Brunei Darussalam: Investing

FDI in Figures

The reduced size of the domestic market discourages FDI in Brunei, 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. According to UNCTAD’s World Investment Report 2021, Brunei's FDI inflows stand at USD 586.21 million in 2020, up from USD 275 million in 2019 (Department of Economic Planning and Development, Brunei, 2021), despite the global economic crisis triggered by the Covid-19 pandemic. The stock of FDI is on the rise, reaching USD 7.6 billion in 2020. 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 Darussalam performs better in innovation inputs than innovation outputs in 2021. That year, the country ranks 51st in innovation inputs, lower than both 2020 and 2019 (WIPO, 2022). Though Brunei Darussalam net FDI inflows in percentage of GDP fluctuated substantially in recent years, it tended to increase through the 1971 - 2020 period ending at 4.7 % in 2020 (Knoema, 2022). The latest FDI flows and stocks data in Brunei are available on the website of the country's Department of Economic Planning and statistics. 

Being an oil-producing country, Brunei's economy, of a relatively small size, is vulnerable to international oil price fluctuations, adding that in recent years, the country, with its efforts to attract foreign investment, has seen a number of foreign companies, particularly Chinese enterprises, come over for business, contributing to its economic diversification. To boost its economic diversification, Brunei is making further efforts to attract foreign investments, including from China. In the last years, FDI inflows have been growing considerably. However, a study of the APEC Business Advisory Council (ABAC) stressed the weaknesses of the country's business climate in several domains (citing the absence of a Special Economic Zone, bureaucratic problems for investors, etc.). In order to increase transparency and strengthen corporate governance, the Company Act was amended to simplify the business climate. The corporate tax rate also decreased and is now among the lowest in the ASEAN countries (18.5%). According to the last World Bank’s 2020 Doing Business report, Brunei ranked 66th out of 190 in terms of its business climate (down 11 places).

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Latest Update: February 2023