Deciding on which countries to expand your business to can be a complex and difficult decision. As an aspiring entrepreneur, you might have heard of the lucrative business environment of Brunei and might be wondering about what the main advantages of starting up a business in Brunei are. In this article, Tetra Consultants will provide a guide on the benefits motivating many to starting a business in Brunei so that you may better understand this business phenomenon and make a more informed decision about whether you should register company in Brunei.
1. Favourable Taxation Policies
One of the primary factors determining the attractiveness of a particular country for economic investment is the level of tax rates imposed on businesses. In this regard, Brunei is often viewed as a low tariff regime, meaning that goods can be imported and exported for international businesses with low tax rates. Additionally, Brunei is also home to low capital gains tax and personal income tax, further increasing the ability for a business to retain its profits.
However, there is a corporate income tax of 22%, which may be perceived as relatively high for many prospective investors. Yet, despite this high corporate income tax rate, governments have exempted many new businesses and foreign investors from this tax rate by up to 20 years, meaning that this corporate income tax rate is much less of a concern. Furthermore, there are also no taxes imposed on sales, payroll, manufacturing and many more, ensuring that the operational costs for businesses are kept to a minimum. Thus, the low tax rate environment makes it favourable for you to register company in Brunei.
2. Geographical Location
Firstly, Brunei is located in one of the most diverse and dynamic regions of the world – Southeast Asia. With the rapidly growing economy of countries within the Southeast Asian region, being located there not only guarantees access to large consumer markets, but also allows Brunei to capitalise on the high volume of trading activity within the region.
Secondly, Brunei is even considered as the “Hub of ASEAN”, located close to almost all of the other ASEAN countries in the region. In fact, it only takes 2 to 3 hours air travel for one to commute from Brunei to its ASEAN neighbours. This further enhances Brunei’s ability to tap on regional markets, as well as boost its economic interconnectivity in a region already displaying significant growth potential in the coming years. In fact, Brunei also boasts robust regional connections with its neighbours, ensuring that any investor considering starting up a business in Brunei will benefit from its strategic geographical location and positioning.
3. Access to natural resources
Brunei is home to a treasure trove of natural resources ranging from oil to gas. This ready access to natural resources has allowed Brunei to truly develop and expand its energy industry over the past 80 years. Hence, it is no surprise that the oil and gas industry has dominated Brunei’s overall economy, with these hydrocarbon resources actively contributing to more than 90% of its total exports and more than half of its Gross Domestic Product (GDP). Even to today, Brunei is the 4th largest producer of oil in Southeast Asia, as well as the 9th largest exporter of liquefied natural gas across all countries in the world.
This has two implications for aspiring entrepreneurs and international investors. Firstly, starting up a business in Brunei highly related to the oil and gas industry would definitely been an excellent business prospect, not only because of Brunei’s historical and continual success in this industry, but also because there are strong government incentives to support such business ventures given that their economy is hugely dependent on the success of its energy. Secondly, the domination of the energy and oil industry also means that there is ample opportunity and space for diversification which investors can seek to capitalise on. Starting up unique businesses specialising in other industries outside of oil and gas will definitely be extremely profitable. Hence, Brunei’s access to natural resources and the nature of its oil and gas industry definitely provides a favourable business environment for many prospective investors.
4. Economic Stability
When looking to set up a new company in a foreign country, having a stable economic and political backdrop is critical in giving international investors the security and confidence that the business will do well. On this front, while Brunei is a relatively small country in terms of its geographical landmass, it has a relatively wealthy economy which has been growing at a stable and consistent rate over the past decades. In fact, its inflation rate, a good indicator of the country’s overall macroeconomic state, has remained consistent at a rate of 1.5% over the past years. This clearly demonstrates that Brunei’s economy is not a volatile environment investors may fear doing business in, but a predictable and safe option, thus making it attractive for new companies.
5. Political Stability
Similarly, with regards to the aspect of political stability, ever since the first Sultan was installed a long time ago in 1363, Brunei has been governed by a benevolent monarchy, with a clear unbroken line of succession facilitating smooth political transitioning. In fact, ever since 1984, Brunei is viewed as an independent sovereign sultanate, ruled and organised on the basis of a written constitution set in 1959. Given these historical factors, political stability has been successfully maintained for Brunei. As such, businesses need not worry about a fluctuating political climate and government policies and attitudes towards businesses switching year after year. Instead, this political stability compounds on the investor confidence already built up through its economic stability, assuring them that starting up a new business in Brunei is not only a profitable option, but a safe and strategic one.
Conclusion
Navigating the country of Brunei’s complex business climate might be a challenging process – a hassle to say the least. However, with key benefits regarding tax rates and a business friendly environment outlined above, it is easy to see why many businesses would choose to set up in Brunei. As such, Tetra Consultants hopes that this article has provided you a much better understanding about the key advantages of starting a business in Brunei so that you can truly decide on whether you should register company in Brunei yourself.
So, what are you waiting for? Contact us to find out more about the process of starting a business in Brunei, and our dedicated and experienced team will respond within the next 24 hours. Tetra Consultants will not only empower you by helping to navigate the different regulations of Brunei, but also aid in facilitating the registration of your company there while providing invaluable, nuanced insights into any potential challenges.
