Last updated October 2nd, 2018.
We usually focus on Asia’s countless opportunities for profit. InvestAsian is fortunate enough to have eyes and ears all throughout this dynamic region.
In general, Asia has a bright future ahead of itself. Average growth rates exceed anywhere in the western world. This trend looks to continue for the foreseeable future.
With that said, not all nations have strong economic prospects. That’s the purpose of this article. Knowing where not to invest is just as important as knowing where you should.
Brunei is one place investors should avoid. This small, wealthy, oil rich sultanate of 400,000 people is heading in the wrong direction.
Here’s several reasons why Brunei is the worst country to invest in Asia… perhaps excluding North Korea.
Brunei’s Nearly Endless Recession
We’re not in 2008 anymore. However, Brunei suffers from one of Southeast Asia’s worst economies.
Brunei’s economy posted only four years of GDP growth over the past decade. Both the IMF and World Bank predict weak growth during the immediate future too.
I suppose 2% growth is better than a recession. But that still makes it among Asia’s worst economies in a region of mostly winners.
Why has Brunei barely escaped recession a decade after the last global financial crisis? Low oil prices are the main contributor.
Vast oil reserves once made Brunei Southeast Asia’s richest country on a per capita basis. The nation barely diversified its economy outside the oil and gas sector though.
That’s contrary to Dubai, for example, which used its oil money to become a major financial hub.
With crude oil at around 1/3rd of prices seen in 2014, it’s easy to understand why Brunei is going through rough times.
Two other reasons below don’t help Brunei’s situation as the worst country to invest in Asia either.
Brunei is oil-rich. Unfortunately, that’s about all they can offer you.
Brunei isn’t Friendly to Investors
Brunei is also one of the hardest places to invest in Asia. Here’s a few examples.
Foreigners cannot own property in Brunei. You couldn’t even get a long-term lease up until recently.
Responding to poor economic conditions, the government began allowing non-citizens to lease property for a maximum term of 99 years back in August of 2017.
Yet this small step forward probably won’t help help much.
It’s too little, too late. Foreign investors will flock toward much better options nearby, such as Malaysia where foreigners can own land on a freehold basis.
Furthermore, Brunei doesn’t have a stock exchange. The fact that you’re not able to buy equities or real estate in Brunei leaves investors with just one option: starting a company.
You shouldn’t be surprised that doing business in Brunei is also a pain.
The government is difficult to work with and Brunei’s energy sector is practically the only one with decent long term prospects.
This reason might be controversial. I should clarify that Muslim nations aren’t necessarily bad to invest in. For example, Indonesia, Malaysia, and many others are doing just fine.
Brunei is taking things to a whole different level though. They’re less like “Malaysia” and more like “Saudi Arabia” with regards to the direction they’re going.
Hassanal Bolkiah, Sultan of Brunei and one of the world’s richest men, is overseeing Brunei’s transition toward a system of Sharia law.
Sharia law will replace exiting ones in several phases and the transformation will finish in 2035.
The good Sultan is doing things such as banning Christmas celebrations, stoning adulterers, and cutting off the limbs of thieves until then.
We’re not here to criticize anyone’s religion. But hopefully you can understand why these things would make some people reluctant to live and invest in Brunei. Less foreign capital means less economic growth.
You should reconsider if you’re thinking of starting a business in Brunei.
Don’t go to the worst country to invest in Asia. Head to some of the best ones instead.
EDITOR’S UPDATE: This article was read by over 12,000 people in Brunei since it was published less than two days ago. That’s 3% of the entire country’s population.
Naturally, locals have given us a lot of hate (and some support) because we said Brunei is the worst country to invest in Asia.
The truth sometimes hurts. InvestAsian will continue telling our readers the facts about places which aren’t competitive though.
Brunei’s situation might improve if locals were less eager to defend an economy that has been in recession for half the last decade.
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