Brunei’s economy depends on its oil and natural gas deposits, which are mostly
offshore, and its investments. Although these are not extensive by world standards,
Brunei’s small population enjoys a very high standard of living. The government has
made recent efforts to diversify the economy, mainly by providing tax concessions on
foreign investment; timber, paper, fertilisers, petrochemicals and glass are the most
promising candidates for development in the growing industrial sector. However,
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these have been fairly limited to date. Some 15 per cent of the land is under
cultivation, with rice, cassava and fruit as the main crops. Japan, which takes half of
the oil produced by Brunei, is the country’s largest single trading partner, followed
by Korea, Singapore, Thailand and Australia. Brunei also belongs to the Association
of South East Asian Nations (ASEAN) and subscribes to its major projects, including
the plan to establish a free-trade zone among member states in around 2010/ 2015.
In 1995, Brunei joined the IMF and World Bank, making available the technical and
consultative advice from those institutions as it hardly needs their financial support.
The Asian financial crisis in 1997 had little effect on Brunei, because of the country’s
lack of indebtedness. However, it has since become apparent that a substantial
proportion of the country’s financial resources, which are under the exclusive
control of the royal family, have been dissipated through individual profligacy.

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