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Brunei: The Richest Little Country You’ve Never Heard Of

Brunei, situated on the northern shore of the island of Borneo in the South China Sea, is one of the smallest yet richest states in the world. With a population of less than 500,000, its socialist society is arguably the closest any nation has gotten to a total welfare state:  the Sultan’s government pays for education, healthcare, and most other living expenses of its citizens, financed through Brunei’s massive oil and natural gas wealth, thus the nickname “Shellfare.” The Sultan is one of the richest men in the world and he flaunts his wealth shamelessly. (At right, the Sultan’s (in)famous gold Rolls Royce.)

The tiny nation, covering only 2200 square miles, has been ruled by the same family for the past 600 years. Due to its long history of monarchal rule, relatively small territory, and fabulous wealth, the nation has a variety of culture and governmental quirks that American diplomats encountered during their time there.  Despite its high standard of living, the country will likely face serious difficulties when the oil begins to run out, as Brunei embodies the definition of a mono-economy, with oil and natural gas making up a full 99% of its exports.

Brunei had a comparatively minor struggle for independence. In 1959, a new constitution was written declaring Brunei a self-governing state, while its foreign affairs, security, and defense remained the responsibility of the United Kingdom. A small rebellion erupted against the monarchy in 1962, which was suppressed with help of the UK. Known as the Brunei Revolt, it contributed to the failure to create the North Borneo Federation. The rebellion partially affected Brunei’s decision to opt out of the Malaysian Federation. Brunei gained its independence from the United Kingdom on 1 January 1, 1984, though its official National Day, which celebrates the country’s independence, is held by tradition on February 23.

The Prince has been in the news for a lawsuit involving statues of questionable taste and lambasted for his absurdly hedonistic lifestyle. The famed Beverly Hills Hotel, which is owned by the royal family, was boycotted by several celebrities in 2014 after Brunei declared it would rule under sharia law, and then in December 2015 the Sultan banned Christmas, asserting that celebrating it would hurt Muslim communities.

The following excerpts go back to a (somewhat) simpler time, before absolutely power corrupted absolutely. Alphonse La Porta worked as Deputy Director of the Malaysia, Burma, and Singapore Affairs Office from 1982-1985. John Taylor worked as a Consular Officer in the Kuching Consulate from 1968-1969. Robert Duemling served as a Consular Officer in Kuala Lumpur from 1963-1966. Francis Tatu was in Brunei on temporary duty (TDY) and witnessed the extravagant independence day celebration. Christopher Phillips served as Ambassador to Brunei from 1989-1991.

As the first female ambassador to be posted to Brunei, from 1993-1996, Theresa Tull gained a unique perspective on the status of women in the Islamic sultanate through her interactions with the royal family and other ministers. As Director of the Office of Indonesia, Malaysia, Brunei, and Singapore Affairs, from 1989-1992, Ambassador Richard Teare observed the sultanate’s growing oil wealth as it sought to expand its role in world affairs in the decade following independence.

Taylor, Duemling, Ambassador La Porta, Ambassador Phillips, Ambassador Tull, and Ambassador Teare were all interviewed by Charles Stuart Kennedy. Mr. Taylor began his interviews in April 2000, Brown began in November 1998, Duemling in September 1989, La Porta in February 2004, Phillips in May 1993, Ambassador Tull in November 2004, and Ambassador Teare in July 1998.

Read other Moments dealing with East Asia and the Pacific.


“The old Sultan just did not want to be second banana to somebody in Malaysia”

Alphonse La Porta, Deputy Director Malaysia, Burma, and Singapore Affairs Office

LA PORTA: Brunei was the odd man out. The original British plan in 1961 for the Borneo states and Singapore and Malaysia was to incorporate Brunei into the Federation but Brunei never joined. The Sultan of Brunei said, no, I’m not gong to have anything to do with that. I’m going to sit here on my little pile of oil. He didn’t know that he had gas, but the LNG [liquefied natural gas] was there, too.….

The old sultan kept his ties with the UK and was always in favor in London and had a good audience there, but he just said, no, I can’t get along with [Singapore’s] Lee Kuan Yew and the Tunku [Abdul Rahman, Chief Minister of the Federation of Malaya from 1955 to 1957, before he became Malaya’s first Prime Minister after independence in 1957; he served as Prime Minister following the formation of Malaysia in 1963, when Sabah, Sarawak, and Singapore joined the Federation].

Our interests in Brunei politically were to simply keep the peace because Brunei was still a thorn in the side in the formation of the Federation of Malaysia. It was the Sultan of Brunei who opted out of the Federation at the last moment and the Bruneians have not been forgiven entirely. (Pictured: Exhibit on Brunei independence)

This occurred because of the Sultan of Brunei…who was in his 70s. He’s the one who guided Brunei throughout the post-World War II period. He was propped up by the British as a Crown Colony and then became head of the Bruneian independent state.

The old Sultan just did not want to be second banana to somebody in Malaysia. He most importantly wanted to control his own economic assets, basically offshore oil and gas, the deposits of which are substantial.

There’s also a silly little territorial claim that goes on between Sabah and Brunei; this was a little finger of territory that was not included in the sultan’s area by the British, but it is an anomaly because it cuts deep into the center of Brunei. It should have been given to Brunei, but wasn’t and is a bone of contention with Malaysia that comes up periodically. There was also the undefined border with Kalimantan in the far South, but by and large that was manageable.

There were a lot of funny things of course – Brunei being a quirky place. The old sultan very much admired Winston Churchill and had a huge statue of Churchill built right in downtown Bandar Seri Begawan, the capital. He created the Churchill Museum, which is quite an interesting place actually, one of the few places in town where you could actually go and see something.

“I predicted a rebellion”

William Brown, Political Officer, Embassy Singapore, 1961-1964

BROWN: Brunei had a Malay Muslim population and a smaller Chinese ethnic population which was doing much of the work within a British shell. Into all of this came a firebrand named Sheikh Azahari, an ethnic Malay. He had Indonesian connections.

As [Indonesian leader] Sukarno launched the Konfrontasi  [a violent conflict from 1963–66 that stemmed from Indonesia’s opposition to the creation of Malaysia] against Singapore, Sarawak, and Sabah, Azahari and his crowd launched an abortive, Muslim coup in Brunei [on December 8, 1962].

I had the good fortune, professionally speaking, to predict it. After home leave I had come back to Brunei where I always spoke to Chinese shopkeepers. I found that a lot of green camouflage cloth and sharp instruments were being sold. Putting all of this together, with some other information, I came back to Singapore fresh from home leave and said, “There’s going to be a revolt in Brunei.” I drafted a cable about this.

My boss, Sam Gilstrap, who was then the Consul General in Singapore, and Bob Donhauser, my immediate supervisor, called me in and said, “This is pretty strong stuff that you’re writing about a coming revolt.”

I said, “Yes, I predicted a rebellion.”

They said, “Well, this is pretty far out. Tell you what we’ll do. We’ll make it an Airgram” [a message sent by courier via the diplomatic pouch instead of by telegram]. So we wrote it up as an Airgram, sent it in, and the revolt did break out.

Naturally, Washington asked “Why didn’t we know about this?” Sam Gilstrap, the Consul General, was visiting Washington and said, “Well, we predicted it for you. It’s all there!”

Brunei was convulsed by Azahari’s attempted takeover, which was put down by the British. I still have somewhere a green, camouflage shirt, with an Azahari logo or patch on the shoulder, with a couple of bullet holes in it. The Muslim imams of the time had blessed Azahari’s troops, telling them that if they wore green shirts and went through certain rituals, they would be bulletproof. I have one of the relics of this. So the situation was red hot. 

“The internal affairs of Brunei were as the same as they had been for 500 years:  under the rule of the Sultan”

John Taylor, Consular Officer, Consulate Kuching, 1968-1969

TAYLOR: Brunei seemed likely to become independent at some point and so part of my job was simply to build a good relationship with the Old Boy, his royal highness. Soon he would have a vote in the United Nations, ASEAN [Association of Southeast Asian Nations], and other international organizations. Besides, his financial holdings alone warranted good relations….

As far as the Sultan was concerned, the internal affairs of Brunei were as the same as they had been for 500 years, i.e., under the rule of the Sultan. The British viewed it as a protectorate, but as far as the Sultan was concerned, he was in charge of all domestic affairs. He wanted and expected to remain absolute ruler forever.

He had once authorized a go at an elected assembly with limited powers, but while I was there it was in suspension. Some token opposition political types did carry on with whom I could talk. But it was all very low key. A Ghurka battalion existed to protect the Sultan. Their presence enhanced the feeling that one was in an outpost of the Raj. The British Governor was a jolly good chap, who could have served anywhere in the old colonies. Along with the Falklands and Hong Kong, this was the very last.

Shell was the only oil company allowed to operate in Brunei. Tons of sterling flowed into this little settlement and that was even before the first tremendous rise in oil prices. At least 50% of the working population were employees of the Public Works Department — or at least they were on that payroll.

Many didn’t really work at all. One quarter claimed to be related to the Sultan, and this was displayed by a special flag that fluttered over many of the simple wooden huts that sat on stilts in the Bay. The government provided free medical care for the population and education was also free all the way through college — Oxford even — for those who could pass the entrance examination.

The Sultan was an absolute ruler and absolutely rich although he also created a little welfare state for the people. Brunei was a story out of Somerset Maugham. Oil of course was its major export then as it is now. The second largest export was empty soda bottles. The Bruneis imported quinine water and Coca-Cola from Singapore and sent back the empty bottles. In other words, except for oil Brunei had no other exports.

“They had built a stadium there that was large enough to take the entire population of the country”

Francis Tatu, Temporary Duty, Embassy Bandar Seri Begawan, 1984

TATU: I went there for their independence [in 1984]…

They had a tremendous turnout of people and representatives. They had built a stadium there that was large enough to take the entire population of the country.

Princess Diana and Prince Charles came….They had a state dinner for 4,000. They were just finishing up construction of the royal palace. It was supposed to be the largest personal residence in the world.

Christopher Phillips, Ambassador, Embassy Bandar Seri Begawan, 1989-1991

PHILLIPS: The Sultan is an absolute hereditary ruler who rules through a Cabinet of Ministers similar to the British system. And he also serves as Prime Minister and Minister of Defense. I have often said, in jest, that Brunei is the only absolute monarchy that has a semi-socialist system of government. It provides free education for all Brunei children, and free medical and subsidized housing for all citizens. To top it off, there is no personal income tax. All of this is possible because of the steady stream of revenue from Brunei’s offshore oil and gas production.

The Sultan himself, seemed to enjoy the respect of most Brunei Malays, who constitute some 55% of the population. It’s more difficult to judge the feelings of the Chinese. They represent about 25 % of the population, but few of them have been granted citizenship. They are therefore ineligible for the benefits accorded Brunei Malays. Nevertheless, it is the Chinese who constitute the commercial class of the country, and those few who have been granted citizenship play an influential role in the life of the country.

As for the Sultan, it took me some time to get through his rather formal and reserved personality. Surrounded by all the trappings of a 19th century monarch, one didn’t push too hard. I think the breakthrough for me occurred when I presented him with a framed photograph of the earth, taken from one of our spacecraft and autographed by a crew member, who happened to be a close friend of my son-in-law. The Sultan, an experienced pilot and much interested in space exploration, was clearly pleased, particularly when I pointed out that Borneo was at the center of the photograph. In time, I came to realize that beneath this reserved and diffident personality was a natural friendliness and a man who took his responsibilities as secular and religious leader seriously.

Unlike other members of the Royal family, the Sultan took a second wife. Though Islamic law allows men up to four wives, this seldom happens in Brunei. Despite widespread criticism within the Royal family, in 1981 he married a very pretty young flight attendant on Royal Brunei Airlines with whom he had fallen in love and for whom he built a second, but substantially smaller palace. Whatever initial hard feelings there may have been, they were no longer evident by the time I arrived. On all official occasions the Sultan was accompanied by both wives – wife number one, Saleha, always seated on his right, and Princess Mariam, his second wife, on his left. As far as one could tell, the relationship was a harmonious one.

The average Bruneian would not mow a lawn or do anything of that nature. The grunt work was done by foreigners.

Theresa Tull, Ambassador, Embassy Bandar Seri Begawan, 1993-1996

TULL:  Politically, there was really no political situation in Brunei to speak of. The same family had ruled Brunei for 600 years. There had been a fair amount of inbreeding, but I found the Sultan to be certainly of adequate intelligence for his position. There were no political parties, there was no national assembly. There was a government mechanism, of course, with ministries and ministers, but they answered to the Sultan and he answered to God, I guess. This was the way that worked.

Being a political officer by nature I was always interested in seeing was there anything out there, what’s going on, is there unrest, and I couldn’t find it. There really wasn’t much….

Q: There’s no economic situation either was there?

TULL: They were drowning in money…. When I was there it was probably a little better for the average person than it is now because in the last couple of years they went through a bad spell with some corruption on the part of the Sultan’s brother apparently and also when oil prices went down.

When I was there oil prices were at a reasonable level, production was good. There was absolutely no tax of any kind in the country, no income tax, no real estate tax, no sales tax, no taxes whatsoever. Free education through the university level for those capable of benefiting from it. Free health care.

Most people who were Bruneians worked for the government in various capacities with a very relaxed type work day. The government was the largest employer. The grunt work in the country was done by imported laborers from the Philippines and Indonesia, but the Philippines were the largest single contingent.

The average Bruneian would not mow a lawn or do anything of that nature. The grunt work was done by foreigners. It wasn’t a bad life for Bruneians. Being a Muslim country, the government gave interest-free loans or near to it for the purchase of your home. There were dirt cheap trips organized by the government to take people to Saudi Arabia for the hajj, the pilgrimage that Muslims are supposed to make once in their life if they can. It was hard to find a lot of discontent in Brunei at that time.

One area of concern was the fact that the Chinese element in the community was discriminated against on the question of citizenship. They tended to be intelligent professionals or business people, the Chinese, and they’d been there a few generations, but the Bruneian constitution made getting citizenship very difficult for non-Malays, including being able to speak the language of Brunei, a variety of the Malay language. That was a little difficult for the Chinese.

On the plus side, all these tax-free elements I mentioned made it easy if you were a good business person to profit, to have nice homes and to live well, but you couldn’t really participate in the sense of being a full citizen. Of course no Bruneian could participate in the political life of their country, either, as there was, in effect, no political life there.

With regard to religion there were also constraints. Brunei is a Muslim country, a moderate Muslim country, but with an element in the country personified by the Education Minister at that time who wanted a tougher, more fundamentalist approach to the Islamic religion. The Sultan, in my view, walked maybe a middle path. He was certainly not a fundamentalist conservative Muslim, but he would give a little nod this way to conservatives and then a nod to the more liberal approach, back and forth, so they didn’t get extreme regarding the practice of Islam.

I mean they didn’t have too many religious police going around. There were some. I heard about them sometimes from ministers’ wives. They would tell me sometimes that they were really annoyed because their daughter or someone had been criticized by somebody or they had gotten a phone call because their daughter was seen out at night, for example.

But basically it wasn’t as bad as in many Muslim countries. As an indication, women could work anywhere they wished to work. I’m talking Bruneian women. They were encouraged to cover their hair, but not compelled to. One of the Sultan’s sisters flatly refused. She was one of the princesses, and she didn’t do it.…They could drive cars. They could do all of that by themselves. It was a decent life for women considering Brunei was a Muslim country. The right wanted to push Islamic practice a little further….

On the religious question, there was nil tolerance for the expansion of other religions. The Chinese were represented in both the Catholic Church and also in the Anglican Church. So, when I was there, there were at most two Catholic priests.… At a certain point, several years before I got there, the Bruneian government expelled all foreign priests from the country. There had been mostly Australian priests, white Australian priests, and ministers, too. They were expelled. Brunei was not going to have any foreign priests there….

“’Women over there, women have to be over there’”

The first time that I had an occasion to be at the palace with the entire diplomatic corps would have been at the conclusion of Ramadan when you have the celebration of Eid al-Fitr. You have three days of visiting people and wishing everybody well. The Sultan had a reception for the diplomatic corps in the palace. Now, the palace is another piece of work, 1,700 rooms I think, incredible. Just absolutely incredible. Wild.

At any rate this would have been in January 1994….The diplomatic corps was ushered into this main reception room of the palace to meet with the Sultan. When I went into the room the ministers’ wives were all seated off to the right and the spouses, the wives of the ambassadors were all also seated off to the right, chit chatting with each other.

I was not a spouse of an ambassador, I was an ambassador, so I remained in the central area with the ambassadors and ministers. I had a little company because the Philippine Chargé d’Affaires was also a woman. Her ambassador was ill and was in the Philippines a good bit of the time so she was also there. We’re there and chit chatting and I feel it’s my job to meet these ministers. I had met some of them and so I greeted them.

Suddenly this older Bruneian gentleman came over to me and said, “Women over there. Women have to be over there.”

I said, “How do you do? I’m the American Ambassador, Theresa Tull.”

“Women over there, women have to be over there.”

I said, “Well, actually I believe that’s for the wives. I’m the American Ambassador, but thank you.” I edged away and he started to follow me. I spotted the Deputy Foreign Minister and so I went over and explained what was happening. I said, “You know, I’m not going to go over and sit with the wives.”

He said, “No, no.” He looked a little nervous. He was a little jumpy. I said, “That gentleman is telling me that I have to go over there, but I’m not going over there.” He said, “Oh, no.” He still looked nervous. The Philippine Chargé had gotten the same word from this man, but she’d moved with me to the Deputy Foreign Minister.

At this point the Sultan and his family came in. On this particular occasion he came with his wife and his children and we lined up by protocol rank, in terms of when you had presented your credentials, so I was at the end of the line, the chargé was next to me. The Sultan couldn’t have been nicer, just completely normal, shook hands which I discovered subsequently a lot of Muslims don’t want to do, to touch a woman’s hand, but he extended his hand and we did that and we chit chatted.….

Any time I needed to meet with the Sultan I got very quick favorable responses, even when it was a little unreasonable as far as I was concerned in terms of deadline. When you get something on a Friday, the [State] Department would sometimes insist they had to have this answer from the Sultan by Monday. You know, they’ve probably been fighting it out in Washington for two weeks. But the Sultan always came through for me, I have to say.

A one-track economy with major overseas investments

PHILLIPS: As of a few years ago, known reserves were about 1.5 billion barrels of oil and 5.6. trillion cubic feet of gas. Some among the petroleum industry people guessed that the end could come early in the 21st century — but that, of course was only a guess. Basically, Brunei is a one-track economy with oil and gas accounting for 70% of its domestic product, and 99% of its exports. The Brunei Shell Petroleum company, which is half owned by the Brunei government and half by Royal Dutch Shell, produces most of the output.

The government was well aware of the need to diversify the economy, but doing so had not been easy. During several meetings I had with Abdul Rahman, the Minister for Trade and Economic Affairs, we discussed the current five-year national development plan. This focused on creating new jobs for the indigenous labor force and on efforts to encourage foreign investment which could promote exports.

They were talking about such possibilities as the development of a glass-making industry from Brunei’s ample silicon resources, the production of pharmaceuticals from products grown in the rain forest, and the development of tourism. None of these seemed to me to offer much hope of success.

Next to the petroleum sector, Brunei’s major source of earnings is from overseas investments. These are mostly handled by the Brunei Investment Agency, although it is sometimes difficult to know when a particular investment is in the name of BIA or of the Sultan himself. (Pictured: Prince Jefri at his apartment in London)

For example, the Dorchester Hotel in London is owned by the Sultan, but other hotels, such as the Beverly Hills in California and the Holiday Inn in Singapore, are owned by BIA.

According to one well-informed individual I knew, Brunei’s national reserves as of 1991 stood at $30.2 billion. A major portion of the income earned from this portfolio is reinvested, and only petroleum income is used as government revenue. Of course, the Sultan’s personal fortune, which is shrouded in secrecy, is not included in those figures.