Darussalam is well served by several commercial banks with branches throughout the country. The first banking was opened more than fifty years ago when the Government set up the Post Office Savings Bank (POSB) in 1935.
Brunei Darussalam operates a Currency Board system and has no Central Bank. The Government under the Banking Acts and Finance Companies Act regulates the banking industry. The Ministry of Finance through the Financial Institutions Division closely regulates all banking activities to ensure a stable and fiscally sound business environment. The Brunei Currency Board is responsible for issuing and managing the currency.
The Brunei Dollar is at par with the Singapore Dollar and are both freely traded in the respective countries. There are currently no exchange controls in Brunei. Money changer facilities are also available.
The banks continue to support local businessmen in their endeavor and thus help in the development of Brunei Darussalam.
There are 9 banks (3 incorporated in Brunei) with branches throughout the country.
List of Banks:
Baiduri Bank Berhad
Development Bank of Brunei Berhad
Islamic Bank of Brunei Berhad (IBB) Berhad
Malayan Banking Berhad
Overseas Union Bank (OUB)
Standard Chartered Bank
Sime Bank Berhad
The unit currency is the Brunei dollar, divided into 100 cents.
Exchange Rate: US$1.00 = between B$1.43 and B$1.60
Brunei Darussalam’s small population accounts for its limited labor force. With the implementation of ambitious plans in recent years, the country has had to recruit both skilled and unskilled labor from abroad.
There are about 36,345 (early 1998) workforce in the government sector and more than 106 thousand wage earners in the private sector. This figure, however, does not include members of the Security Forces, daily-rated employees an domestic servants in private employment.
Economy of Brunei
August 4, 2012 By Leave a Comment