Brunei Darussalam WT/TPR/S/196 
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IV. TRADE POLICIES BY SECTOR 
(1) INTRODUCTION  
1. Through its  many development plans,  the Government has sought to diversify Brunei's 
economy and create sustainable employment in the non-oil private sector.1  The Plans have delineated 
proposals for government investment in infrastructur e, development of services, and incentives, all 
aimed at diversifying the economy and increasing priv ate sector participation.  In the 8th Plan 
covering 2001-052, the Government emphasized the need to move the economy away from oil and gas 
as the primary source of economic activity (and reve nue) through the expansion of agriculture and 
industry and the development of certain industries with  the potential to achieve growth.  In 2001, the 
Government identified four priority areas:  busin ess services;  financial services;  hospitality and 
tourism;  and transport and logistics.  
2. However, during the period under review, Brunei's economy has become even more heavily 
dependent on the oil and gas sector, which in 2006 accounted for well over two thirds of current GDP.  
Despite the Government's emphasis on diversifi cation, the non-oil and gas manufacturing sector 
remains weak and underdeveloped, and has shr unk from 3% to 1% of current GDP since 2002 
(Table I.1).  Therefore, it would appear that, overa ll, Brunei's diversification policy has met with little 
success. 
3. A strong government presence continues in seve ral key sectors of the economy, such as oil 
and gas, telecommunications, transport, and energy ge neration and distribution, often in the form of a 
state-owned monopolies, which can act unencumbered by any competition law.  The resulting lack of 
competition may have affected prices and the cost of doing business in Brunei,  although relevant data 
are not available.  The very small size of the domestic market  seems to discourage local and foreign 
participation in the economy and hampers the ab ility of non-oil and gas industries to achieve 
economies of scale and thus to compete against imports as well as in export markets.  The only other major source of export revenue has been the ga rment industry, which was established to take 
advantage of the international quota system under th e MFA, but following the expiry of the MFA at 
the beginning of January 2005, ex ports have declined strongly. 
4. Government figures show continual growth in  the labour force, which reached over 180,000 
in 2006, up from around 154,000 in 2001 (Table I.3).  Of those in employment in 2006, over 43,000 or approximately 25% were employed in the g overnment sector (not including members of the 
security forces), making the Government by far the largest employer. 
5. The private sector remains highly dependent on immigrant labour, primarily from the ASEAN 
countries, but also from India, Bangladesh, and Paki stan.  According to the Government, there were 
74,046 foreign workers (temporary residents) in the private sector in Brunei in 2005 (although this 
figure did not cover maids, drivers, and private ga rdeners, who are thought to number around 22,000).  
                                                     
 
1 A new Plan is scheduled to be released in 2007 or  2008.  There are a number of agencies involved in 
efforts to diversify the economy and to reduce the size of the public sector.  The Ministries of Development, of 
Industry and Primary Resources and of Finance, along with the Brunei Economic Development Board, are all 
involved in development planning; in addition, reports from international consultants are often used to 
investigate development scenarios.  
2 Under the 8th NDP announced in September 2001, total ex penditure of B$7.3 billion was approved for 
the Plan's implementation, of which the Government intended to provide only B$2.9 billion.  For the first time, 
foreign and local investors were to supply the remaining funding.  In November 2001, the Sultan announced  that an additional B$1 billion would be allocated specifically to economic development projects in 2002.  WT/TPR/S/196 Trade Policy Review 
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In 2004, foreign workers accounted for over 80% of the workforce in manufacturing and construction, 
and between 60% and 70% in pers onal services, retailing, hotels and restaurants, and agriculture. 
6. Brunei Malays ( bumiputera or "sons of the soil"), who constitute the majority of the 
population, generally aspire to work in the civil service, in state-owned Brunei Shell Petroleum  
(BSP), Royal Brunei Airlines, or in more prestigious  jobs in the private sector, such as in the banking 
sector, avoiding the construction industry, agriculture, and other sectors regarded as having low status.  
In 2004, the Government set up a careers centre with the aim of finding private sector jobs for 
Bruneians entering the market.   
(2) AGRICULTURE , FORESTRY , AND FISHING  
7. Agriculture and forestry were the basis of  Brunei's economy before the discovery of 
petroleum in the late 1920s.  Sixty years ago mo re than 50% of the population was employed in the 
primary sector;  that share has now fallen to under 3% (of which more than two thirds are foreign 
workers or temporary residents).  
(i) Agriculture  
8. Farming has become a part-time business for most  rural families, owing to the availability of 
more lucrative forms of employment.  Brunei's agriculture sector is very small, accounting for under 
1% of nominal GDP in 2006;  Brunei imports more than 80% of its food requirements.  
(a) National Development Plan  
9. Government policy is to reduce Brunei's depe ndence on food imports and to attain greater 
self-sufficiency in agriculture.  The enhancement of  long-term food security has been a key objective 
of the National Development Plans both for food security reasons and to diversify production and 
exports.3  Generally, the Plans have sought to:  boost do mestic production of rice, vegetables, poultry, 
and livestock;  develop the agri-food  industr y;  produce high-value-added products using new 
techniques;  and conserve and protect the country 's biological diversity.  Foreign investment in 
agriculture and food processing is encouraged , although it appears that a minimum of 30% 
participation by local producers is required.  The Eighth Plan (2001-05) allocated B$90.5 million (or 
1.2% of overall expenditure) for the development of agriculture.  There are a number of measures to 
assist local producers, including subsidized infrastru cture facilities such as roads, irrigation, and 
electricity, as well as inputs such as seeds, fer tilizer, vaccines for livestock, and farming equipment;  
financial and technical assistance is also provided for local producers.  
10. Brunei has not notified its Aggregate Measurement of Support (AMS) to the WTO since 
1995.  
11. The 8th Plan also called for increasing self-sufficiency in vegetables, poultry, livestock, and 
rice.  A goal was set to increase rice production to 1,300 tonnes (3% of local needs) by 2006, when 
                                                      
3 In particular, the 8th Plan identified halal for processing for export to regional and global markets as a 
prospective growth industry.  A joint Brunei-Australia food production and marketing initiative was announced 
in February 2005, to develop a niche, high quality, ha lal export industry.  Five MoUs were signed between 
Brunei and several Australian companies in 2006 and the Brunei Government launched the 'Brunei Halal Brand' in 2007.  It has published standards on Halal Food (PBD 24:2007) and several guidelines:  Guideline for Halal 
Certification, Guideline for Halal Compliance Audit, Guideline for Certification of Halal Compliance Auditor, 
and Guideline for Halal Surveillance Audit (Australian Go vernment Department of Foreign Affairs and Trade, 
2007).  Brunei Darussalam WT/TPR/S/196 
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production reached 895 tonnes (Table IV.1).  The Government encouraged the planting of rice 
through various schemes such as price support and the provision of improved infrastructure, irrigation, and drainage facilities.
4  With smallholding rice production declining, the Government has 
initiated a pilot large-scale rice mechanization project aimed at increasing output.  It is hoped that 
once fully mechanized, 30% of Brunei's rice needs will be met by domestic production. Despite such 
efforts, however, there has not been much investment in agriculture in recent y ears.  According to the 
authorities, the lack of interest appears to be due  mainly to better employment opportunities in other 
sectors, notably the public sector, as well as unstable prices, limited marketing outlets, and lack of access to start-up funds.  
Table IV.1 
Agriculture and fisheries production, 2001-07 
(Tonnes unless otherwise stated) 
 2001 2002 2003 2004 2005 2006 2007a 
Rice 350 372 547 620 851 895 .. 
Vegetables 8,920 9,590 10,360 11,158 10,710 9,518 6,356 
Fruit 4,140 4,200 4,660 4,516 4,793 3,765 2,834 
Buffaloes 194 204 171 375 141 39.6 93 
Cattle 14.0 2.0 1.0 35.8 5.1 9.4 2.6 
Broiler chickens 15,099 13,685 15,435 17,594 15,419 17,886 14,276 
Chicken eggs (million) 91.7 105.9 108.5 106.4 103.7 118.4 .. 
Capture fisheries 10,343.0 13,833.7 14,541.6 15,681.8 16,096.7 16,924.0 7,706.8 
Aquacultureb 393.4 407.5 617.4 698.1 540.6 540.3 319 
Fish processing industry 273.0 439.4 514.9 478.9 657.5 866.9 375.3 
.. Not available. 
a January-August. 
b Mainly farm prawns. 
Source: Department of Economic Pl anning and Development, Darussalam Statistical Yearbook 2005 , pp. 129-132;  
Economist Intelligence Unit (2007), Brunei Country Profile ;  and Brunei authorities.  
12. The plan for the development of the poultry i ndustry aimed to encourage the development of 
small and medium-scale enterprises linked to processing and marketing centres, such as the Mulaut 
Abattoir, which act as market outlets for pou ltry producers.  The programme emphasized the 
participation of private enterprise in the developm ent of the industry;  government involvement was 
limited to the provision of basic infrastructure and production-support services.  As a result, according to the authorities, Brunei is almost self-suffici ent in the production of eggs and poultry.   
13. The plan for vegetable production was orient ed towards the development of high-value 
products and higher technology farming, such as pr otected cultivation.  Under the Eighth Plan, the 
production target for vegetables was 12,700 tonnes (94% of local requirements) and in 2004 vegetable 
production was estimated at over 11,000 tonnes (Table IV.1).  Under the Depart ment of Agriculture's 
long-term strategic plan, the production target fo r vegetables is 58,000 tonnes by 2023.  The 8
th Plan 
also envisaged the development of small fruit plan tations (mainly bananas a nd coconuts), which could 
support the development of large-scale plantations in the future.  The aim was to increase production 
to 8,000 tonnes and the level of self-sufficiency to  47% by 2005, in which year production exceeded 
                                                      
4 To raise rice production, the Government provides an end-product subsidy scheme for rice producers, 
which was started in 1986.  Its main objectives are to:  revive paddy growing activities;  encourage farmers to 
return to farming activities;  and help rural, low-income families.  The end-product subsidy scheme, in which 
the Government buys back the paddy produced by local farmers at B$1.60 per kg continues to be  provided.  Funding for the scheme increased from B$289,000 in 2000 to B$1.1 billion in 2006.    WT/TPR/S/196 Trade Policy Review 
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5,200 tonnes.  Brunei envisages production on fruit fa rms to increase to 24,000 tonnes by 2023 and 
the level of self-sufficiency to 50% by 2012.  Lo cal production of livestock is low and live cattle are 
imported for slaughter from a cattle ranch in Austra lia owned by the Government of Brunei.  For 
religious reasons, the rearing of pigs has been banned since 1993.  
(b) Import measures 
14. The current MFN tariff is virtually zero for ag riculture and fishing (Table AIII.1).  Tea and 
coffee are subject to specific import duties for which ad valorem  equivalents are not available and are 
hence not included in this overall tariff average.   However, the bound tariff in agriculture is 
considerably higher than the applied rate, giving th e Government scope to raise the applied rates of 
agricultural products within their bindings.  The authorities argue that the difference between the 
bound and applied rates enables the Government to address domestic food security concerns more 
effectively by ensuring a meaningful domestic s upply and reliable imports from MFN sources.  They 
also believe that the bound tariff enables domestic institutions and enforcement agencies to adapt and 
adjust their capacity requirements to suit the varying needs for sanitary and phytosanitary 
requirements when the need arises. 
15. Although there are few tariff restrictions, some agri cultural products, i.e. rice, sugar, and salt, 
are subject to import restrictions.  Most of Brunei' s rice is imported directly by the Department of 
Information Technology and State Stores under a gove rnment-to-government contract, from Thailand.  
The Government, through the Information Technolo gy and State Stores department, which is under 
the Ministry of Finance maintains a minimum level of rice and sugar stocks on food security grounds.  
16. Imports of beef and poultry are subject to a "food balancing" requirement, whereby the 
volume of required imports is determined on the basis of local demand for the products and local 
production.  Imported eggs must be stamped accordi ngly, in order to distinguish them from locally 
produced eggs.  Export restrictions are maintained on rice and sugar.  In addition to import and export 
restrictions, all agricultural products are subject to  sanitary and phytosanitary measures, and random 
checks may be carried out at the border or in Brune i.  Imports of all meat and poultry products are 
subject to Halal requirements and may only be  sourced from government-approved abattoirs. 
(ii) Forestry  
17. Forestry is not economically significant in Brunei, but is important for the conservation of 
soils, water, wildlife, and the environment.  Prim ary (60%) and secondary (16%) rain forest covers 
around 76% of Brunei's total land area.  The Forestry Act of Brunei (revised in 1984) provides the 
legal framework for the protection and conservation of forestry resources, and the National Forest 
Policy (NFP), issued in 1989, guid es and governs forestry activities in accordance with international 
sustainable forest management obligations and st andards.  Logging and other forestry activities are 
limited in large part due to Brunei's emphasis on  sustainable use of natural resources and the 
preservation of biological diversity.   
18. Timber is logged mainly for local consumption;   Brunei maintains restrictions on imports and 
exports of timber to ensure local supply and for e nvironmental reasons.  The Department of Forestry 
in the Ministry of Industry and Primary Resources,  the principle regulator in the sector, oversees the 
Reduced Cut Policy (introduced in 1990), which limits the production of round timber to 100,000 m3 
per year, which accounts for over 50% of domestic dema nd;  the rest has to be imported.  However, 
illegal logging appears to be increasing, especially near the Malaysian border.  Brunei also uses its 
forests to develop eco-tourism.  Brunei Darussalam WT/TPR/S/196 
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(iii) Fishing 
19. The Brunei Fisheries Act (1982) delimits a mariti me area of about 38,600 sq km extending to 
about 200 nautical miles (370 km) from the coast.  Fish is an important part of the local diet.  Brunei's 
catch in 2006 was nearly 17,000 tonnes of fresh fi sh, more than two thirds of which was caught by 
small-scale fishermen.  Brunei has set a goal for the industry of 20,000 tonnes per year on a 
sustainable basis and has targeted the aquacultu re industry, which produced 540 tonnes in 2006 
(Table IV.1), for development.5  In 2005, the fisheries sector was worth an estimated B$100 million 
and the Government believes that the industr y has the potential for B$400 million in annual 
production by 2023.  Nevertheless,  although the sultanate has more than 100 kilometres of coastline, 
and 85% of its population live on the seaboard, Brune i still has to import around 40% of its fish and 
related products.   
20. To increase fish production, the Government encouraged the establishment of a small, 
modern, offshore fishing industry to meet projected  demand and, under the Eighth Plan, B$90 million 
was allocated for the continued development the fi sheries sector.  The Government has emphasized 
the sustainable exploitation of fisheries resources;   the current permitted exploitation level is self-
imposed at the estimated maximum economic yield,  and is managed through the number of fishing 
licences issued for each fishing method.6  Other than providing facilities for aquaculture and overall 
basic infrastructure, the Government also seeks joint ventures with foreign enterprises to obtain 
finance and expertise in expanding both th e annual catch and processing activities.    
21. Brunei's relatively clean environment and free dom from extreme climate-related phenomena 
is conducive to the development of aquaculture.  Once identified,  potential areas are upgraded with 
basic infrastructure such as access to roads, water and power supplies, and telephone lines.   
(3) OIL AND GAS SECTOR  
22. The export of oil and gas has dominated Brune i's economy since the 1930s and the oil and gas 
sector accounts for over two thirds of nominal GD P and generates more than 90% of total export 
earnings and government revenues.  Wealth from o il and gas provides Brunei's small population with 
a relatively high standard of living compared with its ASEAN neighbours. 
(i) Production and trade 
23. Brunei is the fourth-largest oil producer in South East Asia and is the ninth-largest exporter of 
liquefied natural gas in the world.  Brunei's economy  has followed the swings of the world oil market;  
economic growth has averaged around 2.6% in the 2000s, heavily dependent on oil and gas 
production.  Oil production averaged slightly ove r 200,000 barrels a day during the period under 
review.  The output target is flexible, however,  and production in 2006 was 219,000 barrels per day, 
up from average annual production of 201,000 b/d in 2005 and 206,000 b/d in 2004 (Table IV.2);  this 
allowed Brunei to take advantage of the high oil prices in 2006, which rose to US$69.4/b up from 
US$57.7/b in 2005 and US$41.7/b a year earlier.   
                                                      
5 Full figures are not yet available for 2006, but data fo r the first half of the year point to a rebound in 
the fisheries sector.  Prawn farming is a developing sub-sector with 395 tonnes produced in 2005 and 384 tonnes 
in the first half of 2006 alone. 
6 Fishing licences are allocated annu ally to locally registered companies, including joint ventures;  
allocation is based on resource availability and estimated fishing capacity.  All licence holders must land their 
catch in Brunei.  The total annu al harvest must not exceed the maximum economic yield (MEY) of 
20,000 tonnes per year;  figures for the cu rrent exploitation level are not available. WT/TPR/S/196 Trade Policy Review 
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Table IV.2 
Petroleum and natural gas production, ex port and domestic consumption, 2001-07  
 2001 2002 2003 2004 2005 2006  2007a 
P r o d u c t i o n         
Petroleum ('000 barrels/ day) 195 203 207 206 201 219 197 
Natural gas (MMscf / day) 1,133 1,143 1,236 1,214 1,191 1,259 1,195 
Export        
Petroleum ('000 b/day) 189 199 199 196 193 206 .. 
LNG (MMBtu/day) 948,803 965,799 1.01 mn 1.00 mn 977,397 1.03 mn .. 
Price        
Oil (US$/barrel) 24.67 24.82 30.52 41.72 57.72 69.44 .. 
LNG (US$/MMBtu) 4.4137 4.1745 4.5451 4.9110 5.6723 5.9131 .. 
Domestic consumption         
Mogas, diesel, Jet A-1, other 
('000 barrels) 3,281 3,493 3,617 3,691 3,818 3,996 .. 
Gas (MMscf/day) 145 145 146 162 167 167 .. 
.. Not available. 
a Estimates. 
Source: Department of Economic Pl anning and Development, Brunei Darussalam Key Indicators 2001-2006 ;  and data 
provided by the authorities.  
24. In 2006, Brunei consumed an estimated 13,000 barrels/day of oil;  most crude oil production 
is exported to other countries in the region.  O il exports of 206,000 b/d were recorded in 2006, up 
from 193,000 b/d in 2005.  Despite Brunei's status as a net exporter of oil, it im ports about half of the 
refined petroleum products it consumes, as has limited domestic refining capacity.  
25. In 2006, Brunei produced over 1,200 million sta ndard cubic feet (MMscf) of natural gas per 
day (Table IV.2), which translated into a liquefi ed natural gas output that has fluctuated at around 
1,000 trillion btu (British thermal un its) per day during review period. 
26. Brunei's wealth is based on its hydrocarbon reser ves, which were at 1.1 billion barrels of 
mainly low-sulphur oil in January 2007.7  According to two reports, Brunei's oil reserves are expected 
to last 25 years or only another 10 years, at current rates of extraction.8  Brunei's gas reserves have 
been estimated at 390 billion cu metres, and are expe cted to last another 40 years.  The Government 
aims to conserve resources and c ontinue exploration to open new fiel ds;  in early 2006, a consortium 
led by Canada's Loon Energy was awarded a 2,253 sq km oil exploration block.  A 3,011 sq km block 
covering most of Brunei's Belait district was also awarded to a consortium led by the UK-registered 
Valiant International Petroleum.   
27. However, the development of offshore areas is hampered by a territorial dispute with 
Malaysia.  In 2003, Malaysia dis puted Brunei-awarded oil explorati on concessions for offshore blocks 
J and K (Total and Shell, respectively), which le d to a moratorium on exploration activities in the 
areas.9  Negotiations in order to resolve the conflict are continuing. 
                                                      
7 U.S. Energy Information Administration (2006).  
8 EIU (2007), p. 9;  and Rabobank, Economic Research Department (2007). 
9 In April 2003, several naval patrol boats from Mala ysia are alleged to have chased away a Total ship 
in the disputed area in the South China Sea.  Malaysia ha s extended its territorial clai ms into seas that Brunei 
says are in its Exclusive Economic Zone.   Brunei Darussalam WT/TPR/S/196 
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28. According to export figures for the first half of 2006, Indonesia, Australia, and Korea took 
about 67% of Brunei's total crude exports;  traditional customers Japan, the United States, and China 
each took between 5% and 8% (Table IV.3).  Brun ei is one of the world's largest producers of 
liquefied natural gas (LNG), the bulk of which ( over 5 million tonnes) is purchased by three Japanese 
utility companies under a long-term contract signed in  1972 and extended for 20 years in 1993.  The 
Japanese company Mitsubishi is a joint venture pa rtner with Shell and the Brunei Government in 
Brunei LNG Sdn Bhd, Brunei gas Carriers Sdn Bhd, and Brunei Shell Tankers Sdn Bhd, which produce the LNG.  The second largest market is South Korea
10, which accounts for around 10% of 
total LNG exports. 
Table IV.3 
Oil and gas exports by destination (% share), 2002-06 
(B$ million and per cent) 
 2002 2003 2004 2005 2006a 
Crude petroleum      
Total (B$ million) 3, 140 3,759 4,913 6,536 4,197 
Australia 18 17 20 15 17 
China 13 14 7 6 5 
Indonesia 2 5 11 30 33 
Japan 12 12 13 13 8 
Korea 14 16 15 16 17 
Thailand 25 19 12 4 3 
United States 11 8 6 8 7 
Others 5 9 16 8 10 
Natural gas      
Total (B$ million) 2, 604 2,964 2,564 2,983 1,462 
Japan 87 91 88 92 86 
Korea 11 9 12 8 14 
Others 2 - - - - 
a January-June. 
Source:  Brunei Darussalam Key Indicators 2002-2006, Department of Statistics, Report of  Economic Planning and 
Development;  and Brunei authorities. 
(ii) Oil and gas industry  
29. Brunei's oil industry is largely dominated by Brunei Shell Petroleum (BSP), a joint venture 
owned in equal shares by the Brunei Government a nd the Asiatic Petroleum Company Ltd.  BSP had 
a monopoly on all upstream and downstream activiti es until 1999, when the Government awarded 
some exploration blocks to other companies, notably Total E&P Borneo BV11, which started 
production from offshore Block B.   
30. BSP is the leading oil and gas production comp any in Brunei and operates the only refinery, 
which meets domestic demand for most petroleum products.  BSP, BLNG, Brunei Shell marketing 
Company Sdn Bhd (BSM) and BST together constitu te the largest employer in Brunei after the 
Government (Table IV.4) with some 4, 000 personnel, of which 90% are Bruneians.12 
                                                      
10 Brunei started to export LNG to the Korea Gas Co rporation (KOGAS) in 1994 (0.27 million tonnes);  
it signed a two-year contract with the KOGAS in 1994 for 0.7 million tonnes per year to be delivered in 1995 
and 1996.  A long-term contract was signed in 1997 to supply similar amounts for 16 years. 
11 Previously Total Fina Elf.  
12 Prime Minister's Office (2007). WT/TPR/S/196 Trade Policy Review 
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Table IV.4 
Overview of Brunei Shell Petroleum, 2006 
Company Ownership Operations Daily/annual output  Staff 
Brunei Shell Petroleum 
(BSP) Jointly owned by Brunei 
Goverment 50% and 
Asiatic Petroleum (part 
of Royal Dutch  Shell 
group) 50% 11 offshore and 4 onshore oilfields 
(South West Ampa, Fairley Baram, 
Fairley, Gannet, Egret, Champion, 
Champion West, Bugan, Iron Duke, 
Magpie, Peragam. Asam Paya, Rasau, Enggang, Seria) 
645 producing reservoirs, 
837 producing wells, 1,188 pipelines 
Brunei's only petrol refinery  Oil – 213.8 Kbbl/d 
Gas – 31.5 Mil m3/d 3,116 
Brunei Liquefied Natural 
Gas (BLNG) Jointly owned by Brunei 
Government 50%, Shell 
Overseas trading 25%, Mitsubishi 25% World's 3
rd commercial LNG plant 
Plant has 5 LNG trains with a capacity 
of 44 cu m/hour .. 514 
Brunei Shell Tankers 
(BST) Jointly owned by Brunei 
Government 50% and 
Shell 25% and 
Mitsubishi 25% Owns 7 B-class LNG tankers 
chartered to BLNG to transport 
liquefied natural gas .. 300 
Brunei Shell Marketing 
(BSM) Jointly owned by Brunei 
Government 50% and 
Shell Overseas Holdings 
50% Supply and marketing of petroleum 
productsa in Brunei supplied by BSP 
refinery 
36 land-based retail stations and 
3 riversine station storage facilities at 
Muara Port and Brunei International 
Airport .. 67 
Total E&P Borneo BV  Jointly owned by Brunei 
Government, Total and 
Shell Deepwater Block B Joint Venture's (BBJV) 
Maharaja Lela field  Oil – 5.5 Kbbl/d 
Gas – 3.94 Mil m3/d .. 
Brunei Gas Carrier (BGC) Jointly owned by Brunei 
Government 80%, Shell 
10% and Mitsubishi 10% Owns one A-class LNG tanker 
(owned by Brunei Gas Carriersb or 
BGC) named ABADI, chartered to 
BLNG to transport liquefied natural 
gas .. 15 
.. Not available. 
a End-user prices of petroleum products (gasoline, diesel, ke rosene and bottled LPG) have b een regulated since 1978 under Price  
Stabilization Agreement signed by the Gove rnment and BSM, under which the Government subsidizes end-user prices if the 
price of crude rises above a certain level. 
b Established in 1998 and jointly owned by the G overnment of Brunei, Shell Gas and Mitsubishi. 
Source:  BSP Annual Review 2005;  and Brunei authorities. 
31. Natural gas is also used domestically for pe troleum operators' own-use, power generation,  
liquefied petroleum gas (LPG) used domestically, and as a reserve for industrial purposes.  Approximately 90% of Brunei's natural gas is e xported as LNG by BLNG.  Petroleum products for 
local consumption are marketed solely by BSM, jointly owned by the Government of Brunei and 
Shell Overseas Holdings Ltd.  Retail/end-user pri ces of gasoline, diesel, kerosene, and bottled LPG 
have been regulated since 1978, under a Pric e Stabilization Agreement (PSA) between the 
Government and BSM, under which the Government s ubsidizes prices if the price of crude oil rises 
above a certain level.  According to the author ities, the subsidization costs over B$200 million per 
year.   
(a) Petroleum refining and other downstream activities 
32. The Government encourages diversification, including downstream activities related to the 
petroleum and natural gas sector.  At present, around 93% of Brunei's petroleum and 90% of its 
natural gas output is exported as crude oil and LNG,  respectively.  The remaining crude oil output is Brunei Darussalam WT/TPR/S/196 
 Page 75 
 
 
refined for domestic use.  Brunei's only refinery, lo cated in Seria, has a capacity of 10,000 bpd for its 
crude distillation unit and 6,000 bp d for its reformer unit.  The main products include unleaded 
gasoline, gasoil, Jet A1 fuel, and kerosene.   
33. The Government is keen to encourage invest ment in downstream activities and has set aside 
a trillion cubic feet of gas for industrial use.  In 2006, an MoU was signed for the Gas Sales and 
Supply Agreement between BSP Co. Sdn Bhd and a consortium comprising Itochu, Mitsubishi Gas Corporation and Petroleum Brunei;  a marketing ag reement was also signed for the methanol plant 
located at the Sungai Liang Industrial Complex.   
34. Under the Income Tax (Petroleum) Act, Cap. 119 (Laws of Brunei revised edition, 1984), 
Brunei levies a corporate tax on petroleum and g as operations at a rate of 55%.  Royalties and 
petroleum income tax are payable on both con cessions and production sh aring agreements.   
(iii) Policy 
35. In 2002, the Government established the Brune i's first national oil company, the Brunei 
National Petroleum Company Sdn Bhd, also known as Petroleum Brunei.  Petroleum Brunei is responsible for managing assets in designated areas (Blo cks J, K, L and M).  It has chosen to award 
private companies the exploration rights for the blocks it controls.  Despite efforts to introduce 
competition, BSP is likely to remain the dominant oil producer by virtue of its control of Brunei's 
major oil and natural gas fields.  In 2003, BSP signed an extension of the petroleum mining agreements with the Government for a further 19 years until the end of 2022.
13 
36. The Petroleum Unit, established in 1982 under the Prime Minister's Department, is the 
principal regulator of the petroleum and gas sector  in Brunei.  The Petroleum Unit reports to the 
Minister of Energy, whose portfolio was created in May 2005.  The Unit's responsibilities include:  
overseeing the exploitation of Brunei's petroleum and gas reserves, and promoting the development of 
downstream industries;  fixing crude oil prices;  and ensuring compliance with internationally 
acceptable technical, accounting, health and saf ety, and environmental standards.   
37. Under the Petroleum Mining Act (Chapter 44 of the Laws of Brunei, revised edition 2002), 
investors, including foreign investors, may apply fo r petroleum mining agreements in respect of state 
land, whether onshore or offshore;  the applications ar e considered by the Sultan of Brunei in Council.   
(4) NON-OIL AND GAS INDUSTRY  
38. Apart from the energy and construction sectors, Brunei's industrial base remains limited.  
Foreign capital and technology have been deterred by the small domes tic market;  a poorly developed 
local private sector;  high wage costs;  a shortage  of skilled labour;  slow bureaucratic procedures and 
lack of transparency;  an unwillingness on the part  of the Government to underwrite risk-taking 
ventures;  and the ban on foreigners owning land.  
(i) Manufacturing 
39. Non-oil and gas manufacturing accounted for a mere 1.1% of nominal GDP in 2006, down 
from 3.2% in 2002.  However, the sector accounted for 13% of employment in 2005 (latest figure), 
indicating that labour productivity in  manufacturing is less than one tenth of that in the rest of the 
economy;  statistics on productivity trends in th e manufacturing (or any other), sector were not 
                                                      
13 The agreements – the Onshore Petroleum Mining Agreement and the consolidated First and Second 
Offshore Petroleum Agreement – replace the 40 -year contracts that ended in 2003.   WT/TPR/S/196 Trade Policy Review 
Page 76 
 
 
available from the Brunei authorities.  The main la rge-scale industries are cement production, garment 
making, and production of pre-cast c oncrete structures.  Other industries include building material 
products;  electronic and electrical products, such as  cables, switchboard, and assembly appliances;  
mineral water;  canned food;  dair y products;  silica sands products;  and publishing and printing.  In 
November 2006, a local firm (Berjaya Majmur) began construction work on an animal feed 
manufacturing plant in Muara, which is expected to commence production in 2007.  The plant will have sufficient capacity to supply Brunei's animal feed needs;  in 2004, 34,000 tonnes of animal feed 
were imported.  
40. Ready-made garments constitute the third biggest  export after crude oil and liquefied natural 
gas.  The garment industry was established to take advantage of the international quota system agreed 
under the terms of the Multi-Fibre Agreement (MFA).  The industry benefited from a quota 
arrangement with the United States but this expi red at the end of 2004 leading to a 25% fall in 
earnings from garment exports in 2005.  Figures supp lied by the authorities for the first half of 2006 
show garment export earnings of just B$100. 3 million, down from B$303.4 million in 2005 as a 
whole.  In view of the increasing competition from Ch ina and India, the future of the garment industry 
in Brunei has become more uncertain.  The indus try has been encouraged to upgrade through the 
adoption of modern machinery and more efficient production methods.    
41. Fish processing has been the fastest growing sect or in recent years.  Production has risen from 
479 tonnes in 2004 to 867 tonnes in 2006 (Table IV.1 ).  As part of the industrial development 
programme, a number of industrial estates have been  established, including a 40 ha site near Bandar 
Seri Begawan and the Beribi Light I ndustrial Complex, which comprises, inter alia,  textiles, food, and 
electrical manufacturers.  
(a) Industrial development policy 
42. Manufacturing has continued to be encouraged in order to reduce Brunei's dependence on its 
petroleum resources, and a number of incentives are u sed to encourage investme nt in priority sectors 
identified by the Government.  The incentives includ e financial assistance to local companies and tax 
breaks for all investors (Chapter III);  in additio n, the Government provides free or subsidized 
infrastructure and inputs.  In priority sectors in which private investment is not forthcoming, the Government invests directly, mainly through its holding company Semaun Holdings,
14 which is 
especially active in trading and commercial ventures in the food, manufacturing, and service sectors. 
43. The Government's industrial development po licy is managed by the Brunei Industrial 
Development Authority (BINA)15, a department of the Ministry of Industry and Primary Resources.  
BINA's main role is to facilitate industrial devel opment, manage Brunei's industrial sites and advise 
investors wishing to make use of these sites.  Ther e appear to be nine industrial sites covering around 
300 hectares, which provide basic infrastructure su ch as roads, drainage and sewerage facilities, 
electricity, telecommunications, and water.  The Gove rnment also takes a direct stake in industrial 
sectors in the economy through its holding company Semaun Holdings Sendirian Berhad.  Investment 
                                                      
14 Semaun Holdings, whose board of directors consists mainly of government officials, is fully funded 
by the Government of Brunei.  It has launched joint ventures with overseas companies from Singapore, Malaysia, and Chinese Taipei, in areas such as aquaculture, food processing and fine glass crystal 
manufacturing.  Local companies are also involved in the joint ventures".  Viewed at:  
http://www.semaunholdings.com/index.php?optio n=com_content&task=view&id=14&Itemid=28. 
15 BINA was initially established as the Industrial Unit in the Ministry of Development in 1986 and 
was transferred to the Ministry of Industry and Primary Resources in 1989.  In April 1996, the Industrial Unit 
was merged with the Cooperatives Development Department  in the Ministry of Home Affairs to become the 
BINA. Brunei Darussalam WT/TPR/S/196 
 Page 77 
 
 
by Semaun Holdings may take the form of joint vent ures with local or foreign companies, or direct 
investment in the desired sectors. 
(b) BEDB 
44. The Brunei Economic Development Board (BED B) was formed in November 2001 to 
stimulate the growth, expansion,  and development of the econom y by promoting Brunei as an 
investment destination.  In January 2003, the BEDB launched a two-pronged strategy through which 
it aimed to attract US$4.5 billion in foreign direct  investment and create 7,700 new jobs by 2008.  
45. The first prong involves the development of th e Sungai Liang area outside of Bandar Seri 
Begawan into an advanced industr ial site for petrochemical and manufacturing industries that can 
capitalize on Brunei's proven gas reserves.  In Se ptember 2004, the BEDB announced it had entered 
into final negotiations to establish a US$720 million ammonia/urea plant and US$350 million 
methanol plant.16  The Government has approved the metha nol plant and is in the final stages of 
considering the proposed ammonia urea plant.  If the project proceeds, the plant would be the largest 
urea manufacturing operation in Asia, with a cap acity to manufacture 1.2 million tonnes of urea 
per year.  The second prong involves the constructi on of a deep water port facility at Pulau Muara 
Besar (section (iv)(b)).  
46. The BEDB recognizes that Brunei must develop its SMEs in order to achieve sustained 
growth.  In the long term, the Government's emphasi s is to support and devel op the private sector, and 
it has continued to implement a spending package to stimulate the economy in the short term.  A 
number of industrial parks are being developed to  cater for services and manufacturing activities;  
specific industries targeted for these sites include steel, dairy products, glass, pre-cast concrete, and 
light-weight aggregate production. 
(ii) Construction 
47. The construction sector's share of current GDP contracted from 3.7% in 2002 to 2.9% in 
2006.  The industry was badly damaged by the 1998 co llapse of the Amadeo conglomerate, which had 
spent lavishly on construction projects.  The Gove rnment has announced a number of projects aimed 
at bolstering the industry, including the construction of the 271 ha industrial park at Sungai Liang, 
beginning in 200717;  but a real estate glut in the capital h as to some extent offset these efforts.  
(iii) Electricity  
48. The electric supply industry in Brunei Darussalam is governed by the Electricity Act 1973 
and Electricity Act (Amendment) Order, 2002.  The Department of Electrical Services (DES), under 
the Prime Minister's Office, is responsible for the generation, transmission, and distribution of 
electricity.  Other than DES, electricity is also generated by an independent  power utility, the Berakas 
Power Company (BPC).  The two power utilities oper ate independently with their own transmission 
and distribution networks, which are not interconnected.18  About 99% of electricity uses natural gas 
as the main fuel while the remaining 1% is generated by diesel fuel.  Electrical energy demand 
                                                      
16 The ammonia/urea consortium consists of Incitec Pivot Ltd (an ASX-listed company), Mitsubishi 
corporation and Westside Ltd (a privately held Australian majority owned company).  
17 It has been reported that a Malaysian engineer ing and construction firm (Ranhill) was preparing a 
joint bid with a Japanese company (Mitsui) and Brunei's  QAF Oilfield Services fo r a number of contracts 
related to the industrial park.  
18 In 2006, the installed capacities of DES and BPC are about 424 MW and 266 MW whilst the 
electrical energy generated by DES and BPC are at  about 1,669 GWh and 1,280 GWh, respectively. WT/TPR/S/196 Trade Policy Review 
Page 78 
 
 
increased by about 1.2% in 2006.  Big power consum ers such as BSP and BLNG also have their own 
power generating facilities:  BSP has an installe d capacity of about 30 MW powered by gas and 
BLNG has steam turbine gene rators with an installed capacity of about 40 MW. 
(5) SERVICES  
(i) Overview 
49. The share of private sector services (excluding construction and utilities) in current GDP fell 
from 22% in 2002 to just 15% in 2006.  The l eading services sectors are finance and business 
services, the wholesale and retail trade and transport and communications (Table I.1).  Recognizing the importance of services for economic growth, the Government aims to transform Brunei into a 
service hub for trade and tourism (SHuTT).  The SHuTT programme would promote trade, travel, 
business, and communications in and through Brun ei.  The programme was intended to further 
develop Brunei's infrastructure, including upgrad ing facilities at Brunei International Airport;  
expanding Muara Port, Brunei's main port, and incr easing capacity in the telecommunications services 
network to increase penetration rates, as well as expa nding coverage by the do mestic and international 
postal services.  
50. In May 2005, Brunei made a c onditional initial offer under the GATS in the framework of the 
on-going services negotiations in the DDA.
19  The offer covers 5 out of the 12 services in the WTO 
Secretariat classification20:  business services (professional and computer and related services), 
communication services (telecoms), financial services (insurance), tourism and travel-related services, and transport services (air transport).  Overall, the offer is similar to its commitments undertaken in 
the Uruguay Round.  For example, commercial presence is unbound except for existing companies 
where half the board members of a public company a nd half the directors of a private company must 
be nationals or residents of Brunei;  and all compan ies incorporated outside Brunei must have one or 
more local agents.  The movement of natural pers ons (mode 4) is unbound with respect to both market 
access and national treatment, with the exception of temporary intra-corporate transfers at the level of management, executives and specialists.   
51. In its Article II (MFN) exemptions, future lib eralization with regard to foreign equity 
participation is subject to discretionary changes and dependent on Brunei's de velopment requirements.  
Brunei also has a preference for recruiting labour from traditional sources of supply to ensure social cohesion in the country.  Sector-specific MFN exemp tions are also proposed to be maintained for 
legal services, radio and television services, fina ncial services, reinsurance and retrocession, and 
banking and other financial services.  The authorities have indicated that they intend to revise their 
offer at an appropriate time in the DDA negotiations.  
                                                     
 
19 In document TN/S/O/BRN of 13 May 2005.  
20 These are:  business services;  communication services;  construction and related services;  
distribution services;  educatio n services;  environmental services;  financ ial services;  health -related and social 
services;  tourism and travel related services;  recreati onal, cultural and sporting services;  transport services;  
and other services not included elsewhere.  As a result of the Uruguay Round negotiations, Brunei made specific commitments in the following sectors:  business services (professional, computer, and rental or leasing services 
without operators);  communication se rvices (telecommunication), financia l services (insurance, and banking 
and other financial services);  and transport services (air transport).  Further commitments were made in 
telecommunications services under the Fourth Protocol.  Brunei Darussalam WT/TPR/S/196 
 Page 79 
 
 
(ii) Financial services 
(a) Overview 
52. At end 2006, there were eight banks in Brunei (six branches of foreign banks, one local 
conventional bank and  one local Islamic ba nk), and 33 non-banking fi nancial institutions, 
comprising:  one Islamic trust fund;  three inte rnational insurance companies;  three finance 
companies (two local and one foreign);  the Employees Trust Fund (ETF)21, and 25 money changers 
and 19 remittance companies.  In February 2006, the Finance Ministry approved the merger of the 
Islamic Bank of Brunei (IBB) and the state-owned Islamic Development Bank of Brunei (IDBB) to 
create the Sultanate's largest bank, the Islamic Ba nk of Brunei Darussalam (IBBD).  The Government 
is promoting Islamic banking as a niche area.  In addition, th e Islamic Trust Fund (Perbadanan 
Tabung Amanah Islam Brunei) provides savings a nd investment facilities under Islamic principles.22  
The three finance companies in Brunei provide ma inly hire-purchase financing for cars and other 
consumer durables, and mortgages.   
53. The development of a Brunei capital market is in  an infant stage.  Brunei does not have its 
own tradeable stock exchange.  The Securities Orde r 2001 regulates financial exchanges, dealers, and 
other persons providing advice in respect of de alings in securities.  The Order confers on the 
regulating authority extensive power s in monitoring all records mainta ined for securities dealing.  The 
Securities (Amendment) Order 2005 contains additiona l provisions with respect to unlicensed persons 
purporting to act as investment advisers as well as representatives of dealers who are not resident in Brunei. 
54. Brunei does not have a central bank.  The Ministry of Finance, through the Treasury, the 
Brunei Currency and Monetary Board, the Brunei I nvestment Agency, and the Financial Institutions 
Division (FID), exercises most of the functions of a central bank.  The FID, the regulator and 
supervisor of the financial indus try,  publishes guidelines on minimum paid-up capital, cash balances, 
and capital adequacy ratios.  In July 2000, Brunei opened the Brunei International Financial Centre 
(BIFC), an offshore financial centre that has sin ce attracted more than 8,000 international firms, 
licensed under the International Bu siness Companies Order 2000.  Brunei has updated its legislative 
and regulatory framework to attract investors to the BIFC.  
55. Since the establishment of the BIFC, Brunei h as dual jurisdiction whereby the international 
legislation offers "offshore" facilities alongside the us ual range of "domestic" legislation.  The FID  
and the BIFC are responsible for regulation, superv ision, and the financial stability of the financial 
sector.  The supervisory authorities have institutional units dealing w ith:  banking, insurance, finance 
companies, money changers and money remittan ce, and securities, and there is a Financial 
Intelligence Unit.  The authorities perform both off-s ite and on-site inspection of domestic banks and 
have implemented Basel I since 1998.  Officials are currently working on building the infrastructure 
required for the implementation for Basel II.   
(b) Banking 
56. In 2006, more than half of banking assets were  held by three banks:  Citibank, Standard 
Chartered Bank (SCB), and Hongkong and Shangha i Banking Corporation (HSBC).  Commercial 
bank assets increased from B$11.4 billion in 2001 (or 114% of nominal GDP) to B$14.9 billion in 
                                                     
 
21 The ETF was formed in 1993.  It was initially a compulsory pension scheme for all new public sector 
employees and was extended in 1994 to include all private sector empl oyees, except those working for an 
employer with an approved provident fund.   
22 Including Islamic insurance, financing, and assist ance for people to undertake the Haj pilgrimage to 
Mecca.    WT/TPR/S/196 Trade Policy Review 
Page 80 
 
 
June 2007.  Total loans made by Brunei's comme rcial banks increased from B$4.25 billion in 2001 to 
B$5.64 billion in June 2007, an increase of 32%.  Personal loans accounted for over two thirds of 
commercial bank lending during 2001-05, followed by general commerce (around 11%), construction 
(10%) and transportation (4%).  Mortgages account ed for between 10% and 15% of total personal 
loans, and other personal loans made up between 50%  and 60% of all loans in the same period.  
Commercial banks tend to have limited scope for providing mortgages as the Government provides 
loans without interest to civil servants for purchasing housing and automobiles.   
57. Given the level of personal lending, the Ministry  of Finance issued a personal loan capping 
directive in May 2005 to the Brunei Association of Banks (BAB).  The objectives of the directive are 
to:  reduce the level of personal debt and promot e a savings culture.  The directive outlines more 
stringent guidelines on the granting of personal loans a nd issuance of credit cards.  It also requires the 
banks to set their own prime lending rate, which was previously set by the BAB.   
Regulatory framework for prudential supervision 
58. According to the IMF, at the start of the revi ew period the regulatory requirements, limited to 
minimum paid-up capital and a 6% reserve requireme nt at the BCMB, were minimal and appropriate 
standards for accounting, valuation, and loan cl assification and provisioning, single borrower limits, 
and capital adequacy requirements were necessary.  It also recommended "systematizing" reporting requirements for domestic and foreign banks and regular monitoring basic financial soundness 
indicators.
23  The level of non-performing loans was rela tively high and warranted close monitoring as 
did the rise in consumer loans (Table IV.5). 
Table IV.5 
Selected financial soundness indicato rs of commercial banks, 2001-07 
(Per cent)  
 2001 2002 2003 2004 2005 2006 March 2007
(estimates) 
Capital adequacya 8.1 9.0 8.6 14.4 16.8 11.3 13.7 
Non-performing loans ratiob 15.0 15.4 12.5 11.8 11.8 12.0 11.0 
Loans to depositsc 67.3 65.4 62.4 59.6 68.8 60.2 65.8 
Demand deposits to total depositsc 16.3 14.9 15.0 14.4 16.0 18.7 19.5 
a Unweighted, based on data submitted by ba nks for the monetary survey.  For foreign banks, this does not include paid-up and 
reserve capital. 
b Based on loans overdue for at least 60 days. c Excluding government deposits. 
Source:  Brunei authorities;  figures for 2001-03 for capital adequacy cited in IMF (2004), Staff Report for the 2004 
Article IV Consultation,  May, p. 12. 
59. The Banking Order, 2006 has most of the pr ovisions for effective banking supervision 
recommended by Basle Committee through the 25 Core Principles for Effective Banking Supervision.  
These include requirements on capital adequacy, o ff-site surveillance, on-site examinations, 
borrowing limits, major acquisitions or investments by banks, transfer of a bank's shares, scope and 
frequency of reporting, confidentialit y of supervisory information, and disclosure.  Banks use the 
risk-weighted assets to calculate the capital ad equacy ratio, and comply with the minimum 
requirement of 10% (section 11 of Banking Order,  2006).  Since June 2006, all banks send monthly 
reports to FID on the core set of financial soundn ess indicators, which include capital adequacy, asset 
quality, earnings and profitability, liquid ity, and sensitivity to market risk. 
                                                      
23 IMF (2004), p. 12.   Brunei Darussalam WT/TPR/S/196 
 Page 81 
 
 
60. During the review period, there appears to have been considerable strengthening of financial 
sector supervision and regulation, including effo rts to enhance monitoring of financial soundness 
indicators.  In particular, the enactment of  the new Banking, Finance Company, Insurance  and 
Securities Amendment Orders  brings the regulatory framework more in line with international 
standards.  The Banking Order 2006, which amende d the Banking Act, paved the way for on-site 
inspection, increased capital requirements of local  Brunei incorporated banks to not less than 
B$100 million, and tightened provis ions affecting financial leasi ng, money transmission services, 
means of payment such as credit cards, guarantees, fo reign exchange dealings, financial futures, and 
participation in share issues.  The Fi nance Companies Act (Amendment) Order 200624 increased the 
capital requirement for local Brunei finance companie s to not less than B$25 million;  it also provides 
for new forms of business, including Islamic financing business.25  Also, the authorities issued 
guidelines in 2005 to reduce risks associated with the rapid rise in personal loans.  
Islamic banking 
61. The Government has continued to encourage Islamic banking, which (as of June 2007), 
account for 38% of commercial banks' assets.  Legisl ation is in place to support banks operating under 
these principles, including taking a share of profits  from the firms they fund rather than charging 
interest.26  Prudential regulations for Isla mic banks are, in general, more  stringent than for commercial 
banks.  In addition to minimum cash balances, the Islamic Banking Act (Cap. 168) requires regular 
reporting of audited statements a nd monthly balance sheets to the Mi nister of Finance, through the 
FID;  banks are also obliged to furnish any add itional data as requested by the Minister.  Foreign-
owned or controlled companies may not  be granted Islamic banking licences.27  According to the 
authorities there are plans to harmonize Islamic a nd conventional banking regu lations by 2007;  the 
new Islamic banking Order 2007 is in its final stage of drafting.  
62. As part of its diversification programme, and to support the deve lopment of Islamic financing, 
the Syariah Financial Supervisory Board was established in January 2006 to regulate Islamic financial 
institutions.  The Government also floated its first non-interest-bearing Islamic bond in 2006.  In 
April 2006, the Government launched the fi rst Islamic money market programme, worth 
B$150 million, which is a three-month paper based on the Al-Ijarah concept.28 
                                                      
24 Previously, finance companies were regulated and licensed under the Finance Companies Act of 
1972.  Under the Act, they were subject to a minimum paid-up capital requirement of at least B$1 million and 
the same minimum cash balance of 6% as banks, but were not permitted to take demand deposits.  
25 To cater for financing businesses whose aims and operations do not involve any element not 
approved by a moderate form of Islamic Shariah law.  
26 The Islamic Banking Act was enacted in Decembe r 1992 and amended by th e Emergency (Islamic 
Banking) (Amendment) Order 1995.   
27 All changes in control of an Islamic bank must be reported to the Minister (Article 20 of the Islamic 
Banking Act (Cap. 168)).  Foreign owned, or controlled, is defined as 50% or more of the capital issued and 
paid-up being owned by or on behalf of persons who are not Muslim citizens of Brunei or, if a majority of persons having direction, control or management of the company, are not Muslim citizens of Brunei (Article 6 
of the Islamic Banking Act (Cap. 168). 
28 The programme involves the issuance of short-term 'Sukuk Al-Ijarah', which is effectively an 
asset-backed lease security that complies with the Islami c Syariah law.  So far, the Ministry of Finance has 
issued nine series of this short-term Sukuk Al-Ijarah, which has a cumulative nominal issue of B$925 million.  
The latest was issued on 16 August 2007, worth B$80 million, for a maturity of 91 days at a rental rate of 2.245%. WT/TPR/S/196 Trade Policy Review 
Page 82 
 
 
Brunei International Financial Centre (BIFC) 
63. The Government established the Brunei Intern ational Financial Centre (BIFC) in 2000 to 
diversify financial services in Brunei and to establish Brunei as an off-shore banking and trading 
centre for the region offering both conventional and Islamic financial services.  The legislation to 
accompany the formation of the BIFC, sought to  introduce measures against money laundering 
activities and to bring Brunei's standards up to international standards, thereby improving 
transparency and attracting companies to the BIFC.  At end of June 2007, six banks and 
seven investment advisors had obtained a licence an d begun operations (Box IV.1).  The legislation in 
force also caters for Islamic financial services, wh ich have been attracting growing interest from the 
international market.  
Box IV.1:  BIFC 
Brunei International Financial Centre (BIFC), a multi-di sciplinary unit within the Ministry of Finance, was 
established in 2000 to help Brunei become a financial hub in the region, especially in banking, finance, 
securities, and insurance. 
BIFC has registered more than 7,000 international bus iness companies, licensed 10  registered agents under 
the Registered Agents and Trustees Licensing Order 2000;  6 banks under the International Banking Order 
2000;  3 licences under the International Insurance and Takaful Order, 2002;  25 licences under the Mutual Funds Order, 2001;  and 7 investment advise rs licensed under the Securities Order, 2001. 
A comprehensive set of legislation covering financial activities associated with BIFC was enacted from 
2000 to 2002, including Islamic finance.  BIFC has a policy of reviewing the legislation and making 
amendments when required in order to reflect curren t practices and ensure that stringent international 
standards are met.  There are ten statutes in effect, which include the Money Laundering Order, Criminal Conduct (Recovery of Proceeds) Order, International Limited Partnerships Order, International Banking 
Order, Registered Agents and Trustees Licensing Order, International Trusts Order, International Business 
Companies Order, Mutual Funds Order, Securities Orde r and International Insurance and Takaful Order.  
The Sultan of Brunei Darussalam had consented to th e introduction and amendment of several laws, namely 
the Insurance Order 2006, the Banking Order 2006, the Hire Purchase Order 2006 and Finance Companies 
Amendment Order 2006, all of which came into effect in March 2006. 
The launch of the nation's first Islamic Bond, the Short Term Government Sukuk Al-ljarah programme in 
2006, has paved the way for the development of a wider range of Islamic financial instruments and products 
that comply with Syariah principles.  As of September 2007, the issuance of the Short-term Sukuk Al-ljarah securities reached B$925 million. 
The recent formation of a Syariah Financial Superv isory Board pursuant to the Syariah Financial 
Supervisory Board Order, 2006, will further boost Is lamic finance in Brunei.  The Syariah Financial 
Supervisory Board is the authority for regulating Isla mic banking, takaful, Islamic financial business, 
Islamic development financial business and any other business, which is based on Syariah principles. 
Source:  Brunei authorities.
 
(c) Insurance  
64. At the end of 2006, there were 21 active in surance companies:  12 locally incorporated29, 
6 branches of foreign companies, and 3 foreign underwriting companies represented by locally incorporated firms.  Gross premiums for all ge neral insurance companies totalled B$147.9 million (up 
from B$51 million in 2001):  general premiums a ccounted for B$81.6 million, motor insurance for 
63%, fire insurance for 14%, and workmen's compensation for 7%.  In general business, takaful  
                                                     
 
29 Three of the locally in corporated companies are takaful  companies, which provide insurance based 
on Islamic principles. Brunei Darussalam WT/TPR/S/196 
 Page 83 
 
 
operators were heavily concentrated  in motor insurance, and dominated  the market with 51% of total 
general premiums.  In life business,  conventional insurers remain the biggest market players as 
products offered are more extensive compared with takaful . 
65. In addition to the Motor Vehicles (Third-Party Risks) Act, recent specific legislation relating 
to the insurance industry, the Insurance Order 2006, which raised the paid-up capital of Brunei 
insurance companies.  It also pr ovides for tighter regulations on the establishment and maintenance of 
insurance funds;  the allocation of surplus;  the form, investment, and situation of assets;  the 
restrictions on payment of dividends;  and the requireme nts of disclosure of interests by directors.   
66. The main elements of supervision include a security deposit with the Government of 
B$1 million for insurers underwriting motor insuran ce, and for licensed life and/or general insurers 
under the Insurance Order 2006;  minimum paid-up cap ital of B$8 million;  a solvency margin for 
general insurers of 20% of net premium income (N PI) of the previous year;  and guidelines for the 
appointment of foreign employees and motor insu rance agents.  Additionally, all insurance and 
takaful  companies are required to provide their aud ited annual accounts, ASEAN unified statistics, 
and quarterly data on premiums collected, to the FID.  
67. Supervision, which has been provided by the Financial Institutions Division (FID) in the 
Ministry of Finance, since 1993, was based on mora l suasion, and regular contacts with the General 
Insurance Association of Brunei, which represents ge neral insurance companies.  However, since the 
introduction of the Insurance Order 2006, the Perman ent Secretary at the Ministry of Finance was 
granted extensive powers to govern the insuranc e industry, including the power to inspect and 
investigate the affairs of insurers, to approve the appointment of as well as to disqualify the principal 
officer and director.  A standardized application form, available from FID, requires applicants to disclose details of the share of equity;  manageme nt structure;  proposed operational and internal 
control of the company;  projected financial highlights of the company including the authorized capital;  and, for foreign companies, prior approval from the regulatory authorities of the country in 
which the company originates.  No new insurance companies were registered during the period under 
review.   
68. GATS commitments were made for direct in surance (life and non-life), reinsurance and 
retrocession, insurance and intermediation (broki ng and agency services) and auxiliary services 
(consultancy, actuarial risk assessment, risk manageme nt, and maritime loss adjusting).  In general, 
Brunei's schedule reflects current requirements a nd restrictions, including commercial presence only 
through companies registered in Brunei for direct insurance;  and purchase of compulsory insurance 
for motor third-party liability and workmen's compensation only from insurance companies 
established in Brunei.  The initial offer tabled in 2005 does not appear to go beyond current 
commitments.  
(iii) Telecommunications  
69. Brunei, as a small wealthy nation in South East  Asia, has endeavoured to ensure up-to-date 
telecommunication services to its population;  the target of 100% digitalization was achieved in 1995.  Telecommunications throughout Brunei are of a high standard and the country ranks well in Asia in 
terms of penetration and infrastructure.  Brunei has a telephone household penetration rate of 100% 
and there has been significant growth of cellular sub scribers.  Mobile penetration had reached 74% by 
October 2006 (up from 32% at end 2001) (Table IV .6).  There is a nationwide broadband network 
(RaGAM 21), at the core of which is a high-speed switching ATM-based network.  There has also 
been significant investment in a rural telecoms ne twork, which allows all rural and remote areas 
access to telephone and the Internet.  WT/TPR/S/196 Trade Policy Review 
Page 84 
 
 
Table IV.6 
ICT indicators, 2006 
Core indicators Latest  statistics Date 
Fixed telephone lines (number of subscribers) 81,195 June 2006 
Fixed telephone lines per 100 subscribers (%) 21.2 June 2006 
Mobile cellular (number of subscribers) 281,704 October 2006 
Mobile cellular subscribers per 100 inhabitants (%) 73.6 October 2006 
Internet users 134,953 2005 
Internet users per 100 inhabitants (%) 36.5 2005 
Internet subscribers  17,973 2005 
Internet subscribers per 100 inhabitants (%) 4.7 2005 
Broadband Internet subscribers 8,126 2005 
Broadband Internet subscribers per 100 inhabitants (%) 2.1 2005 
International Internet bandwidth (Mbps) 555 2005 
International Internet bandwidth  per inhabitant ((kbps) 1.5 2005 
Internet access tariffs (20 hours per month) (US$) 30 2006 
Internet access tariffs (20 hours per month)  in U.S. dollar as a percentage of per 
capita income (%) 1.1 2006 
Broadband access tariffs (US$) 73.2 2006 
Broadband access tariffs in U.S. dollar as a pe rcentage of per capita income (%) 2.7 2006 
Mobile cellular tariffs (100 minutes  of use per month) (US$) 11.86 2006 
Mobile cellular tariffs (100 minutes of use per month) in U.S. dollar as a 
percentage of per capita income (%) 0.44 2006 
Proportion of households with a fi xed line telephone (%) 100 February 2007 
Proportion of households with a computer (%) 46.6 2001 
Proportion of household with Inte rnet access at home (%) 28.8 2001 
Note: Percentage indicators are calculated based on the following figures obtained from the Department of Statistics, JPKE (18th Ed. 
Brunei Darussalam Key Indicators 2006):  pop ulation – 2005 = 370,100 and 2006 = 383,000. 
Source:  AiTi (2007), APECTEL 35 Country Paper:  Brunei Darussalam,  Appendix 7,  APEC TEL Working Group 
Meeting, April.  Viewed at:  http://www.apectel35.or g.ph/index.php?option= com_docman&task=doc_ 
download&gid=72&Itemid=38 [31 July 2007] . 
(a) Industry developments  
70. Brunei's  telecommunications industry has recently shifted from a monopoly in fixed-line and 
mobile telephony to a state of oligopoly, with the eventual goal, according to the Brunei authorities, of 
creating a competitive environment where home-grown companies would be challenged to rise to global standards and even break into international markets.  Currently, TelB ru, the successor to the 
Government Telecoms Department, has a monopoly over the fixed-line network;  B-mobile has a 
monopoly over the provision of 3G telephony, and the DST Group has a monopoly over the provision 
of GSM telephony.  According to the authorities, th ere is some competition in mobile telephony with 
the entry of B-mobile into the market in 2005, and in the dial-up internet ac cess segment with TelBru 
and DST Group in competition.  The authorities poi nt out that TelBru, DST and B-mobile are 
corporate entities and, although the eventual controlling parties are the Government or linked to the Government, the general perception is that they are quasi private-sector companies. 
71. There are three telecommunications infrastructure providers:  TelBru Bhd, which provides 
basic telephony and a range of value-added services such as leased-line services, dial-up internet, 
ADSL broadband, VoIP, ATM lines and pre-paid ca lling cards;  the  DST Group Sdn Bhd, a private 
company based in Brunei, which operates a GSM mobile network and provides some value-added 
services, VoIP, leased-line, and a dial-up internet;  and B-mobile Communications Sdn Bhd (a joint Brunei Darussalam WT/TPR/S/196 
 Page 85 
 
 
venture between TelBru Bhd and QAF Comserve), which operates a 3G mob ile network and provides 
VoIP, and internet access via 3G.  The three co mpanies are locally owned and controlled and, 
according to the authorities, there is currently no si gnificant foreign participation.  AiTi's published 
licensing framework excludes compani es that are majority-owned or controlled by foreign parties 
from being licensed to operate in Brunei. 
(b) Regulatory developments  
72. Under the Telecommunications Act of 1952, the Government was the exclusive provider of 
telecommunications services.  Jabatan Telekom Brunei/Telecommunications Department (JTB) was established as a government department in 1952 to provide telecom services and to act as the 
regulatory body for telecommunications.  At the star t of the current review period, the Government 
began restructuring the telecom industry through co rporatization (and eventual privatization).  JTB 
was to be corporatized and transformed into a government-administered private company as part of 
the larger programme to corporatize a number of government services.  Telekom Brunei Bhd (TelBru) 
was established in June 2002, under the Telecomm unication Successor Company Order 2001, as the 
designated telecom successor company, which would take over JTB's service operations.  That Order, 
together with the Telecommunications Order 2001 and the AiTi Order 2001, enabled the repeal of the 
1952 Act and, as from entry into force in 2006, provid e the legal basis for the restructured telecom 
sector (Box IV.2).
30 
Box IV.2:  Key dates in regulation of telecoms, 2001-06 
2001:   The Government of Brunei Daru ssalam commenced a restructuring of the ICT industry;  three new 
pieces of legislation were enacted. 
-  The Telecommunication Successor Company Orde r, 2001 transfers all property, rights and 
liabilities belonging to JTB to Telekom Brunei Limite d (TelBru) whereby TelBru assumed the role 
of service provider in place of the JTB.  (JTB  to undergo the process of corporatization.) 
-  The AiTi Order, 2001 establishes the Authority for Info-communications Technology Industry of 
Brunei Darussalam (AiTi) as an independent statutor y body to regulate the local ICT industry.  This 
Order took effect on 1 January 2003. 
-  The Telecommunications Order, 2001 confers upo n AiTi the exclusive pr ivilege to operate and 
provide telecommunication systems and services in Brunei Darussalam and allows AiTi to grant 
licences for the same. 
2003:   AiTi established as an independent statutory body. 
2005:   B-mobile created as a joint venture between TelBru and QAF Comserve.  Granted a licence to 
operate a W-CDMA network and begins operations as the competitor to incumbent mobile operator DST (and incumbent fixed-line operator TelBru) 
2006:   The Telecommunication Order entered into force, giving AiTi full power to grant licences;  
Telecoms Act 1952 repealed. 
  Government telecommunications department (JTB) corporatized as TelBru. a public limited 
company registered under the Brunei Darussa lam Companies Act and 100% owned by the 
Government of Brunei Darussalam. 
Source:  AiTi (2007), APECTEL 35 Country Paper Brunei Darussalam, APEC TEL Working Group 
Meeting, April.  Viewed at:  http://www.apectel35.org.ph/index.php?option=com_docman&task=doc_download&gid=72&Itemid=38 [31 July 2007].
 
                                                      
30 AiTi (2007). WT/TPR/S/196 Trade Policy Review 
Page 86 
 
 
73. Following lengthy delays, JTB was corporatized  in April 2006 and its duties shared between 
TelBru and the Authority for Info-Co mmunications Technology Industry (AiTi)31, which was 
established in January 2003 to administer the regulatory function and the development of the 
info-communication industry in Brunei.  Thus, TelBru assumed responsibility for the supply of 
telecom services in Brunei, while AiTi was charged with regulating and developing the industry and 
is answerable to the Minister of Communications.  AiTi issues licences to operators and manages the 
radio communications spectrum.  AiTi's licensing  regime is technologically neutral, with no 
distinction drawn on the basis of the technology used.  It has a two-tier licensing structure:  InTi (Infrastructure Provider for the Telecommunication Industry) whereby licensees own infrastructure, 
and SeTi (Service Provider for the Telecommunica tion Industry) whereby licensees repackage and 
resell retail services to consumers or corporate customers through wholesale arrangements with InTi 
licensees.  With regard to fixed-line telephony, the licensing framework published by AiTi mandates a 
certain level of local loop unbundling (LLU);  the lack of de facto  LLU and competition in this 
segment is one of AiTi's key issues.   
74. Brunei Darussalam does not have pr ovisions on competition in its le gislation applicable to the 
telecom sector.  Hence, to allow AiTi to monito r and curb anti-competitive behaviour, the licensing 
framework provides obligations for licensees in rela tion to competitive behaviour, and powers for the 
regulator to take action against undesirable or  unfair practices.  Existing licences, under the 
Telecommunications Act, are deemed to have been issued by AiTi by virtue of the 
Telecommunications Order.  AiTi is of the view that  for the sake of consistency of industry practices, 
and to create a "baseline" for all industry discussions , existing licensees should be migrated to the new 
licensing framework, which, among other things, mandates interconnection between fixed network 
suppliers and other service providers, local  loop unbundling, specific clauses regarding 
anti-competitive behaviour and infrastructure-sharing to foster competition.
32 
75. Under the new licences, licensees are required to shift towards alignment with AiTi's and the 
Ministry of Communications' vision for th e industry's future, for example mandating 
interconnectivity, accounting separ ation, and USP fund payments.33  There is no specific regulation on 
price/tariff regulation, but AiTi has the power to give regulatory directions to licensees in the public interest and to ensure fair and efficient market  conduct.  Under this framework, AiTi may issue a 
Directive to regulate prices and tariffs. 
76. In its initial GATS offer of 2005, Brunei made of fers in local, international, and mobile 
telephone services and stated that in its eventual  commitments JTB's (now TelBru's) monopoly over 
voice telephone services will be maintained for ten years after its privatization and subject to a 
Government review to allow new suppliers into th e market.  Similarly, for mobile telecom services, 
the Government has indicated that it will consider issuing new licences to mobile telecommunications 
                                                     
 
31 Established under the Authority for Info-Communications Technology Industry of Brunei 
Darussalam Order 2001.  Under Section 6 of the AiTi Order 2001, AiTi's core functions are to exercise licensing 
and regulatory functions with respect to the telecommunicat ions system and services;  manage the national radio 
frequency spectrum;  and contribute towards diversification and development of the economy through the 
development and growth of the ICT industry in Brunei. 
32 AiTi has published its licensing framework.  Viewed at:  http://www .aiti.gov.bn/licensing/1-aiti-
operational-framework.pdf.  On interconnection, see the Interconnection Handbook at:  http://www.aiti.gov.bn/ 
licensing/3-aiti-interconnection-handbook.pdf.  Accordin g to the authorities, TelBru and DSTComm have not 
issued Model Interconnection Agreements (MItA) or made publicly available the terms and conditions of all of 
their interconnection agreements. 
33 Section 60 of the Telecommunications Order requ ires AiTi to control and operate the universal 
service provision fund (USPF).  The InTi and SeTi li cences require licensees to contribute to the USPF. Brunei Darussalam WT/TPR/S/196 
 Page 87 
 
 
providers (employing other than AMPS and GSM t echnology) in 2010 if public interest and economic 
conditions would justify this.   
(iv) Transport 
(a) Air transport services 
77. Brunei's main airport is Brunei International Ai rport (BIA) at Bandar Seri Begawan;  it has 
the capacity to handle around 1.5 million passengers a nd 50,000 tonnes of cargo a year.  Five airlines 
link Brunei to 21 cities in 12 countries.34  In 2006, there were 11.9 thousand aircraft movements at 
BIA:  total passenger throughput (inbound, outbound,  and transit) was more than 1.4 million up from 
1.28 million in 2001;  and cargo throughput was 22.7 million tonnes (23.3 million tonnes in 2001). 
78. Brunei International Airport is owned by th e Government of Brunei and managed by the 
Department of Civil Aviation in the Ministry of  Communications.  In view of its geographical 
location, Brunei also hopes to establish an air cargo transhipment centre and to establish the airport as 
a regional refuelling centre by offering attractive fuel  prices and liberalizing the supply of fuel.  All 
air cargo transhipment activities are carried out by Royal Brunei Airlines (RBA), although the Government is seeking offers to establish, operate , and manage an air cargo centre for transhipment 
and distribution.    
79. The national carrier, RBA, is a corporation foun ded in November 1974, and wholly owned by 
the Government of Brunei.  The airline currently serves 21 destinations in Europe, the Middle East, 
Asia, and Australia, including several short-haul  destinations in Malaysia and Indonesia.  
Code-sharing agreements are in place between RBA and a number of regional airlines.  RBA has yet 
to record a profit in its three decade long history.
35  Ground-handling services, for passengers and 
cargo, are provided by RBA, whilst airline catering facilities are supplied by Royal Brunei Catering.  The authorities state that consideration would be given to additional companies applying to provide 
ground-handling services.  
80. Brunei maintains a liberal air service policy:  a reciprocal "open skies" policy has been 
adopted in order to attract more foreign airlines to oper ate into Brunei.  As part of this effort, bilateral 
open skies agreements have been signed with New Zealand, Singapore, the United States, and the 
United Arab Emirates.  The agreements allow designated airlines to provide air services between the two countries with rights to pick up passengers at in termediate stops or in third countries with no 
limitation on frequency, capacity, and aircraft type.  Brunei also signed the world's first multilateral 
open skies agreement with Chile, New Zealand, Si ngapore, the United States, Samoa, Cook Islands, 
and Tonga in 2001.   
81. Local airlines require an operating permit or aircraft operating certificate from the 
Department of Civil Aviation.  Regarding the system of allocating landing slots at Brunei 
International Airport, landing charges are based on the aircraft's maximum weight at take-off, and 
there are no differences in charges between peak  and off-peak hours.  Government employees are 
encouraged to travel with Royal Br unei Airlines on official trips.  
82. Brunei has included in its 2005 GATS offer a commitm ent for rental of aircraft with crew.  
Market access through cross-border supply is subject  to certification and approval from the authorities 
and infrastructure capacity;  commercial presence is allowed only through a representative office with 
                                                     
 
34 The five airlines are Royal Brunei Airlines, Ma laysian Airlines, Singapore Airlines, Thai Airways 
International, and Air Asia. 
35 Economist Intelligence Unit (2007), p. 12. WT/TPR/S/196 Trade Policy Review 
Page 88 
 
 
a permanent address in Brunei, or through a genera l sales agent, which must be a Bruneian-controlled 
company.  Market access for personnel is unbound excep t for the requirement of a general sales agent 
in Brunei, who is in turn subject to a local availability test and the designation of a specified number of local trainees.
36 
(b) Maritime transport services 
83. Overall, most of Brunei's international waterbor ne trade is carried by foreign vessels;  only 
eight vessels fly the Brunei flag.  According to th e Brunei Marine Department, at end 2006, 69 vessels 
were registered in Brunei, eight of which were owned by the Government.  Total gross registered 
tonnage under the Brunei flag was 472,454 tonnes.  Eight LNG vessels trade internationally, in 
particular transporting gas to Japan;  foreign-owned vessels are used to transport crude oil on a charter 
basis.  Brunei imports most of its commodities, wh ich are carried by foreign vessels operating through 
Muara port.  Brunei has three passenger vessels pl ying between Muara in Brunei and Labuan (in 
Malaysia);  it also provides car ferry services between Muara and Menumbok in Sabah, Malaysia. 
84. The main port is Muara, 29 km from the capital.37  More than 90% of Brunei's imports and 
exports (except oil and gas) are channelled through Muara.  Under a 25-year agreement38, the Port of 
Singapore Authority, in a joint venture with a lo cal company, manages the container terminal at 
Muara.  Muara Port has gone through extensiv e improvements since 1973, increasing the wharf size 
and overall storage space.  It covers a total of 24 hectares, and has two main terminals;  one is a conventional terminal and the othe r a container terminal.  Muara Port is connected to 16 ports and 
receives more than 1,000 calls per year.  The conve ntional terminal consists of a multi-purpose berth 
for conventional cargo carriers and roll-on/roll-off  car carriers, with a total berth length of 
611 metres.  An additional berth is available for sm aller crafts.  According to the authorities, Muara 
Container Terminal aspires to be a regional tran shipment hub to serve the developing economies of 
the East Asian Growth Area comprising 50 milli on population in Brunei Darussalam, Indonesia, 
Malaysia, and the Philippines (BIMP-EAGA). 
85. Since 2004, annual cargo going through Muara Port has exceeded 100,000 TEUs (twenty-foot 
equivalent units) (Table IV.7);  existing capac ity is 350,000 TEUs a year.  According to the 
authorities, vessel productivity, turnaround time, an d berth throughput are closely monitored by the 
Ports Department with the aid of modern computer  equipment to ensure that accepted performance 
indicator targets are maintained.   
Table IV.7 
Maritime services at Muara Port, 2002-07 
 2002 2003 2004 2005 2006 2007a 
No. of vessels calling at Muara Port 1,124 1,245 1,266 1,124 1,309 907 
Container throughput handled (TEUs) 66,985 76,515 101,096 108,103 101,545 54,176 
Cargo tonnage handled ('000 t onnes) 1,193,760 1,307,396 1,893,307 1,768,620 1,047,655 632,375 
a January-July. 
Source:  Data provided by the Ports Department. 
                                                      
36 The local availability test gives priority to employing a Bruneian as a general sales agent;  however, 
if no Bruneian is available for the post, a foreigner may be appointed. 
37 In addition, there are two smaller ports located at Bandar Seri Begawan and at Kuala Belait, both 
used for smaller vessels carrying conventional cargo.  
38 A contract was signed in October 2000 with Singa pore's PSA Corporation, setting up the PSA Muara 
Container Terminal Sdn. Bhd., which is expect ed to operate the terminal for 25 years. Brunei Darussalam WT/TPR/S/196 
 Page 89 
 
 
86. However, Muara Port is considered to have reached its physical limit for expansion.  The 
Government plans to develop Pulau Muara Besar (PMB), an island opposite the existing port, to 
accommodate a new container terminal, a cruise-line te rminal, and an oil tanker jetty and refinery, as 
well as an export processing zone.  The development of  PMB is part of the BEDB's on-going strategy, 
together with the development of the Sungai Liang Industrial Park, to diversify Brunei's economy.  In 
2006, the BEDB planned to establish a consortium with the Brunei Government to fund, design, 
develop, and operate the proposed PMB project by 2009.  The main competitive advantage of the 
project is deep water.  As container ships get ra pidly larger, they require deeper waters:  future 
generation vessels, with a capacity of 12,500 TEU or more, need ports with a minimum of 16 m of 
water;  PMB's natural seascape would keep dredgi ng expenses relatively low, giving it a long-term 
cost advantage.  In addition, the Government considers that PMB only needs to attract a small part of 
the rapidly growing transhipment trade for the port development to be viable.39    
Policy 
87. The maritime transport sector is regulated by the Marine Department in the Ministry of 
Communications.  The Marine Department is respons ible for the safety and security of ships, the 
protection of the marine environment, and for all sh ips registered in Brunei, trading domestically or 
internationally.  Merchant shipping is subject to  the Merchant Shipping Act, 1984 and a number of 
orders and regulations.40  The Act establishes rules, inter alia,  for registering ships under the Brunei 
flag, licensing ships operating in Brunei waters, and maritime safety.  All Brunei ships must be registered under the Brunei flag unless exempt.
41  According to the authorities, Brunei encourages the 
registration of ships under the Brunei flag, subject  to the rules and regulations of the Merchant 
Shipping Act.  They also state that the Depart ment is upgrading institutional capacity to ensure 
maritime safety and sustainable development.   
88. All ships operating in Brunei waters, either wholly owned by Brunei nationals or by a 
corporation established in Brunei, mu st be registered with or licensed by the Registrar of Brunei Ships 
in the Marine Department.  Under the Merchant Sh ipping (Registration of Ships) Regulations 2006, 
applications must be accompanied by, inter alia,  a declaration of ownership, technical details of the 
vessel, as well as details of the manager, who mu st be resident in Brunei, and an agent.  
89. Port services are regulated by the Ports Depa rtment, while the navigation of vessels entering 
Muara Port is under the purview of the Marine Depa rtment, both in the Ministry of Communications.  
The Ports Department manages:  Muara Port, Kuala Belait Port, and Bangar Wharf.  Some operations, 
including stevedoring, shore crane services, a nd cargo handling forklift services, appear to be 
provided by the private sector.  Towage and tug bo at services, previously provided by the Marine 
Department, were handed over to the Ports Department in April 2007. 
90. Brunei made no commitments under the GATS with r espect to maritime services;  nor has it 
included the sector in its 2005 GATS offer in the DDA negotiations.  
                                                      
39  It has been suggested by the Government that if PMB can capture only 5% of the growing regional 
trade, it could be handling a throughput of 1.2 million TEUs by 2010.   
40 These include:  Merchant Shipping (Safety Zones) Order, 1988;  Merchant Shipping Order, 2002;  
Prevention of Pollution of the Sea Order, 2005;  Mercha nt Shipping (Standard of Training, Certification and 
Watchkeeping) Regulations, 2002 and their amendments, 2004;  Merchant Shipping (Safety Convention) Regulations, 2003 and their amendments, 2004;  Merchant Shipping (Registration of Ships) Regulations, 2006;  
Merchant Shipping (Tonnage) Regulations, 2006;  Merchant Shipping (Harbour and Pleasure Craft) 
Regulations, 1986. 
41 Exempted ships include ships exceeding 15 tonnes of burden and ships licensed in Brunei. WT/TPR/S/196 Trade Policy Review 
Page 90 
 
 
(v) Tourism 
91. Tourism has been identified as a major contributor  to exports in the service sector with the 
potential to play an important role in Brunei's econom ic diversification plans.  However, the tourism 
industry in Brunei remains relatively undeveloped, with around 200,000 foreign tourists in 2007 
(Table IV.8).  At the beginning of the review period, Brunei designated the year 2001 as "Visit Brunei 
Year" but tourist arrivals fell that year by 20% partly as a result of a global tourism slowdown after 
the 11 September terrorist attacks in the United States.  Tourism dropped again in early 2004 
following the regional outbreak of SARS.   
Table IV.8 
Brunei tourism trade, 2002-07 and estimates for 2010 and 2020 
 2002 2003 2004 2005 2006 2007 2010 2020 
Tourism performance         
Total foreign visitors  850,582 871,200 836,426 815,054 836,435 877,024 1,062,189 1,957,977 
Total foreign tourists 257,032 268,045 222,482 189,003 194,662 204,852 249,927 478,469 
Visitor expenditure 
(B$ million) 250 259 356 372 384 407 530 1,302 
Economic contribution         
Total travel and tourism 
economy GDP 
(B$ billion) 1.440 1.133 1.593 1.741 1.903 1.983 2.269 3.738 
Share of travel and 
tourism economy in total GDP (%) 13.8 9.9 11.9 10.9 10.9 11.2 12.2 14.2 
Employment 
contribution         
Total employment in 
travel and tourism 
economy  19,604 19,894 20,807 21,253 21,904 22,784 26,679 38,149 
Share of travel and 
tourism economy 
employment (%) 12.8 13.1 13.1 13.1 13.1 13.4 14.6 16.9 
Source:  World Travel and Tourism Council (2006), "Brunei Darussa lam;  The Impact of Travel and Tourism on Jobs and 
the Economy", Policy Review , 4 December.  
92. Around 70% of tourists come from other ASEAN a nd Asian countries, in particular Malaysia, 
China, and Singapore.  In addition, a much larger  number of same-day visitors from Malaysia enter 
Brunei through land-entry points.  The Government's  objective is to increase international tourist 
arrivals as well as the average length of stay and expenditure.  In order to reach a target of 
250,000 tourists by 2010, additional facilities,  including accommodation, transport and 
communication, and banking services, n eed to be further developed.  
93. A study in 2006 found that the wider travel and tourism economy accounted for 11% of all 
activity and 13% of total employment in Brunei Da russalam in 2005;  residential and business travel, 
especially travel abroad, are significant items of spe nding on travel and tourism;  spending by foreign 
visitors accounts for over a third of all service export ea rnings, but most visits are brief and are mainly 
to friends and relations rather than for business or  leisure purposes;  and Brunei has the potential to 
raise foreign visitor spending significantly.  Growth over the decade is forecast to raise travel and 
tourism's contribution to GDP to over 13.5%, incr easing employment to almost 35,000 from 21,000 in 
2005.42 
                                                      
42 World Travel and Tourism Council (2006), "Brunei Darussa lam;  The Impact of Travel and Tourism on Jobs 
and the Economy", Policy Review , 4 December.  Brunei Darussalam WT/TPR/S/196 
 Page 91 
 
 
94. Tourism promotion is carried out by the Tour ism Development Division in the Ministry of 
Industry and Primary Resources, acting under the advice of the Brunei Tourism Board.  The Ministry and the Board intend to develop Brunei as a unique tourism destination in South East Asia while taking into consideration the traditional and cultura l values of Brunei and the sustainability of its 
environment.  Tourism planning focuses on the ec onomic and social benefits for Brunei, while 
preventing an erosion of Brunei's socio-cultural and religious values, and ensuring conservation of the 
environment.  Particular activities that are targ eted include niche mark ets such as eco-tourism, 
adventure and cultural tourism, theme parks, a nd cruising targeting ma ture, well-travelled, 
tranquillity-seeking visitors from the region and beyond. 
95. The Tourism Development Division is also r esponsible for regulating tourism services and 
issuing licences for tourism services providers.  Trav el agencies are regulated and licensed by the 
Economic Development Board in the Ministry of Finance, under the Travel Agents Act 
(Chapter 103).  Licences issued for travel agencies ar e usually valid for a year and expire at the end of 
the calendar year;  they are not transferable.
43    
96. Brunei made no commitments under the GATS in tourism services. 
 
 
                                                      
43 Persons or companies applying for a licence must be registered in Brunei and supply documents 
including evidence of residence in Brun ei and at least two years executiv e experience in the travel agency 
business;  and no criminal offences (Article 5 of the Travel Agents Regulations (1982)).  Any changes to the 
partnership or share capital, or shareholders in the case of a company, must be notified to the Board within 14 days (Article 3 of the Trav el Agents Regulations (1982)). Brunei Darussalam WT/TPR/S/196 
 Page 93 
 
 
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