WT/TPR/S/196 Trade Policy Review 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
1. During the period under review, new legislation in  Brunei has continued to be promulgated by 
the Sultan as "Emergency Orders", which carry the fo rce of law.  International agreements, including 
WTO Agreements, once ratified by the Sultan, the Head of State and the Executive under Brunei's 
Constitution, must be adopted throu gh national legislation to be enfo rceable in the country.  A number 
of changes and revisions relating to WTO provisions  have been made to national legislation on 
intellectual property rights, customs and excise, and i nvestment, including foreign direct investment.    
2. Regarding institutional developmen ts, after many years without a legislature in Brunei, the 
Legislative Council was reconvened as a wholly appo inted legislature in 2004, although no date has 
yet been set for a partial direct Legislative Council election.  Trade policy formulation and 
implementation was transferred from the Ministry of Industry and Primary Resources to the Ministry of Foreign Affairs and Trade in 2005, which works in cooperation with other agencies, notably the 
Ministry of Finance.  The institutional framework is  characterized by a lack  of transparency with 
respect to trade and trade-related policies, to the detriment of government accountability; in particular, 
there is no independent body to evaluate government policy and, as a consequence, to provide impetus 
for reform of policies that are found to be ineffective. 
3. Brunei has intensified its participation in regi onal and, for the first time, bilateral trade 
agreements.  It is active in ASEAN, the East Asia Growth Area, APEC, and the Trans-Pacific Strategic Economic Partnership Agre ement, as well as in bilateral re lations with the United States and 
Japan.   
4. Brunei sees foreign investment as playing a ke y role in its economic and technological 
development.  Seeking to promote private sect or development in non-oil and gas industries, it 
overhauled its investment laws and established th e Brunei Economic Development Board (BEDB) in 
2001 to promote Brunei as an investment destina tion.  The BEDB adopted a new approach to 
attracting FDI, focusing on a few large projects,  including a global mega port hub and downstream 
manufacturing industries using natural gas.  The G overnment expects these large-scale investment 
projects to improve the international image of Brunei , kick-start economic dive rsification, and provide 
significant employment opportunities for the local labour force.  
(1) G
ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK  
(i) Introduction 
5. The Constitution confers supreme executive authority on the Sultan, who holds the portfolios 
of prime minister, defence minister, finance minister, chief of the armed forces, Supreme Head of 
Islam, and chief of police.  In 19621, certain provisions of the Constitution (including those pertaining 
to elections and to the Legislative Council) were su spended, and the Sultan has since ruled by decree, 
promulgating new laws under the provision of Ar ticle 83(3) of the Constitution as "Orders".2  As was 
                                                      
1 In 1962, the then Sultan annulled legislative election results after the Brunei People's Party (BPP) 
won all 10 elected seats in the 21-member council.  The BPP then mounted an anti-monarchist insurgency that 
was put down by British troops.  The Sultan invoked constitutionally granted emergency powers, which remain 
in force, and began ruling by decree.  The Brunei National Solidarity Party is now one of only three legal 
political organization in the country.  In 1993, the Mukim (district) and Kampong (village) Consultative 
Councils were established in order for the people to air their views and concerns to the Government through 
locally elected village officials. 
2 Since 1986, the only bills introduced in the Legislative Council have been Supply Bills.   Brunei Darussalam WT/TPR/S/196 
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the case at the time of the previous Review in 2001, the power to promulgate new laws is vested 
solely in the Sultan.    
(ii) Executive authority  
6. In exercising his supreme executive authority,  the Sultan is assisted and advised by six 
councils:  Customs and Traditions  (Adat Istiadat ) Council, Religious Council, Privy Council, the 
Council of Ministers, Legislative Council, and C ouncil of Succession.  The Privy Council is presided 
over by the Sultan;  its main functions are to a dvise the Sultan on matters relating to prerogatives of 
the royal pardon, and on constitutional matters, an d bestow state honours and titles.  The Council of 
Succession determines succession to the throne, subj ect to the Constitution of Brunei Darussalam and 
the Succession and Regency Proclamation 1959.  Th e Legislative Council was rejuvenated in 2004 
and consists of not more than 45 members.3  The Council of Ministers consists of the Prime Minister 
and ministers appointed by the Sultan;  currently there are 13 Ministers. 
7. Ultimately, the Sultan has powers to makes laws  concerning peace, order, security, and good 
government.  Laws are still made in accordance with Article 83(3) of the Constitution, under which 
they are deemed to have been validly made, to be fully effectual, and to have had full force from the 
date on which a Proclamation of Emergency was declar ed or any Order made;  they are also deemed 
to have been passed by the Legislative Council. 
(iii) Legislative process  
8. In September 2004, the 21-member Legislative C ouncil was convened, for the first time since 
the country became independent in 1984, and a pproved several constitutional amendments, including 
one providing for the direct election of 15 member s of an expanded 45-member  Legislative Council.  
The remaining 30 members were to be appointed by the Sultan.  In September 2005, the Sultan dissolved the Legislative Council and appointed a ne w, enlarged Council co mprising 29 members:  
15 members of the previous Council were retained  and the 14 newcomers were mainly cabinet 
ministers appointed in May 2005 (including the Cr own Prince) and persons involved in district 
administration.  However, no timetable was establ ished for the elections for 15 of the eventual 
45 seats.  The Legislative Council held a six- day session in March 2006 to endorse the national 
budget for 2006-07, which it approved unanimously. 
9. During the period when the Council was suspen ded, laws were passed in the form of 
Emergency Orders by the Sultan, in accordance with Ar ticle 83(3) of the Constit ution.  The laws were 
drafted by the relevant government ministries (assi sted by the Attorney General's Chambers), or 
directly by the Attorney General's Chambers, if inst ructed to do so by the Sultan.  Draft legislation 
approved by the Sultan is passed as an  "Order" and published in the Government Gazette .  The 
law-making process by the Legislative Council is provi ded for under Part VII of the Constitution.  In 
theory, any member of the Legislative Council ma y introduce a new bill, propose a motion for the 
Council to debate, or present any petition to the C ouncil.  The bill, motion or petition will then be 
debated and disposed of in accordance with the St anding Orders of the Legislative Council.  Every 
bill to be introduced needs to be published in the Gazette  and within seven days of its publication, the 
bill is laid before the Legisla tive Council.  Certain matters, however, are excluded from discussion by 
the Legislative Council, unless the Sultan of Brunei approves otherwise. 
                                                     
 
3 Brunei Darussalam Revised Constitution 2004, Article 24(1). WT/TPR/S/196 Trade Policy Review 
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(iv) Judiciary  
10. Brunei's legal system is based mainly on English common law.  All judges are appointed by 
the Sultan.  The Supreme Court comprises the High  Court and the Court of Appeals, while the 
Subordinate Court consists of the Magistrate's  courts.  The High Court receives appeals from 
Magistrate's courts in the districts and is itself a c ourt of first instance for criminal and civil cases.  An 
appeal from the High Court is submitted to the Court of Appeals.  An Interpretation Tribunal exists, 
which the Sultan may refer to on questions invol ving the meaning, interpretation, purpose, 
construction, ambit or effect of any provisions of the Constitution.4 
11. A separate Syariah (Islamic) Court5 co-exists with the Supreme Court.  The structure of the 
Syariah Court is similar to the civil courts;  it c onsists of Syariah Subordi nate Courts, the Syariah 
High Court, and Syariah Appeal Court.  The Syariah Court in its criminal jurisdiction tries any Syariah criminal offences relating to Islamic fami ly law and in its civil jurisdiction, hears and 
determines all proceedings relating to marriage, maintenance of dependant s, wills, division of 
inheritance of property or any other matters in resp ect of which the jurisdiction is conferred under any 
written law.  
12. Overall, the authorities maintain that the stru cture of the judiciary has remained unchanged 
since 2002 and has no substantial effect on trade-rela ted and other economic policy formulation.  No 
trade dispute has ever been brought to the domestic courts.  The State of Brunei Darussalam cannot be 
brought before domestic courts on cases relating to WTO Agreements.  
(2) T
RADE POLICY OBJECTIVES AND ADMINISTRATION  
(i) Objectives 
13. Brunei's economy remains heavily dependent on revenue from oil and gas.  Small-scale 
manufacturers (mainly textiles and furniture) and pr imary production make up the rest of Brunei's 
merchandise economy.  Brunei has a low tariff regime and imports nearly all of its major 
manufactured products and around 80% of its tota l food requirements.  During the period under 
review, the Government has further sought to di versify the economy away from oil and gas as the 
primary source of revenue and econom ic activity by promoting private sector development in non-oil 
and gas industries.  The Brunei Economic Develo pment Board (BEDB) was set up in November 2001 
to stimulate the growth, expansion, and devel opment of the economy by promoting Brunei as an 
investment destination.  In January 2003,  the BEDB launched its two-pronged strategy6, through 
which it aims to attract US$4.5 billion in foreign direct investment and create 6,000 permanent new 
jobs by 2008.  The BEDB also recognizes that it is imperative for Brunei to develop its small and 
medium enterprises (SMEs) in order to achieve sustained growth in private sector income and 
employment.  
                                                      
4 A Pardons Board is also established under the re vised Constitution, whose function is to advise the 
Sultan in exercising his prerogative of mercy.  Its memb ers consist of the Attorney  General, the State Mufti 
(Mufti Kerajaan)  and three other members, who may be appointed for a term decided by the Sultan of Brunei.  
However, according to the authorities, the function of the Pardons Board is currently suspended.   
5 The Syariah Court is established under the Syariah Courts Act (Cap. 184);  it has jurisdiction to try 
any offences under Syariah Law. 
6 The first prong involves the development of the Sungai Liang area outside of Bandar Seri Begawan 
into an industrial site for petrochemical and manufacturing industries that will capitalize on Brunei's proven gas reserves;  the second prong involves the construction of  a deep water port facility at Palau Muara Besar. Brunei Darussalam WT/TPR/S/196 
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14. The Eighth National Development Plan (2001-05)  continued the emphasis of the sixth and 
seventh plans on diversification of the economy to  reduce the country's dependence on petroleum and 
natural gas.  These plans, although far from compre hensive, have delineated proposals for government 
investment in infrastructure, ser vices, and incentives, all aimed at  diversifying the economy and at 
increasing private sector participation.  In the 8th Development Plan, the Government has emphasized 
the need to diversify the economy through the expansion of agriculture and industry and the 
development of financial services, tourism, and comm unications technology.  Brunei aims to diversify 
into areas like communications technology, fina ncial services, halal (Muslim dietary law) food7, 
tourism and hospitality services, as well as downstream  oil and gas industries like petrochemicals, oil 
refining, and aluminium smelting (Box I.1).  Brunei would also like to turn itself into a major 
shipping hub.  According to the authorities, the completion of the 8th Plan marked the end of the first 
long-term plan (1984-2005).  Currently, a new, more comprehensive long-term plan is being 
formulated, together with supporting medium- and s hort-term plans.  Details have not been made 
available. 
15. Emphasis has been placed on the developmen t of Brunei as a service hub for trade and 
tourism.  Brunei sees itself as a bridge for the EAGA (East ASEAN Growth Area) member states to 
regional and global markets, and a gateway to EAGA markets for the rest of the world.  Ports, airport facilities, and tourism services are being upgraded as part of plans to build upon Brunei's telecommunications network, both regi onally and internationally.    
(ii) Policy implementation 
16. The Ministry of Foreign Affairs and Trade is th e lead agency for trade policy formulation and 
implementation and is responsible for negotiating, signing, and ratifying trade treaties.  The trade 
policy function was moved to the Ministry of Foreign Affairs (renamed the Ministry of Foreign Affairs and Trade in August 2005) from the Ministry of Industry and Primary Resources.  The trade policy function is carried out in cooperation with other government agencies, including the Ministries of Finance, Industry and Primary Resources, Devel opment, Communications, and Energy (Table II.1).  
In May 2005, the Sultan announced the creation of an Office of the Minister of Energy, working in 
conjunction with the Petroleum Unit, to improve  the management of hydrocarbon resources.  
Table II.1 
Ministerial/Departmental responsib ility for trade-related issues, 2007 
Ministry/Agency Competence 
Ministry of Foreign Affairs and Trade Trad e policy formulation a nd  implementation  
Prime Minister's Office  
Attorney General's Chambers Provision of legal advice, registry for Company's Act and Business Names 
Act 
 Intellectual property rights policy issues;  registry of trade marks and 
patents;  enforcement of all IPR laws except copyright  
Office of the Minister of Energy and Petroleum Unit Petrol eum and gas policy, pricing,  and exploration contracts 
Department of Economic Planning and Development 
(JPKE) Economic planning;  formulation of five-year national development plans 
Ministry of Industry and Primary Resources (MIPR)  
Department of Agriculture Agricu lture policy and incentives;  sanita ry and phytosanitary standards 
Table II.1 (cont'd) 
                                                      
7 According to the Australian Government, a joint Australian-Brunei halal food production and 
marketing export initiative was announced in February 2005 when the Sultan visited Australia.  Under the 
initiative, the two countries agreed to examine ways to develop a niche, high-quality halal export industry 
combining Australia's capacity as a producer of quality food products with Brunei's stringent halal certification standards (DFAT online information.  Viewed at:  http://www.dfat.gov.au/geo/brunei/Brunei_brief.html). WT/TPR/S/196 Trade Policy Review 
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Ministry/Agency Competence 
Department of Forestry Forestry policy and incentives 
Department of Fisheries Fisheries policy and in centives;  sanitary and phytosanitary standards 
Brunei Industrial Development Authority (BINA) Industrial development;  management of industrial sites;  investment 
promotion and approval;  training 
Investment Services Section Investment incentives;  administ ers the Brunei Economic Development 
Board Act, the Miscellaneous Licences Act;  Secretariat for the Projects Implementation and Technical Comm ittees for investment approval 
Tourism Development  Touris m regulation and development 
Brunei Economic Development Boarda Foreign investment approva ls, economic development 
Ministry of Development Infrastructure development;  sta ndards and conformance;  housing 
development;  land management 
Ministry of Finance  
Royal Customs and Excise Customs tariff;  va luation;  rules of origin;  duty drawback 
Treasury State budget;  taxes 
Brunei Investment Agency Outward foreign investment 
The Department of Information Technology and State 
Stores (ITSS) Procurement of food products such as salt, sugar, and rice  
State Tender Board (LTN) Government procurement 
Financial Institutions Division In surance and banking supervision 
Ministry of Communications  
Department of Civil Aviation Air transport regulation 
Land Transport Department Land transport regulation 
Marine Department Maritime transport regulation;  and maritime safety 
Ports Department Management of shippi ng, Muara Port, and Muara export zone 
Jabatan Telekom Brunei (JTB) was corporatized as 
TelBru Bhd (fully-owned government service 
provider) and AiTi (independent regulator) in April 
2006  Telecommunications services regulat ion and provision of local and 
international telecommunications services 
a The BEDB reports to the Minister of Foreign Affairs and Trade. 
Source : Government of Brunei Darussalam onlin e information.  Viewed at: http: //www.brunei.gov.bn/min_dept/index.htm;  
and information provided by the authorities. 
17. In formulating and drafting trade policy, and depending on the issues at hand, the opinions of 
non-governmental bodies may be solicited, although Brunei does not seem to follow a regular process 
of consultation with such bodies.  A number of economic committees have been formed, including the 
Human Resources Committee and the National Development Committee (NDC), which was 
responsible for formulating the recent national de velopment plan.  In 2004, the NDC was replaced by 
the Long Term Development Planning Body, wh ich formulates and reviews the development 
planning.  
(iii) Policy evaluation 
18. Brunei does not have an independent body to  evaluate government policy.  Under the 
Constitution, the Auditor General prepares an annual a udit of the financial statements to present to the 
Sultan and the Cabinet.   
(iv) Main trade-related laws 
19. In order for an international agreement to ta ke effect in Brunei Darussalam, it must be 
adopted through enabling legislation and gazetted to carry the force of law.  The provisions of the 
WTO Agreements or ASEAN trade agreements apply only when new or subsidiary legislation is 
passed to incorporate them into national laws.  During the period under review, new national laws 
were gazetted relating to provisions on customs va luation in the WTO and in ASEAN agreements.  Brunei Darussalam WT/TPR/S/196 
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Brunei's main trade and related laws include th e Customs Order and Excise Order, which regulate 
customs and excise procedures.  A number of laws a nd regulations are used to maintain phytosanitary 
and other health measures (Table II.2), and Brunei introduced legislation on securities in 2001 and banking in 2006.  
Table II.2 
Main trade-related laws in Brunei, 2007 
Law Subject 
Customs Order (2006) and related regulations Customs regulations;  preferential tariffs;  duty drawback;  
offences and penalties 
Valuation of Imported Goods Rules 2001  Defin ition of customs value consistent with WTO  
Customs (ASEAN Common Effective Preferential Tariffs Order) 2005; 
Customs (ASEAN Common Effective Preferential Tariffs) (ASEAN 
Integration System of Preferences) Order 2006 (not yet in force); Customs (Goods under early harvest programme) (Framework 
Agreement on Comprehensive Economic Cooperation between ASEAN 
and China) Order 2005;  and Customs Agreement on Trade in Goods of the Framework Agreement on 
Comprehensive Economic Cooperation between ASEAN and China 
Order, 2006 Adoption of ASEAN trade agreements  
Companies Act (1957) Registration of companies;  company law 
Securities Order (2001)  Governs financial exchanges, dealers and other relevant 
persons providing advice in resp ect of managing or dealing 
in securities  
Banking Order 2006 Licensing of banks;  balance sheets and information; 
control of banks 
Investment Incentives Order 2001  Investment  
Economic Development Board (Amendment) Order 2001 Foreign investment, economic development  
Income Tax Act (Amendment) Order 2001  Tax incentives  
Agricultural Pests and Noxious Plants Act (1962);   
Poisons Act; 
Misuse of Drugs Regulations 1984; Infectious Diseases Order 2003;  and 
Infectious Diseases (Quarantine) Regulations 2006 Sanitary and phytosanitary regulations  
Public Health (Food) Re gulations 2001;  and  
Public Health (Food) Act 2002 Food labelling 
Halal Meat Act Regulate the suppl y and importation of halal meat 
Income Tax (Petroleum) Act Cap. 119 Corporate tax on petroleum 
Income Tax  Act Cap. 35 Corporate tax on non-petroleum and gas companies 
Excise Order 2006  Excise taxes 
Price Control Act (1974) Price controls 
Copyright Order, 1999 Copyright protection 
Inventions Act Patents protection 
Trade Marks Act (2000) Trade marks 
Industrial Designs Order, 1999 Industrial designs 
Layout Designs Order, 1999 Layout designs of integrated circuits 
Financial Regulations, 1983 Government procurement 
International Banking Order, 2000; 
International Business Companies Order, 2000; 
International Takaful and Insurance Order, 2000;  and Mutual Funds Order, 2001 Regulation and licensing of bodies carrying on the business 
of international banking 
Source: Government of Br unei Darussalam. WT/TPR/S/196 Trade Policy Review 
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(3) TRADE AGREEMENTS AND ARRANGEMENTS  
20. As an original Member of the WTO, and a contracting party to the GATT since 
December 1993, Brunei is of the view that its economy will benefit from further multilateral trade 
liberalization.  Brunei Darussalam is committed to  applying MFN treatment to products coming from 
all WTO Members.  At the same time, regional agreements and trade liberalization in the regional 
context, particularly in ASEAN (and EAGA) and APEC  are considered to be important and have been 
pursued in the period under review to enhance ac cess to regional markets.  Brunei believes that 
regional and bilateral trade agreemen ts, if consistent with WTO rules and disciplines, could contribute 
to multilateral trade liberalization through the WTO.  
(i) Multilateral agreements 
21. Brunei is an original Member of the WTO.  At the 2005 WTO Ministerial meeting, it 
underlined its commitment to the WTO, which it sees as one of the most important pillars of world 
order, and expressed the hope that the Doha negotiati ons could find room for the principle of fairness 
and for "visible development" in the sense of chang es that improve day-to-day lives in the developing 
world.  Brunei fears a situation emerging that amounts to "every country and every region for itself" 
which, in developing nations, could affect  long-term peace, stability, and security.8  
22. Upon accession, Brunei, as a developing country ma de use of transitional measures available 
under some of the WTO Agreements, notably Article  VII of the GATT (Customs Valuation) and the 
Agreement on Trade-Related Aspects of Intellect ual property Rights (TRIPS).  According to the 
authorities, the Agreement on Customs Valuati on was fully implemented with effect from 
1 September 2001 as contained in the Customs (V aluation of Imported Goods) Rules 2001 and the 
Customs (Amendments) Order 2001.9  
23. Like all Members of the WTO, Brunei is required to make regular notifica tions of its laws and 
regulations to the WTO (Table AII.1). 
24. Brunei has not been involved in any disputes in the WTO since 2001, either directly or on a 
third party basis.  
(ii) Regional agreements 
(a) ASEAN 
25. Brunei became a member of the Association of South-East Asian Nations (ASEAN) at 
independence in 1984 and attaches the highest impor tance to its membership.  Brunei is also a 
member of the Brunei-Indonesia-Malaysia-Philippines–East Asian Growth Area (BIMP-EAGA), 
which seeks to promote economic growth and development in the ASEAN sub-region.   
26. The Framework Agreement on enhancing economic  cooperation, signed in 1992, established 
the Common Effective Preferential Tariff (CEPT) Scheme .  Under the CEPT, it was agreed that tariffs 
on goods in the Inclusion List (i.e. subject to tari ff reductions) would be reduced to 0-5% by 2002 for 
the founding members plus Brunei (ASEAN-6), by 2006 for Viet Nam, by 2008 for Laos and 
Myanmar, and by 2010 for Cambodia.  Tariff reduc tion/elimination under the AFTA is granted on a 
                                                      
8 WTO document WT/MIN(05)/ST/85, 16 December 2005.  
9 Government Gazette  No. 29 of 11 August 2001. Brunei Darussalam WT/TPR/S/196 
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reciprocal basis and local-content requirements apply.10  The process of reducing tariffs, which began 
in 1993, is almost complete for ASEAN-6 members;  Brunei has reduced tariffs on 93% of tariff lines 
to 5% or 0% for products of ASEAN origin.11  Under the terms of AFTA, Brunei applies the two 
lower tiers, of 0% and 5%, to all goods imports from ASEAN members that meet the AFTA rules of 
origin requirements.  According to the authorities, Brunei does not have any products in the temporary 
exclusion list. 
27. ASEAN is also working to:  remove non-tariff barriers to intra-ASEAN trade;  harmonize 
customs nomenclature, valuation, and procedures ;  harmonize product standards and regulatory 
requirements;  and improve rules of origin (R OOs) under the CEPT.  With regard to the work 
programme on the elimination of non-tariff barri ers (NTBs) by 1 January 2008 (First Package), 
1 January 2009 (Second Package) and 1 January 2 010 (Third Package), the authorities state that 
Brunei has submitted updates on its NTB list together w ith the relevant supporting legislation.  As to 
the rules of origin under the CEPT, ASEAN is focussing on finalizing the product specific rules 
(PSRs) for products under the priority integration sectors (PIS). 
28. The ASEAN Framework Agreement on Services, signed in 1995, guides services 
liberalization over and above WTO commitments, and promotes cooperation among service suppliers 
in ASEAN.  To date, ASEAN has completed seve ral packages of services liberalization covering 
construction, telecommunications, business services, fi nancial services, air and maritime transport, 
and tourism.  This involves preferential access fo r other ASEAN member states in the establishment 
of services entities and employment of professionals.  Under the priority integration approach, tourism, healthcare, and air travel are scheduled to be liberalized by 2010.  ASEAN countries are 
currently working on expanding negotiations to  cover all sectors and modes of supply.   
29. The ASEAN Investment Area Agreement, signed in 1998, is aimed at facilitating the free 
flow of direct investment, technology, and skilled professionals.  The agreement covers 
manufacturing, agriculture, fisheries, forestry, a nd mining, as well as services activities related to 
these sectors.  The agreement is also aimed at increasing intra-ASEAN investment and FDI, 
promoting the economic integration of ASEAN, and jointly promoting ASEAN as an attractive region 
for FDI.  In accordance with Articles 2(i) and 2(ii)  of Schedule III of the Framework Agreement on 
the ASEAN Investment Area
12, Brunei Darussalam is due to open  all industries for investment to 
ASEAN investors by 2010 and to all investors by 2020;  this constitutes a clear commitment to 
liberalizing the investment environment.  
30. ASEAN is also seeking to enhance regional ec onomic integration through the establishment 
of the ASEAN Economic Community (AEC) – a single market providing for the free flow of goods, 
services, skilled labour and, to some extent, capita l – by 2015.  Member countries have identified 
11 priority sectors:  agri-based products;  air travel;  automotive products;  electronics;  fisheries;  healthcare;  rubber-based products;  information/co mmunications technology (products and services) 
related to e-commerce;  textiles and apparel;  tourism;  and wood-based products.  ASEAN is 
currently working on legislation for the 12
th priority sector, logistics.  In 2003, the priority sectors 
accounted for more than 50% of intra-ASEAN trade.  A Framework Agreement for the Integration of 
Priority Sectors was signed in 2004 to accelerate integration across members.   
                                                      
10 A product is eligible for a tariff concession if at least 40% of its content originates from any ASEAN 
member state;  the 40% local content refers to both single and cumulative content.  
11 "Consolidated 2007 CEPT package:  Brunei Da russalam".  Viewed at:  http://www.aseansec.org/ 
20937.htm. 
12 ASEAN online information.  Viewed at:  http://www.aseansec.org/6466.htm. WT/TPR/S/196 Trade Policy Review 
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31. ASEAN is seeking regional trade agreements w ith other partners, for example China, Japan, 
Korea, CER members (Australia and New Zealand) , and India.  At the ASEAN summit in 2002, 
ASEAN members and China signed a framework agre ement to begin negotiations in 2003 to create 
the world's largest FTA, with a co mbined market of 1.7 billion people.  The ASEAN–China FTA is 
expected to be implemented over ten years through  progressive elimination of tariffs and non-tariff 
barriers, and progressive liberalization of trade in services and investment.  The Agreement on Trade in Goods was signed in November 2004.  The first package of tariff  reductions, coveri ng 40% of tariff 
lines, was implemented on 1 July 2005;  produc ts covered by the "early harvest package", 
implemented on 1 January 2004, include live anim als, meat, fish, dairy produce, other animal 
products, live trees, vegetables, fruit, and nuts.  The ASEAN-China Services Agreement was signed in 
2006 and entered into force on 1 July 2007.  An ASEAN-Korea Agreement was signed in 
August 2006 and entered into force on 1 June 2007. 
(b) BIMP-EAGA 
32. The Brunei-Indonesia-Malaysia-Philippines East Asian Growth Area (BIMP-EAGA), formed 
in 1994, aims to increase economic cooperation, tr ade, investment, and tourism among participating 
economies in the sub-region.
13  BIMP-EAGA currently has four priority areas of cooperation: 
transport, infrastructure, and ICT developmen t; natural resource development;  joint tourism 
development;  and SME development.   Brunei is the designated lead country in transport and oversees 
a number of working groups dealing with air linka ges, sea linkages, and construction and construction 
materials and ICT.   
33. The third BIMP-EAGA summit, held on the sidelines of the main ASEAN summit in 
January 2007 in the Philippines, concluded that effo rts at economic integration were beginning to bear 
fruit and that faster growth in the region was likel y over the medium term.  During the summit, Brunei 
signed a memorandum of understanding (MoU) on ai r links with partner countries, which would 
allow fifth freedom traffic rights for passenger a nd cargo services in designated BIMP-EAGA points.  
According to the MoU, fifth freedom rights14 for both passenger and cargo services are to be available 
between Brunei's Bandar Seri Bagawan airport and those of Balikpapan Sepingan and Ponitanak 
Supadio in Indonesia, Davao and Zamboanga in th e Philippines and Kota Kinabalu and Kuching in 
eastern Malaysia.  The agreement is expected to re duce travel time in the region and boost trade and 
tourism links.  A number of other measures were al so agreed to simplify customs and immigration 
procedures in the region.  
(c) APEC 
34. Brunei is a member of the Asia-Pacific Economic Cooperation (APEC) forum, which has 
been instrumental in advancing regional and globa l trade and investment liberalization since it was 
founded in 1989.  The 21 APEC economies collectiv ely account for 46% of world trade and 57% of 
global GDP.  In 2005, they undertook a review of  progress towards the 1994 "Bogor Goals" of free 
and open trade and investment in the APEC regi on by 2010 for industrialized economies and by 2020 
for developing countries.  The review conclude d that significant work was needed, including:  
redoubling efforts to advance the DDA negotiations;  promoting high-quality FTAs;  and improving 
the regional business environment.  
                                                      
13 Brunei Darussalam, the Indonesian provinces of Kalimantan, Sulawesi, Maluku and Irian Jaya;  
Sabah, Sarawak and the Federal territory Labuan in Malaysia;  and Mindanao and Palawan in the Philippines.  
EAGA covers a land area of 1.54 million sq. km and 57 million people.  
14 Fifth freedom rights allow airlines based in one country to operate servi ces between airports in 
two other countries.  Brunei Darussalam WT/TPR/S/196 
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35. Brunei has played an active role in advanci ng APEC's efforts to move towards the Bogor 
goals and to reduce the digital divide in the region with the aim of enabling individual or 
community-based access to Internet in formation and services by 2010.   
36. To promote liberalization, each APEC member adopts a unilateral liberalization plan or 
Individual Action Plan (IAP).  The IAPs can be implemented according to each economy's domestic policy objectives and are reviewed periodically by all APEC Members in the context of achieving the 
Bogor targets.  The 2005 peer review of Brunei fo cused on a number of areas in which progress and 
best practices towards the achievement  of the Bogor Goals were considered
15:  tariffs16, NTMs, 
services, investment, customs, IPRs, government pr ocurement, standards and competition policy.  The 
peer review noted that Brunei maintains low ove rall tariff rates and no quantitative restrictions, 
although non-transparent practices ex ist in some areas, for example quarantine and inspection.  In 
services, the Government remains in a dominant positi on and maintains entry restrictions in several 
areas, including telecommunications.  Brunei is cons idered to have a very progressive investment 
regime, which has facilitated inflows of FDI and thus national development.  
(d) Trans-Pacific SEP 
37. The Trans-Pacific Strategic Economic Partnership Agreement17 (Trans-Pacific SEP), between 
Brunei, Chile, New Zealand, and Singapore, was a nnounced on 3 June 2005, on the sidelines of an 
APEC Ministers meeting in Korea (Box II.1).  As part of the overall package, ministers also announced the conclusion of negotiations on a binding Environment Cooperation Agreement
18, and a 
binding labour Cooperation MoU.  The Agreement was first launched in October 2002 and Brunei 
asked to join the negotiations as a founding member  before the final round in April 2005.  The 
Agreement entered into force for Brunei on 12 July 2 006, on terms that allow it to implement some of 
its commitments progressively by 2008. 
38. The Trans-Pacific SEP will encourage Br unei Darussalam, Chile, Singapore, and 
New Zealand to pool their expertise, ideas, technology, and resources to improve their 
competitiveness in the global market.  It will also  help advance shared objectives in APEC and the 
WTO.  Key elements comprise:  a comprehensive ag reement on trade in goods, whereby more than 
90% of total trade among the four parties will be  duty free on implementation;  trade facilitation, 
aimed at reducing transaction costs relating to san itary and phytosanitary measures, standards and 
conformance, and customs procedures;  a liberalizi ng framework that will enc ourage trade in services 
(negotiations between Brunei and th e other parties on its services specific commitments are expected 
to conclude in 2008);  a commitment to ensure th at companies from the other parties compete on an 
equal footing with domestic supp liers for government procurement contracts, above certain 
thresholds;  cooperation on compe tition and intellectual property rights;  and the provision of a 
framework for collaboration in strategic areas, such  as innovation, and research and development. 
(e) Asia Cooperation Dialogue (ACD) 
39. Established in 2002, ACD is a forum of 30 me mber countries designed to consolidate Asia's 
competitiveness and strengths thro ugh cooperation in a number of areas, including:  energy, 
                                                      
15 APEC (2005).   
16 For tariffs, see APEC-IAP online informati on.  Viewed at:  http://www.apec-iap.org/ 
document/BD_2006_Tariffs.pdf. 
17 Notified by the parties to the WTO Committee on Regional Trade Agreements in document 
WT/REG229/N/1 dated 21 May 2007.  
18 During 2006, for example, New Zealand ran a workshop for Brunei government officials on 
conducting environmental impact assessments.  WT/TPR/S/196 Trade Policy Review 
Page 28 
 
 
agriculture, transport linkages, biotechnology, standa rds, IT development, tourism, finance, human 
resource development, and environmental education.19  
Box II.1:  Trans-Pacific Strategic Economic Partnership 
1. Overview 
The Trans-Pacific SEP is to liberalize and facilitate trade in goods and services, improve the business 
environment, and promote cooperation on a broad range of economic areas of mutual interest to its parties, which have undertaken to remove all tariffs on tr aded goods over time.  Th e Trans-Pacific SEP also 
includes broad coverage of services, which will make it easier for service providers to operate in Trans-
Pacific SEP markets. 
Measures relating to customs procedures, sanitary and phytosanitary procedures, technical barriers to trade, 
intellectual property, and competition policy are desi gned to reduce barriers to doing business.  The 
agreement establishes dispute settlement mechanisms  and protection to preserve governments' domestic 
regulatory and policy-making flexibility.  It also establishes a framework for expanding the membership, 
through scheduled reviews and cooperation. 
2. Goods 
On entry into force, Brunei Darussalam has undertaken to ensure all tariffs currently at zero will be held at 
zero.  Products include:  dairy products, seafood products, fruit and vegetables, and meat products.  Its 
remaining tariffs will be eliminated in three stages, in 2010 (forestry products), 2012 (some machinery) and 
2015 (vehicles and vehicle parts, and remaining machinery).  A short list of products (alcohol, tobacco, and firearms) is excluded, for the time being, from Brunei Darussalam's tariff elimination schedule for moral, 
human health, and security reasons.  The list is set out in a 'side letter' to the Trans-Pacific SEP, which is 
available at:  www.mfat.govt.nz/trad eagreements/transpacepa /transpacsepagreement.html .  There are to be 
further discussions about how these products w ill be accommodated under the Trans-Pacific SEP. 
3. Services 
Under the agreed conditions for entry, Brunei Darussala m will have two years from entry into force of the 
Trans-Pacific SEP to negotiate its services schedule.   Until it has completed these negotiations it will not 
benefit from the other parties' commitments in servi ces.  For temporary entry, each country has reaffirmed 
its commitments under the GATS relating to the moveme nt of businesspeople.  These are listed in their 
individual GATS schedules and set out conditions for the entry of mainly intr a-corporate transferees 
including senior and specialized personnel.   
4. Government procurement 
The Trans-Pacific SEP applies to proc urement by specific government agenci es (listed in Annex 10.A of the 
Trans-Pacific SEP) for contracts va lued above specified thresholds.  Brunei has been granted a special 
threshold:  on completion of its schedule, the provisi ons will apply only for tenders of goods and services 
above B$250,000.  Brunei has been given two years in which to negotiate its government procurement 
schedule.  Until it has completed these negotiations it will not benefit from the other parties' commitments 
in government procurement.  
Source:    New Zealand Ministry of  Foreign Affairs and Trade, Trans-Pacific SEP Booklet,
  October 2006.  Viewed at:  http://www.mfat .govt.nz/downloads/trad e-agreement/transpacific/
  trans-pacificbooklet.pdf. 
                                                      
19 The members are:  Bahrain, Bangladesh, Brunei Darussalam, Bhutan, Cambodia, China, India, 
Indonesia, Iran, Japan, Kazakhstan, South Korea, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Pakistan, 
Philippines, Oman, Qatar, Russia, Saudi Arabia, Singapor e, Sri Lanka, Thailand, Tajikistan, UAE, Uzbekistan, 
and Viet Nam.   Brunei Darussalam WT/TPR/S/196 
 Page 29 
 
 
(iii) Bilateral agreements 
40. In December 2002, Brunei and the United Stat es signed a Trade and Investment Framework 
Agreement (TIFA) to enhance bilateral trade and inv estment liberalization in such areas as intellectual 
property, information and communication technol ogy, biotechnology and eco -tourism, aquaculture, 
and halal products.  It also includes consultations on the elements of a possible free-trade agreement.  
The TIFA was a product of the "Enterprise for ASEAN Initiative" announced by the United States in 
October 2002, aimed at strengthening ties betw een the United States and ASEAN countries.   
41. In December 2006, Japan and Brunei announced an  agreement in principle to negotiate a 
free-trade agreement in the first half of 2007 to  enhance cooperation in energy, human resources 
development, and capacity building.  The Brune i-Japan Economic Partners hip Agreement (BJEPA) 
was signed on 18 June 2007, to facilitate the free flow of goods, services, and investment.  The 
agreement is also aimed at improving the overa ll business environment of both countries, and 
enhancing cooperation in fields including energy , human resource development, and science and 
technology.  Brunei's exports to Japan consist almost  entirely of oil and natural gas, while its imports 
from Japan are mainly cars and automotive parts.  Br unei has undertaken to eliminate import tariffs on 
Japan's automotive products by 2010.  The agreemen t covers trade in goods and services, customs 
procedures, investment, government procurement, intellectual property protection, and competition 
policy.  
42. According to the authorities, regular consultations between Brunei Darussalam and Pakistan 
are being held with the objective of further stre ngthening trade ties.  A Brunei Darussalam-Pakistan 
Joint Study Group, initiated in 2005, held its fi rst meeting in November 2006 in Pakistan, and 
subsequently in August 2007 in Brunei Darussalam. 
(4) FOREIGN INVESTMENT REGIME  
43. The authorities state that foreign investment is  open except in restricted sectors in which the 
Government is the major provider of services, such as the mass media, telecommunications, posts, energy and utilities.  Other restricted activities ar e banking, arms and ammunition, retail businesses, 
petrol stations, and manufacture and sales of liquor.  According to the type of industry and particular 
situation, full, majority or minority foreign owners hip is allowed.  Only activities relating to national 
food security and those based on local natural resour ces require local participation.  Brunei does not 
restrict the repatriation of capital and there are no restrictions on the remittance of profits (e.g. dividends) or royalties from investments.  Brunei a llows recruitment of foreign workers ranging from 
labourers to executive managers in areas in which the supply of local workers is insufficient.  
(i) Legislative and institutional framework and investment procedures 
44. The basic legislation on investment, the Investment Incentives Order 2001, replaced the 
Investment Incentives Act (chapter 97), and the author ity to administer the legislation was transferred 
from the Ministry of Finance to the Ministry of Industry and Primary Resources.  Its main objectives 
are to promote the diversification of Brunei's ec onomic activities by providing tax-based incentives to 
promoted activities;  and to encourage investment  and reinvestment activities to upgrade technology, 
undertake research and development, increase produc tion capacities.  Foreigners may be allowed to 
hold up to 100% of the equity in certain industr ies and activities in which the Government wishes to 
encourage investment (Table AII.2).  Foreign na tionals are generally not permitted to own land (of WT/TPR/S/196 Trade Policy Review 
Page 30 
 
 
which 95% is estimated to be owned by the State), but may lease land for industrial purposes, 
agriculture, forestry, and aquaculture on a long-term basis.20  
45. The Government of Brunei has established several agencies to promote foreign direct 
investment (FDI), which it hopes will become an impor tant driver of growth in the local economy.  
The Ministry of Foreign Affairs and Trade is invo lved with national agencies, including MIPR and 
JPKE, in formulating national investment polic ies and monitoring developments nationally and 
regionally with a view to improving the investment  climate of Brunei.  The Brunei International 
Financial Centre (BIFC), under the Ministry of Fina nce, also aims to attract investment to the 
financial sector.  In addition, the Brunei I ndustrial Development Authority (BINA), under the 
Ministry of Industry & Primary Resources, coor dinates all industrial development activities and 
liaises with other agencies to expedite applicati ons for those requiring Government facilities and 
assistance.  The BINA has developed several industrial parks near the Muara Port and in other parts of 
Brunei, with infrastructure to facilitate small and medium-sized enterprises.   
46. Other significant legislation on domestic and foreign investment is the Economic 
Development Board (Amendment) Order 2001, whic h restructured the EDB as an autonomous 
statutory body tasked with promoting inward  and outward investment.  The Brunei Economic 
Development Board (BEDB), formed in 2001, aims to  attract FDI and promote joint ventures so as to 
further diversify Brunei's economy and create em ployment opportunities for its people (Box II.2).  
The BEDB coordinates with relevant ministries a nd agencies to maximize the benefits generated by 
both local and foreign direct investment.  The BEDB proposed a five-year US$4.5 billion 
infrastructure development strategy in January 2003, which could offer foreign firms significant 
technical, construction, and expa nsion opportunities.  Specifically, the plans include a US$3 billion 
industrial site at Sungai Liang and a US$1.5 b illion Mega port at Pulau Muara.  The proposed 
industrial site includes a US$400 million power plant, relying on the Sultanate's natural gas resources, 
an aluminium smelter and downstream projects, as well as a port, free-trade zone, and supporting 
infrastructure.  The Government of Brunei is in various stages of negotiation with investors on those 
projects.21   
47. Additionally, the BEDB announced significan t incentives and loans to encourage other 
investment projects from abroad.  International cons ultancies have confirmed the growth potential for 
hospitality and tourism, focusing on eco-tourism, s ports and medical tourism;  financial services, 
aiming at high-end, niche investment mana gement services and asset fund management; 
transportation and logistics primarily focusing on aircraft maintenance services;  and business 
services, concentrating on software development and business process outsourcing.   
48. The Ministry of Industry and Primary Resources is the main coordinating agency for 
investment and industrial development in the pr imary sector, manufacturing, and tourism.  The 
Ministry encourages and helps local and foreign inv estors to participate in ventures to produce goods 
and services for export and local markets and to satisfy national food security and employment needs.  
                                                      
20 Based on the Land Code, foreign nationals are permitted to own land only with the consent of the 
Sultan.   
21 In 2006, the Brunei Methanol Company Sdn.Bhd (BMC), a joint venture between Mitsubishi Gas 
Chemical Company and Itochu Corporation of Japan, and Petroleum BRUNEI, began construction of a 
methanol plant at Sungai, targeting full commercial operation by 2010 and anticipating employment of 
120 people, involving an investment of US$400 million.  Under discussion are plants for ammonia/urea production, an aluminium smelter, a plant for biodiesel production, and a container terminal. Brunei Darussalam WT/TPR/S/196 
 Page 31 
 
 
The Ministry is aware of the importance of a clear timeframe and decision making process with 
respect to investment approvals.22 
Box II.2:  Brunei Economic Development Board's economic diversification strategy  
The Brunei Economic Development Board's (BEDB) economic diversification strategy is designed to create 
long-term business and employment opportunities for Bruneians.  It is currently focusing on developing downstream oil and gas industries, particularly on its Sungai Liang Industrial Park (SPARK) and planning 
the development of a globally competitive port on Pulau Muara Besar, supported by an export processing 
zone for logistics, distribution and light to medium manufacturing industries.  In addition to industrial site development, in 2003 the BEDB sponsored a study to identify industry clusters with the potential for 
growth.  Subsequently, four industry clusters were prioritized:  transportation and logistics;  business 
services;  financial services;  and hospitality and t ourism.  The BEDB collaborates with various lead 
agencies to develop these clusters. 
The BEDB's main objectives are to :  stimulate the growth and development of the economy by promoting 
Brunei Darussalam as an investment destination;  develop plans to attract foreign and local investment in industries and skill-intensive services that enjoy good export-market prospects;  promote and assist in the 
development of industrial activities;  encourage foreign and local industries to invest in new technology, 
automation, training, research, and product development activities;  and support the development of local entrepreneurs and SMEs. 
The general criteria for evaluation of investment projects are:  sustainability, prospects of industrial spin-off 
and businesses opportunities for domestic SMEs, potential to create employment opportunities and fit with 
the national economic development plan.  In keeping with its efforts to ensure real and sustainable benefits 
are derived from investments, investors enter into a Cooperation Agreement with the BEDB.  In signing the agreement, the BEDB helps the investor in securing incentives, utilities, and infrastructure.  The investor 
commits to agreed quantifiable and qualitative undertakings on a best endeavours basis in such areas as 
employment, transfer of technology, local partic ipation, promotion of local SMEs, spin-offs, and 
community development. 
Source:   Authorities of Brunei Darussalam.  
 
(ii) Incentives 
49. In January 2001, the Sultan issued the Inv estment Incentives Order 2001 and the Income Tax 
Act (Amendment) Order 2001, which contained reform s designed to stimulate investment.  The first 
made application for tax incentives simpler for corporations and the se cond broadened the tax 
incentives.  The Investment Incentives Order 2001 provi des for a number of incentives, mainly in the 
form of tax exemptions for companies that have be en granted "Pioneer Status" and for the expansion 
of established enterprises.  Administration of the legislation is under the Minister of Industry and 
Primary Resources.  Longer corporate tax relief peri ods are provided to promote the establishment of 
industries;  the emphasis is on pioneer enterprises, including high-technology industries, export-oriented manufacturing and services, research and de velopment, transhipment, and activities that 
support the introduction of new technology into Br unei Darussalam.  Any limited company with a 
Pioneer Status Certificate will be granted an exempt ion from corporate income tax (normally levied at 
a rate of 30%), for between two and five years depe nding on the level of investment on capital assets.  
The exemption begins on the first day of production and may be extended to 20 years.  Pioneer Status 
companies are also exempted from customs duty on plant, machinery, and equipment for their 
premises, and on raw materials that are not available in Brunei and are to be used in the production of 
the pioneer products.  Tax incentives are also provi ded for the expansion of an enterprise already 
established in Brunei.  
                                                     
 
22 Ministry of Industry and Primary Resources (2006), p. 34. WT/TPR/S/196 Trade Policy Review 
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(iii) Bilateral investment treaties and double taxation agreements 
50. During the period under review, Brunei has conc luded bilateral investment treaties with 
France, Bahrain, India, and Iran;  they will be si gned once approval by the Government is obtained.  
Double taxation agreements (DTAs) have been signe d with China, Singapore, and Laos;  a number of 
other DTAs have been concluded (with Thailand, Pakistan, Oman, Viet Nam, and the Philippines) and 
await signature pending approval. 
(5) AID FOR TRADE  
51. Brunei continues to face significant human res ource and capacity challenges that limit its  
responsiveness at the multilateral level and affect th e pace of implementation of its WTO obligations.  
New obligations for implementation arising out of the DDA may further challenge already stretched 
resources.  Support from the international commun ity could assist Brunei in achieving greater 
integration into the multilateral trading system.  Tw o prominent areas in this regard are standards/SPS 
measures and intellectual property protection.  Brune i could benefit from technical assistance to help 
develop its resources and establish appropriate st andard institutions.  Officials involved in the 
development of national standards, for example, could benefit from improved training, monitoring, 
and surveillance capacity, and performance in the area  of notifications in both TBT and SPS matters.  
On TRIPS, while Brunei has enacted much of the le gislation necessary to be fully compliant with the 
Agreement, lack of administrative capacity in a number of IPR-related areas is a major obstacle to implementation.  Additional training on TRIPS and on the administration of IP legislation, including 
the development bodies to deal with IPR issues,  and enforcement issues would be beneficial.