By Pan Yanqin, Hoon Chang Yau
China and Brunei have maintained a tradition of friendly exchanges since ancient times. According to Chinese history books, China’s relations with the ancient Brunei state began in the 5th Century. Since the establishment of diplomatic relations, the countries have engaged in frequent high-level exchanges and strengthening cooperation. Since the turn of the 21st Century, especially after the establishment of ASEAN-China Free Trade Area (ACFTA) in 2010, bilateral economic and trade cooperation, including investment, has developed rapidly, creating strong potential for complementary development.
Pragmatic Investment Cooperation
Within the framework of the Belt and Road Initiative (BRI), China and Brunei signed the Memorandum of Understanding on the Belt and Road Initiative and the Memorandum of Understanding on Strengthening Cooperation in the Field of Infrastructure.
Trade volume between China and Brunei was US$1 billion in 2017, a year-on-year increase of 36.5 percent, including US$650 million of Chinese exports and US$350 million of Chinese imports, up 26.8 and 58.8 percent respectively over the same period last year. China primarily imports crude oil from Brunei and exports textiles, building materials and plastic products the other way. The two sides have made remarkable achievements in investment and labor services. By the end of 2017, Brunei’s actual investment in China was US$2.79 billion.
China’s largest investment project in Brunei is the Hengyi Crude Oil Refinery and Aromatics Cracker Complex located at Pulau Muara Besar (PMB). It is a petrochemical integration project based on crude oil and gas distillate entirely funded by Zhejiang Hengyi Petrochemical Group and the Brunei Ministry of Finance. It is the largest bilateral cooperation project since the establishment of diplomatic relations and was catalogued as a key construction project of the Belt and Road Initiative. It is also the largest single FDI project in Brunei in recent years. Construction on the two-phase project began in 2015 with a total investment of US$15 billion. The first phase is expected to be completed by the end of 2018 and begin production in the first quarter of 2019. The second phase is expected to begin production in 2022. Upon completion, the project will serve as Hengyi’s crude oil refinery and petrochemical production base with capacity of 22 million tons.
To further promote the development of the Brunei-Guangxi Economic Corridor (BGEC) pragmatically, the government of Guangxi Zhuang Autonomous Region and the relevant government ministries of Brunei have tentatively agreed to strengthen cooperation in fields of agriculture, fisheries, halal food processing, tourism, transportation and logistics. Economic and trade cooperation between Guangxi and Brunei has developed rapidly thanks to the joint efforts. As of June 2018, Brunei had invested in seven manufacturing and real estate projects in Guangxi, with an actual investment of US$18.91 million. At the same time, Guangxi has reviewed or approved investment in Brunei by five enterprises and institutions totaling US$53.48 million.
Tourism as a Priority
In recent years, the Brunei government has made tourism a priority for development. The Tourism and Development Department of the Brunei Ministry of Primary Resources and Tourism is responsible for tourism development, marketing and promotion as well as issuance of tourism business licenses. Since the mid1990s, the Board has been actively promoting the development of tourism in Brunei, with culture, heritage, natural scenery and contemporary Asia as the four pillars of the industry. To promote bilateral cooperation in tourism, China and Brunei signed the Memorandum of Understanding on the Implementation Plan for Outbound Travel by Chinese Citizens at Their Own Expense to Brunei Darussalam in 2000 and the Memorandum of Understanding on Tourism Cooperation in 2006. Since July 2003, China has granted visa-free 15-day visits to Brunei citizens who travel to China with ordinary passports for sightseeing or business. The Exchange of Letters between the two countries on mutual exemption of visas for diplomatic and official passport holders entered into force in June 2005. Since May 2016, Brunei has provided visas upon arrival to Chinese citizens.
In the first quarter of 2018, China became Brunei’s biggest source of foreign tourist arrivals, 4 percent more than the same period last year. To attract more Chinese tourists, the Brunei government has been developing tourist attraction sites, improving the tourism environment, enhancing tourism services and strengthening cooperation with Chinese travel agencies. The government invited instructors from the Yunnan College of Tourism Vocation to Brunei to conduct a three-day Chinese workshop for local licensed tour guides. The Ministry of Primary Resources and Tourism urged the tour guides to improve their Mandarin skills to provide better services for Chinese tourists. In July 2017, China’s budget airline Lucky Air launched a direct air route between Kunming, capital of China’s Yunnan Province, and Bandar Seri Begawan, capital of Brunei. In July 2018, Royal Brunei Airlines launched a direct air route between Bandar Seri Begawan and Nanning, capital of China’s Guangxi Zhuang Autonomous Region.
Thanks to the efforts of both governments, Brunei’s tourism industry has continuously developed with the number of Chinese tourists to Brunei constantly increasing. In 2015, Chinese tourist arrivals to Brunei reached 36,900, accounting for 16.9 percent of all foreign tourist arrivals (218,200). In 2017, Chinese tourist arrivals to Brunei reached 52,000, accounting for 20.2 percent of all foreign tourist arrivals, second only to Malaysian tourist arrivals (23.2 percent). A total of over 45,000 Chinese tourists vacationed in Brunei, the largest group in the category of leisure, accounting for 39.2 percent of the total. In 2017, 7,600 Bruneian tourists visited China.
Higher Education Exchange
In 2004, China and Brunei signed the Memorandum of Understanding on Higher Education Cooperation. Hengyi Industries Sdn Bhd cooperated with Universiti Brunei Darussalam (UBD) to launch the Hengyi Petrochemical Training Program at the university. It also cooperated with Zhejiang University to establish an international exchange fund for Bruneian students to study petrochemical-related subjects in China. In February 2014, the first group of 13 Bruneian students arrived at Zhejiang University. They have already completed their studies. By February 2016, 45 Bruneian students in three groups had been trained at Zhejiang University.
In 2017, the Brunei Research Centre was established at the College of ASEAN Studies at Guangxi University for Nationalities. Among its first projects, researchers and graduate students of the institute conducted a field study of the Chinese community in Brunei in July of that year.
At present, four graduate students are engaged in in-depth fieldwork in Brunei with the country as the focus of their academic research. In September 2018, two graduate students from ASEAN College went to Brunei to work as research interns based in UBD for three months. The College of ASEAN Studies and the Centre for Advanced Research at UBD have officially carried out cooperation in academic exchanges, scientific research and graduate student supervision.
The historical friendship between China and Brunei has laid a solid foundation for the current development of friendly cooperative relations between the two countries. The Belt and Road Initiative and Brunei Vision 2035 are both based on a common vision for development. The two countries have great potential to enhance their cooperation for common prosperity.
About the authors: Pan Yanqin is Director of Brunei Research Institute at the College of ASEAN Studies, Guangxi University for Nationalities and Hoon Chang Yau is Directors at the Centre for Advanced Research, Universiti Brunei Darussalam (UBD).
China Report ASEAN 