Brunei Darussalam: Consolidating the Foundations of its Future?
In lieu of an abstract, here is a brief excerpt of the content:

Brunei Darussalam
Consolidating the Foundations of its Future?
No description available
Click for larger view
View full resolution

[End Page 34]

Political stability in Brunei Darussalam — the abode of peace — is built on oil wealth and Brunei’s citizens subsequently enjoy some of the best standards of living in Asia. This fortuitous state of affairs is reinforced by a small population of just 402,000 — two thirds of whom are ethnic Malays. Nonetheless, a range of short, medium, and long-term challenges have compelled the kingdom to be increasingly innovative and, in some areas, more progressive for the purpose of maintaining long-term economic and social stability. Such themes are evident in the three sections covered by this chapter. The first section focuses on Brunei’s economy. While the economy has not been particularly strong in recent years, the section reveals that some developments have either taken place, or are in the process of being implemented, that may eventually strengthen the foundations for a more robust economy. The second section examines the political environment of Brunei and finds that while there has been little change to the institutions of government, there were a number of subtle policy reorientations for the purpose of responding to past omissions and new problems. The final section examines the country’s foreign relations and developments concerning its defence policy. Here, significant events included Brunei’s relations with China together with a final resolution of Brunei’s maritime disputes with Malaysia. Overall, 2010 was a crisis free year that enabled the Kingdom of Brunei to refine some of its political and economic policies. [End Page 35]

The Economy: Strengthening the Foundations for Diversification?

By the close of 2010, the GDP (purchasing power parity) per capita for the Kingdom of Brunei was US$50,300 — the second highest in Southeast Asia. The citizens of Brunei also enjoy some of the best social welfare and healthcare in Asia and the average life expectancy also sits at a very high 77.4 years of age. Further, Brunei maintains the highest global rating for macroeconomic stability and the nation is also ranked first in the Islamic world on the United Nations Human Development Index.1 Brunei owes this prosperity to the profits that stem from 1.1 billion barrels of oil reserves (2009 estimate) and 400 billion cubic metress in natural gas reserves (2010 estimate). However, Brunei’s economy is not without challenges. While the economy grew by an estimated 0.5 per cent in 2010, the change in real GDP was −0.5 per cent in 2009 and −1.9 per cent in 2008. Further, Brunei’s economic performance is well below the rest of Southeast Asia where the ASEAN economies expanded by an average of 7.4 per cent in 2010.2 Ironically, Brunei’s recent economic performance is a consequence of its continued reliance on fossil fuels where, in 2009, the country’s hydrocarbon revenues declined by BN$4,591.8 million (37.4 per cent) compared to 2008. While a 38 per cent decline in global crude oil prices contributed to this outcome, the government’s policy to cap production levels also had some bearing.3 At its peak, oil production had reached 240,000 barrels per day (bpd) in 1979, but by 2008 production had been reduced to 138,070 bpd, and then down to 132,140 bpd in 2009. This policy has been deemed necessary in order to extend the life cycle of the remaining reserves, which are currently estimated to expire within twenty-five years.4

Under the leadership of the Sultan, His Majesty Haji Hassanal Bolkiah, the government has sought to respond to the country’s economic challenges through the formation of new industries, an expansion of agricultural production, and the utilization of other natural resources — e.g., bio-prospecting. In the process, the government is also seeking to generate new opportunities for employment as the government sector — currently the largest single source of employment — is now saturated to the stage where many new appointments are relatively unnecessary and dispiriting. The manner by which the sultanate has sought to diversify the economy has also been guided by Islamic philosophy and the traditions...