Essay on the oil-rich Sultanate of Brunei

The oil-rich Sultanate of Brunei is a tiny state on the north coast of the island of Borneo, comprising of two enclaves in East Malaysia. With a territory of 2,226 sq. miles (5,765 sq. km) and a population of about 300,000, it is one of the smaller na­tions of Southeast Asia but one of the richest in the world. (Its per capita income is estimated to be over $25,000 annually in the late 1990s).

Brunei traces its history and royal line to the 14th century when the rulers were converted to Islam. By the 16th century it controlled all of Borneo and parts of Sulu islands (of the Philip­pines). Most of its territory when the British increased pressure on its territory in the 18th century, resulting in Brunei be­coming a small protectorate of Britain containing only a small port town, and the adjoining agricultural hinterland. The discovery of oil in 1929 and natural gas in 1965 pushed the small, sleepy Protectorate State into an era of economic prosperity.

In 1984 it gained complete independence from Great Britain, and shortly afterwards became a member of the Association of the Southeast Asian Nations (ASEAN) and a member of the United Nations. Lying between 4° and 5° north of equa­tor, Brunei’s land surface is mostly mountainous in the southeast rising to 607 feet (1,850 meters), and is largely covered by dense tropical rainforest.

Climate is that of hot, humid equatorial type with temperatures ranging from 76°F (24°C) to 86°F (30°C). Precipitation is heavy–be­tween 100 inches (2,500 mm) annually on the coast to 200 inches in the interior. Rainfall is heaviest during the northeast monsoon (December to March) season.

The population, two-thirds of which is composed of Malays, 16 percent Chinese, 11 percent Indians, and 6 percent of indige­nous groups, has been growing rapidly at an average rate of nearly 3 percent a year for the last 20 years. However, it has regis­tered a small downturn in growth rates from the 4 percent a year of the 1980s to 2.1 percent in 1995. Short of manpower, Brunei has depended heavily on foreign workers for its oil industry.

Temporary immigrants account for nearly one-third of its entire workforce recruited primarily from South and Southeast Asian nations. Brunei Malays dominate the bureaucracy while the Chinese are largely engaged in commerce. Despite longstanding ties be­tween the Chinese and royal family, tensions between the two communities have always existed, and only 5 percent of the Chinese have acquired Bruneian citi­zenship.

Islam is the state religion professed by two-thirds of the population. Thirteen percent of the population—pri­marily of the Chinese—is Buddhist, and ten percent subscribe to Christianity. The remainder belongs to several indigenous groups living inland and tends to be animists, although many individuals have adopted Islam during the last few decades. Some of the indigenous peoples are Chris­tians.

Oil and liquefied natural gas (LNG) dominate the economy, accounting for 98 percent of export earnings. The major ex­port destinations are Japan, South Korea, Thailand, Singapore, and the Philippines, with Japan consuming over 50 percent of all exports. Oil is produced from onshore and offshore wells; but the vast reserves are estimated to last until 2010 if no new oil- bearing areas are discovered.

The LNG now equals oil as a major revenue source and the LNG refinery at Lumut is among the worlds largest. Enormous wealth from oil revenues has transformed this remote, little-known state into a prosperous wel­fare state. Education and medical care are free, and there is no income tax. Wage lev­els are comparatively high for Southeast Asia. Dependence on a single commodity has, however, made the country subject to vagaries of market fluctuations in oil.

Agriculture accounts for only 3 per­cent of the total value of gross domestic product, and consists of fishing on the coastal areas, the production of fruits, vegetables and rubber on the better- drained portions of the inland area. Agriculture and fishing, the traditional economic activities, and the once-healthy rubber industry, have, however, declined during the past two decades. The area un­der rice cultivation has also decreased.

The timber has been developed for consump­tion in the home market. Efforts to diversify the economy have failed to at­tract interest in revitalizing fishing and rubber plantations. Most food is imported. Other major imports are machinery used for the petroleum industry, manufactured goods, chemicals, and consumer items. Ma­jor import sources are Singapore, Malaysia, United States, and Japan.

The small size of the labor-force, in general, and people’s preference for civil service, has so far slowed the country’s in­dustrialization and economic diversifica­tion. As part of a long-term economic de­velopment plan, the government has modernized the ports, created the world’s largest gas liquefaction plant, and built an international airport at Bandar Seri Begawan, the capital city (population: 46,000).

Around it and its adjacent port city of Muana; and in Seria and Kuala Belait area near the oil fields, nearly two- thirds of the country’s population is concentrated. A sign of the development boom is visible in modern apartment houses, shopping centers, and hotels in the capital city, where a splendid 1800-room palace costing half a billion dollars was built by the present ruler.

The cities, in general, however, retain the air of a typical Malay town containing Kampongs, the Ma­lay water villages with their traditional wooden houses standing on stilts. Some in­terior portions of the country still remain an area of subsistence agriculture, and rural isolation, virtually untouched by the mod­ernization that characterizes the coastal fringe.