The Endogenous State of Brunei Darussalam : The Traditional Society Versus Economic Development

Diversification of the economy, the aim being to decrease economic dependence on oil and gas, has been propagated for years as the paramount task of Brunei policy-makers. Although this is obviously a sensible objective, it has proved to be a difficult goal to achieve in practice. The main thesis discussed in this paper is that economic diversification in Brunei Darussalam is not primarily an issue of economics. It is fairly easy to draw conclusions about what can and cannot be done from a purely economic point of view. Instead, the issue appears to involve the problem of political economy. Diversification may unleash forces that would make it difficult to preserve the status quo as far as it is outlined in the official State ideology of the "Malay Muslim Monarchy". Hence the Government has to tread carefully. It must balance between the risk of alienating the indigenous Malays ? whose support is crucial for upholding the traditional monarchy ? from traditional cultural and religious values, which could easily be the consequence of successful economic diversification; and the risk of creating resentment among foreigners and permanent residents, whom the economy cannot do without