Following the global drop in oil prices for three consecutive years, economic developments during 2016 demonstrated the fact that Brunei was adjusting well to the challenging economic environment. Oil and gas exports traditionally account for 65 per cent of the country's gross domestic product (GDP) and for more than 90 per cent of government revenue. Due to the prolonged period of low oil prices, the country's trade deficit was about B$2 billion in 2015, and by October 2016 total national exports stood at B$545.5 million, a decrease of 12.1 per cent from the figure in the same month in 2015.

However, Brunei was fortunate that the pace of contraction was moderated as production output generated a 3.6 per cent rebound in GDP, mainly contributed by liquefied natural gas exports, which increased by 13.6 per cent in October 2016. However, as the non-oil and gas industrial sector's contribution to GDP decreased, Brunei's projected GDP growth for 2016 is only at 1 per cent, one of the slowest growing economies in Southeast Asia.

Better Economic Climate

The government has long acknowledged the country's dependency on the energy industry, simultaneously recognizing the urgent need for fiscal and structural policy reforms to strengthen and diversify the economy. In His Majesty Sultan Haji Hassanal Bolkiah's New Year Titah, the monarch announced the formation of a Foreign Direct Investment and Downstream Industry Committee, which is tasked essentially to carry out reforms to create a competitive business environment conducive for foreign investment. The monarch also approved the establishment of a Small and Medium Enterprise Centre to support the development of local businesses and nurture entrepreneurs.

The monarch further made it clear that policy reforms should deliver measurable results, and for this reason he authorized the adoption of the Brunei Vision 2035 Framework to monitor and evaluate the country's progress in achieving Vision 2035's main objectives of producing an educated and highly skilled population with a good quality of life as well as a dynamic and sustainable economy. This in many ways makes economic diversification efforts imperative.

Since the cabinet reshuffle in October 2015 there have been remarkable changes in government delivery and in the country's focus on the diversification of the economy.