Claim: Brunei is almost completely surrounded by a state of Malaysia.

Brunei -LRB- -LSB- bruːˈnaɪ -RSB- , -RRB- , officially the Nation of Brunei , the Abode of Peace -LRB- Negara Brunei Darussalam , Jawi : -RRB- , is a sovereign state located on the north coast of the island of Borneo in Southeast Asia . Apart from its coastline with the South China Sea , the country is completely surrounded by the state of Sarawak , Malaysia . It is separated into two parts by the Sarawak district of Limbang . Brunei is the only sovereign state completely on the island of Borneo ; the remainder of the island 's territory is divided between the nations of Malaysia and Indonesia . Brunei 's population was 408,786 in July 2012 .   At the peak of the Bruneian Empire , Sultan Bolkiah -LRB- reigned 1485 -- 1528 -RRB- is alleged to have had control over most regions of Borneo , including modern-day Sarawak and Sabah , as well as the Sulu archipelago off the northeast tip of Borneo , Seludong -LRB- modern-day Manila -RRB- , and the islands off the northwest tip of Borneo . The maritime state was visited by Spain 's Magellan Expedition in 1521 and fought against Spain in the 1578 Castille War .   During the 19th century , the Bruneian Empire began to decline . The Sultanate ceded Sarawak -LRB- Kuching -RRB- to James Brooke and installed him as the White Rajah , and it ceded Sabah to the British North Borneo Chartered Company . In 1888 , Brunei became a British protectorate and was assigned a British resident as colonial manager in 1906 . After the Japanese occupation during World War II , in 1959 a new constitution was written . In 1962 , a small armed rebellion against the monarchy was ended with the help of the British .   Brunei gained its independence from the United Kingdom on 1 January 1984 . Economic growth during the 1990s and 2000s , with the GDP increasing 56 % from 1999 to 2008 , transformed Brunei into an industrialised country . It has developed wealth from extensive petroleum and natural gas fields . Brunei has the second-highest Human Development Index among the Southeast Asian nations , after Singapore , and is classified as a `` developed country '' . According to the International Monetary Fund -LRB- IMF -RRB- , Brunei is ranked fifth in the world by gross domestic product per capita at purchasing power parity . The IMF estimated in 2011 that Brunei was one of two countries -LRB- the other being Libya -RRB- with a public debt at 0 % of the national GDP . Forbes also ranks Brunei as the fifth-richest nation out of 182 , based on its petroleum and natural gas fields .