Brunei Darussalam through its Brunei Vision 2035 has set out strategic routes for its economic goals with a focus on attracting more foreign direct investments (FDIs) as a key driver for sustainability and growth. The country proactively seeks FDI that will contribute towards economic diversification and development by increasing export oriented industries, while providing spin-off business opportunities for local businesses and meaningful employment opportunities for locals.
According to statistics published by the Department of Economic Planning and Statistics (JPES), FDI inflow in Brunei recorded a positive value of BND169.0 million in Q2 2022, comprising equity positive value of BND201.6 million and debts instruments negative value of BND 32.6 million. This increase is due to a large increase in equity in Q2 2022. FDI stock has also increased by 41.1 per cent from BND9,638.9 million to BND9,775.5 million in Q2 2022 which comprise equity of BND8,288.0 million and debt instruments of BND1,487.5 million.
Through an open economy policy favourable to foreign trade and FDIs, the government continues its economic diversification efforts to limit its long reliance on oil and gas exports. This is part of the government’s reform agenda to ensure a pro-business and conducive investment climate.
The last few years saw the country accelerating its pace on bringing in more FDIs thanks to a slew of investment incentives, political stability and peaceful environment in Brunei. Some of these incentives include programmes such as the Strategic Development Capital Fund, a government trust fund under the Ministry of Finance and Economy (MoFE) which provides equity financing for local development projects. Through this fund where Brunei is willing to share capital risk, the country has already attracted a number of significant FDIs from foreign investors. While foreign companies are allowed to have 100 per cent ownership, credible and reliable co-investment partnership is also available through the Strategic Development Capital Fund. This gives foreign investors a peace of mind, assuring that their investments are perfectly secured.
One example of such partnership is Hengyi Industries at Pulau Muara Besar, a USD3.4 billion joint venture between China’s Zhejiang Hengyi Group and Damai Holdings – a wholly owned subsidiary under the Brunei Government’s Strategic Development Capital Fund – owning 70 per cent and 30 per cent stakes respectively. Through the Strategic Development Capital Fund, the Brunei government also has holdings in Amann Shipping Group Sdn Bhd, CAE, SBI Islamic Fund Sdn Bhd, Simpor Pharma Sdn Bhd, Brunei Fertilizer Industries Sdn Bhd and Western Foods and Packaging Sdn Bhd.
As an investment destination, Brunei provides market access to more than two billion people with its engagement in various free trade agreements (FTAs) including through ASEAN FTA and the Regional Comprehensive Economic Partnership (RCEP). Brunei is also part of a close knit sub-regional economic grouping of Brunei Darussalam- Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) with a population of 75 million people.
These factors make Brunei a viable investment home and a trading partner in the BIMP-EAGA, a fast-growing economy in the region and beyond, through partnership in transshipment, repackaging and processing activities.
Copyright 1993 Borneo Bulletin Yearbook All rights reserved.