Lying on the northwestern coast of the island of Borneo, Brunei is divided in two by a strip of the surrounding Malaysian state of Sarawak. The interior is mostly rainforest. Independent from the UK since 1984, Brunei is ruled by decree of the sultan. It is undergoing increasing Islamicization. Oil and gas reserves have brought one of the world's highest standards of living.

Malays are the beneficiaries of positive discrimination; many in the Chinese community are either stateless or hold British protected person passports. Among indigenous groups, the Murut and Dusuns are favored over the Ibans. Women, less restricted than in some Muslim states, are obliged to wear headscarves but not the veil. Many hold influential posts in the civil service.

Strengths

Nearly 20 years of known oil reserves; over 30 years of gas. Earnings from massive overseas investments, mainly in the USA and Europe, now exceed oil and gas revenues.

Weaknesses

Single-product economy. Failure of diversification programs could lead to problems in the future.

Since a failed rebellion in 1962, a state of emergency has been in force and the sultan has ruled by decree. Hopes for democracy were dashed when political parties were banned in 1988. In 1990, "Malay Muslim Monarchy" was introduced, promoting Islamic values as the state ideology. This further alienated the large Chinese and expatriate communities. Power is closely tied to the royal family. One of the sultan's brothers holds the foreign affairs portfolio and the sultan himself looks after defense and finance.

Brunei leads calls for a regional free trade area. Political exiles opposed to the government and based in Malaysia are a main concern. Relations with the UK, the ex-colonial power, are good.

As well as being head of the 5900-strong armed forces, the sultan has a personal bodyguard of 2000 UK-trained Gurkhas. The UK and Singapore are close defense allies.

Oil and gas are the major resources. Energy policy is now focused on regulating output in order to conserve stocks, since reserves are of limited duration. Almost all food is imported.

The Forestry Strategic Plan aims to protect Brunei's forests (which take up 80% of its land area). It has allocated 64% of their area for protection and recreation and the prevention of soil erosion. However, Brunei's mangrove swamps, the largest in Borneo, remain unprotected.

Interest-free loans for civil servants, subsidized gasoline, and limited public transportation account for the high rates of car ownership.

The health service is free, although for major surgery Bruneians tend to travel to Singapore.

Free schooling is available to all the population, with the exception of stateless Chinese, who do not qualify. The University of Brunei Darussalam was opened in 1985.

Crime levels are low. Most crime involves petty theft or is linked to alcohol and narcotics (both banned). A stolen car often makes TV news headlines. The state of emergency enables the government to detain without charge or trial for indefinitely renewable two-year periods.

The wealthiest people in Brunei are those close to the sultan, one of the world's richest men. A generally high standard of living, along with a degree of social mobility among Malays, keeps discontent to a minimum. Bruneians are major consumers of high-tech hi-fi and video equipment, designer-label watches, and Western designer clothes. The sultan's younger brother, Prince Jefri, in 2001 auctioned his possessions, from fire engines to marble baths, after the failure of his business left him with debts of US$3 billion.

Although the goverment is keen to protect Bruneians from Western influence, it wants to develop quality tourism as part of its diversification program. Promoted as the "Gateway to Borneo," Brunei's rainforests could be developed for tourism. A former attraction was the Churchill Museum, founded by the late sultan. This has now been superseded by the Museum of Royal Regalia.

Under British control since 1841, Brunei became a formal British Protectorate in 1888.

• 1929 Oil extraction begins.
• 1959 First constitution enshrines Islam as state religion. Internal self-government.
• 1962 Prodemocracy rebellion. State of emergency; sultan rules by decree.
• 1984 Independence from Britain. Brunei joins ASEAN.
• 1990 Ideology of "Malay Muslim Monarchy" introduced.
• 1991 Imports of alcohol banned.
• 1992 Joins Non-Aligned Movement.
• 1998 Sultan's son, Prince Al-Muhtadee Billah, made crown prince.