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BRUNEI AND OMAN: STRENGTHENING BILATERAL RELATIONS


Bilateral relations between Brunei Darussalam and the Sultanate of Oman have been strengthening in recent years. This is only natural because of the similarities between the two countries.


Bilateral relations between Brunei Darussalam and the Sultanate of Oman have been strengthening in recent years. This is only natural because of the similarities between the two countries. Both countries were former protectorates of European powers (the British for Brunei and the Portuguese for Oman) and both are now governed by an Islamic absolute monarchy. More significantly, both countries’ economies heavily rely on oil production and exports. In Brunei, crude oil and natural gas production account for over 50 percent of its GDP. In Oman, oil revenues account for over 40 percent of its GDP. Moreover, despite the importance of oil in both countries, neither are members of the Organization of the Petroleum Exporting Countries (OPEC).

Since establishing diplomatic relations in 1984, Brunei and Oman have concluded numerous cooperative agreements and Memorandums of Understanding (MOU). These include an MOU on Cooperation in Islamic Affairs (1996), an MOU on Trade and Commerce (1997), an Agreement on Promotion and Reciprocal Protection of Foreign Investment (1998), and a visa exemption agreement for stays not longer than 30 days (2001).

Moreover, a Joint Working Group, also known as “Bilateral Consultative Meeting”, was established in 1993 to strengthen bilateral relations. Over 10 meetings have taken place, alternating between the two capitals of Bandar Seri Begawan (BSB) in Brunei and Muscat in Oman.

More agreements have been concluded between the two countries in recent years. In October 2007, an MOU between the two countries’ education ministries was signed to increase education ties and, in particular, to take advantage of each other’s research facilities. In February 2008, Brunei and Oman signed an Agreement on the Avoidance of Double Taxation to decrease the burden of tax on companies operating in both countries and to encourage investment and trade between the two countries. In November 2008, the Ambassador of the Oman to Brunei expressed his country’s interest in strengthening trade ties with Brunei and encouraged Bruneian businesses to invest in Oman. The most recent agreement came in February 2009, when an MOU was signed to improve cooperation in health care, including information exchange, human resource development, and health research development.

It is evident that bilateral relations between Brunei and Oman have so far involved a wide range of issues. The range of issues involved indicates each country’s ultimate aim to diversify their economies away from oil and natural gas. This is to mitigate the negative impact of volatile prices and the demand and supply of oil. In addition,  both countries understand that oil, their current primary source of economic growth, is a non-renewable resource and will eventually run out. Energy statistics from the Energy Information Administration show that oil production in both countries have declined as they try to prolong their shrinking oil reserves.  Thus, despite some new discoveries of oil reserves, it is clear that their economies cannot primarily depend on the resource anymore.

To reach their goal of diversifying their economy, Brunei’s government aims to upgrade its labor force and strengthen its banking and tourism sectors. Similarly, Oman’s government is focusing on their industrial development plans, income diversification, job creation for Omanis in the private sector, and development of the country’s interior.

It is clear that improving bilateral relations between Brunei and Oman works to each country’s advantage. The challenge and promise of these relations is to find more areas that are mutually beneficial for both countries.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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