2021 Index of Economic Freedom

Brunei Darussalam

OVERALL SCORE66.6
WORLD RANK57
Rule of Law

Property Rights61.1

Judicial Effectiveness62.3

Government Integrity47.5

Government Size

Tax Burden92.3

Government Spending67.6

Fiscal Health20.0

Regulatory Efficiency

Business Freedom83.6

Labor Freedom90.9

Monetary Freedom74.7

Open Markets

Trade Freedom84.6

Investment Freedom65.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $36.6 billion
    • 3.9% growth
    • 0.5% 5-year compound annual growth
    • $64,673 per capita
  • Unemployment:
    • 9.1%
  • Inflation (CPI):
    • -0.5%
  • FDI Inflow:
    • $274.6 million

Brunei Darussalam’s economic freedom score is 66.6, making its economy the 57th freest in the 2021 Index. Its overall score is unchanged, with an improvement in the government spending score partially offsetting a decline in property rights. Brunei Darussalam is ranked 11th among 40 countries in the Asia–Pacific region, and its overall score is above the regional and world averages.

Although economic freedom has declined slightly in Brunei over the past five years, the country’s economy remains firmly in the moderately free category. The major factor holding back Brunei in the Index of Economic Freedom continues to be its very low score on the fiscal health indicator. The government should continue to expand the financial sector by establishing a bond market and stock exchange.

IMPACT OF COVID-19: As of December 1, 2020, three deaths had been attributed to the pandemic in Brunei Darussalam, and economic growth was forecast to decline to 0.1 percent for the year.

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Background

Brunei consists of two enclaves surrounded by Malaysia on the northern coast of Borneo. The sultan serves as prime minister, minister of defense, foreign minister, and minister of finance and appoints several advisory councils including a Legislative Council and Privy Council. The sultan’s 2019 decision to implement certain provisions of Sharia (Islamic) law was met with international condemnation. Oil and gas production, which provides 90 percent of government revenue and 90 percent of exports while generating few jobs, accounts for more than half of GDP. Most people work directly for the government. Economic growth has stagnated because of lower global oil prices and OPEC production caps. Brunei has little manufacturing capacity and imports most of its manufactured goods and food.

Rule of LawView Methodology

Property Rights 61.1 Create a Graph using this measurement

Judicial Effectiveness 62.3 Create a Graph using this measurement

Government Integrity 47.5 Create a Graph using this measurement

Although property registration has improved, protections for private property are not strong. Only citizens may purchase land. The constitution does not provide for an independent judiciary, but the court system operates without government interference in practice. Brunei is one of the world’s last remaining autocracies, and the sultan wields nearly absolute power. The level and extent of corruption are relatively low.

Government SizeView Methodology

Brunei has no personal income tax. The top corporate tax rate is 18.5 percent for most companies and 55 percent for oil and gas companies. The overall tax burden equals 20.6 percent of total domestic income. Government spending has amounted to 32.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 8.2 percent of GDP. Public debt is equivalent to 2.5 percent of GDP.

Regulatory EfficiencyView Methodology

Business freedom is largely unchanged from last year. The labor force speaks English and is well-educated. Brunei has made progress in promoting growth led by the private sector, but more can be done. The government continues to provide heavy subsidies for such basic goods and services as fuel, power, food, health care, and education.

Open MarketsView Methodology

Brunei Darussalam has eight preferential trade agreements in force, and its trade-weighted average tariff rate is 0.2 percent. One formal nontariff measure is in place, but other impediments to trade flows persist. State-owned enterprises distort the economy, and foreign ownership of land is restricted. The small financial sector remains dominated by banks. Islamic financial services have grown in recent years.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore89.70.3
2New Zealand83.9-0.2
3Australia82.4-0.2
4Taiwan78.61.5
5Malaysia74.4-0.3
6Japan74.10.8
7South Korea740.0
8Kazakhstan71.11.5
9Thailand69.70.3
10Indonesia66.9-0.3
11Brunei Darussalam66.60.0
12Philippines64.1-0.4
13Kyrgyz Republic63.70.8
14Mongolia62.46.5
15Fiji62.2-1.2
16Samoa61.9-0.2
17Vietnam61.72.9
18Vanuatu60.5-0.2
19Papua New Guinea58.90.5
20China58.4-1.1
21Uzbekistan58.31.1
22Bhutan58.3-3.8
23Tonga57.5-1.3
24Cambodia57.30.0
25Bangladesh 56.50.1
26India56.50.0
27Solomon Islands56.53.6
28Sri Lanka55.7-1.7
29Tajikistan55.23.0
30Burma55.21.2
31Maldives55.2-1.3
32Laos53.9-1.6
33Afghanistan53-1.7
34Pakistan51.7-3.1
35Nepal50.7-3.5
36Micronesia50.4-1.6
37Turkmenistan47.40.9
38Timor-Leste44.7-1.2
39Kiribati44.4-0.8
40North Korea5.21.0
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