Brunei Economy Overview

Currency

B$ Brunei Dollar (BND)

Working hours

40-44 hours/week

Public/bank holidays

17 public holidays

Capital

Bandar Seri Begawan

Languages

Malay & English

Population

455,858

Minimum hourly salary

$2.62 per hour

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Brunei, like many other countries, treats self-employed individuals or contractors and full-time employees differently. Misclassification of contractors in Brunei may lead to fines and penalties for the offending company.

Fun fact

Brunei Darussalam is the third largest oil producer in Southeast Asia and it produced 163,000 barrels per day. It is also the fourth largest producer of liquefied natural gas in the world.

Brunei has a population of 452,524 as of 2023 and is recognized as the second-wealthiest country in Asia. Brunei is located between the South China Sea and Malaysia and is rich in hydrocarbons, contributing to its significant GDP. 

More than 90% of its exports involve oil and gas, and it is the third-largest producer of oil in Southeast Asia. What makes Brunei attractive to businesses looking to expand in the country is that investors are not subject to personal income tax or capital gains.

The economic and political stability, in addition to a highly skilled and talented workforce, make the Southeast Asian destination a favorable choice as a business hub.

Overview of Brunei's Economy

Since 1929, Brunei has been recognized for its extensive oil and natural gas fields. In fact, its hydrocarbon sector accounts for the country having the highest per capita GDP globally.

Brunei’s Economic Indicators (2022)
Nominal GDP: 16.7 billion
Real GDP growth (average over last 10 years): 0.3%
Global economic rank (based on nominal GDP): 135th

Despite Brunei experiencing economic stagnation after the COVID-19 pandemic, the region saw marginal growth in 2023. Fortunately, the introduction of the second phase of Hengyi’s petrochemical project has supported the operation of the hydrocarbon industry.

Brunei has maintained an inflation rate of 1.5% for more than a decade.

Taxes

Employer Tax: 22%

Pension Plan

5%

Corporate Tax Rate

18.5%

Employee Tax: 15% – 33%

Pension Plan

5%

Income tax

Brunei has the least number of taxes in the region. There is no personal income tax, and there are no export, sales, payroll, or manufacturing taxes. Only companies are subject to tax under the Income Tax Act 1949.

Business Regulation in Brunei

Brunei’s legal system is based on a combination of British and Shariah law due to its large Muslim population. The country’s employment law falls under the Employment Order of 2009, governing the minimum requirements for workers’ rights and employment conditions. 

Employment agencies acting in Brunei Darussalam are governed by the Employment Agencies Order, 2004, while the Employment Information Act, 1974, details legislation for employees in the private sector. As per Section 10 of the Employment Order, 2009, an employer and an employee must enter into a signed contract describing the employment conditions, including benefits, minimum wages, and job roles. 

Employers who fail to present a signed contract when hiring employees in Brunei will face a fine of up to $3000 and the possibility of a year of imprisonment if convicted. All workers in this Southeast Asian country receive paid leave, including maternity leave, paternity leave, compassionate leave, and holiday leave. 

The Brunei business regulations cover various aspects of employment, including paying compensation, contract termination, working hours, and providing probation for new employees of 90 days. The Brunei Companies Act provides a legal framework for the registration of companies in the country.

What Are the Benefits of Doing Business in Brunei?

Brunei is seen as a well-positioned country in Southeast Asia, making it easier to access markets and various forms of trade in the region. Most investors are attracted to the country’s favorable tax laws. Businesses are subject to a standard corporate tax rate of 18.5%. 

All companies, including those in the oil and gas sector, can benefit from specific tax exemptions, providing cost savings and attractive incentives. Brunei is known for its developed infrastructure, offering established ports, transportation, and communication technology for ongoing economic growth. 

The country provides businesses with a stable political environment and a government that is supportive of foreign investment. The high literacy rate of the workforce, combined with the government’s emphasis on education, makes for a strong and skilled workforce. 

If you are looking to establish a business or workforce in Brunei, Chapter 39 of the Companies Act makes it easier for companies to follow legislation concerning the operation of businesses. Some of the entities that can be established in the region include sole proprietorships, limited liability companies, partnerships, private and public limited companies, and branch offices.

What Are the Downsides of Doing Business in Brunei?

For businesses preparing to enter the Brunei market, it’s important to be aware of the challenges and identify how to overcome them. The small population and country size of Brunei might provide companies with a relatively small market for future expansion. 

However, foreign investors in Brunei are permitted sole ownership over the operations and management of their businesses. This means that a resident partner is not necessary to establish oneself in the market. 

For businesses in the hydrocarbon sector, a local partner is required to establish operations in the industry. Many US companies experience significant delays when transacting with the government.

Business Expansion Options in Brunei

Companies that are interested in expanding their workforce or establishing their business in Brunei have a multitude of options available to them. The following entities are available to assist companies in Brunei with international expansion:

Brunei Employer or Record (EOR)

An EOR in Brunei is a legal entity and can act as an employer on behalf of a foreign company. They have the legal standing to oversee the onboarding process, negotiate employment contracts, manage the termination of contracts, and ensure that employees are paid their wages and benefits according to Brunei’s employment regulations. Some EOR’s even provide Brunei recruitment services. 

 An EOR prevents being issued with a fine or possible imprisonment because of non-compliance with local labor laws.

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Recruitment Agencies

Recruitment agencies in Brunei help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Bruneians labor laws.

For businesses looking to grow in Brunei, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

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Brunei Professional Employer Organization (PEO)

A PEO (professional employer organization) and an EOR (employer of record) are available to foreign companies that want to expand a workforce in Brunei but do not have a legal entity in the country. These services assist with HR administration, payroll, and compliance, helping businesses hire skilled employees without the time and expense of establishing a subsidiary or branch office. 

 A professional PEO differs from an EOR in that it assists companies with HR tasks such as administering payroll and employee benefits. The purpose of a PEO is to support a business’s existing workforce with various HR tasks.

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Subsidiary Incorporation

The laws to register a subsidiary incorporation are detailed in the Articles of Association of Brunei’s employment legislation. Companies that want to set up subsidiary incorporations must have a board of which 50% must be permanent residents of Brunei. An affordable capital investment of $1 is required for both private and public subsidiaries.

When establishing a public subsidiary, all shareholders must be Brunei citizens. The board for public and private subsidiaries must have a minimum of two directors. The shareholders are legally required to submit financial reports to an auditor every year.

The option of setting up a subsidiary in Brunei offers the benefit of operating as an independent entity from the parent company. This means the subsidiary is held liable for its decisions and operations in the country.

Branch Registration

A branch office is a business entity from a foreign company that can be registered in Brunei. It is not legally independent from the parent company and must follow the same laws and regulations as the parent company. 

To establish a branch office in Brunei, you will require a resident director, one secretary, and a registered office with a local address. The office must have a registered local agent.

Branch offices are not exempt from withholding tax and standard corporate tax. A branch office can be set up in as little as 2 weeks by following the correct practices and submitting the legally required documents. 

Business Opportunities in Brunei

Brunei’s simplified tax system is attractive to local and foreign businesses because of the exemptions and flat rates offered on corporate income tax. The Southeast Asian country has one of the strongest GDPs and is a major producer of oil and natural gas. 

As a member of the Association of Southeast Asian Nations (ASEAN), Brunei provides access to a large regional market and benefits from various trade agreements. Some of the most promising sectors for investment include:

Business OpportunityReason
Islamic FinanceBrunei’s strong commitment to Islamic principles and its growing Islamic finance industry present opportunities for investments in Shariah-compliant banking, insurance, and asset management.
Halal Products and ServicesWith its strict halal certification standards and strategic location, Brunei offers potential for businesses in the halal food, cosmetics, and pharmaceutical industries, serving both domestic and export markets.
Tourism and HospitalityBrunei’s pristine rainforests, cultural heritage sites, and high-end tourism infrastructure offer opportunities for investments in eco-tourism, luxury resorts, and wellness tourism.
Petrochemicals and Downstream IndustriesBrunei’s abundant oil and gas reserves, coupled with government initiatives to promote downstream industries, create opportunities for investments in petrochemical manufacturing, plastics, and specialty chemicals.
Technology and Digital EconomyAs Brunei aims to become a smart nation, there are growing opportunities for investments in e-commerce, digital services, and innovative technologies, supported by government initiatives and a tech-savvy population.

These opportunities align with Brunei’s Vision 2035, which aims to create a dynamic and sustainable economy, diversify its sources of growth, and attract foreign investment. The government offers various incentives for businesses, such as tax exemptions, subsidies, and streamlined business registration processes.

Many international businesses have the opportunity to establish different types of professional entities in the country, from subsidiaries and branch offices to private and public limited companies. The developed infrastructure, in addition to the government’s investment in education, continues to support job creation and economic stability.