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11 - Oil and Gas Dependence of Brunei Economy: Current Progress and Challenges

Published online by Cambridge University Press:  10 January 2024

Aris Ananta
Affiliation:
Universitas Indonesia and Universiti Brunei Darussalam
Chang-Yau Hoon
Affiliation:
Universiti Brunei Darussalam and University of Western Australia, Perth
Mahani Hamdan
Affiliation:
Universiti Brunei Darussalam
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Summary

INTRODUCTION

The Sultanate of Brunei Darussalam is a small but rich country that is most notably known for hydrocarbon resource abundance. Its economy heavily relies on oil and gas, accounting for over 91 per cent of total commodity export and 76 per cent of government revenue. It has a relatively large share of public sector that supports a population of 459,500 (2019) with a generous welfare system that subsidizes staple food, petrol, water and electricity, while providing free education, affordable healthcare services, low-cost government housing scheme and subsidized land purchase, and old-age pensions for those above 60 years old. Its accumulated wealth from oil and gas has propelled the Sultanate into a high-income country, with the 2019 real gross domestic product (GDP) per capita of US$62,100 international purchasing power parity (internationally comparable purchasing power of the income per person). Life expectancy has increased from 62.6 years in 1970 to 70.2 years and 75.7 years in 1990 and 2018, respectively, while educational attainment and literacy rate of its population aged 15 years old and older has also increased over time from 85.1 per cent in 1981 to 97.2 per cent in 2018 (UNDP 2020; UIS 2021). These improvements led Brunei to rank 47 (out of 189 countries and territories) and score 0.838 on the United Nations’ Human Development Index (HDI) in 2019.

Despite being wealthy, Brunei economy has been growing at slower rates, with an average GDP growth of 1.7 per cent over 1975–2019 (1.2 per cent during 1986–2019, and 3.9 per cent in 2019). Its non-oil-and-gas private sectors are still relatively small (less than 30 per cent share in GDP) and are dominated by Micro, Small and Medium Enterprises (MSMEs) that are mainly concentrated in the service sector. The manufacturing sector is dominated by downstream oil and gas production while the agriculture sector accounts for just 1 per cent of the total output. The Brunei government has been actively seeking, through its National Development Plans (NDPs), to diversify the economy towards non-resource sector with various policy initiatives and institutional reforms, as well as large investment projects and modernizing its business and economic infrastructures.

Type
Chapter
Information
Stability, Growth and Sustainability
Catalysts for Socio-economic Development in Brunei Darussalam
, pp. 271 - 304
Publisher: ISEAS–Yusof Ishak Institute
Print publication year: 2023

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