Brunei Darussalam: Investing

FDI in Figures

According to UNCTAD’s World Investment Report 2023, FDI inflows to Brunei were negative by USD 292 million in 2022 (compared to a positive inflow of USD 205 million one year earlier). At the end of the same period, the total stock of FDI stood at USD 6.8 billion, around 40.9% of the Sultanate’s GDP. According to the Department of Economic Planning and Development, FDI flows for Brunei Darussalam recorded a positive inflow in Q3 2023, increasing from -BND 420.6 million in Q2 2023 to BND 84.3 million, with equity amounting to BND 115.3 million and debt instrument at -BND 31.0 million. The mining and quarrying sector receives the largest share of FDI. The largest foreign investment accomplished to this day is a methanol distillery, partially financed by the Japanese Mitsubishi Gas Chemical Company, while China is also present in the hydrocarbon sector. Malaysia was the immediate source of investments, with USD 496 million. The Government has been making an effort to diversify the economy and turn Brunei into a banking centre as well as an international offshore financial centre.

Brunei benefits from a stable political environment and is relatively immune to natural disasters. Its strategic position in Southeast Asia, complemented by robust telecommunications and air travel networks, along with business tax incentives in designated sectors and the absence of income, sales, or export taxes, presents an inviting environment for prospective investors. However, despite aspirations for economic diversification, Brunei's economy continues to heavily rely on revenue generated from oil and gas sales, constituting approximately half of the nation's GDP. The reduced size of the domestic market discourages FDI, despite the advantages offered by the Sultanate: tax incentives and customs duty exemptions on certain sectors, especially for non-oil investments; freedom of investment in all sectors, with the exception of certain fields in which local participation is required. Moreover, Brunei features a highly educated populace, predominantly fluent in English, and possesses outstanding infrastructure. Concurrently with Brunei's initiatives to allure foreign investment and foster an open and transparent investment environment, the nation has simplified procedures for entrepreneurs and investors to set up businesses and has enhanced its safeguards for Intellectual Property Rights (IPR). Foreign ownership of companies incorporated in Brunei faces no restrictions. Under the Companies Act, locally incorporated firms must appoint at least one resident director, or at least two if more directors are appointed, though exceptions are possible upon request. Corporate income tax rates apply equally to both locally and foreign-owned and managed companies. All businesses in Brunei must register with the Registry of Companies and Business Names under the Ministry of Finance and Economy. Foreign investors have full ownership rights over incorporated companies, foreign company branches, or representative offices, excluding sole proprietorships or partnerships. Brunei reserves the right to screen investments to ensure alignment with the National Development Plan and national interests. The Sultanate ranks 87th among the 132 economies on the Global Innovation Index 2023 and 43rd out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024