Chapter

BRUNEI DARUSSALAM

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: October 10, 1995.
Exchange Arrangement
CurrencyThe currency of Brunei Darussalam is the Brunei dollar.
Other legal tenderThe Singapore dollar is also legal tender.
Exchange rate structureUnitary.
Classification
Currency board arrangementThe Brunei dollar is issued by the Brunei Currency Board (BCB) only against payments in Singapore dollars and at par. Under the terms of a 1967 Currency Interchangeability Agreement (CIA) between the BCB and the Board of Commissioners of Currency of Singapore (BCCS), the Singapore dollar is customary tender in Brunei Darussalam and the Brunei dollar in Singapore. The BCB and BCCS have accepted each other’s currency and have agreed to mutual exchange at par and without charge. They have instructed their banks to do the same with their customers. Any excess currency is repatriated regularly, with the issuing institution bearing the costs, and settlements are made in the other country’s currency. The BCB deals only in Singapore dollars and does not quote rates for other currencies. Banks, however, are free to deal in all currencies, with no restrictions on amount, maturity, or type of transaction.



The Brunei Association of Banks fixes daily buying and selling rates for electronic transfers and sight drafts in 17 other currencies on the basis of the interbank quotations for these currencies in relation to the Singapore dollar. Banks in Brunei Darussalam must apply these rates for transactions with the general public for amounts up to B$100,000. Exchange rates for amounts exceeding B$100,000 are set competitively by each bank on the basis of the current interbank quotations for the Singapore dollar on the Singapore market.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThere is no forward market for foreign exchange in Brunei Darussalam. However, as a result of the CIA, foreign exchange risk can be hedged in terms of Singapore dollars by resorting to facilities available in that country, including foreign currency futures and options traded on the Singapore International Monetary Exchange, over-the-counter forward transactions arranged by banks in Singapore, and the short-term foreign exchange swap market operated among the banks in the Singapore money market.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangements
Regional arrangementsBrunei Darussalam is a member of the ASEAN.
Administration of controlThere are no formal exchange controls, but the MOF retains responsibility for exchange control matters.
International security restrictionsNo.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeOnly banks licensed to operate in Brunei Darussalam, and gold dealers and jewelers specifically authorized by the MOF may buy and sell gold bars. Gold bars are not subject to import duty, but a 10% duty is levied on the importation of gold jewelry.
Controls on external tradeYes.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedThere is no distinction between accounts of residents and nonresidents of Brunei Darussalam.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listA few imports are banned or restricted for environmental, health, safety, security, or religious reasons.
Import taxes and/or tariffsExcept for cigarettes and alcoholic beverages, most imports are subject to tariff rates of up to 200%. Some 70% of items (including basic foodstuffs, construction materials, and educational materials) are zero rated. Most other goods are subject to tariff rates of 5%, 15%, or 20%. Fireworks are subject to a 30% duty, while automobiles are subject to duties ranging between 40% and 200%, depending on engine size. In accordance with the CEPT scheme for the AFTA, Brunei Darussalam will eliminate its tariffs on imports from other ASEAN members by 2003, with the exception of about 120 tariff lines that are permanently excluded from the plan.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsn.a.
Documentation requirementsNo.
Export licensesExport licenses are required for alcoholic beverages, cigarettes, diesel, gasoline, kerosene, rice, salt, and sugar.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersThere are indicative limits/bona fide tests for all payments for invisible transactions and current transfers.
Investment-related paymentsInterest payments are subject to a 20% withholding tax. Information is not available on the payment of amortization of loans and depreciation of direct investments.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentThere are no sectoral controls, but activities relating to national food security and those based on local resources require some degree of local participation. Industries producing for the local market that are not related to national food security and industries that solely export may be fully foreign owned. Joint ventures are particularly encouraged in export-import industries and activities supporting such industries. At least one-half of the directors of a company must be either Brunei citizens or residents of Brunei Darussalam.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsOnly Brunei citizens are allowed to own land. However, foreign investors may lease land on a long-term basis, including sites destined for industry, agriculture, agro-forestry, and aquaculture.
Controls on personal capital movements
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsYes.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 1999
No significant changes occurred in the exchange and trade system.

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