Brunei's economic diversification draws Singapore investments
SINGAPORE – After cyber-security firm CyberSafe chose to set up its security operations control room in Brunei in October 2024, it was up and running in five months in stead of an anticipated eight-month timeline.
Costs came in at 60 per cent of a similar set-up in Singapore, thanks to lower rent and wage costs.
The firm is one of a rising number of Singapore companies looking to invest in Brunei, since the country in 2021 started to diversify its economic reliance on its traditional oil and energy resources.
Close to 10 Singapore investors are currently in planning stages, and interest is growing, the Brunei Economic Development Board (BEDB) told The Straits Times in response to queries.
About half of them are in primary food production, with the remaining exploring data centres, ecotourism and next-generation special economic zones, t he organisation added.
Singapore firms – which have had a long presence in Brunei – invested B$68.8 million (S$68.8 million) in the country in 2022, making them among the top foreign sources of investment that year. Although the amount turned negative with an outflow of B$27.6 million in 2024, it was likely due to company-level movements such as loan repayments or capital restructuring, said BEDB.
Singapore's bilateral trade with Brunei is in fact growing, and reached $4.9 billion in 2024, 36.9 per cent more from 2023.
Ms Lim Jing Jun, director for South-east Asia at Enterprise Singapore, listed opportunities in renewable energy, the digital economy and food supply chain resilience for Singapore businesses.
Firms are drawn to Brunei for its geographical proximity, cultural similarities and abundant natural resources that are scarce in Singapore, she said.
Brunei, 1½ hours by plane from Singapore, records a 99 per cent literacy rate and high English fluency among its 480,000 population. More than 70 per cent of its land is covered by rainforests.
Ms Lim said: 'Many companies also view Brunei as a complementary secondary market, leveraging the country's extensive network of free trade agreements within Asean to expand their regional footprint.'
A participant in 10 free trade agreements, Brunei provides market access to more than three billion consumers, according to BEDB.
Singapore's longstanding agreement with Brunei to recognise each country's currency cuts out foreign exchange risk, there is also no restriction on profit repatriation, and full foreign ownership is permitted in most sectors, it added.
In 2021, the Brunei government launched the Brunei economic blueprint, and identified five priority sectors for development: downstream oil and gas, food, services, tourism, and information and communications technology.
On offer to entice investors are: joint investments from the Brunei government; no personal income tax; no capital gains tax; and a corporate tax rate of 18.5 per cent, slightly above Singapore's 17 per cent prevailing tax for most businesses.
Diversification efforts have begun to yield results, said BEDB. Non-oil and gas exports shot up from just 3 per cent in 2017 to 61 per cent in 2023.
In 2024, the country's economy grew 4.2 per cent, with the non-oil and gas sector accounting for more than half of the output. That was the highest growth rate in 25 years.
Enterprise Singapore has supported several Singapore firms in entering Brunei, such as Rotary Engineering and halal food company Pondok Abang.
In November 2024, Pondok Abang tied up with Bruneian government-linked company PDS Abattoir to distribute and market PDS Abattoir's products in Singapore. PDS reciprocates for Pondok Abang's products in Brunei, Indonesia and Malaysia – known as the Borneo region.
Pondok Abang's managing director, Mr Hasan Abdul Rahman, said PDS has been handling its regulatory approvals to enter the market.
The cross-sell strategy makes sense for the firm, he said.
He added: 'For Singapore, we are reliant on food imports. Therefore, our intent is to secure the supply of raw and processed meat products.
'Brunei is a viable market for us as there has been strong demand for our products since 2016, and we see Brunei as a platform for us to penetrate the greater Borneo region through PDS' network.'
Should there be demand from Borneo, he added, Brunei would be a viable 'secondary base' as it would reduce costs, especially in logistics.
Since March, CyberSafe's teams have been working in sync with augmented reality glasses across its offices in Singapore, Brunei and the Philippines.
Mr Dave Gurbani, chief executive of CyberSafe, expects the rates to slide as the state continues to digitalise.
ST PHOTO: KELVIN CHNG
Its chief executive Dave Gurbani said: 'Our Singaporean and Bruneian teams have integrated extremely well, not just linguistically, but also because our education systems and social norms are quite aligned.
'Skills-wise, Bruneian talent has proven highly competent, adaptable and reliable. We've had no major operational challenges so far.'
The 48-member firm plans to hire another 20 employees in its 10-member Brunei office in 2025, in anticipation of more business as Singapore's healthcare sector moves towards integrated data sharing in 2025.
High fixed internet charges in Brunei, reported by global rankings to be among the highest in the region at more than US$120 (S$155) a month, is not deterring Mr Gurbani, who expects the rates to slide as the state continues to digitalise.
For data security, he advises companies thinking of putting their back offices in Brunei to assess their regulatory obligations, customer agreements and sensitivity of their projects.
Brunei recently introduced its own data privacy framework, the Personal Data Protection Order, signalling its intent to meet international data governance standards, Mr Gurbani said.
Except for sectors operating with strict data rules, he said, in most cases, operating out of Brunei is viable.
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