$Unique_ID{COW00581} $Pretitle{406} $Title{Brunei Darrussalam Part 3B. Defense and National Security} $Subtitle{} $Author{Embassy of Brunei Darussalam, Washington DC} $Affiliation{Embassy of Brunei Darussalam, Washington DC} $Subject{brunei royal asean forces armed economic foreign ministry government development} $Date{1988} $Log{} Country: Brunei Darrussalam Book: Brunei Darussalam in Profile Author: Embassy of Brunei Darussalam, Washington DC Affiliation: Embassy of Brunei Darussalam, Washington DC Date: 1988 Part 3B. Defense and National Security Ministry Of Defence His Majesty The Sultan and Yang Di-Pertuan is the Minister of Defence as well as the Supreme Commander of the Royal Brunei Armed Forces. The Ministry of Defence is an integrated Ministry consisting of the Military Staff Division and the Civil Staff Division. The Deputy Minister of Defence assists the Minister in the decision-making process affecting the Ministry. The Military Staff Division is headed by the Chief of the Armed Forces Staff, the principal adviser on defence and operational military matters to the Minister. There are five directorates in this division: Operations and Plans, Intelligence, Training and Staff Duties, Personnel and Administration, and Logistics. The Civil Staff Division is headed by two Permanent Secretaries, each of them responsible for two directorates: the Permanent Secretary (Finance & Development) who is in charge of Finance and Procurement and Development and Works Services; and the Permanent Secretary (Policy & Administration) responsible for Politics and Organisation and Administration and Manpower. The importance which Brunei Darussalam attaches to national security is underlined by the fact that, under the fifth Five Year Development Plan, 10 per cent of expenditure is allocated to defence. For its size, Brunei Darussalam has one of the most well-equipped armed forces of any country in the region, with land, air and sea capability. The Task Force of the Royal Brunei Armed Forces comprises land, naval and air forces grouped together as a brigade spearheaded by two infantry battalions. The Task Force is equipped with armoured reconnaissance vehicles and armoured personnel carriers, supported by Rapier air defence missiles. For coastal patrol work, there is a flotilla of fast strike vessels equipped with surface to surface missiles. Plans have been announced for the Air Wing to acquire fixed wing jet and maritime surveillance aircraft with a view to being operational in 1992. Bruneians between the ages of 18 and 23 will be recruited to be trained as pilots. The new aircraft will reinforce the Air Wing which at present comprises both armed and utility helicopters and provides helicopter support for other Ministries including the 'Flying Doctor' service. The Royal Brunei Armed Forces has forged close links with its immediate neighbours, particularly Singapore, Malaysia and Indonesia. Joint exercises are carried out with the armed forces of ASEAN countries, and there is also close collaboration with other countries such as Britain and Australia. 1988 saw one of the biggest ever joint exercises between British and Bruneian forces, involving ships from the British Royal Navy and a British battalion from Hong Kong as well as all elements of the Royal Brunei Armed Forces. An active programme of recruitment has been implemented in Brunei Darussalam to attract young men and women into the Armed Forces. The Royal Brunei Malay Reserve Regiment has been formed to retain the skills of trained soldiers leaving the Armed Forces and as a back-up to the regular force in times of emergency. In 1981 the Women's Company of the Royal Brunei Armed Forces was formed. Her Royal Highness Pengiran Isteri Hajjah Mariam graciously consented to become Colonel Commandant of the Women's Company. The Royal Brunei Armed Forces was first established in 1961 as the Brunei Malay Regiment. To commemorate its fifth anniversary, its name was changed to the Royal Brunei Malay Regiment. In 1971, His Majesty The Sultan and Yang Di-Pertuan awarded the Sultan's Colours to the Royal Brunei Malay Regiment. In 1983, in the wake of Brunei Darussalam's independence, the name Royal Brunei Malay Regiment was changed to Royal Brunei Armed Forces. At celebrations in 1988 to mark the 27th anniversary of the Royal Brunei Armed Forces, His Majesty The Sultan and Yang Di-Pertuan presented new colours to the First and Second Battalions of the Royal Brunei Armed Forces. The Ministry is also responsible for the Gurkha Reserve Unit. Ministry of Defence Telephone: 02-30531 Minister of Defence: His Majesty Paduka Seri Baginda Sultan Haji Hassanal Bolkiah Mu'izzaddin Waddaulah, Sultan and Yang Di-Pertuan Negara Brunei Darussalam Deputy Defence Minister: Yang Amat Mulia Pengiran Sanggamara Diraja Major General (Res) Pengiran Haji Ibnu bin Pengiran Datu Penghulu Pengiran Haji Apong Chief of the Armed Forces Staff: Yang Dimuliakan Pehin Orang Kaya Seri Dewa Major General Dato Seri Pahlawan Haji Mohammad bin Haji Daud Permanent Secretary (Finance and Development): Dato Paduka Sidek bin Yahy Permanent Secretary (Policy and Administration): Dato Paduka Haji Mohammad Alimin bin Haji Abdul Wahab Task Force HQ Royal Brunei Armed Forces Telephone: 02-31111 Gurkha Reserve Unit Telephone: 02-30923 Royal Brunei Malay Reserve Regiment Telephone: 02-30531 Ministry of Foreign Affairs Among the principles which influence Brunei's foreign policy are support for the United Nations Charter, a growing role in ASEAN and membership of other international organisations which strengthens its links with other countries. The United Kingdom Government was largely responsible for Brunei's foreign policy until the resumption of full sovereignty in 1984. In that year Brunei Darussalam was admitted as the 159th member of the United Nations. In his acceptance speech His Majesty The Sultan and Yang Di-Pertuan said Brunei fully accepted the obligations contained in the United Nations Charter and, together with other nations, would strive to realise the aims and objectives of the United Nations. This declaration is reinforced by the guiding principles on which Brunei's foreign policy is based. Among the principles are: - The maintenance of friendly relations among nations. - Non-interference in the internal affairs of other countries. - Mutual respect of each other's territorial sovereignty, integrity and independence. - Maintenance and promotion of peace, security and stability in the region. Brunei plays a full and active role in ASEAN, the Association of South East Asian Nations, whose other members are Indonesia, Malaysia, The Philippines, Singapore and Thailand. Brunei became the sixth member of ASEAN one week after resuming full independence. Brunei looks to ASEAN, the cornerstone in Brunei's foreign policy, to ensure territorial integrity, regional peace, security and stability. Brunei supports ASEAN's plans for ZOPFAN, a Zone of Peace, Freedom and Neutrality. It has played an active role in meetings of ASEAN and is the current Chairman of the ASEAN Standing Committee as well as the country co-ordinator for the ASEAN-Canada Dialogue. In his speech to the ASEAN Heads of Government in Manila in December 1987, His Majesty The Sultan outlined the country's deep commitment to ASEAN: "Brunei has benefited much from our membership of ASEAN, and we look forward to the future, confident that ASEAN will continue to strive for the security and stability of the region as well as for the economic advancement of our peoples. Brunei is committed to play its part within the constraints and limitations of our ability as the smallest member, to ensure that ASEAN remains a viable and effective association." Brunei is keen to develop youth links between various member states and to encourage an ASEAN consciousness among the peoples of the region. Commenting on the importance of youth in this process, His Majesty said: "Through our experience of working side by side, our youth can at an early stage begin to build the foundation of neighbourly relations based on friendship and mutual trust and confidence. In this way, commitment to ASEAN can be renewed and passed on to future generations, thus ensuring continued stability in our region." Brunei became a member of the Organisation of the Islamic Conference in 1984 and a member of the Commonwealth in the same year. Brunei regards its relations with other Islamic countries as an important element in its foreign policy and there is close collaboration in economic, cultural, social and scientific matters. Brunei has a realistic approach to the Commonwealth and sees it as providing a valuable international forum in which small states can consult and voice their views. Brunei resumed full political independence on 1 January 1984. Under its agreement with the United Kingdom, the Diplomatic Services Department was established in 1980. The country has diplomatic relations with 42 other states and this number is increasing each year. Embassies or high commissions are maintained in all ASEAN capitals, as well as in London, Washington, New York, Riyadh, Cairo, Seoul, Tokyo, Geneva and, most recently, Canberra. A Permanent Mission to the United Nations is maintained in New York. In Bandar Seri Begawan there are now 15 resident missions. Brunei has concluded agreements on the abolition of visa requirements with 14 countries. Since its resumption of independence, Brunei Darussalam has become a member of a number of regional and international organisations: - Association of South East Asian Nations (ASEAN) - Commonwealth - United Nations (UN) - Organisation of the Islamic Conference (OIC) - World Health Organisation (WHO) - International Maritime Organisation (IMO) - United Nations Conference on Trade and Development (UNCtaD) - Islamic Education, Scientific and Cultural Organisation (ISESCO) - Islamic Development Bank (IDB) - Economic and Social Commission for Asia and Pacific (ESCAP) - South East Asian Ministers of Education Organisation (SEAMEO) - Asia and Pacific Development Centre (APDC) - Asia-Pacific Telecommunity (APT) - World Meteorological Organisation (WMO) - Universal Postal Union (UPU) - International Civil Aviation Organisation (ICAO) The Ministry of Foreign Affairs comprises six departments: Administration, Protocol and Consular, Economic, Political, ASEAN and Research. These departments are supervised by two Permanent Secretaries. His Royal Highness Prince Mohamed Bolkiah is the Foreign Minister, assisted by the Deputy Foreign Minister. Ministry of Foreign Affairs Telephone: 02-41177 Minister of Foreign Affairs: His Royal Highness Paduka Seri Pengiran Perdana Wazir Sahibul Himmah Wal-Waqar Pengiran Muda Haji Mohamed Bolkiah Deputy Minister of Foreign Affairs: Yang Mulia Dato Paduka Awang Haji Mohd. Ali bin Haji Mohd. Daud. Permanent Secretary I: Yang Berbahagia Dato Paduka Lim Jock Seng Permanent Secretary II: Yang Berbahagia Pengiran Anak Dato Seri Laila Jasa Puteh Ibni Al-Marhum Pengiran Pemancha Pengiran Anak Haji Mohd. Alam Ministry of Finance Brunei's financial power, monetary reserves and investment portfolio have been the subject of much international speculation and comment in recent years. In brief, financial policy in the Sultanate is determined by five key rules: - The investment objective is to increase over time the real value of the nation's foreign reserves. - A policy of sound finance should be followed at home, with inflation kept at low levels. The economy should not be allowed to `overheat'. - The supply of credit must be sufficient to encourage local industry and entrepreneurs to expand. - Brunei's financial strength should be used as a platform to develop financial skills, thereby providing employment opportunities among its citizens. - The overseas investment policy should be constructive, long-term and mutually beneficial. It should avoid any adverse effects on the host countries' economies, both public and private. The Brunei Ministry of Finance operates through seven functional bodies: - The Treasury: this operates in the normal way of controlling Government expenditure and scrutinizing proposed departmental budgets. - The Brunei Investment Agency (BIA) handles Brunei's overseas investments. Its staff of 151, based mainly in Brunei but with an office in London, manages one of the world's largest investment portfolios. - The Economic Planning Unit is responsible for advising the Government on various economic and statistical matters. It prepares the State Five Year Plan and serves the State's main committee on development plans. In addition to this macro-economic role, the EPU handles price controls and consumer standards. - The Economic Development Board is the State body responsible for lending money at favourable rates of interest for business projects and directly assisting local businessmen. - The Currency Board is responsible for the issuing and redemption of State banknotes and coins and the supervision of the banks. - The Customs and Excise Department is responsible for the implementation of import duties and prevention of importation of illegal goods and weapons. - The State Stores is responsible for the purchase and distribution of certain essential goods required by the Government and the country. The Ministry of Finance is in a relatively fortunate position compared to most of its counterparts elsewhere. Brunei has a buoyant revenue base-in 1987 the Government had an actual revenue, excluding investment income, of B $2.7 billion and expenditure of B $2.4 billion. The small population means that Government expenditure can be controlled effectively and Brunei has maintained a policy of balanced budgets for many years. There is no national debt. There is no personal taxation in Brunei and it is unlikely that direct taxation will be introduced. There is a company tax rate of 30 per cent on income accruing derived from or received in Brunei. There is no capital gains tax. Tax on the petroleum industry is similar to that in many other oil producing states. Customs duty is waived on most goods except luxury items and those classified as non-development goods. Brunei's monetary policy has been determined by linking the Brunei dollar to the Singapore dollar and there is parity between the two. The Ministry of Finance feels that the Monetary Authority of Singapore exercises sufficient caution and such a link will not have detrimental effects on the economies of either country. At the same time, this agreement is not seen as inhibiting the management of the domestic economy. Currency matters are the responsibility of the Brunei Currency Board and the ratio of external assets to demand liabilities is around 110 per cent-considerably more than the 70 per cent laid down by the Board's governing Act. Brunei Investment Agency The Brunei Investment Agency has attracted considerable interest since it was set up in July 1983. The Government established the Agency to manage the country's foreign reserves so that future generations of Bruneians will be able to enjoy the prosperity currently produced by income from the nation's oil and gas resources. The BIA took over the funds originally managed by the UK Crown Agents on behalf of the Brunei Government. It has seen a considerable expansion in the value of the funds and, in conjunction with a number of leading financial institutions across the world, it manages a large bond, equity, currency, gold and real estate portfolio. The Ministry of Finance is particularly pleased with the fact that the BIA has built up considerable experience and expertise using only Brunei citizens on its staff. The BIA stresses the importance of learning-by-doing and hands-on experience. This has encouraged hopes of further developing the country's financial services. The BIA's guiding principle in investment is to increase the real value of the country's foreign reserves and at the same time to pursue a deliberately diverse investment strategy, with holdings in the United States, Japan, Western Europe and ASEAN countries. Economic Planning Unit The Economic Planning Unit was set up in the mid-1960s and is a relatively small department within the Ministry of Finance. Its importance is crucial to the economic development strategy. The EPU provides the data and the framework and advises on the overall national economic plan. Brunei's approach to planning is both pragmatic and indicative. A series of Five Year Plans outline general development goals and the EPU is charged with ensuring that such goals make economic sense and that funds approved for certain projects are spent according to approved plans. However, in terms of everyday life in Brunei, the EPU's main point of contact with citizens is its administration of price controls. Brunei has been concerned for a number of years that importers would use the relatively high purchasing power of its people to push up prices and make overly large profits. The EPU price control mechanism, therefore, is a way of preventing inflation being imported and in no way detracts from the Sultanate's commitment to the free market. Economic Development Board Economic planners at the Ministry of Finance have been concerned for some time that small-scale businesses in Brunei had experienced difficulty in obtaining loans from foreign commercial banks. In the early 1970s, it was decided to create a source of `soft' finance for Brunei businessmen who could borrow money long term and at favourable rates in order to start enterprises locally. Since that time, the Economic Development Board has lent some B $70 million, either in joint ventures or single schemes. The rate of interest is currently some 6 per cent, with loans repayable over 10 or 12 years. The loans can be for up to B $500,000. Good, successful applicants may apply for new loans for different ventures or schemes. The Brunei Government sees the EDB, along with the EPU, as helping set the economic agenda for the country, in conjunction with the National Plan. Customs The Royal Customs and Excise Department registered a total revenue of B $58.8 million in 1986 and B $61.5 million in 1987, the bulk of which constituted import duties amounting to more than B $57 million and B $61 million respectively. Dutiable items include vehicles, bulldozers, electrical goods and appliances, oil, cameras, gold ornaments and valuables. Excise duties on locally produced items amounted to B $22,492 in 1986 and B $26,393 the following year. The present Customs tariff is governed by the Customs Import Duties Order, 1973. All preferential rates of duty were revoked by the Customs Import Duties (Amendment) Order, 1975. Import duty is calculated 'ad valorem' (based on the estimated value of goods on c.i.f.), or at specified rates. Apart from enforcing the Customs Act, 1954 and various Customs Orders and regulations, the Royal Customs and Excise is also responsible for ensuring the correct classification of goods for tariff and statistical purposes. Several items are categorised as restricted exports. These include cigarettes, liquors, spirits, rice, petrol, kerosene and diesel fuel. As some of these items are heavily subsidised by the Brunei Darussalam Government, one of the tasks of Customs is to prevent smuggling involving such goods. For the year 1987 the total number of Customs offences recorded was 72 (compared with 70 the year before) and the estimated value of the goods involved and the total amount of fines collected were B $67,152 and B $97,903 respectively. State Stores and Supplies The State Stores and Supplies Department is responsible for the purchase and storage of items for the use of Government departments, and of essential foodstuffs for public consumption in Brunei Darussalam. The goods are purchased both locally and from international markets at current prices and are stored in Government godowns. One of the aims of this department is to provide services to other departments without the involvement of any profitmaking. Government departments are only allowed to use their allocated budgets for the year to requisition common user items available from the State Stores; they may also request State Stores to stock any unavailable items either for special projects or for general use throughout the current year. The State Stores holds stocks of rice, sugar and milk with the aim of having available a 12-month supply for any contingency which may arise. The purchase of these foodstuffs is made on a government-to-government basis: in the case of rice, Brunei Darussalam and Thailand through an appointed agent in Bangkok. In 1986, 12,500 metric tons of rice were imported at a cost of B $8,384,912, while in 1987, 10,000 metric tons at B $6,495,150 were imported. The rice is sold to the public at the subsidised price of B $77 per 100-kilogram sack. Sugar was imported at a cost of B $3,643,604 for 3,986 metric tons in 1987; no sugar was imported in 1986. The State Stores and Supplies also keeps a stockpile of condensed and powdered milk.