02 Christopher.indd 83 4/29/14 5:24:42 PM Southeast Asian Affairs 2014
Brunei in 2013 Paradoxes in Image and Performance?
Christopher Roberts
Brunei is currently a politically stable and peaceful country that enjoys one of the highest per capita incomes in Asia due to an abundance of hydrocarbon reserves. However, it is the smallest Southeast Asian nation in terms of its population (415,717) and second smallest in terms of its land mass (5,765 square kilometres). This, together with its long term existence as a constitutional sultanate or Malay Islamic Monarchy (Melayu Islam Beraja), provides for a fascinating mix of historical, cultural, and political considerations. However, its size, strategic location, and the challenges of modernization and globalization continue to generate a conundrum over the most viable policy approaches to economic, social, and security issues in the long term. Given these considerations, this chapter provides an overview of a broad spectrum of key developments in economic, political, and foreign affairs during 2013. As detailed below, Brunei faced a mixed year where there was a general stasis on the economic front and a new level of conservatism politically, but a successful mix of international diplomacy and leadership vis-à-vis Southeast Asian regionalism.
Economic Affairs The pace of economic development in Brunei Darussalam has been quite mediocre in recent years. At the time of writing, Brunei was estimated to have achieved only 1.4 per cent real GDP growth during 2013 and this follows from 0.9 per cent in 2012.1 While real GDP growth is predicted to accelerate to 2.1 per cent
Christopher Roberts is Senior Lecturer in Asian Politics and Security, Research Convenor, National Security College at the Australian National University.
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in 2014 and 2.5 per cent in 2015, such growth falls far short of the official target of 6 per cent that is declared in the country’s Vision/Wawasan 2035.2 This relatively lacklustre performance is primarily a consequence of continued dependence on the export of hydrocarbons and an associated lack of capacity to diversify the economy away from such dependence despite numerous decrees and directives to the contrary by Sultan Haji Hassanal Bolkiah. Nonetheless, the hydrocarbon revenue remains sufficient to maintain significant trade and budget surpluses; a state-of-affairs that is reinforced by the long-term channelling of its oil wealth into significant investments abroad.3 The economic climate was also reinforced by continued low inflation (estimated at 0.8 per cent in 2013), an outcome that is a consequence of the currency peg to the Singapore dollar and the government’s continued subsidization of certain basic items like rice and sugar. Despite the continued dependence of the country on hydrocarbon revenue (approximately 90 per cent of GDP),4 there have been some successes in the Sultanate’s attempts to diversify its economy. Noteworthy examples include the commencement of construction for the Pulau Muara Besar port, the construction of a new ammonia plant (scheduled to come online in 2014), and the completion of a methanol plant in mid-2010. However, the methanol plant suffered from an “unexpected shutdown” for a week in February and was then taken offline for “maintenance” from May 2013 through to January 2014. A smaller development concerned a joint investment between Aureos (Brunei) and Viva Pharmaceutical (Canada) to construct Brunei’s first Pharmaceutical manufacturing plant that is estimated to generate a further 250 local positions.5 Given that Brunei only has a few thousand unemployed workers, such projects will have a significant impact in this sphere. However, the extent to which the country has a current need to extend its number of employment opportunities is debatable as it is already heavily dependent on foreign labour. The government is also targeting tourism as a further source of income and employment and has declared an intention to increase tourist arrivals from 242,000 in 2011 to 400,000 by 2016.6 Here, there is room to further develop eco-tourism in the largely untouched tropical rainforest areas of the Temburong District. The government will support tourism and other industries through the enlargement of Brunei’s international airport (scheduled for completion by November 2014) and a July 2013 announcement that it will be launching a new low-cost airline in 2014.7 For several years the Sultanate has also sought to develop the information and communications technology sector and has subsequently invested US$190 million to install a high-speed optic fibre broadband network
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to the homes of 85 per cent of the population by 2017.8 Another positive development for the sector was the May 2013 removal of Brunei from the US watch list of countries that had problems concerning the protection of intellectual property rights.9 The government has also made strong investments in the development of the agriculture, fisheries, and agro-processing sectors but there have been mixed results to date and a strong dependence on related imports continues. Meanwhile, some significant developments and investments occurred that will act to keep the hydrocarbon industry at the forefront of the economy for at least the next decade. In February 2013, Hengyi industries secured regulatory approval from China to construct a US$4.32 billion petrochemical refinery plant. The first phase of the project is expected to generate 800 positions and it is claimed that it will generate US$2 billion per annum for the economy once it is operational.10 Then, in December 2013, the hydrocarbon company Petronas announced a major gas discovery in block CA2 which is in an area subject to a 2010 production sharing agreement between Brunei and Malaysia.11 Dependence on the hydrocarbon sector is also reinforced by the number of Bruneians it employs and the subsequent regulation of the sector so that seven out of ten people employed in high positions in the sector are now Bruneian.12 Despite some discussions concerning the possibility of diversifying through greater reliance on solar energy,13 Brunei fell thirty-three places in an index that benchmarks and ranks progress by economies transitioning to a new energy system.14 While Brunei has been ranked by the World Bank as one of the best places for paying taxes,15 it also struggled in an OECD report concerning the level of tax transparency where it was assessed to have failed to put in place five of the nine criteria that, if addressed, would enable it to progress to the second phase of assessment.16 More positive was the 2013 Ease of Doing Business Report where Brunei increased its rank by twenty positions to 59th out of 189 countries. The Sultanate also improved its position in terms of the “Corruption Perceptions Index” where it climbed eight places to the 38th least corrupt in the world. Nonetheless, as the small size of the Brunei economy remains a deterrent for many investors, increased subregional integration and regional connectivity will be critically important in determining the success of future economic diversification. Here, an October agreement was reached to open new air, shipping and transportation routes between the countries of the Brunei, Indonesia, Malaysia, Philippines-East ASEAN Growth Area.17
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Political and Domestic Affairs The Sultan is well aware that a failure to successfully implement his multi- decade plans for economic diversification will have long term implications. Consequently, during the second half of 2013 he renewed his focus on the performance of the civil service. During a speech at the annual civil service day celebrations, he reminded his audience that “we are responsible in ensuring that every government project and program runs as scheduled. For all these, we continue to be committed to various investments for the desired human capacity building. The development of capacity is not solely in the form of skills and expertise but also complementary for the development and interest of the nation.” For some years the sultan has expressed his discontent about the pace of economic diversification and the extent to which his decrees (royal titahs) have been implemented. In terms of the image of the civil service amongst the public, he also highlighted that “it is the responsibility of the civil service to know that any services that fail to meet the public needs should be improved immediately” and he also complained that he and the public did not know the full extent of the implementation of a project to install broadband internet to 85 per cent of the country’s homes by 2017.18 Despite some early signals by the Sultan concerning democratic reforms, nothing of significance has occurred since the appointment of the first female members to the Legislative Council in 2011, and 2013 was no exception. The pressure to move towards democracy has, in part, been reduced by more positive assessments concerning the amount of hydrocarbon reserves. While earlier assessments had indicated that there was as little as twenty years’ worth of reserves, more recent assessments suggest a significantly extended shelf-life due to recent discoveries and expected future deep sea discoveries as well as a production cap on the annual level of gas and oil extraction.19 Assessments about the continued threat of terrorism also serve to justify the continuation of the Sultan’s rule and, in this vein, the Sultanate strengthened its anti-terrorism laws during the year.20 Further, the Sultan has sought to counter any potential deficits in regime legitimacy by imposing a new level of religious conservatism into the formal judicial system. In October 2013, Sultan Hassanal Bolkiah announced that the country would be introducing an Islamic Sharia penal code in stages from April 2014. Under the new criminal Code, harsh penalties will be enforced including public flogging of citizens for drinking alcohol, undertaking an abortion, or engaging in homosexuality; the severing of hands and/or feet for theft; and stoning to death for crimes such as adultery.21 The Sultan has justified this based
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on the state’s official ideology of “Malay Islamic Monarchy” or “Melayu Islam Beraja”. While some regional analysts, such as Yang Razali Kasim, have downplayed the development as coming from a Sultan who is “getting on in age” and becoming “more religious and increasingly harkens back to Brunei’s glorious past as an Islamic sultanate”, others such as Tim Lindsey argue that the Code is about maintaining legitimacy among the people and that “the implementa tion of Sharia is the key to state control”.22 Moreover, the imposition of Sharia law does not appear to be particularly compatible with the lifestyle of some members of the royal family and, therefore, Lindsey’s contention appears the most likely motive. This sentence is softer and does not name any particular member.23 Notwithstanding the Code and the associated problem of rising crime that it is intended to address, Brunei still maintains its reputation as an “abode of peace” and remains one of the safest countries in Asia. Nonetheless, statements by the government in 2013 indicated that the number of incidents of crime are rising with theft being the most common — having increased from 3,152 reported cases in 2012 to 3,546 cases in 2013. Here, the most frequent property offences involved auto thefts, stolen mobile phones, and other electronic devices.24 Beyond this, illicit drug abuse has also continued to rise, particularly among youths between sixteen and thirty years of age.25 Other incidents during the year included the discovery of a murdered Malaysian woman found encased in a cement block as well as various raids on brothels and gambling facilities.26 Black market cigarettes are also a problem with an announcement by officials in October that 90 per cent of the cigarettes in the country have been sourced unlawfully.27 Meanwhile, migration offences have remained common despite harsh penalties where, for example, two Thai men were sentenced in May to “three strokes of the cane” for overstaying their visas.28 In terms of organized crime, there was the December 2013 arrest of a Bruneian in Malaysia for attempting to smuggle 10 kilogrammes of methamphetamine and this follows Malaysia’s arrest of three Bruneians earlier in the year for similar offences.29 Another Bruneian was arrested at Penang Airport (Malaysia) for the possession of 4.1 kilogrammes of methamphetamines — such offences carry a mandatory death penalty in Malaysia.30 Intelligence sharing reports between Singapore and Malaysia also highlighted the use of Brunei as a transit point for human trafficking from its airport through to one of four border checkpoints into Sarawak and then onto other parts of Malaysia. In response to these issues, Brunei has sought to enhance cooperation bilaterally (e.g. with Malaysia and Thailand) and at the regional level through initiatives such as
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the Bali Process and a new database system in ASEAN.31 Automotive theft has also had an organized crime element to it. In one instance, Malaysian authorities arrested seven suspects while recovering forty-one luxury cars that had been stolen from Brunei.32 During 2013, the sultanate faced some environmental issues including another round of the regional haze generated by forest fires primarily from Borneo Island (Indonesia). In response, a subregional meeting of foreign ministers from Singapore, Malaysia, Indonesia, and Brunei was held in June where they discussed what future preventative measures could be undertaken.33 There were also concerns that a dark and possibly toxic smoke was emanating from Brunei’s methanol plant early in the year but officials claimed that the source had likely come from some other industrial complex nearby.34 Of continued concern for the nation’s plans with regard to tourism was the continuation of significant levels of household waste from kampungs (villages) along the Brunei River. In response, the government funded a programme to clean up the area but also indicated that there was a limit to what could be achieved unless they had stronger support from local villages.35 Brunei has also sought to promote itself as a clean and green nation and, in this context, has commenced plans to establish a green ratings system termed the “Brunei Accredited Green Unified Seal” or “BAGUS”. The system will promote the construction of more energy efficient buildings and practices. To this end, Brunei’s first eco-friendly petrol kiosk — incorporating energy and rainwater saving measures — was scheduled to open in December 2013.36
Regionalism and Foreign Affairs By far the strongest area of performance was the sultanate’s international diplomacy. Brunei was the ASEAN Chair during 2013 and this meant that it also chaired the ASEAN Regional Forum, the ASEAN Plus Three (APT) and the East Asia Summit (EAS), as well as managed in excess of 1,000 other ASEAN meetings from ministerial level to senior officials and below. During this time, significant attention was devoted to the realization, by 2015, of key commitments in the three pillars of the ASEAN Community — the economic, political-security, and socio-cultural. For this purpose, the Sultan proposed a mid-term review of the socio-cultural pillar. The outcome of the review demonstrated some significant success with 86.4 per cent of the 339 milestones for the socio-cultural community being reached. During the year Brunei also initiated several programmes to further advance this pillar as well as the economic community pillar including goals to
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double the groups’ combined GDP to US$4.4 billion and to reduce poverty to 9.3 per cent by 2030.37 In building on the aforementioned subregional meeting over the haze, a further agreement was negotiated whereby Singapore, Malaysia, Indonesia, Brunei, and Thailand will share satellite data, including digitized land-use maps of fire-prone areas, that will allow authorities to pin-point the origin of the fires and be more successful in the prosecution of offenders.38 Another key development concerned military cooperation where Brunei hosted the Inaugural ASEAN Defence Ministers’ Meeting Plus Humanitarian Assistance and Disaster Relief and Military Medicine Exercise between 16 and 20 June 2013. The combined exercise brought together more than 2,000 military personnel from the ten ASEAN countries as well as the eight “Plus” countries — China, the US, Russia, South Korea, Japan, India, New Zealand, and Australia.39 The continuation of tensions over territorial disputes in the South China Sea was the most sensitive issue for Brunei to manage. Brunei’s year as the Chair of ASEAN was depicted by numerous analysts to be relatively successful in relation to the South China Sea issue. At the outset of 2013, the Sultanate declared that it will pursue, “as a top priority”, a binding code of conduct over the South China Sea40 and the Sultan also proposed a number of practical measures to mitigate tensions including the establishment of a hotline between senior officials in the event of a flare-up as well as a hotline for rescue at sea.41 In line with Brunei’s pledge, the 46th ASEAN Ministerial Meeting confirmed that formal consultations (Beijing eschewed the term “negotiations”) over a code of conduct had commenced. However, a distinct shift in the nature of China’s diplomacy occurred primarily because of a decision by Beijing to repair its damaged image whilst realizing that the commencement of extended consultations would not need to lead to any binding commitments given ASEAN’s modalities and decision-making system.42 Given these considerations, the most significant achievement on the issue was the year-long management of largely amicable meetings at all levels. During the previous year, ASEAN unity had splintered over a disagreement about certain references to the South China Sea in a joint communiqué; this was the first time that ASEAN had failed to issue a joint communiqué following an ASEAN summit.43 The management of this issue, together with potential great power rivalries in forums such as the EAS and the APT was particularly delicate given Brunei’s increased trade dependence on China. Since the onset of the China-ASEAN Free Trade Agreement (CAFTA), two-way trade between the two countries has risen from US$422 million in 2010 to US$1.6 billion in 2012.44
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In order to mitigate against any repercussions, Brunei may have entered into a strategic partnership with China as well as an October agreement for joint exploration with Beijing’s state-owned “China National Offshore Company”.45 The latter follows from a Memorandum of Understanding on joint development that the two countries had been quietly negotiating since 2010.46 Regarding Brunei’s broader foreign relations, the sultanate has also continued to maintain very cordial relations with the United States. In March 2013 the Sultan visited President Obama in Washington, and Brunei also hosted twelve country negotiations over a US proposal to establish a “trans-pacific partnership” (TPP) for free trade. Brunei has also been a part of the Cooperation Afloat Readiness and Training (CARAT) series of bilateral naval exercises with the US since the first round commenced in 1995 and the sultanate took part in the 19th round of the exercises in November 2013.47 The Sultanate’s closest relationship is with Singapore. During the year, various high level exchanges took place, the Singapore armed forces continued to conduct training in Brunei, and a bilateral naval exercise was undertaken in March. The Royal Brunei Armed Forces also contributed to the international profile of Brunei through their continued peacekeeping role in Mindanao.
Conclusion 2013 was a very successful year in terms of Brunei’s international diplomacy including the success by which it chaired ASEAN and, in the process, the modern and sophisticated image it portrayed to the world. However, the Sultanate was also quite strategic in how it maintained positive relations with countries such as China. Regarding the specific issue of the South China Sea, Brunei may have actually undermined ASEAN’s collective bargaining position in as far as it has been willing to negotiate bilaterally with China. On the economic front, the realization of the TPP will strengthen Brunei’s trade but the extent of those benefits are likely to be less than the country experienced following the onset of CAFTA. Brunei is set to remain highly dependent on hydrocarbon revenue despite a few individual success stories regarding economic diversification. However, the most controversial development to occur has been the commitment to implement Sharia law on criminal offences for Muslims within the country. The decision does not align with the lavish and sometimes decadent lifestyles of some members of the royal family. Consequently, it appears to be primarily motivated by calculations concerning longer term regime legitimacy and authority. This decision may have a number of unintended consequences ranging from
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resistance by the country’s increasingly educated and cosmopolitan youth to a decline in the attractiveness of the country as a destination for tourism and foreign investment.
Notes 1. Figures are percentage change year-on-year. “Brunei Fact Sheet”, Australian Department of Foreign Affairs and Trade, 2014, available from
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21. “Shariah Penal Code Will Be Introduced Next Year”, Economist Intelligence Unit, 7 November 2013. 22. Joe Cochrane, “Sultan of Brunei Takes His Role to a New Level; Stricter Islamic Code Appears to Be an Effort to Shore up Legitimacy”, International New York Times, 23 December 2013. 23. Cochrane, “Sultan of Brunei Takes His Role to a New Level; Stricter Islamic Code Appears to Be an Effort to Shore up Legitimacy”. 24. Zheng Jie, “Property Crime Escalates in Brunei in 2013: Police”, Xinhua News Agency, 16 January 2014. 25. Fadhil Yunas, “Statistics Highlight Several Worrying Trends in Brunei”, Borneo Bulletin, 28 December 2012. 26. “Thailand and Brunei Will Ramp up Efforts to Combat Human Trafficking and Prostitution”, Thai News Service, 15 April 2013; “Body of Brunei Woman Found Encased in Cement Block”, Times of Oman, 23 February 2013; James Kon, “Foreigners and Locals Held in Prostitution Raid”, Borneo Bulletin, 21 July 2013; “19 Detained, 48 Computers Seized in Gambling Raid”, Borneo Bulletin, 18 June 2013. 27. “9 in 10 Cigarettes in Brunei Illicit”, Brunei Times, 2 October 2013. 28. “Brunei to Whip Overstaying Thais”, Bangkok Post, 24 May 2013. 29. Siti Hajar, “Bruneian Caught in Sabah for Drugs Faces Death Penalty”, Borneo Bulletin, 5 December 2013. 30. Hakim Hayat, “Brunei Passenger Caught with Drugs at Penang Airport”, Borneo Bulletin, 14 February 2013. 31. “Brunei Remains Committed to Fighting Human Trafficking”, Borneo Bulletin, 3 April 2013; “ASEAN Ministerial Meeting on Drug Issues in Brunei”, Vietnam News Summary, 5 September 2013. 32. “41 Stolen Cars to Be Sent Back to Brunei”, New Straits Times, 15 May 2013. 33. “Foreign Ministers of Singapore, Malaysia and Indonesia Meet in Brunei over Haze”, Channel News Asia, 29 June 2013. 34. Zee Yusri, “Bmc Conducts Dialogue Session”, Borneo Bulletin, 5 April 2013. 35. “Floating Household Waste Clogs Brunei River”, Borneo Bulletin, 24 July 2013. 36. Fitri Shahminan, “Brunei’s First Eco-Friendly Petrol Kiosk Set to Open Next Month”, Brunei Times, 13 November 2013. 37. James Kon, “Brunei Lauded for Early Completion of Ascc Blueprint”, Borneo Bulletin, 27 September 2013. 38. Luke Hunt, “Brunei Caps Off a Solid Year at Asean’s Helm”, The Diplomat, 12 October 2013. 39. “Brunei Ready for Hosting Asean’s Humanitarian Assistance, Disaster Relief Exercise Meetings”, Philippines News Agency, 29 May 2013. 40. For example, see Carlyle A. Thayer, “South China Sea Developments in 2013: ASEAN Unity Restored, Sino-Philippine Tensions and ASEAN-China Consultations
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on a Code of Conduct”, The 5th International Workshop on the South China Sea: Cooperation for Regional Security Development, Melia Hotel, Hanoi, 2013, p. 2; Hunt, “Brunei Caps Off a Solid Year at Asean’s Helm”. 41. “23rd ASEAN Summit Sees Positive Outcomes and Progress”, Borneo Bulletin, 11 October 2013. 42. Truong Thuy Tran, “Code of Conduct: Possible Content, Who Participates, How to Conclude?”, paper presented at the 5th International Workshop on the South China Sea: Cooperation for Regional Security Development, Melia Hotel, Hanoi, 11–12 November 2013, p. 3; Ian Storey, “China Runs Rings around ASEAN; Bejing Has Repeatedly Blocked Meaningful Action in the South China Sea Disputes”, Wall Street Journal, 2 October 2013; “China Warns against Rush to Set Code of Conduct in South China Sea”, Xinhua, 5 August 2013. 43. “Cambodia’s Foreign Relations; Losing the Limelight”, The Economist, 17 July 2012; “ASEAN Struggles for Unity over South China Sea”, Agence France Presse, 12 July 2012. 44. “China’s Trade with Brunei in September 2013”, Xinhua’s China Economic Information Service, 4 November 2013. 45. Olivier Boyd, “China Pursues Hydrocarbon Co-operation in South China Sea with Brunei Joint Venture”, IHS Global Insight Daily Analysis, 17 October 2013. 46. Christopher B. Roberts, “Brunei Darussalam: Consolidating the Foundations of Its Future?”, in Southeast Asian Affairs 2011, edited by Daljit Singh (Singapore: Institute of Southeast Asian Studies, 2011), p. 43. 47. “19th Carat Brunei Reinforces Longstanding Ties between U.S. Navy and Royal Brunei Armed Forces”, U.S. Department of Defence, 14 November 2013.
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