Brunei is one of the safest and most attractive investment destinations in the world. This can be attributed to a number of factors.
A stable socio-political system, increasingly robust regulatory and legal framework to protect investors, excellent 21st Century education environment and good communication and transportation infrastructure, are just some of the factors.
The top value proposition for investors are the country’s investment incentives. Tax relief layouts, relative ease in setting up businesses as reflected in the country’s high standing in the World Bank’s ‘ease of doing business’ rankings and attractive business ownership options for Foreign Direct Investment (FDIs) represent prime conditions for companies to prosper.
The availability of joint investment projects with the government in key industrial areas also gives prospective investors an added advantage.
Brunei allows 100 per cent foreign ownership of a company or business, except for activities that directly utilise the country’s natural resources such as oil and gas and fisheries.
The people of Brunei enjoy one of the highest per capita incomes in the region and the world, creating an affluent market for businesses to thrive. The country has also received several accolades, both regionally and internationally for its reputation of having a stable macroeconomic environment – free from social and political strife, absence of disruptions from natural disasters, as well as its good, strategic location within the region.
The country’s stable socio-political system combined with prudent national financial management has created a healthy and stable macroeconomic environment.
Brunei’s connectivity with the world is going from strength to strength, with more international airlines establishing airport-airline operator partnerships with Brunei International Airport (BIA). The government has been investing generously to improve BIA’s infrastructure while a number of strategies to attract more airlines to operate in Brunei have been implemented.
These include moving BIA up in the Skytrax rankings (Skytrax is a UK-based firm which rates the world’s airlines and airports); encouraging fair competition between airline companies within the framework of the Open Sky Policy; working closely with Royal Brunei Airlines (RB) and reviewing its best reciprocity practices; giving appropriate incentives to airlines to operate in Brunei – which will in turn attract more visitors to the country; and privatising BIA in the long run.
The Brunei government has adopted the Open Skies Policy and signed Air Services Agreements (ASA) with 48 countries, meaning investors are able to leverage on Brunei’s strategic location to reach a wider market base within Asean countries and beyond.
Approximately 600 million people live within the region, creating a market that is larger than the whole of the European Union.
Brunei aspires to be one of the major players in a growing industry which is set to be worth USD2.55 trillion by 2024, both in terms of halal production and certification, with the aim of catering halal food, pharmaceuticals and cosmetics of premium quality to Muslim populations worldwide.
The halal industry leverages on the country’s reputation as an Islamic nation that practices the principles of Islamic Sharia extensively as well as its stringent Halal certification procedures, which are well respected by neighbours Malaysia and Indonesia and Middle Eastern nations such as Oman and the United Arab Emirates.
Brunei continues to make great strides in improving its regulatory environment to ensure that the business environment is conducive to trade and property rights are fully enforced.
As the country is moving towards a creative and innovative economy, the country has put in place robust intellectual property rights regulations, the most notable being the setting up of the Brunei Intellectual Property Office (BruIPO), which allows companies, organisations and individuals to register for patents, trademarks, industrial designs and Plant Varieties Protection (PVP).
BruIPO has strong links to and membership with the World Intellectual Property Organization (WIPO), with various treaties administered by the agency and World Trade Organization (WTO).
Brunei has one of the most favourable tax regimes in the region, as there are no sales, payroll, capital gains, manufacturing and personal income tax.
It has a corporate income tax rate of 18.5 per cent – the second-lowest figure in the Asean region – while companies also stand to benefit from the Investment Incentive Order 2001.
Companies may apply for pioneer status and, depending on the amount of capital they invest, are entitled to a number of investment incentives, including tax relief beginning on the day they start production (ranging from five to 11 years), exemption from corporate tax and exemption from import duties on raw materials which aren’t available in the country.
Brunei is also a party to Double Taxation Treaties with Bahrain, China, Hong Kong, Indonesia, Japan, Kuwait, Laos, Malaysia, Oman, Pakistan, Qatar, Singapore, South Korea, Tajikistan, the United Arab Emirates, the United Kingdom and Vietnam.
The nation offers very low utility rates – among the lowest in the region, to encourage industrial investment and growth. Electricity rates are approximately USD0.08- USD0.10 per kilowatt-hour, while subsidised diesel is at a rate of USD0.25 per litre. Potable water costs approximately USD0.53 per cubic metre.
The government of Brunei has created several dedicated industrial parks with competitively-priced utilities as it understands that innovation plays a large part in ensuring organic growth within the country.
There are a number of industrial sites in Brunei which have been earmarked for specific clusters and export oriented activities: the Bukit Panggal Industrial Park (Energy Intensive Industries, 50 hectares); the Sungai Liang Industrial Park (Petrochemicals Industries, 271 hectares); the Telisai Industrial Park (Mixed Industries, 2,808 hectares); the Lumapas Industrial Park (Agricultural-related Industries, 25 hectares); the Digital Junction (ICT & Hi-Tech Industries, 15 hectares); the Pulau Muara Besar Industrial Park (Oil and Gas-related Industries, 955 hectares); the Salambigar Industrial Park (Light Manufacturing Industries, 121 hectares); and the Anggerek Desa Technology Park (ICT, Innovative and Creative Industries – 17 hectares).
Copyright 2017 Borneo Bulletin Yearbook 2017 All rights reserved.
