2016 Index of Economic Freedom

Brunei Darussalam

overall score67.3
world rank51
Rule of Law

Property Rights30.0

Freedom From Corruption60.0

Limited Government

Government Spending57.3

Fiscal Freedom87.0

Regulatory Efficiency

Business Freedom71.3

Labor Freedom90.2

Monetary Freedom76.8

Open Markets

Trade Freedom85.2

Investment Freedom65.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $30.2 billion
    • -0.7% growth
    • 0.9% 5-year compound annual growth
    • $73,233 per capita
  • Unemployment:
    • 3.8%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $567.9 million
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Brunei has benefited from moderately well-maintained monetary stability and a relatively high level of market openness that facilitates engagement with the world through trade and investment. Economic growth has been sluggish in recent years, largely due to a decline in domestic production of crude oil and liquefied natural gas.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 67.3 (down 1.6 points)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 51st
  • Regional Ranking: 10th in the Asia–Pacific Region
  • Notable Successes: Trade Freedom and Business Freedom
  • Concerns: Property Rights and Management of Public Finance
  • Overall Score Change Since 2014: –1.7

Measures to expand the non-energy sector have been undertaken, particularly in areas such as manufacturing, construction, and services. The investment environment is generally efficient and transparent, but the overall regulatory framework needs to be more streamlined to enhance overall competitiveness.

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Background

Brunei, two disconnected enclaves surrounded by the Malaysian state of Sarawak, lies on the northern coast of Borneo. The sultan serves as his own prime minister, minister of defense, and minister of finance. He is advised by several councils, including a Legislative Council and Privy Council, which he appoints. The oil and gas industry accounts for over half of GDP and 90 percent of government revenues. However, it provides for only a small fraction of employment, and most of the population works directly for the government. Brunei has extremely low manufacturing capacity and imports most of its manufactured goods and food. It is among the world’s most prosperous countries due to its oil revenue, but long-standing efforts at economic diversification have met with only limited success.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 60.0 Create a Graph using this measurement

The government intends to fully implement sharia (Islamic) law in 2016, raising human rights concerns. Protection of private property is weak. Only Brunei citizens may purchase land; foreign firms must have a local partner. The constitution does not provide for an independent judiciary. Brunei is one of the world’s last remaining autocracies, and the sultan wields broad powers. No direct legislative elections have been held since 1962.

Limited GovernmentView Methodology

Brunei has no personal income tax. The top corporate tax rate is 20 percent for most companies, and the rate for oil and gas companies is 55 percent. Other taxes include a social security tax. Overall tax revenue is 30 percent of gross domestic output. Government spending is over one-third the size of the domestic economy, but substantial fiscal surpluses enable public debt to remain below 3 percent of GDP.

Regulatory EfficiencyView Methodology

Despite some progress, procedures for establishing and registering a private enterprise remain time-consuming. The labor market is relatively flexible, and foreign workers account for over 70 percent of private-sector employment. The government provides generous but price-distorting subsidies for nearly everything the average citizen needs, such as fuel, power, food, health care, and education.

Open MarketsView Methodology

Brunei’s average tariff rate is 2.4 percent. Non-tariff barriers are low, but state-owned enterprises in the transportation, energy, and telecommunications sectors distort the economy. Among other restrictions, foreign investors may not own land. The small financial sector remains dominated by banking, which is well capitalized and open to foreign competition. Islamic financial services have grown considerably in recent years.

Country's Score Over Time

Bar Graph of Brunei Darussalam Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Brunei Darussalam to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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