Brunei Darussalam WT/TPR/S/196/Rev.1 
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I. ECONOMIC ENVIRONMENT 
(1) INTRODUCTION  
1. Brunei Darussalam is a small, relatively open economy and has one of the highest standards 
of living amongst its ASEAN partners with an estim ated per capita income of over US$30,000, almost 
double its level at the beginning of the review peri od, in 2002 (Table I.1).  Situated on the northern 
end of the island of Borneo, Brunei has a total ar ea of 5,765 square kilometres, some 80% of it 
forested.  Brunei's population in 2006 was estimated at around 383,000, of which, it appears, some 
20% are expatriate workers.  The economy grew at a modest and stable annual average real rate of 
2.5% between 2002 and 2006.  The Government prov ides a wide range of free or heavily subsidized 
public services and employs 25% of the labour force.1  However, some of its policies, practices, and 
measures, including those pertaining to trade and foreign investment, are rather opaque.  
2. The country continues to owe its economic pr osperity overwhelmingl y to its abundant 
petroleum and natural gas resources, whose share of current GDP grew from 53% in 2002 to 69% in 
2006;  in the same period, the share of petroleum and liquefied natural gas in exports rose from 88% 
to 96% and its share in total government revenue  increased from 86% to 94%.  The oil and gas 
sector's increased shares of GDP and exports, togeth er with its contribution to government revenue, 
are largely due to the ri se in oil and gas prices. 
Table I.1 
Basic economic and social indicators, 2002-06  
      2002 2003 2004 2005 2006 
Real GDP (B$ million, 2000 prices) 11,041.5  11,362.1  11,419.4  11,463.7  12,053.0  
Real GDP (US$ million, 2000 prices) 6,166. 4  6,521.8  6,756.1  6,887.6  7,585.4  
Current GDP (B$ million) 10,463.1  11,424.2  13,305.8  15,864.1  18,370.2  
Current GDP (US$ million) 5,843.4  6,557.4  7,872.2  9,531.4  11,561.0  
GDP per capita (B$) 30,398.0  32,678.0  37,188.0  42,864.0  47,964.0  
GDP per capita (US$) 16,976.5  18,757.0  22,001.7  25,753.4  30,185.4  
   (Annual percentage change) 
GDP by economic activity at constant 2000 prices      
Oil and gas sector 3.2 4.5 -1.0 -2.6 5.7 
 Oil and gas mining 3.3 3.7 -0.7 -2.7 6.1 
 Oil and gas manufacturing 2.7 7.2 -2.0 -2.2 4.5 
Non-oil and gas sector 4.8 0.9 2.5 4.1 4.5 
 Government services 1.7 -0.5 3.1 2.9 8.9 
 Private sector 6.5 1.6 2.2 4.8 2.2 
  Agriculture, forestry and fishery 5.2 11.3 12.0 1.3 -9.9 
  Non-oil & gas manufacturing 30.6 -15.9 4.0 -0.4 -19.0 
  Electricity and water 5.5 3.8 0.4 4.1 0.1 
  Construction 9.3 2.9 4.2 8.0 -3.7 
  Wholesale and retail trade 12.3 6.0 3.1 2.2 2.6 
  Hotels and restaurants -0.6 1.9 4.9 -29.5 3.4 
  Transport and communication 6.4 2.0 -3.6 4.1 0.9 
  Finance -0.5 3.1 5.2 9.9 13.9 
  Business -5.2 8.2 3.0 5.4 15.2 
Table I.1 (cont'd)  
                                                      
1 The authorities consider that government subsidies have helped to lower household income inequality 
in Brunei as measured by the Gini Coefficient, which declined from 0.413 in 1998 to 0.401 in 2005. WT/TPR/S/196/Rev.1 Trade Policy Review 
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      2002 2003 2004 2005 2006 
  Real estate and ownership of  dwellings 2.8 -1 .1 0.3 1.2 0.3 
  Private health and education 33.6 9.0 7.2 68.3 1.8 
  Other services 2.3 -5.9 -10.5 -3.9 5.9 
   (Per cent) 
Share of main sectors in current GDP      
Oil and gas sector 52.9 57.2 61.9 66.4 68.8 
 Oil and gas mining 40.4 44.5 50.7 55.9 59.4 
 Oil and gas manufacturing 12.5 12.7 11.2 10.5 9.4 
Non-oil and gas sector 47.1 42.8 38.1 33.6 31.2 
 Government services 16.3 14.8 13.4 11.6 10.9 
 Private sector 30.8 28.1 24.7 21.9 20.3 
  Agriculture, forestry and fishery 1.1 1.2 1.1 0.9 0.7 
  Non-oil & gas manufacturing 3.2 2.6 2.1 1.8 1.1 
  Electricity and water 0.9 0.9 0.7 0.7 0.6 
  Construction 3.7 3.5 3.2 2.6 2.9 
  Wholesale and retail trade 3.9 3.6 3.3 2.9 2.6 
  Hotels and restaurants 0.6 0.6 0.5 0.4 0.4 
  Transport and communication 4.1 3.9 3.4 2.9 2.7 
  Finance 3.4 3.1 2.8 3.0 3.0 
  Business 4.6 3.8 3.3 2.9 2.9 
  Real estate and ownership of  dwellings 3.9 3.5 3.1 2.6 2.3 
  Private health and education 0.5 0.5 0.5 0.7 0.6 
  Other services 1.0 0.9 0.7 0.6 0.5 
Memorandum      
Population ('000) 340.8 348.8 359.7 370.1 383.0 
 Annual rate of increase (%) 2.4 2.3 3.1 2.9 3.5 
Migrant workers ('000) .. .. .. .. 76.0 
Life expectancy at birth (years) 75.8 75.9 76.1 75.8 .. 
Infant mortality rate (per 1,000 live births) 8.3 9.5 8.8 7.4 6.8 
.. Not available.  
Source :  Department of Statistics, Department  of Economic Planning and Development, Brunei Darussalam Statistical 
Yearbook 2005 and 2006;  and Brunei Darussalam Key Indicators (various issues) ;  and data provided by the 
authorities . 
3. Petroleum's large share of GDP has continued to be a cause for concern in recent years, 
mainly due to fluctuating international prices, whic h leaves Brunei vulnerable to an eventual depletion 
of resources over the next two to three decades.  Since 2000, when the Government issued a landmark 
report acknowledging the country's lack of a sufficiently diversified economic base2, a series of plans 
to reduce unemployment, attract new foreign i nvestment, and restructure the economy away from 
over-dependence on limited petroleum reserves have la rgely failed to achieve the desired changes.  
                                                      
2 Following the regional crisis and the collapse of the local Amedeo Developm ent Corporation (ADC), 
Brunei's largest non-government employer, the Government set up the Brunei Darussalam Economic Council 
(BDEC) in 1998 to examine the economic situation of the country.  In its report, the BDEC warned that the 
Bruneian economy was unsustainable,  citing the inability of income grow th to keep pace with the rising 
population and unemployment;  the Government's chronic budget deficit;  and Brunei's weak private sector.  
Highlights of the report can be found in the 2001 Trade Policy Review of Brunei (document WT/TPR/S/84, 
pp. 5-6).  The Secretariat of the BDEC was subsequently renamed the Department of Economic Planning and Development, and moved to the Prime Minister's Office. Brunei Darussalam WT/TPR/S/196/Rev.1 
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(2) RECENT ECONOMIC DEVELOPMENTS  
(i) Macroeconomic performance 
(a) Overall trends 
4. By the start of the review period in 2002, the overall level of economic activity had recovered 
from the recession of the late 1990s.3  Real GDP growth picked up from 2.7% in 2001 to 3.9% in 
2002, reflecting increased production of oil and gas and government development spending.  GDP 
growth slowed to 0.5% and 0.4%  in 2004 and 2005 respectively, owing to temporarily lower oil and 
gas production as production facilities were repair ed and upgraded.  Non-oil economic activity, 
however, strengthened, reflecting large oil reve nue inflows and increased government spending.  
Based on the new national accounts data for 2006, annual economic growth was estimated to have 
been 5.1%, due primarily to high energy prices and thus strong earnings from oil and gas exports 
(Table I.2).  The non-oil and gas sector, benefiting fr om the spillovers from higher oil prices, grew by 
4.5% year-on-year.  
Table I.2 
Selected macroeconom ic indicators, 2002-06  
  2002 2003 2004 2005 2006a 
National accounts (Percentage change) 
Real GDP (2000 prices) 3.9 2.9 0.5 0.4 5.1 
Consumption -0.7 6.3 8.4 -0.8 7.8 
Private consumption expenditure 0.7 15.8 12.3 -0.6 3.7 
Government consumption expenditu re -2.0 -2.6 4.1 -1.0 12.8 
Gross fixed capital formation 43.2 -21.0 2.9 0.8 1.7 
Exports of goods and non-factor services 5.8 2.3 -0.7 -1.3 3.7 
Imports of goods and non-factor services 13.3 -8.1 3.8 2.8 4.1 
Unemployment rate (%) 3.5  4.5  3.5  4.3  4.0  
Prices and interest rates (Per cent) 
Inflation (CPI, % change (2000=100)) -2.3 0.3 0.9 1.1 0.2 
Deposit rate (end-of-period) .. 1.06  1.04  1.01  1.04  
Prime lending rate (end-of-period) 5.50  5.50  5.50  5.50  5.50  
Money credit (end period)b (Percentage change) 
M1 9.8 3.0 9.0 1.3 10.9 
M2 1.9 4.0 16.0 -4.5 2.2 
Credit to private sector  4.3 3.4 6.4 3.5 -0.9 
Exchange rate      
B$/US$ (annual average) 1.791  1.742  1.690  1.664  1.589  
Real effective exchange rate (% change) -1.0  -1.8  -0.6  0.8  .. 
Nominal effective exchange rate (% change) -1.5  -2.7  -2.2  -0.6  ..  
Table I.2 (cont'd) 
                                                      
3 Brunei's abundant natural resources had for years ensured a high st andard of living for its citizens.  A 
combination of internal and external shocks during 1997 and 1998, however, led to a contraction of the 
economy in 1998.  Contributing factors included a sharp decline in international petroleum prices, the regional 
economic crisis, and the collapse of the Amedeo Corporation, which had interests in a number of sectors, 
including construction and telecommunications services.  Although the shocks were cushioned by transfers from 
the Brunei Investment Agency (BIA), fluctuations in inte rnational petroleum prices in particular highlighted the 
need for a more stable source of gov ernment revenue (e.g. by widening the tax base) and policies to encourage 
economic diversification and private-s ector participation in the economy. WT/TPR/S/196/Rev.1 Trade Policy Review 
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  2002 2003 2004 2005 2006a 
 (Per cent of GDP, unless otherwise indicated) 
Government balancec -5.0  5.5  11.3  21.1  21.3  
Revenue 40.8  55.8  48.1  53.2  50.0  
Tax revenue 22.3  30.0  27.7  33.1  30.0  
Non-tax revenue 18.5  25.8  20.4  20.1  20.0  
Expenditure 45.8  50.3  36.8  32.1  28.7  
Current expenditure 36.1  40.2  30.1  25.8  21.9  
Capital expenditure 9.7  10.1  6.7  6.4  31.0  
Government total debt (end-peri od, calendar year) ..  .. .. .. .. 
Domestic debt  ..  .. .. .. .. 
Saving and investment       
Gross national savings 47.2  48.6  51.4  59.1  62.4  
Gross domestic investment 21.3  15.1  13.5  11.4  10.4  
Savings-investment gap 26.0  33.6  37.9  47.8  52.1  
External sector      
Current account balance  42.5  49.6  47.9  56.0  60.2  
Net merchandise trade  37.5  48.3  47.3  50.7  56.8  
Merchandise exports 63.4  67.4  64.2  65.6  70.0  
Oil and gas 55.8  59.1  58.7  61.8  66.5  
Merchandise imports 25.8  19.1  17.0  14.8  13.1  
Services balance -7.9  -9.1  -6.7  -5.2  -4.4  
Capital account -0.0  -0.0  -0.1  -0.1  .. 
Financial account -6.9  -24.3  -26.3  -20.6  .. 
Direct investment 4.0  1.9  0.9  1.8  .. 
Overall balance of payments 0.8  0.7  0.3  -0.1  .. 
Errors and omissions -34.8 -24.6 -21.2 -35.4 .. 
Merchandise exports (% change) 1.7  19.4  14.4  23.6  29.4  
Merchandise imports (% change) 37.3  -16.9  6.5  5.8  7.6  
Service exports (% change) -10.6  -0.5  24.8  13.6  19.9  
Service imports (% change) -16.2  14.8  4.4  3.4  8.5  
Foreign exchange reservesd (US$ million, end-period) 437.8  481.5  505.1  494.2  523.3  
in months of importse 2.3  2.4  2.4  2.2  .. 
Total external debt (US$ b illion;  end-period) .. .. .. .. .. 
Debt service ratio .. .. .. .. .. 
.. Not available.  
a Provisional. 
b M1 equals the sum of currency outside deposit money banks an d demand deposits other than those of the central government.  
M2 equals M1 plus time , savings, and foreign currency deposits of resident sectors other than central bank. 
c From 2004, Brunei's government data cha nged from calendar year to fiscal year (April-March).  Data for 2003 include 
January 2003 to March 2004. 
d Excluding gold and including SDR holdi ngs and reserve position in the Fund. 
e Next year's imports of goods and services. 
Source : Department of Economic Planning and Development, Brunei Darussalam Statistical Yearbook 2006 and Brunei 
Darussalam Key Indicators (various issues) ;  IMF, International Financ ial Statistics;  IMF Country Report 
No. 06/428, Brunei Darussalam:  Statistical Appendix, December 2006;  and data provided by the authorities.  
5. With an expected decrease in oil and gas output , real economic growth for 2007 is expected to 
be sluggish.  The IMF estimates a growth rate of 1.9%4, and the Brunei authorities' published figures 
for the first two quarters of 2007 show growth of  0.3% in the second quarter following negative 
growth of 3.6% in the first three months of 2007.5  Furthermore, the non-energy sector, helped by the 
                                                      
4 IMF (2007). 
5 Department of Economic Planning and Development (2007b). Brunei Darussalam WT/TPR/S/196/Rev.1 
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construction of a methanol plant, is recording stead y growth in Brunei, which would be more in line 
with long-term economic plans.  Although petroleu m products still account for more than two thirds 
of the economy, the contribution of financial services , food retailing, and private health and education 
to GDP growth has increased in recent years.  
(b) Employment 
6. Brunei's population is growing at an annual ra te of about 3%, and reached an estimated 
383,000 in 2006 (Table I.1).  Out of an estimated working-age population of 180,400 in 2006, about 173,100 were economically active (Table I.3).  Rela tively high salaries and generous benefits offered 
by the Government continue to act as a disincen tive to private sector employment, and according to 
the latest Labour Department statistics, 25% of  the working population is employed by the 
Government.   
Table I.3 
Brunei labour statistics, 2001-06 
 2001 2002 2003 2004 2005 2006 
Labour force ('000) 154.2 158.8 158.9 164.4 169.2 180.4 
Employed ('000) 145.6 153.3 151.8 158.6 162.0 173.1 
Labour force participation rate (%) 69.3 69.8 69.8 69.9 70.0 71.7 
Unemployed ('000) 8.6 5.5 7.1 5.8 7.2 7.3 
Unemployment rate (%) 5.6 3.5 4.5 3.5 4.3 4.0 
Government sector employment 
(number of persons)       
Total government employees 39,671 41,066 41,505 42,191 43,469 43,516 
Division I:  heads of 
department/section 566 599 640 662 711 788 
Division II:  Senior officers 5,447 5,736 6,165 6,759 7,351 7,615 
Division III:  Supervisory 10,062 10,400 10,269 10,266 10,206 10,167 
Division IV:  Clerical and opera tors 11,358 11,644 11,651 11,571 11,818 11,618 
Division V:  Clerical and opera tors 12,238 12,687 12,780 12,933 13,383 13,328 
Private sector employment by 
industry (number of persons)       
Agriculture, forestry, and fishing 3,942 4,235 4,196 4,465 4,832 .. 
Production of oil and liquefied natural 
gas 3,701 3,920 4,215 4,590 4,379 .. 
Sawmilling and timber processing 628 701 662 681 673 .. 
Other mining, quarrying, and 
manufacturing 16,304 19,098 19,204 21,560 18,508 .. 
Construction 27,597 28,667 28,315 27,236 26,900 .. 
Wholesale and retail trade 16,537 15,144 16,280 16,740 16,863 .. 
Coffee shop, restaurants, and hotels 8,404 7,926 9,239 9,582 10,079 .. 
Transport, storage, and communication 5,232 5,063 5,174 5,122 5,258 .. 
Financial, insurance, and business 
services 6,522 6,739 6,854 7,082 7,475 .. 
Other community, social and personal 
service activities 9,505 9,098 10,681 11,413 11,853 .. 
All industries 98,372 100,591 104,820 108,471 106,820 .. 
.. Not available. 
Note: Between 2001 and 2005, figures for government sector employ ment plus private sector employment are approximately 5,000 to  
12,000 lower than the number of employed (shown in line 2), depending on the year. 
Source: Department of Economic Planning and Development ( 2006 and 2007), "Labour Department's Annual Census on 
Employees", Brunei Darussalam Statistical Yearbook  2005 and 2006 . WT/TPR/S/196/Rev.1 Trade Policy Review 
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7. Other large-scale employers are Brunei Shell Petroleum and Royal Brunei Airlines.  The 
"Bruneization" policy, which encourages companies to give preference to Bruneians in their employment policies, and which was put in place to reduce unemployment among Bruneians, has 
been successful mainly in the government and petroleu m sectors.  It is estimated that over 90% of the 
Bruneian labour force are employed by the public sector, including state-owned enterprises.  In the 
private sector, chronic labour shortages, in professi onal and unskilled areas, have been alleviated by 
the recruitment of foreign workers, who made up an  estimated 44% of the total working population in 
2006.  According to the latest (2005) figures for the private sector, employment is concentrated in the construction sector (over 17% of total employment ), followed by non-oil and -gas mining, quarrying, 
and manufacturing (11%) and wholesal e and retail trading (10%).   
8. Despite the need for foreign workers and th e underlying excess demand for labour, registered 
unemployment is estimated at about 4%, owing to the reluctance of Bruneians to accept manual-type 
employment (in construction, for example) and an apparent mismatch between vacancies and suitably qualified candidates.  It seems, however, that  actual unemployment may be higher, as many 
unemployed people fail to register, particularly teenagers.  The Brunei Darussalam Economic Council 
suggested almost ten years ago, that economic growth must be faster in order for Brunei to absorb its 
growing labour force.  The Government has thus b een encouraging economic diversification, mainly 
into manufacturing and services, especially financial services, tourism, and transport.   
9. Despite encouragement and a recent freeze in govern ment salaries, it has been difficult for the 
private sector to compete for labour.  The Govern ment remains the most attractive employer in 
Brunei;  the annual salary is supplemented by various allowances and benefits including rent subsidy, 
low interest housing and car loan s, and an allowance for the haj pilgrimage.  This is the case in 
particular for small and medium-sized enterprises (SMEs), which are encouraged by the Government 
through various tax and non-tax incentives.  The au thorities, however, maintain that the gap between 
public and private sector salaries has been declining owing to a freeze on salaries in the public sector.  
10. An Employees Pension Fund, created in January  1993, required mandatory contributions by 
employers  for private-sector employees, in the hope that this would improve the attractiveness of jobs 
in the private sector.  In addition, the Government  pledged to increase expenditure devoted to human 
resource development during the 8
th Plan period (2001-05). 
(c) Prices 
11. Overall, inflation, as measured by changes in  the CPI, has remained subdued at (mainly) 
under 1%, supported by the currency board arrangemen t fixing the exchange rate at par with the 
Singapore dollar.  Consumer prices rose by 1.2% in 2005 before falling back to  0.2% in 2006.  While 
inflation in Brunei has generally moved in line with  trend price developments in Singapore, because 
of the currency peg, deviations in overall annua l inflation performance can arise through supply 
disruptions, changes in administered prices, price developments in the non-traded goods sector, and 
the composition and pattern of imports.  Inflation continues to be constrained by the imposition of 
price controls and subsidies on essential foods and petrol.  
(ii) Macroeconomic policies 
(a) Fiscal policy  
Overview 
12. With revenue heavily dependent on petroleum and natural gas, and a narrow tax base 
(consisting mainly of corporate taxes levied on oil and gas companies), the overall budget was in Brunei Darussalam WT/TPR/S/196/Rev.1 
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deficit in 2002, at 5% of GDP, but rising petroleum prices have resulted in a surplus, reaching an 
estimated 21% of GDP in 2006.  In 2006, tax revenue accounted for 30% of GDP, a considerable increase over its 2002 share (22%) due to higher in come tax receipts from oil and gas companies 
(Table I.2 and Table AI.1).  Non-tax revenue increased its share of GDP in the same period from 
18.5% to 20%, due mostly to o il/gas-related dividends and to roya lties rising from B$1.6 billion to 
B$2 billion.  
13. Brunei's economic growth is due in large part to  high energy prices.  The saving of windfall 
revenues associated with those high energy prices has helped stabilize the economic cycle and provided a comfortable fiscal position.  The fiscal  surplus for FY2005/06 was much larger than 
budgeted due to high energy prices and slow expend iture execution.  Energy-related revenues were 
more than double the budget projections, which we re based on an average oil price of US$25 per 
barrel.  The FY2006/07 budget, projected to be in balance, and presented for the first time to the 
Legislative Council, is also based on conservative oil and gas price assumptions, suggesting another 
significant revenue windfall.   
14. The Ministry of Finance has apparently dr awn up a strategic plan aimed at achieving 
long-term fiscal stability
6;  minimizing the economic impact from short-term revenue volatility, and 
preparing for the eventual depletion of hydro carbon reserves;  strengthening non-oil revenues;  
containing the size of the government and public secto r wage bill;  and reducing subsidies.  The IMF 
has pointed out that fiscal management could be  further strengthened by improving the governance 
framework for the two oil-related funds7, the Consolidated Fund and General Reserve Fund.  
Revenue 
15. Government revenues  continue to be dominated by receipts from the hydrocarbon sector in 
the form of corporate income tax, royalties, and dividends.  Consequently, re venues fluctuate with oil 
and gas production and prices, and the profitability of the oil and gas industry.  Oil and gas sector 
revenue as a share of total revenue increased from 87 % in 2001 to 94% in 2006 (Table AI.1).  With 
over 90% of revenues coming from oil and gas, sust ainability appears to be the main medium-term 
concern. 
16. In 2006, royalties and dividends from oil and g as accounted for 89% of total non-tax revenue, 
while corporate taxes from oil and gas companies accounted for some 98% of total corporate tax 
revenue.  Brunei has no personal income tax or sales ta xes.  The corporate income tax rate is 55% for 
petroleum companies and natural gas companies, bot h of which pay taxes on a quarterly basis, and 
30% for all other companies that are not included under tax exemption schemes.  Corporate tax 
accounted for the largest share of tax revenue in 2006 at around 98%;  the other major tax is customs 
duty, which accounted for around 1.9%, down from 4.8%  of tax revenue in 2002.  Other minor taxes 
are those on goods and services, estate duty, and stamp duty.  
Expenditure 
17. The Government's budgetary expenditure consists  of current expenditures (which includes 
public sector salaries, pensions and gratuities, a nd operational costs) and capital expenditure (which 
includes "development expenditure" or spending d ecided in the context of the five-year NDPs).  
Brunei's budget policy is founded on the principle that  all its people should share in the revenues from 
the exploitation of oil and gas and, based on this  policy, current expenditure has provided public 
                                                      
6 It is not clear whether this includes a broadening of the tax base. 
7 IMF, Public Information Notice No.06/137, December.  Viewed at:  http://www.imf.org/ 
external/np/sec/pn/2006/pn06137.htm.  WT/TPR/S/196/Rev.1 Trade Policy Review 
Page 8 
 
 
sector employees with generous remuneration and an elaborate welfare system.  Current expenditure 
accounted for over one third of GDP in 2002;  th is fell to 23% of GDP in 2006 (Table AI.2), 
reflecting restraints on government salaries and empl oyment.  Nevertheless, it appears that since 2006 
the Government again needs to monitor its growin g expenditures following a salary increase for civil 
servants and recent increases in 2007 for h ealth and education expenditures.    
National Development Plan and other expenditure 
18. While the main objective of NDPs has been to diversify the economic base through expansion 
of agriculture and industry, the emphasis has tended to shift on different spending categories.  Under 
the 8th NDP (2001-05), for example, the structural reforms to promote economic diversification 
included:  encouraging oil and gas downstream activities, such as petrochemical and gas-based 
industries and refining;  promoting Brunei as a serv ices hub for tourism, transhipment, and promotion 
of the Brunei international financia l centre;  and developing agriculture  and fisheries, to provide for 
Brunei's domestic requirements and promote exports of halal food.  The aim was to achieve economic 
growth of 5% to 6% per annum during the plan peri od, noting that productivity needed to be enhanced 
in value-added activities including technology-intensive industries.8  B$7.3 billion was allocated for 
the 8th Plan, of which the Government intended to pr ovide only B$2.9 billion.  For the first time, 
foreign and local investors were to supply the remaining funding.    
19. Expenditure under the 8th Plan was concentrated in social services (19.9% of total 
development spending), public utilities (16%), tran sport and communications (11%), and industry and 
commerce (15%).9  In FY2005/06, actual expenditures were around 90% of the full-year target, 
mainly due to slow execution of development spe nding.  It appears that generally disbursement 
increasingly fell behind schedule, reflecting in part a lack of administrative capacity.  The authorities 
have provided a brief assessment of progress under the pl an and the extent to which targets were met;  
annual economic growth during the period was under ha lf of the targeted growth (Box I.1).  The 
authorities have indicated to the Secretariat that after 20 years of development, significant achievements were made in improving the quality of lif e, maintaining a low inflation rate and a clean 
and healthy environment.  However, progress has been slow to moderate in human resource 
development, maintaining full employment, increasing  the level of productivity, and the development 
of the non-oil and gas industry.    
20. Other expenditures are made through a number of government funds.  The General Reserve 
Fund (GRF), administered by the autonomous Brunei I nvestment Agency (BIA), is a sovereign wealth 
fund containing savings set aside for future generati ons;  information on this fund is not available as 
the BIA presents its accounts only to the Sultan.  Th ere are two other reserve funds:  the Consolidated 
Fund (CF), administered by the Ministry of Fina nce, comprising the Government's tax and non-tax 
revenues (including transfers from the GRF), and fro m which the Government's ordinary and charged 
expenditures are paid;  and the Development Fund, allocated in accordance with the NDP from which 
development expenditures are paid.  The Govern ment Trust Fund, another extra-budgetary fund, 
finances loans on favourable terms to government employees.   
                                                     
 
8 Brunei Darussalam National Development Plan Committee (2001),  p. 20. 
9 Brunei Economic Development Board  (undated) . Brunei Darussalam WT/TPR/S/196/Rev.1 
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Box I.1:  Assessment by the Brunei authorities of the 8th National Development Plan (NDP) 
The 8th NDP, which began in 2001 and ended in 2005, was the fourth and last phase in the implementation of 
the 20-year long-term national development plan, which started in 1986. 
The objectives of the 8th NDP were to:  improve the quality of life of the people;  maximize the economic 
utilization of national resources;  de velop non-oil industries  (diversification of the economy);  accelerate 
human resources development so as to meet demand of an increasingly sophisticated economy;  maintain full 
employment and increase productivity;  maintain a moderate rate of inflation;  foster a more disciplined, 
self-reliant, and caring society;  encourage and nurture the development of Rakyat Melayu (Malay Citizen) as 
leaders of industry and commerce;  and  have a clean and healthy environment. 
The 8th NDP achieved some of its objectives in terms of developing the transport and communications sector, 
though it encountered difficulties in several key areas, such as increasing the contributions of the non-oil and 
private sector to GDP.  
There have been significant achievements in some of the development objectives, such as quality of life, low 
inflation rate, and a healthy environment.  More progress has been made in the development of non-oil 
industries and the creation of a disciplined and caring society vis-à-vis  the fostering of self-reliance and the 
advancement of Malay citizens  as leaders of indu stry and commerce. 
On the economic front, progress has been mixed.  After a period of robust growth during the 1990s, Brunei's 
economy has shown signs of weakness in the afte rmath of the Asian financial crisis.  The 8th NDP did not 
achieve the desired target of annual growth in GDP of 5-6 %:  average gr owth for the past few years has only 
been 2.1%.  However, this average growth rate  is better than the 1.3% rate during the 7th NDP.  
The difficulties in meeting the targets were attributed to:  over-dependency on the oil and gas sectors;   
continued reliance on fiscal stimulus from Government's development projects;  human resource constraints;   
a relatively small presence of the priv ate sector;  and a small domestic mark et due to a very small population. 
Source: Brunei authorities. 
(b) Monetary and exchange rate policies 
21. There is no central bank in Brunei.  The Ministry of Finance – through the Treasury, the 
Brunei Currency and Monetary Board (BCMB), the Financial Institutions Division, and the Brunei 
Investment Agency – exercises most of the functions of a central bank.  The Brunei Currency and 
Monetary Board Order 2004, which took effect on 1 February 2004, replacing the outdated Currency 
Act of 1967, established the BCMB.10  The BCMB is the sole authority to issue and manage currency, 
and to maintain external reserves to safeguard the international value of the currency.  Under the 2004 
law, the BCMB may purchase, sell, discount, a nd rediscount Treasury Bills and short-term 
government securities denominated in Brunei dollars.  
22. The Brunei authorities, who have limited moneta ry institutional capacities, remain committed 
to maintaining the Currency Interc hangeability Agreement with Singapore.11  Under this, Brunei has a 
currency board arrangement (CBA) whereby the Br unei dollar is pegged to the Singapore dollar at 
                                                      
10 According to the IMF, to further strengthen the credibility of the currency board arrangement, the 
BCMB should increase the minimum st atutory foreign exchange coverage from 70% to 100% in line with 
international best practices and the actual coverage (IMF, 2006, p. 3). 
11 The Brunei dollar is issued by th e Brunei Currency Board only agains t payments in, and at par with, 
the Singapore dollar, under the Currency Interchangea bility Agreement, signed between the Brunei Currency 
Board and Singapore's Board of Commissioners of Currency of Singapore in 1967.  Brunei's Currency Board deals only in Singapore dollars and does not quote rates for other currencies.  There are no restrictions on 
commercial banks dealing in other foreign currencies and no exchange controls are imposed except on gold and 
jewellery, for which only banks licensed to operate in gold and jewellery may buy and sell gold bars.  There are no capital controls, and no distinction is made between accounts held by Brunei nationals and non-nationals.  WT/TPR/S/196/Rev.1 Trade Policy Review 
Page 10 
 
 
parity.  The currency board system, anchored to  the Singapore dollar, precludes an independent 
monetary policy.   
23. The authorities appear to believe that the advantages of pegging the Brunei dollar to the 
Singapore dollar outweigh the disadvantages and that it imparts a high degree of stability to the 
financial system and the economy as a whole.  One possible disadvantage is that the resulting steady 
effective appreciation of the Brunei dollar may impe de the Government's efforts to diversify the 
economy and develop export industries.   (The currency has strengthened steadily, trading at B$1.51 to 
the U.S. dollar in April 2007.) 
24. As with the exchange rate, trends in interest rates closely follow those in Singapore.  Brunei's 
prime interest rates are set each month by th e Brunei Bankers' Association, usually within a 
0.25-0.5% margin of corresponding rates in Singa pore, and act as a benchmark lending rate for 
commercial banks.  The prime lending rate has remain ed a constant 5.5% since 2000.  The authorities 
do not believe that prevailing interest rates in a ny way impede economic sector growth in Brunei.  
(iii) Balance of payments 
25. Sizable hydrocarbon exports and the steady accumulation of long-term foreign assets over 
many years have provided Brunei with a comfortabl e external payments position.  During the period 
under review, Brunei's petroleum and natural gas rese rves have in general ensured a sizeable surplus 
on the trade balance.  Reflecting high energy prices,  the external current account surplus widened to 
56% of GDP in 2005 from 48% in 2004 and reached 60%  in 2006 (Table I.2).  This large surplus 
reflects the sizeable gap between savings and investment.   
26. While the merchandise trade surplus grew from 37.5% of GDP in 2002 to more than 50% in 
2006, the deficit on the services balance remained be tween 4% and 9%.  Net outflows have occurred 
in the form of payments for foreign travel, trad e-related transport, and occasionally high professional 
fees in the oil and gas sector.  Both the trad e and current account surpluses have shown increasing 
trends since 2002, due mainly to improved petroleum prices, but also to lowe r levels of imports over 
previous years.  The value of exports as a sh are of GDP grew from around 63% in 2002 to 70% in 
2006, while merchandise imports declined from 26% to 13%. 
27. However, the overall balance of payments has recorded only small surpluses, of 
US$24 million to 46 million since 2002;  and a defic it of US$11 million was recorded in 2005, owing, 
it appears, to huge unexplained negative ite ms in the errors and omissions category.12  
28. According to the Economist Intelligence Unit,  Brunei's foreign assets are estimated at 
US$30 billion, down from an estimated US$80 billion in the early 1990s.13  The assets generate 
considerable investment income, which in many y ears seems to have exceeded the combined revenue 
from oil and gas, although the lack of available da ta on the Government's investment income renders 
the level of transparency of the BIA rather low.   According to the Brunei Investment Agency Act14, 
the main aims of the BIA are the holding and management of the General Reserve Fund and all 
external assets of the Government, and providing money management services.  The operations of the 
BIA are secret and Article 12 of the Act on the preservation of secrecy states that "no director, officer or employee of the Agency shall disclose to any pe rson any information relating to the affairs of the 
                                                     
 
12 According to data published by the IMF, errors and omissions were (in US$):  2002:  -2 billion;  
2003:  -1.6 billion;  2004:  -1.7 billion;  and 2005:  -3.4  billion.  The IMF notes that their "large scale reflects the 
lack of comprehensive balance-of-payments data" (IMF, 2006, p. 27). 
13 Economist Intelligence Unit (2007),  p. 20. 
14 Brunei Investment Agency (2002). Brunei Darussalam WT/TPR/S/196/Rev.1 
 Page 11 
 
 
Agency".  The BIA is reported to have holdings in the United States, Japan, ASEAN countries, and 
Western Europe.  A long-running dispute over billi ons of U.S. dollars, which it claimed were 
channelled from the BIA to private bank accounts during the 1990s, now appears to have been 
resolved.15 
(iv) Structural policies:  diversification of the economy  
29. The authorities' medium-term economic objectives, as elaborated in the 8th National 
Development Plan, for the period 2001-05, were to diversify Brunei's productive base away from its 
heavy dependence on oil and gas and enhance econom ic efficiency by expanding the role of the 
private sector.  The strategy to achieve these goals was based on a broad corporatization/privatization 
effort, greater foreign investment, and a more competitive labour market.   
30. However, in 2007 as Brunei embarks on a new plan, its economy seems to have become even 
more heavily dependent on the oil and gas sect or.  Despite the Government's emphasis on 
diversification, non-oil and gas manufacturing rema ins weak and underdeveloped, and has shrunk to 
under 2% of current GDP.  It would appear that, ove rall, Brunei's diversification policy has met with 
little success. 
31. Despite some privatization in several key sect ors of the economy, for example oil and gas, 
telecommunications, transport, and energy generation and distribution, there continues to be a strong 
government presence in the economy, often in the form of a state-owned monopolies, which can act unencumbered by any competition law.  It appears th at the resulting lack of competition has affected 
prices and the cost of doing business in Brunei.  The very small size of the domestic market seems to 
discourage local and foreign participation in th e economy and hampers the ability of non-oil and gas 
industries to achieve economies of scale and thus  to compete against imports as well as in export 
markets.   
32. The Government also continues to provide a wide range of subsidized public services and 
employs about half of the local labour force.  Ec onomic diversification remains seriously hampered 
by the relatively high level of remuneration in th e government sector;  the differential between public 
and private sector remuneration continues to act  as a serious disincentive to private sector 
employment.  Although tax and non-tax incentives ar e provided for investors in agriculture and a 
number of manufacturing activities, the non-oil, privat e sector – consisting mainly of SMEs providing 
around 90% of private sector employment – remains weak and dependent on government spending on 
construction and services. 
33. The Brunei Economic Development Board, formed in 2001, has adopted a new approach to  
attract foreign direct investment (with a target of  US$4.5 billion) and job creation (7,700 new jobs by 
2008) in a few large projects, including the Sungai Liang industrial site for petrochemical and manufacturing industries, which can capitalize on Brunei's proven gas reserves
16, and the global mega 
                                                      
15 In an article of 9 November 2 007, entitled "Hotels, houses, paintin gs and gems....the price of settling 
up with a sultan",  the Times  online  reported that the Privy Council in London, Brunei's court of final appeal,  
settled the dispute between the Sultan and his youngest brother, a former chairman of the BIA, who was 
reportedly ordered to surrender several assets, including two hotels, three houses, diamonds, paintings and cash.  
Viewed at:  http://business.timesonline.co.uk/tol/ business/law/article283643 9.ece?print=yes&rand... 
[9 November 2007]. 
16 In September 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.  The Government has approved the methanol plant and is in the final stages of considering the proposed ammonia urea plant.  If the project WT/TPR/S/196/Rev.1 Trade Policy Review 
Page 12 
 
 
port hub, which involves the construction of a deep water port facility (at Pulau Muara Besar).  Efforts 
to develop private sector activities not directly re lated to the hydrocarbon sector and its downstream 
activities appear to remain hampered.  Nevertheless, in the services sector, tourism and banking in particular are being encouraged with the development of the slow ly but steadily increasing activities 
of the Brunei International Financial Centre (BIFC).  
(3) D
EVELOPMENTS IN TRADE  
(i) Composition of trade 
(a) Trade in goods 
34. Brunei has had large surpluses on its balance of tr ade, owing to its exports of petroleum and 
natural gas.  At the beginning of the review peri od, Brunei exported three times more than it imported 
in value terms, and by 2006 the value of exports  was over four times higher than imports.  Brunei's 
merchandise exports were US$7.6 b illion in 2006, more than double their value in 2002.  Imports 
were US$1.7 billion in 2006, up from US$1.5 billi on in 2002. (Charts I.1 and I.2 and Appendix 
Tables AI.3 to AI.6).  The most significant devel opment in the structure of exports is the steadily 
increasing share of mineral fuels, which includes pe troleum and natural gas;  this rose from 88% in 
2002 to over 96% in 2006.  During the review period, clothing accounted for a major share of non-
mining and petroleum exports, declining from 5.8% in 2002 to under 2% in 2006.  Similarly, Brunei's exports of machinery and transport equipment decl ined from almost 5% of merchandise exports in 
2002 to around 1% in 2006. 
35. Brunei imports almost everything, including most foodstuffs and beverages.  Imports 
amounted to US$1.7 billion in 2006 up from US$1.5 billion  in 2002, a 12% increase.  The pattern of 
imports has not changed significantly;  manufactur ed goods, machinery and transport equipment, and 
miscellaneous manufactures accounted for over 79% of  total imports in 2006, down from nearly 85% 
in 2002.  At over 17%, agriculture accounts for an in creasing share of imports;  the majority consists 
of food imports, which grew from almost 14% of total merchandise imports to 17% during the period. 
(b) Trade in services 
36. Balance-of-payments data indicate that the ne t services deficit has been substantial since 
2001, when it was US$580 million and declining to US$466 million in 2006.  Payments for services 
imports have generally been either slightly mo re or slightly less than US$1 billion, and were 
US$1.2 billion in 2006.  In comparison, receipt s for services exports were under US$500 million 
between 1988 to 2003, increasing to US$617 milli on in 2005 and US$739 million in 2006.  A 
breakdown of the data by major service sub-sectors is included in Table AI.7.   
(ii) Direction of trade  
37. Brunei's merchandise exports are mainly destined  for the east Asian region.  Japan remains 
Brunei's largest trading partner, although its share in exports fell from 40% in 2002 to around 30% in 
2006.  Exports, mainly of natural gas, have incr eased significantly to Korea, which accounted for 
11.7% in 2002 and 15% in 2006.  ASEAN's share increased from 22.5% in 2002 to 24.8% in 2006, with Indonesia in particular importing substantial quantities of crude petroleum in 2006.  Outside the 
east Asian region, the shares of Australia and India have increased, whereas the shares of the 
United States and China have remained or declined.  The share of the Europ ean Union was negligible 
in 2006 at 0.2%.  
                                                                                                                                                                    
 
proceeds, the plant would be the largest urea manufacturin g operation in Asia, with a capacity to manufacture 
1.2 million tonnes of urea per year.   Brunei Darussalam WT/TPR/S/196/Rev.1 
 Page 13 
 
 
Chart I.1
Product composition of merchandise trade, 2002 and 2006
2002 2006
(a)    Exports (f.o.b.)
Crude oils
47.4
Total:   US$3,565.7 million Total:  US$7,636.1 million  
(b)    Imports (c.i.f.)
Iron & steel
5.5
Chemicals
6.1 Other 
transport  
equipment  
17.1Manufactures
84.9
Non-electrical 
machinery
8.3 Electrical
 machines  
9.3Mining
1.2
Other semi-manuf.
9.6Other
 consumer 
goods
7.4
Automotive products
11.2Mining
3.0Other
consumer
 goods
8.3
Electrical 
machines
9.6
Other  semi-manuf.   
10.7Other transport equip.  
2.6
Chemicals
10.5Manufactures
79.3
Non-electrical 
machinery
12.6
Total:   US$1,498.9 million Total:   US$1,676.2 million Per cent
Clothing
5.8Crude oils
67.3
Machinery & 
transport equipment
4.6Other
3.6
Natural gas, liquefied
39.3
Source :  UNSD, Comtrade database (SITC Rev.3).Textiles & clothing
10.4Agriculture
17.2Agriculture
13.6
Iron & steel
7.6Other
2.9
Natural gas, liquefied
29.0
Automotive
products
10.4Textiles & clothing
7.2Other
0.5Other
0.3
 WT/TPR/S/196/Rev.1 Trade Policy Review 
Page 14 
 
 
Chart I.2
Direction of merchandise trade, 2002 and 2006
2002 2006
(a)    Exports (f.o.b.)
Other 
Asia  
3.2
Asia
91.4
Total:   US$3,565.7 million Total:  US$7,636.1 million
(b)    Imports (c.i.f.)
Other 
Asia  
4.2
EC25
12.7Hong Kong, China  4.1United States
18.5
EC25
10.8Hong Kong, China   3.3Indonesia  2.8
Singapore
 17.4United States
9.0
Total:   US$1,498.9 million Total:   US$1,676.2 millionPer cent
Asia
92.9Other Asia  
          2.5
Japan
40.4
Australia  2.0United 
States
7.9 China
2.3
Other 
Asia  
5.0United 
States
6.7
Source :  UNSD, Comtrade database (SITC Rev.3).Japan
12.8Australia
12.2Australia
8.8
Asia
78.2Asia
67.7
Japan
13.7Other 
0.4
Thailand
13.3Other
0.7
Japan
30.6
Indonesia
19.8
Malaysia
21.6 China
3.9Thailand  3.7China
6.3
Korea, Rep. of
15.1Korea, Rep. of   
11.7
Other 
1.1Other
2.0Australia  2.6
Thailand
5.5
Singapore
18.1Malaysia
3.6India  4.9New Zealand  3.0
China
7.9Indonesia  2.4
Malaysia
15.0Singapore 
4.1
Singapore
2.5
 Brunei Darussalam WT/TPR/S/196/Rev.1 
 Page 15 
 
 
38. Merchandise imports also originate mainly in east Asia.  Malaysia has become the largest 
source of imports, increasing its share from 15%  in 2002 to nearly 22% in 2006, followed by 
Singapore whose share declined slightly from 18% to 17%.  Imports from ASEAN countries have 
grown steadily during the review period, to 48% in 2006, up from 39% in 2002, which suggests that 
the lowering of trade barriers within the ASE AN region through the ASEAN Free-Trade Agreement 
(AFTA) may have led to some trade diversion.  Over all, Asian countries have increased their share of 
imports to Brunei from two thirds to over three quart ers of total imports mainly at the expense of the 
United States and the EC whose shares declined fro m 18% to 9% and from 13% to 11%, respectively;  
the share of Hong Kong, China declined from 4% to 3% in the same period.   
(4) DEVELOPMENTS IN FOREIGN DIRECT INVESTMENT  
39. The authorities indicate that net foreign direct investment was slightly over US$1 billion in 
2002, then tripled to over US$3 billion in 2003.  Since 2003, FDI inflows have been somewhat 
volatile (Table I.4):  in particular, oil and gas e xploration and extraction accounted for virtually all of 
the US$3 billion inflows in that year and for most of  the inflows since then.  An investment recovery 
since the start of the decade shows that net FDI has grown impressively and has been significantly higher than pre-crisis levels of  around 4%, climbing to 17.7% of GDP in 2002, to an extraordinary 
46% in 2003, before reverting to its  more traditional level of betwee n 3% and 4%.  Most of the FDI 
flows went to the primary sector, in particular oil a nd gas, except in 2002, when more than half of 
foreign direct investment went to the tertiary sector.  
Table I.4 
Inflows of foreign direct investment by sector, 2002-06  
    2002 2003 2004 2005 2006a 
Total inflows of FDI (B$ milli on) 1,854.2 5,316. 8 347.6 481.9 689.6 
 (US$ million) (1,035.5) (3, 051.8) (205.7) ( 289.5) (434.0) 
 (as per cent of GDP) (17.7) (46.5) (2.6) (3.0) (3.8) 
  (Per cent of total) 
Agriculture, fishing, and forestry 0.2 0.0 0.0 0.0 5.6 
Oil and gas 40.1 97.8 74.8 69.0 76.9 
Manufacturing 3.1 1.2 12.9 22.1 15.0 
Construction 0.2 0.4 2.4 1.1 0.7 
Services 56.4 0.6 9.8 7.8 1.8 
 Wholesale and retail trade 0.8 0.3 6.3 5.6 1.3 
 Transport, storage, and communication 55.2 0.0 0.1 1.2 0.0 
 Hotels and restaurants 0.0 0.0 0.1 0.4 0.0 
 Real estate, renting, and business 0.0 0.3 2.8 0.6 0.4 
 Financial intermediation 0.0 0.0 0.5 0.0 0.0 
 Other  0.4 0.0 0.1 0.0 0.0 
a  Provisional.  
Source : Department of Economic Plan ning and Development (2007), Brunei Darussalam Statistical Yearbook 2006. 
40. FDI inflows have been dominated by investment from developed countries, the 
United Kingdom and the Netherlands being the tw o largest investors in 2002 and 2003.  Since 2004, 
the United Kingdom has remained by far the largest investor, followed by France (Table I.5).    
 WT/TPR/S/196/Rev.1 Trade Policy Review 
Page 16 
 
 
Table I.5 
Inflows of foreign direct in vestment by country, 2002-06  
    2002 2003 2004 2005 2006a 
Total inflows of FDI (B$ milli on) 1,854.2 5,316. 8 347.6 481.9 689.6 
 (US$ million) (1,035.5) (3, 051.8) (205.7) ( 289.5) (434.0) 
  (Per cent of total)  
ASEAN 2.1 1.2 9.3 6.8 2.2 
 Indonesia 0.3 0.1 0.5 0.4 0.0 
 Malaysia 0.6 0.5 6.3 4.9 1.8 
 Philippines 0.1 0.0 0.6 0.1 0.1 
 Singapore 0.9 0.5 1.8 1.4 0.4 
EC(25)b 62.9 95.6 68.8 69.2 69.9 
 France 4.6 0.0 0.0 1.5 19.3 
 Netherlands 27.6 34.9 0.0 0.0 0.0 
 Spain 1.5 0.0 0.0 0.0 0.0 
 United Kingdom 29.2 60.8 68.3 67.7 50.5 
Bermuda 1.6 0.0 6.6 6.5 7.7 
Canada 0.0 0.0 0.0 0.0 3.0 
China 0.0 0.0 1.4 0.0 1.1 
Hong Kong, China 0.1 0.1 1.0 0.1 0.0 
India 0.1 0.0 0.6 1.3 0.1 
Japan 28.5 0.1 7.6 7.0 8.1 
Korea, Rep. of 0.8 0.0 3.0 7.9 0.1 
Mauritius 0.0 0. 0 0.0 0.5 0.0 
New Zealand 3.8 2.8 1.0 0.0 0.0 
United States 0.0 0.0 0.0 0.0 7.3 
Other 0.1 0.1 0.8 0.7 0.5 
a Provisional.  
b Up to 2005 EC(15).  
Source : Department of Economic Plan ning and Development (2007), Brunei Darussalam Statistical Yearbook 2006.  
(5) OUTLOOK  
41. The major challenge to Brunei's economy stem s from its continuing high dependence on oil 
and natural gas.  The authorities need to deal  with volatile government revenue caused by energy 
price instability, and prepare for the depletion of o il and gas resources by creating sustained growth in 
the non-oil private sector, while reducing the role of the Government.  The Government recognizes 
the need for diversification away from petroleum a nd energy-based industries in the longer run, but to 
date Brunei's diversification policies see m to have met with little success.   
42. A key, internal, long-term risk continues to be the slow pace of the Government's 
diversification programme.  Implementation of the privatization plan, which has been ongoing for a 
decade or more, appears to have been slowed by  concern about the effect of privatization on 
government revenue and prices.  Despite investment  incentives, the private sector in Brunei remains 
small and weak (a point noted by the Brunei Daru ssalam Economic Council eight years ago), in part 
because the public sector continues to be pervasive  and provides attractive salaries with which very 
few private companies can compete.  Efforts to deve lop the private sector are also hampered by the 
limited availability of human resources, particular ly in the financial sector, which could reduce 
investor confidence.  Brunei Darussalam WT/TPR/S/196/Rev.1 
 Page 17 
 
 
43. A related factor is the apparent lack of tran sparency in government policies and the manner in 
which they are administered.  Foreign investment  policies, while encouraging investment in all 
sectors, are unclear about limits on foreign equity holdings and the sectors in which investment is restricted, thereby providing scope for discretion in  government decision-making.  According to the 
IMF, the financial and statistical database in Brune i is considered weak w ith regard to coverage, 
quality, timeliness, and frequency.  La ck of reliable and timely data on, inter alia,  investment income, 
balance of payments, monetary statistics, the labour market, and the national accounts, as well as 
scant or non-existent information about progress under  the latest National Development Plan appear 
to highlight the general lack of transparency, and thus public accountability, in the management of the 
economy.