Political stability in Brunei Darussalam — the abode of peace — is built on oil wealth and Brunei's citizens subsequently enjoy some of the best standards of living in Asia. This fortuitous state of affairs is reinforced by a small population of just 402,000 — two thirds of whom are ethnic Malays. Nonetheless, a range of short, medium, and long-term challenges have compelled the kingdom to be increasingly innovative and, in some areas, more progressive for the purpose of maintaining long-term economic and social stability. Such themes are evident in the three sections covered by this chapter. The first section focuses on Brunei's economy. While the economy has not been particularly strong in recent years, the section reveals that some developments have either taken place, or are in the process of being implemented, that may eventually strengthen the foundations for a more robust economy. The second section examines the political environment of Brunei and finds that while there has been little change to the institutions of government, there were a number of subtle policy reorientations for the purpose of responding to past omissions and new problems. The final section examines the country's foreign relations and developments concerning its defence policy. Here, significant events included Brunei's relations with China together with a final resolution of Brunei's maritime disputes with Malaysia. Overall, 2010 was a crisis free year that enabled the Kingdom of Brunei to refine some of its political and economic policies.

The Economy: Strengthening the Foundations for Diversification?

By the close of 2010, the GDP (purchasing power parity) per capita for the Kingdom of Brunei was US$50,300 — the second highest in Southeast Asia. The citizens of Brunei also enjoy some of the best social welfare and healthcare in Asia and the average life expectancy also sits at a very high 77.4 years of age. Further, Brunei maintains the highest global rating for macroeconomic stability and the nation is also ranked first in the Islamic world on the United Nations Human Development Index.1 Brunei owes this prosperity to the profits that stem from 1.1 billion barrels of oil reserves (2009 estimate) and 400 billion cubic metres in natural gas reserves (2010 estimate).