WT/TPR/S/84 Trade Policy Review
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II. TRADE AND INVESTMENT POLICY REGIME
(1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK
(i) Introduction
1. Brunei's present Constitution is based on the original Constitution drawn up in 1959 and
amendments made between 1971 and 1984;  in 1984, Brunei resumed full political independence and
took over responsibility for its own defence and foreign relations from the United Kingdom.  TheConstitution provides for the Sultan of Brunei as the Head of State, with full executive authority.
Under the Constitution, the Sultan is assisted and advised by five councils, including the Council of
Ministers or the Cabinet, and the Legislative Council, although, in practice, the Legislative Council
has been suspended (in accordance with the Constitution) since 1984.
1  As a consequence, the power
to promulgate new laws is currently vested solely in the Sultan;  all new laws are now made under theprovision of Section 83(3) of the Constitution as "Orders".
(ii) The Executive
2. Executive authority rests with the Sultan of Brunei assisted and advised by five councils:  the
Religious Council, the Privy Council, the Council of Ministers, the Legislative Council, and the
Council of Succession.
3. The Religious Council, at present consisting of 17 members, provides advice on matters
relating to Islam;  the Privy Council, which has 34 members, advises the Sultan on any amendment or
revocation of any constitutional provisions, the Sultan's power to grant mercy, and the award of
honours;  the Council of Succession determines succession to the throne, in the event that this is
required;  the Legislative Council was dissolved in 1984 (section (iii) below).
4. The Council of Ministers, or Cabinet, consists of the Prime Minister and the Ministers, all of
whom are appointed by the Sultan.  The term of office held by Cabinet members is determined by theSultan.  At present, there are eight ministers;  the Prime Minister's post is held by the Sultan.
2
Provision is also made in the Constitution for the Sultan to appoint Deputy Ministers, the Attorney
General, and the Auditor General.  There are seven Deputy Ministers at present.
(iii) Legislative process
5. The section of the Constitution dealing with the formation of the Legislative Council was
suspended in 1984.3  The Council, which under the Constitution consists of six ex-officio, five
official, and ten nominated members, was dissolved.4  In the absence of the Legislative Council, the
Sultan promulgates laws.  As the section in the Constitution dealing with legislative procedures was
suspended in 1984, new legislation in Brunei Darussalam, called "Emergency Orders" rather than
"Acts", are drafted by the relevant government mini stries in cooperation with the Attorney General's
Chambers or directly by the Attorney General's Chambers, if instructed to do so.  The draft
                                                     
1 The appointment and functions of the Council of Ministers is described under Part V of the
Constitution of Brunei Darussalam;  Parts VI and VII of the Constitution, dealing with the Legislative Counciland Legislative Procedures, were suspended in 1984.  All other provisions of the Constitution continue to apply.
2 In addition, the Sultan currently holds the Finance and Defence portfolios.
3 Parts VI and VII of the Constitution were temporarily suspended in 1984.
4 Government of Brunei Darussalam (undated a).  The six ex-officio members were to include the
Prime Minister, the Attorney General and the Religious Adviser.  Both official and nominated members were tobe appointed by the Sultan.Brunei Darussalam WT/TPR/S/84
Page 17
legislation, or Order, is then presented to the Sultan by the relevant ministry or agency for signature.
All new "Emergency Orders" must be consented to (signed and approved) by the Sultan in order to
have the force of law.  In some cases, where the principle legislation enables this, individual ministers
may sign new subsidiary legislation.  Upon the Sultan's consent, all Bills become law and must be
gazetted, although there is no minimum time-period within which laws have to be gazetted.
6. Laws in Brunei consist of Acts, followed by "Regulations", which are subsidiary laws enacted
subsequently.  Laws passed after 1984, as menti oned, are called Emergency Orders or Orders.
Emergency Orders carry the force of law and do not lapse unless incorporated into the laws of Brunei
as "Acts" by the power of the Attorney General under the Brunei Law Revision Act.
(iv) The Judiciary
7. The highest judicial authority in Brunei is the Sultan.5  He appoints all of the judges in the
courts.
8. Brunei's legal system is based mainly on English common law.  The highest court in Brunei is
the Supreme Court, which comprises the High Co urt and the Court of Appeals.  The Subordinate
Court consists of the magistrates courts.  Appeals resulting from decisions taken by the magistrates
courts are examined by the High Court, which forms a court of first instance for criminal and civilcases.  For appeals relating to decisions on civil cases taken by the High Court the final court of
appeal is the Court of Appeals, unless all the parties to the case agree before the commencement of
any civil proceedings that the final court of appeal would be the Judicial Committee of the Privy
Council, based in London.
6  The High Court may not overrule any provisions of the Constitution of
Brunei Darussalam, but can deal with issues relating to the Constitution insofar as interpreting them.
9. A separate Sharia (Islamic Law) Court exists for matters relating to religious disputes.  There
is no proper appellate process as such;  according to the authorities, at present, all appeals are heardby the Judicial Committee, which rarely sits in practice.  The new Syariah Courts Act (Cap. 184)
provides for a court hierarchy and appellate process similar to that for civil cases;  the proposed date
for enforcement of this Act is 25 March 2001.
10. WTO-related issues may be raised in a domestic court of law between private parties, if the
relevant WTO Agreements have been incorporated in national law through enabling legislation;however, the State of Brunei Darussalam cannot be brought before the domestic courts on cases
relating to the WTO Agreements.
(2) D
EVELOPMENT AND ADMINISTRATION OF TRADE POLICY
(i) Policy formulation and implementation
11. Responsibility for trade policy formulation and implementation rests with the Ministry of
Industry and Primary Resources in cooperation with other government agencies, including the
Ministries of Finance, Development, and Communications  (Table II.1).  In this regard, the authorities
also consult with the private sector.
                                                     
5 Under section 9 of the Constitution, the prerogative of majesty is vested in the Sultan.
6 Government of Brunei Darussalam (undated b).WT/TPR/S/84 Trade Policy Review
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Table II.1
Ministerial/Departmental responsibility for trade-related issues
Ministry/Agency Competence
Prime Minister's Office
Petroleum Unit Petroleum policy, pricing, and exploration contracts
Attorney General's Chambers Registry for Company's Act and Business Names Act
Intellectual property rights policy issues;  registry of trade marks and patents;
enforcement of all IPR laws except copyright
Ministry of Industry and Primary Resources
Department of Agriculture Agriculture policy and incentives;  sanitary and phytosanitary standards
Department of Forestry Forestry policy and incentives
Department of Fisheries Fisheries policy and incentives;  sanitary and phytosanitary standards
Brunei Industrial Development Authority(BINA)Industrial development;  management of industrial sites;  investment
promotion and approval;  training
Economic Development Board Foreign investment approvals
Investment Services Section Investment incentives;  administers the Brunei Economic Development Board
Act, the Miscellaneous Licences Act;  Secretariat for the Projects
Implementation and Technical Committees for investment approval
Tourism Development and Promotion Division Tourism regulation and development
Ministry of Development Infrastructure development;  standards and conformance;  housing
development;  land management
Ministry of Finance
Royal Customs and Excise Customs tariff;  valuation;  rules of origin;  duty drawback
Treasury State budget;  taxes
Brunei Investment Agency Outward foreign investment
Economic Planning and Development Economic planning;  formulation of five-year national development plans
The Department of Information Technology and
State StoreGovernment procurement and procurement of food products such as salt,
sugar, and rice
Financial Institutions Division Insurance and banking supervision
Ministry of Communications
Department of Civil Aviation Air transport regulation
Land Transport Department Land transport regulation
Marine Department Maritime transport regulation;  and maritime safety
Ports Department Management of shipping and Muara Port and management of Muara export
zone
Jabatan Telekom Brunei Telecommunications services regulation and provision of local and
international telecommunications services
Source : Government of Brunei Darussalam [Online].  Available at:  http://brunei.sultanate.com/ [16 August 2000];  and
information provided by the authorities.
12. In formulating and drafting trade policy, and depending on circumstances, the opinions of
non-governmental bodies may be solicited although Brunei does not appear to follow a regular
process of consulting with such bodies.  One such recent example was the formation of a new body,
the Brunei Darussalam Ministerial Economic Council, which was established in September 1998 tohelp Brunei to respond to the financial and economic crisis in the region.  Its membership includes
government officials and representatives of the business community.  The Council was set the task of
examining ways in which to revitalize the economy .  The result was a report published in September
1999, which suggests both short- and long-term strategies to ensure long-term sustainable
development (Chapter I(1)).  Recommendations made  by the Council are currently being implemented
by the Economic Planning and Development De partment in the Prime Minister's Office.
13. Brunei does not  have an independent body to evaluate government policy.  Under the
Constitution, the Auditor General may prepare an annual audit of the financial statements to present to
the Sultan and to the Cabinet at any time.  The frequency for preparation of such reports is notBrunei Darussalam WT/TPR/S/84
Page 19
specified.  According to the Audit Department, the ma in issue it is currently trying to address is an
amendment to the Audit Act, giving the Department the mandate to conduct value-for-money audits.
There is however a lack of data in several key areas, including national accounts, the stock of foreign
assets managed by the BIA, government finance, balance-of-payments, the financial system and
activities of government linked companies;  this c onstitutes an impediment to transparency and public
accountability as well as to the formulation and effective evaluation of trade and trade-related policiesand measures.
(ii) Main trade-related laws
14. International treaties and agreements, once ratified by the Government of Brunei, must be
adopted through enabling national legislation and gazetted in order to carry the force of law in Brunei
Darussalam.  Thus the provisions of the WTO Agreements do not apply in Brunei unless new orsubsidiary legislation is passed to include them in Brunei's body of "written laws".  However, to date,
other than legislation on intellectual property rights and pending legislation on customs valuation, no
new national laws relating to WTO provisions have  been gazetted.  Nevertheless, during the course of
this review, the authorities indicated that the provisions of other WTO Agreements were being
implemented by the Government of Brunei Darussalam in good faith.
15. Brunei's main trade and related laws include the Customs Act, and the Customs (Prohibition
and Restriction on Imports and Exports Amendment) Order, as amended, which regulate customs
procedures, and prohibitions and restrictions on impor ts and exports (Table II.2).  Other trade-related
laws include:  the Agricultural Pests and Noxious Plants Act, which is used to maintain phytosanitary
measures;  the Quarantine and Prevention of Disease (Animals) Regulations, for ensuring animal
health;  and the Poisons Act, and Misuse of Drugs Regulations, for other health measures.  Brunei
also recently passed legislation on intellectual property rights, including for copyright and trademarks, to comply with its obligations under the WTO.
Table II.2
Main trade-related laws in Brunei
Law Subject
Customs Act (1955) Customs regulations; preferential tariffs;  duty
drawback
Customs (Prohibition and Restriction on Imports and Exports) (Amendment)Order (1955)Import and export regulations/licensing
Customs (Prohibition and Restriction on Imports and Exports) (Amendment)
Order (1955)Import/export prohibitions
Companies Act (1957) Registration of companies;  company law
Business Act (1958) Registration of business names
Investment Incentives Act, Cap. 97 Investment
Agricultural Pests and Noxious Plants Act (1962);  Quarantine and Prevention
of Disease (Animals) Regulations;  Poisons Act;  Misuse of Drugs Regulations.Sanitary and phytosanitary regulations
Emergency (Public Health) (Food) Order, 1998 Food labelling
Income Tax (Petroleum) Act Corporate tax on petroleum
.. Corporate tax on non-petroleum and gas companies
Excise Act Excise taxes
Price Control Act (1974) Price controls
Emergency (Copyright) Order, 1999 Copyright protection
Emergency (Patents) Order, 1999 Patents protection
Emergency (Trade Mark) Order, 1999 Trade marks
Emergency (Industrial Designs) Order, 1999 Industrial designs
Emergency (Layout Designs) Order, 1999 Layout designs of integrated circuits
Financial Regulations, 1983 Government procurement
.. Not available.
Source: Government of Brunei Darussalam.WT/TPR/S/84 Trade Policy Review
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(3) TRADE AND INVESTMENT POLICY OBJECTIVES
16. As a founding Member of the WTO, and a contracting party to the GATT since
December 1993, Brunei believes strongly that its economy will benefit from further multilateral trade
liberalization.7  Brunei provides at least most-favoured-nation treatment (MFN) to all WTO Members.
At the same time, regional agreements and trade li beralization in the regional context, particularly in
ASEAN and APEC, are believed to be important and have been pursued to enhance access to regionalmarkets.  Brunei believes that regional and bilateral trade agreements, if consistent with WTO rules
and disciplines, could serve as building blocks for multilateral trade liberalization through the WTO.
In the context of the ASEAN Free-Trade Area (AFTA), Brunei has been reducing its tariffs, and plans
to meet the liberalization deadline, set for founding ASEAN members, by 2002.  Brunei also
participates in other liberalization initiatives, incl uding for services and investment (section (4)(ii)
below).
17. Brunei's trade and investment priorities, however, are mainly determined by its dependence
on natural resources and the need to diversify its economic base and export markets.  Recent changes
in the tariff and particularly foreign investme nt rules have been implemented with a view to
developing certain sectors of the economy, which the Government believes will assist Brunei inachieving this goal of diversification.  Brunei's small domestic market also makes it imperative that
exports form an important part of its economic diversification strategy.  As a result, a number of
incentives are provided to develop industries that will also ensure growth in
non-natural-resource-based exports, such as textiles and clothing.  The incentives are provided mainly
in the form of tax and tariff exemptions, for example under the Pioneer Status programme
(Chapter III(4)(ii)(a)).  Cooperative agreements with other ASEAN member countries, such as the
Brunei Darussalam, Indonesia, Malaysia, Phili ppines – East ASEAN Growth Area (BIMP-EAGA),
have also been pursued to attract foreign investment  in targeted activities (section (4)(ii)(d) below).
18. Emphasis is also being placed on the development of trade and tourism, in particular,
developing Brunei as a service hub for trade and tourism in the region.  In the Seventh National
Development Plan (1996-2000), for example, the Government has committed itself to building
Brunei's infrastructure, such as port and airport services, in order to develop Brunei as atrans-shipment centre for trade in goods, as well as in tourism and other services.
8  Other services,
notably financial services, are also being developed to attract investment and to enhance Brunei's role
as a provider of financial and other business services in the region.
(4) TRADE AGREEMENTS AND ARRANGEMENTS
(i) Multilateral agreements
19. Brunei became a founding Member of the WTO when it accepted the Marrakesh Agreement
Establishing the WTO on 16 November 1994.9  Brunei became a contracting party to the GATT on
9 December 1993.
20. Brunei, as a developing country, has made use of transitional measures available under some
of the WTO Agreements, notably Article VII of the GATT (Customs Valuation) and the Agreement
                                                     
7 WTO document MTN.TNC/Min(94)/ST/39, 13 April 1994.
8 Government of Brunei Darussalam (1997).
9 WTO document WT/Let/1, 27 January 1995.  Before a treaty is signed or ratified, it is normally
submitted either directly to the Sultan or through the Cabinet.  Signing or acceding to a treaty is normallydelegated to a minister with the appropriate instruments of power or with consent from the Sultan;  the Sultanmay also choose to sign the treaty himself.Brunei Darussalam WT/TPR/S/84
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on Trade-Related  Aspects of Intellectual Property Rights (TRIPS).  According to the authorities, the
Agreement on Customs Valuation has been implemented on an administrative basis and is to be fully
implemented in 2001;  legislation on customs valuation has not yet been enacted.  In addition, new
legislation on intellectual property rights has been enacted recently, including for copyright, trade
marks, industrial designs, and layout-designs of integrated circuits, while legislation on patents is
being finalized (Chapter III(4)(v));  Brunei appears to have no legislation to protect trade secrets.
21. In WTO bodies, Brunei has referred frequently to the difficulties experienced by developing
countries in implementing the WTO Agreements and has called for further technical assistance to be
provided.10  Given these difficulties, Brunei feels that the current work on trade and investment, trade
and competition policy, and transparency in government procurement should be continued, but should
remain at an exploratory stage.  At the 1999 WTO Ministerial Meeting, Brunei stated that issues otherthan the mandated negotiations in agriculture and services needed to be closely examined before
including them in any negotiations, to avoid over loading the work programme in the coming years;
Brunei also declared that it would support new nego tiations and negotiations on non-agricultural tariff
liberalization if these included products of interest to developing countries and took into account their
needs.
11
22. Like all Members of the WTO, Brunei is required to make regular notifications of its laws and
regulations to the WTO.  The status of selected notifications, as of January 2001 is shown in
Table II.3.
Table II.3
Status of selected notification requirements to the WTO, 1995 to January 2001
WTO Agreement Description of requirement Periodicity Most recent notification
Agreement on Agriculture (Art. 18.2) Domestic support Annual -
Agreement on Agriculture (Art. 10
and 18.2)Export subsidies Annual -
Agreement on Implementation of
Article VI of the GATT 1994
(Art. 18.5)Laws and regulations Once, then changes G/ADP/N/1/BRN/1,
21 November 1996
Agreement on Implementation of
Article VI of the GATT 1994
(Art. 16.4)Anti-dumping actions taken Semi-annual G/ADP/N/59/Add.1/Rev.1
25 October 2000
Agreement on Subsidies and
Countervailing Measures (Art. 32.6)Laws and regulations Once, then changes G/SCM/N/1/BRN/1,
18 March 1997
Agreement on Subsidies and
Countervailing Measures (Art. 25.11)Countervailing duty actions
takenSemi-annual G/SCM/N/56/Add.1/Rev.1,
26 October 2000
Agreement on Subsidies andCountervailing Measures (Art. 25.1);
GATT 1994 (Art. XVI:I)Specific subsidies Annual G/SCM/N/3/BRN,
22 November 1996
Agreement on Safeguards (Art. 12.6) Laws and regulations Once, then changes G/SG/N/1BRN/1,
21 November 1996
Agreement on Safeguards (Art. 12.7) Pre-existing Article XIX
measuresOnce, then changes -
Table II.3 (cont'd)
                                                     
10 WTO documents WT/MIN(98)/ST/87, 20 May 1998 and WT/MIN(99)/ST/99, 2 December 1999.
11 WTO document WT/MIN(99)/ST/99, 2 December 1999.  The view that a new round of multilateral
trade negotiations should be pursued in 2001 was also expressed by the APEC forum, of which Brunei is amember, but with the provisio that it would take into account the needs of developing countries (section (ii)(b)below).WT/TPR/S/84 Trade Policy Review
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WTO Agreement Description of requirement Periodicity Most recent notification
Agreement on Import Licensing
(Art. 1.4(a) and 8.2(b))Laws and regulations Once, then changes -
Agreement on Import Licensing
(Art. 7)Questionnaire on import
licensingAnnual G/LIC/N/3/BRN/1,
10 April 1997
Agreement on Preshipment Inspection
(Art. 5)Laws and regulations
bringing the Agreement into
forceOnce, then changes G/PSI/N/1/Add.5,
3 February 1997
Agreement on Rules of Origin
(Art. 5 and Annex II.4)Preferential and non-
preferential rules of originUpon entry into force G/RO/N/4,
7 August 1995
G/RO/N/5,
1 November 1995
Agreement on Sanitary andPhytosanitary measuresNotification authority - G/SPS/GEN/167,
9 March 2000
Agreement on Sanitary and
Phytosanitary measuresEnquiry points - G/SPS/ENQ/11,
2 November 2000
Agreement on Technical Barriers to
Trade (Art. 15.2)Laws and regulations Once upon entry into force -
Agreement on Technical Barriers to
Trade (Annex 3C)Acceptance of Code Once, then changes -
Agreement on Textiles and Clothing
(Art. 6.1)Safeguard decisions Once G/TMB/N/204/,
16 January 1997
GATT 1994 (Art. XXVIII:5) Modification of schedule - G/MA/111,
12 October 2000
GATT 1994 (Art. 17(4)(a)) State trading activities Annual -
GATT 1994 (Art. VII) Transitional measures under
the Customs Valuation
AgreementOnce and then changes WT/Let/36,
8 November 1995
GATT Council for Trade in Goods Non-tariff measures Every two years G/MA/NTM/QR/1/Add.3,
21 January 1997
GATS (Art. III:4) Enquiry points Once, then changes S/ENQ/40,
26 March 1997
TRIMS (Art. 6.2) Publications in which TRIM
may be foundOnce, then changes G/TRIMS/N/2/Rev.8,
19 July 2000
TRIPS (Art. 63.2) Laws and regulations Once, then changes -
TRIPS (Art. 65.2 and 65.4) Transitional period Once -
Source : WTO documents.
23. Brunei has not been involved in any disputes in the WTO since 1995, either directly or on a
third party basis.
(ii) Regional agreements
(a) ASEAN12
Overview
24. Brunei became a member of the Associati on of South East Asian Nations (ASEAN) on
8 January 1984.13  Accounting for around 15% of Brunei's exports and 48% of its imports in 1998, the
regional grouping continues to play an important role in external trade for Brunei.
                                                     
12 Unless otherwise indicated, this section is based on information obtained from the ASEAN internet
website (http://www.aseansec.org).Brunei Darussalam WT/TPR/S/84
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25. As part of the Framework Agreement on Enhancing Economic Cooperation to accelerate
regional economic growth, ASEAN set up the ASE AN Free-Trade Area (AFTA) in 1992.  The
AFTA, which was expected to reduce tariffs to between 0 and 5% for all trade between member
nations by 2008, was brought forward at the Fifth ASEAN Summit in 1995, to the year 2003 for the
six original founding members of ASEAN, and later, in response to the financial crisis that affected
the region in 1998, to 2002.  The Common Effective Preferential Tariff (CEPT) scheme is the maintrade instrument of the AFTA and currently covers, on average, 90% of the tariff lines of all ASEAN
member nations.  Brunei has included 6,263 tariff lines in its CEPT tariff.  Tariffs for these lines are
expected to be reduced to a range of 0 to 5% by 2002 (Chapter III(2)(iv)(b)).
14
26. Products excluded by members from their CEPT  tariffs could be placed on the temporary
exclusion list (TEL), or on the sensitive or general exclusion lists. Products on the TEL were to betransferred gradually to the inclusion list in five equal instalments of 20% annually, within five years
beginning on 1 January 1995.  For Brunei, this transition appears to have been completed as there are
no products currently listed on its TEL.  The products currently excluded by Brunei fall under the
sensitive and general exclusion lists and include coffee and tea, under the sensitive list, and tobacco,
alcohol, and motor vehicles, under the general exclusion list.  The situation concerning the phasedremoval of items, such as tea and coffee, from the sensitive list (including the future schedule for
applying CEPT rates in the range 0 to 5% to these items) was unclear to the Secretariat.  The
authorities state that items on the sensitive list (tea and coffee) should be phased into the CEPT by
2001 but not later than 2003 and will be subject to tariff reductions to 0 to 5% by 2010.  According to
the authorities, the main reason for listing motor vehi cles on the general exclusion list is to curb the
alarming increase in the number of motor vehicles, with the aim of reducing pollution.
27. Efforts have also been made to include agricultural products previously excluded from the
CEPT scheme under the sensitive list, with some agricultural products being immediately included.
However, at the 32
nd ASEAN Economic Ministers Meeting, held in October 2000, which led to the
signing of a protocol on 23 November 2000, members agreed to allow a temporary delay in tariff
liberalization for those products still on temporary exclusion lists of the six original founding
members of ASEAN as at 31 December 1999.  To request such a delay, the member concerned is towrite formally to the AFTA Council;  the submissi on is then considered by the relevant ASEAN
bodies and members and may result in compensation being paid to countries affected by the delay.
The amount of the compensation is to be agreed  upon between ASEAN members within 180 days of
receipt of the submission.
15  The target date for the complete elimination of all tariff barriers remains
2015 for the six founding nations (Brunei, Indonesia, Malaysia, the Philippines, Singapore, andThailand) and 2018 for the rest (Cambodia, Laos, Myanmar, and Viet Nam).
28. Other agreements aimed at increasing intra-ASEAN trade, promoting greater integration of
ASEAN economies, and increase investment in ASEAN countries, which have been signed in
addition to the AFTA include the ASEAN Industr ial Cooperation Scheme (AICO) and the ASEAN
Investment Area (AIA).  The AICO, signed in April 1996, aims to integrate ASEAN economies more
closely and increase industrial output of the region, in addition to increasing foreign investment into
the region.
16  The AIA, which was signed in October 1998, aims to increase foreign investment from
both ASEAN and non-ASEAN sources in the region by  removing barriers to investment for all
ASEAN investors by 2010 and for all investors by 2020.  Sectors specified in the temporary exclusion
                                                                                                                                                                    
13 Originally formed in 1967, ASEAN currently includes Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand;  and Viet Nam, in addition to Brunei.
14 APEC (2000a) .
15 ASEAN Secretariat (undated a).
16 ASEAN Secretariat (undated b).WT/TPR/S/84 Trade Policy Review
Page 24
and sensitive lists would be excluded.17  Most recently, ASEAN leaders adopted the e-ASEAN
Framework Agreement at the Fourth ASEAN Inform al Summit, held in November 2000 in Singapore.
The Agreement aims to achieve digital readiness in six areas:  connectivity, local content, electronic
commerce, ICT goods and services, human resources development, and e-governance.  Efforts to
develop such digital readiness will include the development of an appropriate legal and regulatory
environment as well as skills and proficiency in the use of information technology in the region.18
29. Further regional economic integration has been pursued under the ASEAN Vision 2020,
adopted in 1997, aimed at achieving a free flow of goods, services, and investment and reducing
economic disparities in the region by the year 2020.  Economic cooperation between member States is
also taking place in a number of areas including, customs procedures and valuation, intellectual
property rights, standards and conformance, and investment, as well as sectoral liberalization.
Economic Cooperation with non-members
30. In addition to regional liberalization, ASEAN pursues cooperation with other inter-
governmental organizations including the Andean Council, the Australia-New Zealand Closer
Economic Relations (CER), the Economic Cooperati on Organization, the Gulf Cooperation Council,
MERCOSUR, the Rio Group, the South Asian Associ ation for Regional Cooperation and the South
Pacific Forum.  Most ASEAN members are also active participants in the activities of the Asia Pacific
Economic Cooperation (APEC) forum, the Asia-Eur ope Meeting (ASEM), and the East Asia–Latin
America Forum (EALAF).
31. ASEAN also pursues bilateral cooperation with non-member States.  In recent years annual
dialogues have been held with China, Japan, a nd the Republic of Korea (ASEAN plus three) and
resulted in a joint statement between ASEAN and each of these countries, which provides for a
framework for cooperation towards the 21st century.  ASEAN also maintains regular contact with its
other "dialogue partners" including Australia, Ca nada, the European Union, India, New Zealand, the
Russian Federation, the United States, and the United Nations Development Programme;  cooperation
with Pakistan is also pursued in certain sectors.
(b) APEC
32. Brunei is a founding member of the Asia Pacific Economic Cooperation (APEC) forum.19
Under the terms of the Bogor declaration of November 1994, Brunei intends to implement free trade
and investment by 2020, as is expected of  developing country members of APEC.
33. At their 1997 meeting in Vancouver, the heads of APEC States agreed to implement early
voluntary sectoral liberalization (EVSL) in 15 sectors, of which nine were to be accelerated under the
accelerated tariff liberalization (ATL) initiative.20  At their meeting in Kuala Lumpur in
                                                     
17 ASEAN (1999).
18 ASEAN (2000).
19 Formed in 1989, APEC currently consists of Australia;  Brunei Darussalam;  Canada;  Chile;  China;
Chinese Taipei;  Hong Kong, China;  Indonesia;  Japan;   Korea;  Malaysia;  Mexico;  New Zealand;  PapuaNew Guinea;  Peru;  Philippines;  Russia;  Singapore;  Thailand;  United States;  and Viet Nam.
20 The 15 sectors were:  automotive products;  chemicals;  civil aircraft;  energy;  environmental goods
and services;  fish and fish products;  food;  forest products;  gems and jewellery;  medical equipment and
instruments;  natural and synthetic rubber;  oilseeds and oilseed products;  toys;  as well as a mutual recognition
agreement for telecommunications products.  Liberalization in nine of these sectors, chemicals, energy,environmental goods and services, fish and fish products, forest products, gems and jewellery, medicalequipment and instruments and toys, as well as the mutual recognition agreement for telecommunicationsproducts were to be accelerated.Brunei Darussalam WT/TPR/S/84
Page 25
November 1998, APEC ministers confirmed that 16 APEC members would participate in the EVSL
programme.21  It was also decided to pursue liberalization in the ATL sectors at the WTO.  In
June 1999, it was decided to pursue liberalization in the remaining six sectors at the WTO, although
separated from the ATL package.  Work on the EVSL in APEC is currently focused on non-tariff
measures facilitation and economic and technical cooperation components of the sectoral initiatives.
34. As chair of APEC in 2000, Brunei's priorities included:  continued efforts to advance trade
and investment liberalization in the region;  the development of human resources with an emphasis on
capacity building;  the development of small and medium-sized enterprises, and to enhance exchange
of information between APEC and the business co mmunity;  strengthening of information technology
based sectors, and to address the growing problems  of a "digital divide" in electronic commerce and
information technology infrastructure.22  The APEC meeting in November 2000 called for a new
round of multilateral trade negotiations to be launched in 2001.  The new round, however, would be
expected to be balanced and broad-based, responding to the interests and concerns of all WTO
Members, particularly least developed and developing countries.  APEC also agreed to continue a
moratorium on customs duties on electronic comm erce until the next WTO Ministerial Conference
in 2001.  Other issues discussed included the encouraging recovery of the region from the economicand financial crisis, and the need for continued structural reform, particularly of the banking and
financial system, the recent volatility of petroleum prices, and the need to address the international
digital divide and develop information technology.
23
(c) ASEM
35. The Asia-Europe Meeting (ASEM) held its first summit meeting in Thailand in 1996, with the
participation of seven ASEAN members24;  the European Commission and the 15 members of the
European Union;  Japan;  China;  and Korea.  The goal of ASEM is to build a political, economic andcultural relationship between the two regions.  The second ASEM summit meeting, which was held in
London, in April 1998, adopted a trade pledge to main tain open markets between participants in the
ASEM dialogue despite difficulties experienced as a result of the Asian financial crisis, which erupted
in 1997.  The second summit also endorsed a trade facilitation action plan (TFAP), aimed at reducing
non-tariff barriers, particularly with regard to customs regulations and procedures, standards,government procurement, and sanitary and phytosanitary measures.
36. The second ASEM Economic Ministers Meeting, which was held in Berlin in October 1999,
adopted future action on the TFAP and extended a mandate for a further two years for the Investment
Experts Group.  The commitment to trade liberalization was reiterated at the third ASEM meeting
held in Seoul, Korea, in October 2000.  ASEM members agreed to intensify efforts to launch a newround of world trade liberalization talks "at the earliest opportunity".
25  Other areas of cooperation in
ASEM include science and technology and the environment.
(d) BIMP-EAGA
37. The Brunei Darussalam, Indonesia, Malaysia , Philippines – East ASEAN Growth Area
(BIMP-EAGA) was formed in March 1994.  It is composed of the entire area of Brunei;  tenprovinces in the Indonesian islands of Kalimantan, Sulawesi, Maluku and Irian Jaya;  Sabah, Sarawak
                                                     
21 Australia;  Brunei;  Canada;  China;  Hong Kong, China;  Chinese Taipei;  Indonesia;  Japan;  Korea;
Malaysia;  New Zealand;  Papua New Guinea;  Philippines;  Singapore;  Thailand;  and the United States.
22 APEC (undated).
23 APEC (2000b).
24 Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam.
25 Financial Times , 23 October 2000.WT/TPR/S/84 Trade Policy Review
Page 26
and Labuan in Malaysia;  and Mindanao and Palawan in the Philippines.  With a total area of around
1.54 million square kilometres and a population of around 46 million, the BIMP-EAGA is the largest
growth area in Asia.  Its goal is to provide investment and trade opportunities to the business
community through the pooling of common and complementary resources and infrastructure, and to
encourage the free movement of resources across borders.  The BIMP-EAGA, which identifies sectors
for liberalization through the formation of working groups, including participation from both theprivate and the public sectors, has currently identified air linkages, sea linkages, construction,
fisheries, and tourism, as fast-track sectors.
26  Investment in these activities is encouraged through the
provision, inter alia,  of tax and non-tax incentives.
(iii) Bilateral agreements
38. Brunei does not have any bilateral trade agreements at present.
(5) FOREIGN INVESTMENT REGIME
(i) Overview
39. Foreign investment in Brunei is, in principle, open for all sectors except those deemed to be
important for national food security and those based on local resources.  Brunei also offers a number
of attractions to foreign investors, including investment incentives, good physical infrastructure, and astable macroeconomic environment.  Nevertheless,  investment procedures are not always obvious;
approval is required at various stages without clear time limits indicated for each of these stages;  and
guidelines on which sectors or industries are important for national food security or require local
participation are unclear.  In addition, it is not clear whether a recently formed one-stop agency in the
Ministry of Industry and Primary Resources has proved successful in attracting much-needed foreign
investment and technical expertise, despite tax and other duty exemptions.  These factors suggest that,
despite the tax incentives offered, the authorities' degree of discretion in approving foreign investmentprojects may be a disincentive to foreign investors.
(ii) Legislative framework and investment procedures
40. Brunei does not have any legislation dealing specifically with foreign investment;
nevertheless, the basic legislation on investment, the Investment Incentives Act (Cap. 97)
promulgated in 1975, which is administered by the Economic Development Board in the Ministry ofFinance, appears to allow foreigners to hold up to 100% of the equity in certain industries and
activities in which the Government wishes to encourage investment (Table II.4).  Activities relating to
national food security and those based on local resources require some level of local participation;  it
is not clear to the Secretariat what these activities include, although it appears that a minimum 30%
local investment is required in agriculture, fisheries, and food processing.  Firms that operate inindustries for the local market, that do not affect national food security, and that export, may be
entirely foreign owned.
27  Foreign nationals are not allowed to own land, but may lease land for
industrial purposes, agriculture, forestry, and aquaculture on a long-term basis.28
                                                     
26 Other sectors in which EAGA Working Groups have been formed are agri-industry, capital
formation and financial services, energy, environmental protection and management, forestry, human resource
development and people mobility, and telecommunications.
27 Ministry of Industry and Primary Resources (1993).
28 It is estimated that around 95.4% of land in Brunei is owned by the State;  of the remaining 4.6%,
2.37% and 2.12% are owned by Bumiputra and non-Bumiputra, respectively (Brunei Darussalam EconomicCouncil, 1999).Brunei Darussalam WT/TPR/S/84
Page 27
Table II.4
Preferred industries, associated activities, and products for investment
Industry/activity Government support and assistance
Agriculture
Poultry farming
Cultivation of vegetables, medicinal plants, herbs and spices,
fruit, rice and other cereals and floriculture
Production of planting material
Livestock farming
Cultivation of coffee
Cultivation of fodder crops or animal feed ingredientsAssistance for infrastructure, technical and material inputs,
training,  marketing and location.  Finance assistance is provided
for local farmers/producers only.
Fisheries
Offshore/inshore fishing, aquaculture crustaceans and fish, andspawning, breeding or culturing of aquarium fishSupport and assistance is available for infrastructure facilities,
technical assistance, training, marketing and location.  Finance
assistance is provided only for local producers, whereas materialinputs are provided for offshore and inshore fisheries for local
producers.
Forestry
Timber plantations, non-timber products, re-afforestation
Processing and treatment of wood products, non-timber products,furniture and fixtures and integrated timber complexAssistance is provided for infrastructure facilities, technical
support, material inputs, training and location.  Finance assistance
is provided for local producers.  Marketing assistance is available
only for non-timber products.
Processed food
Vegetables, tubers, roots, rice and other cereals, fruit, herbs andspices, medicinal plants and coffee
Livestock, poultry, eggs
Fodder crops or animal feed ingredients
Fish, convenience fishery products and fish-meal/feedAssistance is provided for infrastructure facilities, technical
inputs, marketing and location.  Assistance is not provided for
material inputs nor for training for fish-meal/feed processing.
Finance and training assistance is available for local producers.
Manufactures
Leather products and footwear Infrastructure facilities and for location.  Finance assistance for
local producers is also available.
Electrical and electronic machinery including electrical power
machinery and switching gear;  electrical apparatus for medical
purposes and radiological apparatus;  telecommunications
equipment;  domestic electrical equipment;  and equipment for
distributing electricityAssistance for infrastructure facilities and for location.  Finance
assistance available for local producers only.
Printed matter Assistance for infrastructure facilities and for location.  Finance
assistance available for local producers only.
Pigments, paints, varnishes and related material;  chemicalmaterials and products n.e.s;  fertilizers;  soaps, cleansing and
polishing preparations;  and inorganic chemicals, oxides and
halogen saltsAssistance for infrastructure facilities and for location.  Finance
assistance available for local producers only.
Medicinal and pharmaceutical products;  essential oils, perfumesand flavouring materialsAssistance for infrastructure facilities, technical and material
inputs, marketing and location.  Finance assistance available for
local producers only.
Ships and boats Assistance for infrastructure facilities and location.  Finance
assistance available for local producers only.
Other industries including, perambulators, toys, games andsporting goods;  jewellery;  and travel goods and similar articles.Assistance for infrastructure facilities and location.  Finance
assistance available for local producers only.
Silica products Assistance for infrastructure, material inputs, marketing and
location.  Finance assistance available for local producers only.
Ceramic products and pottery Assistance for infrastructure, material inputs, marketing and
location.  Finance assistance available for local producers only.
Table II.4 (cont'd)WT/TPR/S/84 Trade Policy Review
Page 28
Industry/activity Government support and assistance
Metal products, containers for storage and transport, wire
products (excluding electric wiring), and fencing grills;  nails,screws, nuts, bolts, rivets and similar parts of iron, steel and
copper;  hand held tools or machines;  sanitary, plumbing, heating
and lighting fixtures and fittingsAssistance for infrastructure, marketing and location.  Assistance
for material inputs also provided for metal products, containers forstorage and for sanitary, plumbing, heating and lighting fixtures
and fittings.  Finance assistance available for local producers only.
Non-metal products such as lime, cement and fabricated buildingmaterials;  clay construction material and refractory construction
material;  and mineral manufacturingAssistance for infrastructure, marketing and location.  Material
input assistance also available for clay construction material,
refractory construction material and mineral manufacturing.
Finance assistance provided for local producers only.
Apparel products;  and textile products including synthetic andregenerated (artificial) fibres, floor coverings, materials of rubber
and plastics, and plastic material, regenerated cellulose andartificial resins.Assistance for infrastructure, and location.  Marketing assistance
for apparel products, synthetic and regenerated fibres, and floor
coverings also available.  Finance assistance available for localproducers only.
Source: Ministry of Industry and Primary Resources (1993), List of Preferred Industries, Associated Activities and
Products , One Stop Agency.
41. The Ministry of Industry and Primary Resources is the main coordinating agency for
investment and industrial development.  The Minist ry, through its Investment Services Sector, aims to
provide a one-stop service to investors, assisting them in obtaining access to physical facilities, local
resources, incentives, technical and production services, and administrative services.  According to
the Ministry, it will provide a response to the potential investor within two weeks of the application.29
Once the completed application has been submitted, the proposal is examined by the Projects
Implementation Committee (PIC), followed by a Technical Committee and finally by Cabinet
Ministers, before being approved.30  Both the PIC and the Technical Committees include strong
representation from the Ministry of Industry and Primary Resources.31
42. The authorities state that the process of examination by these committees takes about 20 days.
Once the project has been approved, there are three remaining stages:  approval of detailed activities,
costs, benefits, and implementation;  approval of the physical details of the planned projects;  and
approval to begin operation.  Projects not related to primary resources and manufacturing are
examined by the District Office and Municipal Board.   Additional licences may be required from
other agencies for some activities, such as retailin g outlets and financial institutions.  All companies
applying to invest in Brunei must first be locally incorporated under the Companies Act
(Chapter III(4)(i)).
43. Despite these efforts, recent data appear to s how that the net foreign investment position has
not changed significantly, since 1995 (Chapter I(4)).  In its report, presented in 1999, the Brunei
Darussalam Economic Council recommended an investment promotion drive to encourage furtherinvestment.  Measures suggested included:  the es tablishment of an effective Investment Promotion
Board;  revision of the existing Investment Incentives Act and implementation mechanisms;
expansion of the coverage of bilateral investment treaties;  reviewing and, where necessary, removing
restrictive regulations to create a more business-friendly environment;  and introducing greater scope
                                                     
29 Ministry of Industry and Primary Resources (1993).
30 Ministry of Development (undated a).
31 The PIC is chaired by Permanent Secretary of the Ministry of Industry and Primary Resources
(MIPR) and includes participation by the Directors of the Investment Services Section, the Brunei Industrial
Development Authority (BINA), the Agriculture, Forestry and Fisheries Departments, the Policy and
Administration Section, and the Industrial and Tourism Promotion Section in the Ministry;  the Technical
Committee, also chaired by the Permanent Secretary of th e Ministry, includes the Director of Special Duties in
the Ministry of Finance as Deputy Chairman, the Directors of the Investment Services Section, BINA, theAgriculture, Forestry and Fisheries Departments, as well as representatives of the Permanent Secretaries of theMinistries of Development and Home Affairs.Brunei Darussalam WT/TPR/S/84
Page 29
for corporate ownership of property in Brunei.32  The current status of implementation of these
recommendations is not clear.
(iii) Incentives
44. While the Ministry of Industry and Primary Products is responsible for approving investment
projects, the Investment Incentives Act provides for a number of incentives, mainly in the form of tax
exemptions, for companies that have been granted Pioneer Status and for the expansion of establishedenterprises.  These incentives appear to be administered by the Economic Development Board, part of
the Department of Economic Planning and Deve lopment since 1997, in the Ministry of Finance.
Under the first scheme, any limited company with a Pioneer Status Certificate is granted an
exemption from payment of corporate income tax, nor mally levied at a rate of 30%, for between two
and five years depending on the level of fixed capital expenditure.
33  The exemption begins on the
first day of production and may be extended for a further three years.  Pioneer Status companies are
also exempt from payment of customs duty on plant, machinery, and equipment to be installed on its
premises, and raw materials that are not available in Brunei and are to be used in the production of the
pioneer products.  The second scheme provides tax incentives for the expansion of enterprises already
established in Brunei if the expansion is judged to be beneficial to Brunei and in the public interest(Chapter III(4)(ii)(a)).
(iv) Bilateral investment treaties
45. Brunei signed bilateral investment agreements with Germany and Oman in April and
June 1998, and with Korea and China in November 2000.
46. Brunei also concluded tax treaties with the United Kingdom in 1950 and with Indonesia
in 2000.
                                                     
32 Brunei Darussalam Economic Council (1999).
33 The exemption is for two years for fixed capital expenditure of less than B$250,000;  three years for
fixed capital expenditure of between B$250,000 and B$500,000;  four years for fixed capital expenditure ofbetween B$500,000 and B$1 million;  and five years for fixed capital expenditure of B$1 million and over(Ministry of Development, undated b).