Introduction

Situated on the northern coast of Borneo, Brunei Darussalam is more than twice the size of the Australian Capital Territory (ACT), occupying an area of 5,270 square kilometres. Its population of 406,000 is only slightly larger than the ACT, and the smallest of any Association of Southeast Asian Nations (ASEAN) member. Brunei ranks 121st for overall GDP (PPP terms), but that ranking is deceptive: its per capita GDP was US$49,384 (PPP terms) in 2010–11, placing it among the wealthiest 25 countries in the world, and second only to Singapore among Southeast Asian nations - according to the IMF.

Brunei’s quick acquisition of wealth was the result of the discovery of oil in its western-most district in 1929. The oil and gas sector dominates the nation’s economy, providing 68 per cent of Brunei’s GDP and 83 per cent of government revenues in 2011. The central role of oil and gas has brought challenges. A wealthy country in per capita terms, Brunei is still very much preoccupied with nation-building. It is working to fill gaps in national capacity and infrastructure through the implementation of its ‘Vision 2035’ (Wawasan 2035) strategy and successive five-year long-term development plans. ‘Vision 2035’ highlights a need for increased economic growth to maintain the country’s high standard of living. Taking into account Brunei’s growing number of job-seeking youths; a saturated public service; and a dominant oil and gas sector which employs less than 3 per cent of the work force, economic diversification has become a key policy objective for the Brunei Government. Brunei also recognises the importance of energy security and environmental sustainability to fuel economic growth. Brunei has identified energy security as a key priority for when it chairs ASEAN meetings in 2013.

Australia and Brunei have cooperated closely in building regional trade links. Our common commitment to open regional trade is demonstrated by our joint membership in the Asia–Pacific Economic Cooperation (APEC) forum, as parties to the ASEAN – Australia – New Zealand Free Trade Agreement (AANZFTA), and in negotiations for the Trans-Pacific Partnership (TPP) Agreement, which builds on the Trans-Pacific Strategic Economic Partnership Agreement between Brunei Darussalam, Chile, New Zealand and Singapore.

Government, business and people-to-people links

Australia’s first significant interaction with modern Brunei was during World War II, when Australian efforts contributed to the end of the Japanese occupation in 1945. Australia was also among the first countries to establish diplomatic relations when Brunei achieved independence from the United Kingdom in 1984. Brunei and Australia continue to enjoy a strong bilateral relationship encompassing diplomatic cooperation, trade, education, defence, security and law enforcement. There are also longstanding and warm people-to-people links.

Australia is the second most preferred destination for Bruneian students after the United Kingdom. Thousands of young Bruneians who have studied in Australia over the three decades since independence are the core of significant people-to-people links. Visitors to Brunei are often struck by the fact that few Bruneians do not have some direct or indirect connection with Australia. In the 2011 census, just over 300 Australians registered Bruneian ancestry.

Brunei was Australia’s 35th-largest trading partner in 2011, although that ranking probably understates commodities transhipped through Singapore. Total two-way merchandise trade amounted to $1.3 billion in 2011. Most of it was Australian imports of Bruneian crude petroleum ($1.27 billion), making Australia Brunei’s third-largest export market. Australia is a significant exporter of meat and other foods into Brunei and is Brunei’s 11th-largest source of imports overall. In 2011, Australian service exports to Brunei were a modest $54 million, leaving scope for greater services trade.

Royal Brunei Airlines operates direct daily flights to Melbourne. Around 800 Australians live in Brunei, and Australians are prominent among the tourists who visit the Sultanate. More recently, small numbers of Australian students have also begun coming to Brunei. For example, as a result of Bruneian students studying medicine at the University of Queensland, the university now sends groups of medical students each year to do placements at Brunei’s main public hospital.

The two countries share a deep interest in the application of international law and in regional institutions that promote human development and ensure that disputes are settled peacefully. Brunei has a firm commitment to ASEAN and cooperates closely with Australia in regional bodies, including the East Asia Summit and the ASEAN Regional Forum. Brunei and Australia also work together in global forums, such as the United Nations and the Commonwealth.

The defence and security relationship is close, with regular exercises between the Australian Defence Force and the Royal Brunei Armed Forces, and regular interactions between the two defence ministries.

Law enforcement cooperation on transport security, border security, people smuggling and trafficking, and narcotics is also in good shape, with regular engagement focusing on exchanges of criminal intelligence. Australia also provides ongoing training opportunities for Brunei law enforcement officers each year.

Towards 2025

Australia will continue to have a strong interest in Brunei achieving a more diversified economy. As Brunei moves forward with its national development goals, there will be services and investment opportunities for Australian companies, particularly in the energy, education, (eco) tourism, and agriculture and food sectors including the halal market.

The energy sector will remain important in our bilateral relationship. Brunei is likely to continue to be a source of crude oil for Australia, although there will be increasing competition from other countries interested in securing access to Brunei’s high-quality product. As global energy exporters, Australia and Brunei are likely to interact more in regional and global energy dialogues. Bruneian plans for the rapid expansion of its oil and gas production will create new opportunities in exploration and in the provision of infrastructure, logistics and specialist support. The Brunei Government’s more recent focus on energy efficiency and renewables opens up opportunities for Australian providers in that area, too.

Australia will remain an important source of food for Brunei, and that may present opportunities to expand related investment and services links. There is scope to increase beef and other meat exports to Brunei, and the potential for increased demand for Australian expertise in animal husbandry, dairying, aquaculture, and forest and coral reef management.

Brunei is reforming its education system, including through technical skills development. In 2011, as part of a national Energy White Paper, Brunei flagged major new goals for job creation and skills development in its energy sector. There will be opportunities for Australian technical and vocational education institutions to provide expertise and to train young Bruneians.

The number of Bruneians studying in Australia is expected to grow in the years to 2025. It will be important to deepen teaching and research links between Australian and Bruneian higher education institutions, particularly in the areas of engineering, environmental science, the health sciences, Islamic studies and Asian studies, as well as in emerging areas such as the creative industries.

As partners in a number of regional bodies, Australia and Brunei will also engage more actively on regional issues, including on education, public health, the environment, finance, defence and security and disaster management. In terms of regional economic integration and trade liberalisation, there is significant scope for Australia to continue working closely with Brunei, building on outcomes from the AANZFTA, bringing the TPP negotiations to a successful conclusion and in progressing ASEAN’s plans for an ASEAN-centred Regional Comprehensive Economic Partnership (RCEP).