The ‘Know Your Region’ series is designed to support unit and individual professional military education on the Indo-Pacific region. It’s important for all serving members of our military to have a foundational knowledge of the countries and issues in our region.
On this page:
- Summary
- Economy and GDP
- Trade with Australia
Summary
Brunei’s economy is almost totally dependent on its vast reserves of petroleum and natural gas. Although oil and gas revenues have allowed the state to give its citizens one of the highest per capita incomes in Asia, the country is almost entirely dependent on a single commodity subject to market fluctuations. To ensure economic stability for the future, the government has striven to develop other sectors such as agriculture, fisheries, tourism, and financial services, with some success.
Economy and GDP
The economy of Brunei is almost exclusively reliant on petroleum and gas exports (over 90%) which provides more than half of the country’s GDP, despite employing only a small portion of the labour force. The revenue derived from fossil fuels has enabled the government to provide its citizens with a range of benefits including free education, healthcare, no personal income tax, subsidised housing, and a range of public amenities and places of worship.
Agriculture, fishing, and forestry – once the mainstays of Brunei’s economy – declined in importance after the discovery of petroleum resources in the 1920s; however, during the latter half of the 20th century, efforts were made to improve agricultural production which is now largely self-sustaining. Brunei now produces enough food, including livestock and poultry, to avoid most imports on food. To protect the natural forest terrain from logging, the government has banned all timber exports.
In addition to its hydrocarbon reserves which have been exploited heavily since the 1930s (petrol) and 1970s (gas), the country also has rich deposits of white quartz sand that remains largely untouched.
Several Islamic commercial banks, foreign banks, and offshore banks all operate in the country. Much of the state’s financial activity is concerned with managing its substantial foreign investments, and the return on these has become an important source of income. Brunei is one of only a handful of countries that has zero public debt and does not require foreign aid.
The country’s principal trading partners are in Asia and include Japan, Singapore, Malaysia, China, South Korea, and India. Brunei also trades with the US, EU, Australia, and New Zealand to varying degrees.
Increases in oil and gas prices during the Ukraine conflict has recently bolstered Brunei’s revenues; however, the long-term sustainability of the economy is questionable. Diverse investment strategies and innovation will be required to maintain Brunei’s high standard of living for generations to come.
Trade with Australia
Brunei and Australia both share a free and open trading system with several economic partnership agreements including the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressing Agreement for Trans-Pacific Partnership (CPTPP), and the Indo-Pacific Economic Framework.
During the last 27 years, exports from Australia to Brunei have increased from $47.3M in 1995 to $388M in 2022 (an average increase of 8.1% per year). The main products that Australia exported to Brunei in 2022 were Crude Petroleum ($303M), Frozen Bovine Meat ($18.1M), and Refined Petroleum ($17.6M).
For further information on Brunei’s economy, see the resources below:
Articles
