RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/84
27 April 2001
(01-2006)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
BRUNEI DARUSSALAM
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Brunei Darussalam is
attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Brunei Darussalam.Brunei Darussalam WT/TPR/G/84
Page 3
CONTENTS
Page
I. GENERAL POLICY STATEMENT 5
II. ECONOMIC ENVIRONMENT 5
III. TRADE POLICY FRAMEWORK 6
IV. SECTORAL POLICIES AND DEVELOPMENTS 8
(1) O IL AND GAS 8
(2) S MALL AND MEDIUM ENTERPRISES 8
(3) A GRICULTURE 9
(4) M ANUFACTURING 9
(5) B RUNEI INTERNATIONAL FINANCIAL CENTRE 9
(6) A IR TRANSPORT SERVICES 11
(7) T ELECOMMUNICATIONS 11
(8) T OURISM 12
V. CONCLUDING REMARKS 12Brunei Darussalam WT/TPR/G/84
Page 5
I. GENERAL POLICY STATEMENT
1. Brunei Darussalam pursues free trade policies, with the responsibility for allocating resources
and determining economic decisions left to market forces.
2. Brunei Darussalam strongly supports an open, rules-based and non-discriminatory
multilateral trading system, as essential to fostering global economic growth.
3. Participation in regional economic forums is based on the concept of “open regionalism”, in
which regional economic cooperation is seen as a building block towards multilateral trade
liberalization.
II. ECONOMIC ENVIRONMENT
4. Hydrocarbon exports and the steady accumulation of long-term foreign assets, over many
years have provided Brunei Darussalam with a comfortable external position.  This has facilitated the
maintenance of a liberal trade and exchange system.  However, in recent years, both trade and current
account balances have deteriorated, as imports rose sharply while exports remained stagnant.  The
Government has thus tightened its fiscal outlay.
5. Nevertheless, in 2000, Brunei’s economy improved, as it grew by 3.0% compared to 2.5% in
1999.  GDP growth was largely due to positive developments in both the hydrocarbon and
Government sectors.  Crude oil prices reached their highest level in a decade and this has been
accompanied by an increase in production levels.
6. This not withstanding, the Government considers it essential to diversify the economy, and
promote inward foreign investments, for the following reasons:
- the mining, manufacturing and quarrying sectors comprised mainly of oil and gas,
continue to make up about 50% of total output;
- on the other hand, the contribution from agriculture, forestry and fisheries is still very
insignificant at less than 4% of GDP, despite achieving some improvement;
- the services sector has undergone a decline as contributions from private sector
activities, particularly construction, were adversely affected by Government spending
cuts;
- whilst portfolio and direct investment inflows have risen in recent years, these have
been dwarfed by long-term outflows;  and
- whilst the participation of women in the labour force has increased significantly, from
29.5% in 1986 to 52.3% in 1999, the Government is increasingly concerned by the
fact that over 6,000 or so persons, especially youths, are still actively seeking jobs.
7. The performance of the economy this year and the next, depends very much on developments
in both the hydrocarbon sector and the Government’s contributions.  This year, GDP growth is
estimated to be 3.5%, while inflation is expected to be around 1%.
8. The Government recently renamed the Brunei Darussalam Economic Council (BDEC)
Secretariat as the Department of Economic Planni ng and Development (DEPD) and placed it underWT/TPR/G/84 Trade Policy Review
Page 6
the Prime Minister’s Department.  This move underscores the Government’s determination to hasten
the country’s economic recovery in the short term and ensure sustainable economic growth.
9. The long-term strategy for sustainable growth aims, among others, at strengthening
government finances and the private sector.  A diversified and healthy private sector is necessary to
create the employment opportunities that the government is increasingly unable to provide and to
reduce the economy’s dependence on government expenditure.  This strategy includes theprivatization of several government services, including Muara Container Terminal and the
Telecommunications Department, accompanied by prudent regulatory reform, where appropriate.
The tax system is also being reviewed to expand the tax base and all direct and indirect subsidies will
be gradually removed.
III. TRADE POLICY FRAMEWORK
10. Brunei Darussalam signed the Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations in April 1994 in Marrakesh.  All the agreements embodied in this Act
form part of Brunei’s written laws upon incorporat ion through enabling or implementing legislation.
11. The objective of Brunei’s trade and industrial policies is to develop non-traditional exports
such as processed agricultural goods, resource-based manufactures and hi-tech manufactures(including ICT products), as well as service industries such as business and financial services and
tourism.
12.  Brunei’s tariff structure is liberal and transparent - four-fifths of tariff lines are duty-free and
nearly 99% are ad valorem rates.  Tariffs have been eliminated or progressively reduced over the
years, with the result that the average MFN tariff is currently 3.1%, whilst customs duties accounted
for 6.8% of tax revenue (1.2% of GDP) in 1999, declining from 13.3% (2.2% of GDP) in 1995.
Efforts are also being made to convert some of the specific tariffs into ad valorem  rates.
13. Peak tariffs apply to some categories of motor vehicles to reduce the already high car
ownership rate and prevent the accompanying problems of traffic congestion and pollution.  There is
no domestic auto manufacturing industry.
14. Non-tariff measures are few and maintained only to discharge Brunei’s obligations under
international commitments, or for public health and safety, environmental, religious, or nationalsecurity considerations.
15. The Department of Information Technology and State Stores administers the importation and
stockpiling of sugar and certain types of rice, to ensure security of supplies and price stability.
16. Brunei Darussalam does not maintain any WTO-inconsistent trade-related investment
measures.  A local equity requirement of not less than 30% applies to joint ventures in agriculture,fisheries and food processing, only if government facilities such as government-developed industrial
sites are applied for.
17. The current Investment Incentive Act is in the process of revision to widen its scope beyond
pioneer manufacturing industries, to include among other things pioneer services, all established and
expanding enterprises, trade and investment promotions, foreign loans for capital, venture capital,export-import services and hi-tech industries.  In addition, the Government is actively pursuing
Bilateral Investment Treaties and Double Taxation Agreements with interested countries.Brunei Darussalam WT/TPR/G/84
Page 7
18. The existing Brunei Economic Development Board Act is being revised to strengthen its
powers for the promotion of foreign direct investme nt, development of joint ventures in strategic
sectors and the provision of efficient services to investors.
19. The Brunei Investment Agency is also active in  promoting foreign direct investment.  As part
of its overall investment objective to diversify its investment activities, it has recently begun to
explore investment opportunities in commercially viable companies within Brunei Darussalam.
20. Semaun Holdings is a private limited company wholly owned by His  Majesty’s Government
and placed under the jurisdiction of the Ministry of Industry and Primary Resources.  Its mission is to
spearhead industrial and commercial development th rough direct investment in key industrial sectors
in the interest of Brunei Darussalam. Being incorporated under the Companies Act, it complies with
all legal requirements, including annual accounts.
21. A new Industrial Coordination Order will facilitate better coordination, especially of licensing
and industrial building approval.  At the same time, the Government is also currently reviewing and
revising restrictions on the ownership and development of industrial land and  its use as collateral to
raise financing.
22. The services sector is an area of focus in efforts to diversify the economy and the Government
will thus be formulating a services sector policy.
23. Brunei Darussalam is party to the Convention Establishing the World Intellectual Property
Organization (WIPO).  All relevant laws for the protection of intellectual property rights have been
enacted.  With the exception of the Patent Order, the relevant intellectual property laws came into
effect as of May 2000.
24. No national standards body exists in Brunei Darussalam.  However, the Construction
Planning and Research Unit (CPRU) at the Ministry of Development is the focal point for standardsand conformity assessment activities.  The Resource and Standards Centre of the Ministry of Industry
and Primary Resources is mandated to act as a quality control and accreditation centre for local
products as a guarantee to local acceptance and to meet international standards.  It is strengthening its
ability to fulfil this mandate by re-organising itself to create a Product Development and Standards
Division that will develop, adopt or modify product and service standards and quality certificationschemes in the primary resources, manufacturing and tourism and tourism-related industries.  The
Centre is now in the process of negotiating a Memorandum of Understanding with SIRIM Sdn Bhd
Malaysia that will hasten the Centre’s organisa tional ability to act as a quality control and
accreditation centre.
25. National standards are available only in the construction sector.  It is the policy of Technical
Committees for the development of standards to a dopt international standards where relevant and
there is an ongoing exercise to review the alignment of national standards with existing relevant
international standards in line with ISO/IEC Guide 21:1999.
26. Brunei’s participation in the ASEAN Free Trade Area (AFTA) and the Brunei-Indonesia-
Malaysia-Philippines East ASEAN Growth Area  (BIMP-EAGA) is aime d at overcoming the
constraints of a small domestic market, as well as capitalizing on resource complementarity and
geographical proximity.
27. Brunei Darussalam is also a member of AS EM and APEC, which, among others, holds
informal consultations on WTO matters, thus comple menting and reinforcing ef forts to strengthen the
multilateral trading system.  As host of APEC in 2000, Brunei Darussalam helped to steer theWT/TPR/G/84 Trade Policy Review
Page 8
grouping in addressing a balanced agenda vis-à-vis Trade and Investment Liberalization and
Facilitation (TILF), and Capacity Building, thereby reflecting the interests of all APEC members.
IV. SECTORAL POLICIES AND DEVELOPMENTS
(1) OIL AND GAS
28. The Brunei Oil and Gas Authority (BOGA) advises and makes recommendations to His
Majesty the Sultan on all matters relating to the oil and gas sector.  The Petroleum Unit in the PrimeMinister’s Department is the principal regulator of this sector.  It oversees exploitation of Brunei’s
reserves, promotes the development of downstream activities, fixes crude oil prices and ensures that
internationally acceptable standards on technical, accounting, health and safety and environmental
grounds are adhered to.  Brunei’s total proven reserves of natural gas will last for at least another
twenty years at the current production rate.  At present, Brunei Shell Petroleum (BSP) and
TotalFinaElf are the two operators producing oil and natural gas.
29. While the diversification of the Brunei Darussalam economy remains the primary objective,
the oil and gas sector will continue to be the main contributor to the GDP in the years to come.
Brunei’s long-term development plans therefore include the further development of the oil and gas
sector.
30. Foreign investors have been invited to bid in the petroleum new areas, both onshore and
offshore.  The 3D seismic survey conducted very recently has been very promising.  During a
conference on oil and gas held in conjunction with the launching of the new areas, a number of
potential investors expressed their interest in the opportunities being offered.
31. Based on its strength and experience in the exploration and production of oil and gas, Brunei
Darussalam strives to expand into the downstream oil and gas industry, not only producing
downstream products, but also becoming a provid er of services to regional oil producers.
(2) S
MALL AND MEDIUM ENTERPRISES
32. Small and Medium Enterprises or SMEs, make up 99% of the business sector in Brunei
Darussalam.  The creation of a business environment that is supportive of the development of SMEs is
therefore a priority area for the Government.
33. The Resource and Standards Centre of the Ministry of Industry and Primary Resources has
been mandated to provide facilities and expertise for facilitating the growth and development of small
and medium enterprises.  It is strengthening its capacity to support SMEs in terms of management,
entrepreneurial and technical  skills upgrading, product quality enhancement and business matching.
Similarly, the Centre is also expanding its existing “Enterprise Facilitation Scheme” to assist a greater
number of SMEs.
34. In January 2001, a B$30 million Working Capital Credit Fund was launched.  Under this
scheme, the Government provides a guarantee to the value of 75% of the facility and participating
banks provide the remaining 25%.  In addition, the Government also makes a deposit in the
participating banks to match the value of its guarantee and this deposit only earns 2%.  Participation
by banks in the Fund is voluntary.
35. This fund complements the existing “Enterprise Facilitation Scheme”, which is aimed at
increasing production capacity, the marketing and mana gement effectiveness of local enterprises, and
business activities in agriculture, fisheries and forestry, as well as the manufacturing and tourismBrunei Darussalam WT/TPR/G/84
Page 9
sectors.  The Scheme, currently being administered by The Islamic Development Bank of Brunei, in
cooperation with the Resource and Standards Centre, provides up to a maximum of B$1.5 million per
company.
36. Recognizing the financial needs of micro-enterprises to sustain and upgrade their socio-
economic activities, the Centre is launching a micro-credit scheme that provides a collateral-free loan
of up B$30,000 per approved applicant.  These micro-credit loans will be made available throughlocal banks and monitored by the Centre.  The Centre will complement this financial support scheme
with technology and entrepreneurship training programs to upgrade the business and management
skills of micro-entrepreneurs and ensure better prospects for success.
(3) A
GRICULTURE
37. Agriculture in Brunei Darussalam is supported by the Government in the form of incentives
for infrastructure development, in an effort to boost its currently small share of the GDP.
Infrastructure development includes clearing of new farm area and construction of main farm roads
and main irrigation and drainage systems.
38. Brunei Darussalam aspires to tap the regional and global market for Halal products.  The
Ministry of Industry and Primary Resources is actively promoting the development of BruneiDarussalam as a regional centre for the production and export of Halal products.
(4) M
ANUFACTURING
39. Ready-made garments constitute the third biggest export after crude oil and liquefied natural
gas.  Exports reached US$208 million in 2000, an increase of 46% from the previous year.  Related
industries in the form of value-added services such as embroidery and printing have also been
established.  Bearing in mind that the textiles and clothing sector is to be integrated into GATT 1994,
the industry is being encouraged to upgrade through, among others, the adoption of modernmachinery and efficient production methods.
40. In its efforts to diversify the economy through the promotion of Information and
Communications Technology (ICT)-related business activities, the Brunei Industrial Development
Authority (BINA) has designated an area for the development of a hi-tech industrial park and the
necessary infrastructure is currently being put in place.
41. On the more long-term front, the Government is to set up a Government Development
Corporation, specifically to promote and develop Pulau Muara Besar into a designated area for
industrial activities.  This will cater not only to shipping needs, but also support the petrochemical
sector.  The further deepening of the Muara channel and the privatization of port services are aimed at
establishing an efficient and competitive deep-water port, that will enable Brunei Darussalam tocompete for a larger share of the regional and international shipping market.
(5) B
RUNEI INTERNATIONAL FINANCIAL CENTRE
42. The Brunei International Financial Centre was officially announced by His Majesty the Sultan
on the 15 July 2000.  This is line with the economic diversification programme.  The following
legislations have been enacted for the Brunei IFC to date:WT/TPR/G/84 Trade Policy Review
Page 10
ORDER ISSUE NOTIFICATION
NUMBERISSUE DATE
Money Laundering Order, 2000 27 S 44 17/6/2000
International Limited Partnerships Order, 2000 28 S 45 17/6/2000
Criminal Conduct (Recovery of Proceeds) Order, 2000 32 S 52 27/6/2000
International Banking Order, 2000 33 S 53 29/6/2000
Registered Agents and Trustees Licensing Order, 2000 34 S 54 3/7/2000
International Trusts Order, 2000 35 S 55 17/7/2000
International Business Companies Order, 2000 36 S 56 20/7/2000
Various regulations have also been made under the primary legislations mentioned above.  These
include the International Limited Partnerships (Fees, Forms and Miscellaneous Provisions)
Regulations, 2000 (S67), the International Banking (Fees, Forms and Miscellaneous Provisions)
Regulations, 2000 (S68) and the International Business Companies Regulations, 2000 (S69).  The
Mutual Funds Order 2001 is also now operative.  Securities and insurance legislation is expected to be
enacted subject to His Majesty the Sultan’ IFC s approval very shortly.
43. The Brunei International Financial Centre is conducted pursuant to the ‘parallel jurisdiction’
model;  that is, an “international” jurisdiction is established to facilitate the operations of BIFC and
runs parallel to the existing “onshore” or “domestic” legislation.
44. BIFC will license both conventional and Islamic financial institutions.  Both financial
institutions are subject to requirements prescribed in the appropriate orders.  For example, a minimum
capital requirement prescribed pursuant to section 5(2) (g), (International Banking Order, 2000) is five
million US dollars capital plus other requirements detailed in the Regulations.  It is regarded as very
much a minimum, and only genuine significant bankers will be licensed.  The only pronounced
difference between conventional and Islamic financial institutions is that Islamic institutions must
comply with doctrines of Islamic Religion, and that proper provision is made in the institutions
constituting documents for the appointment of and provision of advice by the appropriate Shari’ahCouncil pursuant to section 5(2) (b), (International Banking Order, 2000) .
45. Several steps are being taken to strengthen the supervisory role of BIFC such as:
- the formation of a money-laundering committee comprising relevant departments
within the Brunei Government and private businesses;
- joining relevant International Association of Supervisors such as IOSCO and IAIS;
- meetings with overseas regulatory bodies. More are planned with, among others, FSA
(UK) and MAS (Singapore);
- an emphasis on admitting only licensees who are of high standards;  and
- all new IBCs must be the subject of Certificates of Due Diligence completed by the
Licensed Agent responsible.Brunei Darussalam WT/TPR/G/84
Page 11
(6) AIR TRANSPORT SERVICES
46. Brunei Darussalam adopts a reciprocal “Open Sky” air services policy, in its efforts to attract
more foreign airlines to operate into Brunei Darussalam.  As part of this effort, bilateral open skies
agreements have been signed with New Zealand, Singapore and the United States which allow
designated airlines to provide air services between the two countries with the rights to uplift
passengers at intermediate and beyond points, with no limitation of frequency, capacity and aircrafttype.
47. Brunei Darussalam also initialled the world’s first plurilateral open skies air services
agreement with Chile, New Zealand, Singapore and the United States in November 2000.  Brunei
Darussalam made GATS commitments in rental and le asing services relating to aircraft with and
without crew.
(7) T
ELECOMMUNICATIONS
48. Under the Telecommunications Act of 1956, the Government is the exclusive provider of
telecommunications services in Brunei Darussalam.  However, the Ministry of Communications is
now at the stage of finalizing a new telecommunications order in conjunction with another new Order
to establish a new regulatory authority independent from the operator(s).  Meanwhile, in the spirit of
attempting to establish an independent regulator and while waiting for the enactment of the new
legislations, an interim agent in the form of a Regulatory Unit under the Ministry of Communications
has been created.  In practice, all regulatory functions have been taken over by this Unit.  Jabatan
Telekom Brunei (JTB) is now left with service provision functions only.  In addition, a Succession
Order is also being finalized to corporatize JTB.  The Succession Order will allow the assets and
liabilities of JTB to be transferred to a company to be owned by the government.
49. The Regulatory Unit is responsible for monitoring the prices charged by JTB and DSTCom
(the exclusive provider of mobile telephone services).  The Regulatory Unit does not set prices but all
proposed prices by the operators must first be submitted for approval.  This is done to ensure the
proposed charges are not predatory and not anti-competitive.  In the new legislation, the new
‘Authority’ can give directions and make regulations on a wide range of issues including prices.
Alternatively, the requirement to first submit proposed prices to the authority can be incorporated inthe licence document.  The Regulatory Unit will develop a number of new guidelines, such as Anti-
competitive Behaviour Guidelines, Separate-accounting Guidelines, Standard of Quality Guidelines,
Code of Practice Guidelines etc.
50. Brunei Darussalam declared in its APEC Individual Action Plan that it intends to participate
in the APEC telecommunications mutual recogni tion agreement (MRA) in 2003.  Longer run plans
include opening up value added services for competition;  consideration may also be given to issuing
licences for local public switched voice services, public cellular mobile telephone services employing
technologies other than AMPS and GSM, and international telecommunication services.
51. Brunei Darussalam participated in the Fifth Pr otocol to the GATS and made commitments in
local, international and mobile telephone services.  In general, Brunei's commitments reflect the
existing situation in the telecommunications sector.  Brunei Darussalam has also stated in its
commitments that JTB's monopoly over voice telephone services will be maintained for ten years
after its privatization and subject to a Government review to allow new suppliers into the market.
Similarly, for mobile telecommunications services, the Government will consider issuing new
licences to mobile telecommunications providers employing other than AMPS and GSM technology
in 2010 if public interest and economic conditions justify this.WT/TPR/G/84 Trade Policy Review
Page 12
(8) TOURISM
52. The launch of the Visit Brunei Year in January 2001 is an effort to promote tourism,
particularly eco-tourism, as a sustainable industry.  The Government will intensify its efforts to
implement the Tourism Master Plan, so as to increase the contribution of the tourism industry to the
GDP.  Eco-tourism is to play a big role, in view that a large part of Brunei Darussalam is covered by
protected tropical rainforests.  Brunei Darussalam is to be promoted as the gateway to and businesshub for the East ASEAN sub-region, in view of its infrastructure and transport and communications
services capacity.
V. CONCLUDING REMARKS
53. While the Government is committed to trade liberalization within the framework of the WTO,
it recognizes the importance of adopting a gradual approach, so as not to impair the growth ofdomestic industries.  Protection is thus reduced in order to spur efficiency and deregulation is
undertaken with the view to reduce the existing high costs.
54. Legal frameworks to accommodate policy changes and facilitate private sector development
will be an important area of focus.  Current efforts to improve the transparency of government
policies and regulations, including improving public access to information, are being accelerated andexpanded.
55. At the same time, long-term investments are being made in institutions and capabilities to
promote economic diversification and enhance the competitiveness of the domestic economy.
56. The Government is committed to strengthening the private sector through, among others, the
reduction and simplification of policies and procedures that have a bearing on private enterprise, and
the provision of incentives and first class infrastructure.
57. The Government is also committed to enhancing knowledge of rights and obligations under
the WTO.  To this end, it has organized seminars and workshops on the WTO agreements for
government officials and businesspeople in Brunei Darussalam, with the assistance of the WTO
Secretariat.
58. Since its accession to the GATT on 13 December 1993 and subsequently to the WTO, and
despite the scope and complexity of the work involved, and the heavy burdens placed on its scarcehuman resources, Brunei Darussalam has worked to ensure compliance with its commitments.
59. Brunei Darussalam therefore welcomes economic and technical cooperation in the
implementation of WTO commitments by developing countries and the expansion of their negotiating
capabilities that will enable developing countries to play a more effective role in the multilateral
trading system.
60. The Government of Brunei Darussalam has drawn many lessons from the preparatory work
undertaken for its first Trade Policy Review.  Together with the Report by the WTO Secretariat, these
will enable us to review our trade policy regime to ensure that it is both effective and responsive to the
needs of a global economy.
__________