PROFILE

OFFICIAL NAME:
Negara Brunei Darussalam

Geography
Area: 5,765 sq. km. (2,226 sq. mi.), slightly larger than Delaware.
Cities: Capital--Bandar Seri Begawan.
Terrain: East--flat coastal plains with beaches; west--hilly with a few mountain ridges.
Climate: Equatorial; high temperatures, humidity, and rainfall.

People
Nationality: Noun and adjective--Bruneian(s).
Population (2003 est.): 348,800.
Annual growth rate: 2.3%.
Ethnic groups: Malay, Chinese, other, indigenous groups.
Religion: Islam.
Languages: Malay, English, Chinese; Iban and other indigenous dialects.
Education: Years compulsory--9. Literacy (2001)--94.7%.
Health: Life expectancy--74 yrs. Infant mortality rate (2002)--8.3/1,000.

Government
Type: Malay Islamic Monarchy.
Independence: January 1, 1984.
Constitution: 1959.
Branches: Executive--Sultan is both head of state and Prime Minister, presiding over a nine-member cabinet. Legislative--a Legislative Council has been reactivated after a 20-year suspension to play an advisory role for the Sultan. Judicial (based on Indian penal code and English common law)--magistrate's courts, High Court, Court of Appeals, Judicial Committee of the Privy Council (sits in London).
Subdivisions: Four districts--Brunei-Muara, Belait, Tutong, and Temburong.

Economy
GDP (2003): $4.71 billion.
Growth rate (2003 est.): 3.2%.
Natural resources: Oil and natural gas.
Trade: Exports--oil, liquefied natural gas, petroleum products, garments. Major markets--Japan, Korea, ASEAN, U.S. Imports--machinery and transport equipment, manufactured goods. Major suppliers--ASEAN, Japan, U.S., EU.

PEOPLE
Many cultural and linguistic differences make Brunei Malays distinct from the larger Malay populations in nearby Malaysia and Indonesia, even though they are ethnically related and share the Muslim religion.

Brunei has hereditary nobility, carrying the title Pengiran. The Sultan can award to commoners the title Pehin, the equivalent of a life peerage awarded in the United Kingdom. The Sultan also can award his subjects the Dato, the equivalent of a knighthood in the United Kingdom, and Datin, the equivalent of damehood.

Bruneians adhere to the practice of using complete full names with all titles, including the title Haji (for men) or Hajjah (for women) for those who have made the Haj pilgrimage to Mecca. Many Brunei Malay women wear the tudong, a traditional head covering. Men wear the songkok, a traditional Malay cap. Men who have completed the Haj wear a white songkok.

The requirements to attain Brunei citizenship include passing tests in Malay culture, customs, and language. Stateless permanent residents of Brunei are given International Certificates of Identity, which allow them to travel overseas. The majority of Brunei's Chinese are permanent residents, and many are stateless. An amendment to the National Registration and Immigration Act of 2002 allowed female Bruneian citizens for the first time to transfer their nationality to their children.

Oil wealth allows the Brunei Government to provide the population with one of Asia's finest health care systems. Malaria has been eradicated, and cholera is virtually nonexistent. There are three general hospitals--in Bandar Seri Begawan, Tutong, and Kuala Belait--and there are numerous health clinics throughout the country.

Education starts with preschool, followed by 6 years of primary education and up to 6 years of secondary education. Nine years of education are mandatory. Most of Brunei's college students attend universities and other institutions abroad, but approximately 3,422 (2003) study at the University of Brunei Darussalam. Opened in 1985, the university has a faculty of more than 300 instructors and is located on a sprawling campus overlooking the South China Sea.

The official language is Malay, but English is widely understood and used in business. Other languages spoken are several Chinese dialects, Iban, and a number of native dialects. Islam is the official religion, but religious freedom is guaranteed under the constitution.

HISTORY
Historians believe there was a forerunner to the present Brunei Sultanate, which the Chinese called Po-ni. Chinese and Arabic records indicate that this ancient trading kingdom existed at the mouth of the Brunei River as early as the seventh or eighth century A.D. This early kingdom was apparently conquered by the Sumatran Hindu Empire of Srivijaya in the early ninth century, which later controlled northern Borneo and the Philippines. It was subjugated briefly by the Java-based Majapahit Empire but soon regained its independence and once again rose to prominence.

The Brunei Empire had its golden age from the 15th to the 17th centuries, when its control extended over the entire island of Borneo and north into the Philippines. Brunei was particularly powerful under the fifth sultan, Bolkiah (1473-1521), who was famed for his sea exploits and even briefly captured Manila; and under the ninth sultan, Hassan (1605-19), who fully developed an elaborate Royal Court structure, elements of which remain today.

After Sultan Hassan, Brunei entered a period of decline due to internal battles over royal succession as well as the rising influences of European colonial powers in the region that, among other things, disrupted traditional trading patterns, destroying the economic base of Brunei and many other Southeast Asian sultanates. In 1839, the English adventurer James Brooke arrived in Borneo and helped the Sultan put down a rebellion. As a reward, he became governor and later "Rajah" of Sarawak in northwest Borneo and gradually expanded the territory under his control.

Meanwhile, the British North Borneo Company was expanding its control over territory in northeast Borneo. In 1888, Brunei became a protectorate of the British Government, retaining internal independence but with British control over external affairs. In 1906, Brunei accepted a further measure of British control when executive power was transferred to a British resident, who advised the ruler on all matters except those concerning local custom and religion.

In 1959, a new constitution was written declaring Brunei a self-governing state, while its foreign affairs, security, and defense remained the responsibility of the United Kingdom. An attempt in 1962 to introduce a partially elected legislative body with limited powers was abandoned after the opposition political party, Parti Rakyat Brunei, launched an armed uprising, which the government put down with the help of British forces. In the late 1950s and early 1960s, the government also resisted pressures to join neighboring Sabah and Sarawak in the newly formed Malaysia. The Sultan eventually decided that Brunei would remain an independent state.

In 1967, Sultan Omar abdicated in favor of his eldest son, Hassanal Bolkiah, who became the 29th ruler. The former Sultan remained as Defense Minister and assumed the royal title Seri Begawan. In 1970, the national capital, Brunei Town, was renamed Bandar Seri Begawan in his honor. The Seri Begawan died in 1986.

On January 4, 1979, Brunei and the United Kingdom signed a new treaty of friendship and cooperation. On January 1, 1984, Brunei Darussalam became a fully independent state.

GOVERNMENT AND POLITICAL CONDITIONS
Under Brunei's 1959 constitution, the Sultan is the head of state with full executive authority, including emergency powers since 1962. The Sultan is assisted and advised by five councils, which he appoints. A Council of Ministers, or cabinet, which currently consists of nine members (including the Sultan himself), assists in the administration of the government. The Sultan presides over the cabinet as Prime Minister and also holds the positions of Minister of Defense and Minister of Finance. One of the Sultan's brothers, Prince Mohamed, serves as Minister of Foreign Affairs.

Brunei's legal system is based on English common law, with an independent judiciary, a body of written common law judgments and statutes, and legislation enacted by the sultan. The local magistrates’ courts try most cases. More serious cases go before the High Court, which sits for about 2 weeks every few months. Brunei has an arrangement with the United Kingdom whereby United Kingdom judges are appointed as the judges for Brunei's High Court and Court of Appeal. Final appeal can be made to the Judicial Committee of the Privy Council in London in civil but not criminal cases. Brunei also has a separate system of Islamic courts that apply Sharia law in family and other matters involving Muslims. Brunei is considering merging the common law and Islamic legal systems.

The Government of Brunei assures continuing public support for the current form of government by providing economic benefits such as subsidized food, fuel, and housing; free education and medical care; and low-interest loans for government employees. The Sultan said in a 1989 interview that he intended to proceed, with prudence, to establish more liberal institutions in the country and that he would reintroduce elections and a legislature when he "[could] see evidence of a genuine interest in politics on the part of a responsible majority of Bruneians." In 1994, a constitutional review committee submitted its findings to the Sultan, but these have not been made public. In 2004 the Sultan re-introduced a fully appointed Legislative Council with minimal powers.

Brunei's economy is almost totally supported by exports of crude oil and natural gas. The government uses its earnings in part to build up its foreign reserves, which at one time reportedly reached more than $30 billion. The country's wealth, coupled with its membership in the United Nations, Association of Southeast Asian Nations (ASEAN), the Asia Pacific Economic Cooperation (APEC) forum, and the Organization of the Islamic Conference give it an influence in the world disproportionate to its size.

Principal Government Officials
Sultan and Yang di-Pertuan, Prime Minister, Minister of Defense, and Minister of Finance--His Majesty Sultan Hassanal Bolkiah
Minister of Foreign Affairs--His Royal Highness Prince Mohamed Bolkiah
Ambassador to the United States--Pengiran Anak Dato Haji Puteh
Ambassador to the United Nations--Awang Haji Shofry bin Haji Abd. Ghafor

Brunei Darussalam maintains an embassy in the United States at 3520 International Court, NW, Washington, DC 20008; tel. 202-237-1838.

ECONOMY
The Asian financial crisis in 1997-98, coupled with fluctuations in the price of oil have created uncertainty and instability in Brunei's economy. In addition, the 1998 collapse of the Amedeo Development Corporation, Brunei's largest construction firm whose projects helped fuel the domestic economy, caused the country to slip into a mild recession.

Brunei is the third-largest oil producer in Southeast Asia, averaging about 203,000 barrels a day. It also is the fourth-largest producer of liquefied natural gas in the world. Brunei's gross domestic product (GDP) soared with the petroleum price increases of the 1970s to a peak of $5.7 billion in 1980. It declined slightly in each of the next 5 years, then fell by almost 30% in 1986.

This drop was caused by a combination of sharply lower petroleum prices in world markets and voluntary production cuts in Brunei. The GDP recovered somewhat since 1986, growing by 12% in 1987, 1% in 1988, and 9% in 1989. In recent years, GDP growth was 3.6% in 1997, -4.0% in 1998, 2.6% in 1999, 2.8% in 2000, 3.0% in 2001, 2.8% in 2002 and an estimated 3.2% in 2003. However, the 2003 GDP was about $4.68 billion, still below the 1980 peak.

In the 1970s, Brunei invested sharply increasing revenues from petroleum exports and maintained government spending at a low and constant rate. Consequently, the government was able to build its foreign reserves and invest them around the world to help provide for future generations. Part of the reserve earnings was reportedly also used to help finance the government's annual budget deficit. Since 1986, however, petroleum revenues have decreased, and government spending has increased. Until 2000, the government ran a budget deficit since 1988.

Brunei Shell Petroleum (BSP), a joint venture owned in equal shares by the Brunei Government and the Royal Dutch/Shell group of companies, is the chief oil and gas production company in Brunei. It also operates the country's only refinery. BSP and four sister companies constitute the largest employer in Brunei after the government. BSP's small refinery has a distillation capacity of 10,000 barrels per day. This satisfies domestic demand for most petroleum products.

The French oil company ELF Aquitaine became active in petroleum exploration in Brunei in the 1980s. Known as Elf Petroleum Asia BV in 1992, it has discovered commercially exploitable quantities of oil and gas in three of the four wells drilled since 1987, including a particularly promising discovery announced in early 1990. The company has renamed Total Fina Elf in 2001 and changed names again in 2003 to Total E&P Borneo BV. Brunei is preparing to tender concessions for deepwater oil and gas exploration. In 2003, Malaysia disputed Brunei-awarded oil exploration concessions, which led to both countries ceasing exploration activities. Negotiations between the two countries are continuing in order to resolve the conflict.

Brunei's oil production peaked in 1979 at more than 240,000 barrels per day. Since then it has been deliberately cut back to extend the life of oil reserves and improve recovery rates. Petroleum production is currently averaging 203,000 barrels per day. Japan has traditionally been the main customer for Brunei's oil exports, and in 1999 took in about 50.3% of Brunei's export production, followed by the United States (13.9%), Korea (13.5%) and Thailand (13.3%). Other major customers include Taiwan and the countries of ASEAN.

Almost all of Brunei's natural gas is liquefied at Brunei Shell's Liquefied Natural Gas (LNG) plant, which opened in 1972 and is one of the largest LNG plants in the world. Some 90% of Brunei's LNG produced is sold to Japan under a long-term agreement renewed in 1993. The agreement calls for Brunei to provide over 5 million tons of LNG per year to three Japanese utilities, namely to TEPCo, Tokyo Electric Power Co. (J.TER or 5001), Tokyo Gas Co. (J.TYG or 9531) and Osaka Gas Co. (J.OSG or 9532). The Japanese company, Mitsubishi, is a joint venture partner with Shell and the Brunei Government in Brunei LNG, Brunei Coldgas, and Brunei Shell Tankers, which together produce the LNG and supply it to Japan. Since 1995, Brunei has supplied more than 700,000 tons of LNG to the Korea Gas Corporation (KOGAS) as well. In 1999, Brunei's natural gas production reached 90 cargoes per day. A small amount of natural gas is used for domestic power generation. Since 2001, Japan remains the dominant export market for natural gas. Brunei is the fourth-largest exporter of LNG in the Asia-Pacific region behind Indonesia, Malaysia, and Australia.

Brunei's proven oil and gas reserves are sufficient until at least 2015, and planned deep-sea exploration is expected to find significant new reserves. The government sought in the past decade to diversify the economy with limited success. Oil and gas and government spending still account for most of Brunei's economic activity. Brunei's non-petroleum industries include agriculture, forestry, fishing, and banking. The Brunei Economic Development Board announced plans in 2003 to use proven gas reserves to establish downstream industrial projects. A 500-megawatt (MW) power plant is to be built in the Sungai Liang region to power an aluminum smelting plant. A second major project in the planning stage is a giant container hub at the Muara Port facilities. Both projects depend on foreign direct investors.

The government regulates the immigration of foreign labor out of concern it might disrupt Brunei's society. Work permits for foreigners are issued only for short periods and must be continually renewed. Despite these restrictions, foreigners make up a significant portion of the work force. The government reported a total work force of 158,000 in 2001, with an official unemployment rate of 7.2%. In 2003, the total work force was reportedly 160,000 with an official unemployment rate of 4.3%.

Oil and natural gas account for almost all exports. Since only a few products other than petroleum are produced locally, a wide variety of items must be imported. Brunei statistics show Singapore as the largest point of origin of imports, accounting for 28.5% in 1999. However, this figure includes some transshipment, since most of Brunei's imports transit Singapore. Japan and Malaysia were the second-largest suppliers. As in many other countries, Japanese products dominate local markets for motor vehicles, construction equipment, electronic goods, and household appliances. The United States was the third-largest supplier of imports to Brunei in 1998.

Brunei's substantial foreign reserves are managed by the Brunei Investment Agency (BIA), an arm of the Ministry of Finance. BIA's guiding principle is to increase the real value of Brunei's foreign reserves while pursuing a diverse investment strategy, with holdings in the United States, Japan, Western Europe, and the Association of Southeast Asian Nations (ASEAN) countries.

The Brunei Government encourages more foreign investment. New enterprises that meet certain criteria can receive pioneer status, exempting profits from income tax for up to 5 years, depending on the amount of capital invested. The normal corporate income tax rate is 30%. There is no personal income tax or capital gains tax.

One of the government's priorities is to encourage the development of Brunei Malays as leaders of industry and commerce. There are no specific restrictions of foreign equity ownership, but local participation, both shared capital and management, is encouraged. Such participation helps when tendering for contracts with the government or Brunei Shell Petroleum.

Companies in Brunei must either be incorporated locally or registered as a branch of a foreign company and must be registered with the Registrar of Companies. Public companies must have a minimum of seven shareholders. Private companies must have a minimum of two but not more than 50 shareholders. At least half of the directors in a company must be residents of Brunei.

The government owns a cattle farm in Australia through which the country’s beef supplies are processed . At 2,262 square miles, this ranch is larger than Brunei itself. Eggs and chickens are largely produced locally, but most of Brunei's other food needs must be imported. Agriculture and fisheries are among the industrial sectors that the government has selected for highest priority in its efforts to diversify the economy.

Recently the government has announced plans for Brunei to become an international offshore financial center as well as a center for Islamic banking. Brunei is keen on the development of small and medium enterprises and also is investigating the possibility of establishing a "cyber park" to develop an information technology industry. Brunei has also promoted tourism.

DEFENSE
The Sultan is both Minister of Defense and Supreme Commander of the Armed Forces (RBAF). All infantry, navy, and air combat units are made up of volunteers. There are two infantry battalions equipped with armored reconnaissance vehicles and armored personnel carriers and supported by Rapier air defense missiles and a flotilla of coastal patrol vessels armed with surface-to-surface missiles. Brunei has ordered, but not yet taken possession of, three offshore patrol vessels from the U.K.

Brunei has a defense agreement with the United Kingdom, under which a British Armed Forces Ghurka battalion (1,500 men) is permanently stationed in Seria, near the center of Brunei's oil industry. The RBAF has joint exercises, training programs, and other military cooperation with the United Kingdom and many other countries, including the United States. The U.S. and Brunei signed a memorandum of understanding (MOU) on defense cooperation in November 1994. The two countries conduct an annual military exercise called CARAT.

FOREIGN RELATIONS
Brunei joined ASEAN on January 7, 1984--one week after resuming full independence--and gives its ASEAN membership the highest priority in its foreign relations. Brunei joined the UN in September 1984. It also is a member of the Organization of the Islamic Conference (OIC) and of the Asia-Pacific Economic Cooperation (APEC) forum. Brunei hosted the APEC Economic Leaders' Meeting in November 2000.

U.S.-BRUNEI RELATIONS
Relations between the United States and Brunei date from the 1800s. On April 6, 1845, the U.S.S. Constitution visited Brunei. The two countries concluded a Treaty of Peace, Friendship, Commerce and Navigation in 1850, which remains in force today. The United States maintained a consulate in Brunei from 1865 to 1867.

The U.S. welcomed Brunei Darussalam's full independence from the United Kingdom on January 1, 1984, and opened an Embassy in Bandar Seri Begawan on that date. Brunei opened its embassy in Washington in March 1984. Brunei's armed forces engage in joint exercises, training programs, and other military cooperation with the U.S. A memorandum of understanding on defense cooperation was signed on November 29, 1994. The Sultan visited Washington in December 2002.

Principal U.S. Embassy Officials
Ambassador--Emil Skodon
Deputy Chief of Mission--Jeffrey J. Hawkins
Management/Consular Officer--Christa A. Dupuis