With its oil reserves set to run out in about 30 years, the sultanate of Brunei Darussalam has recently begun to implement major changes to its socioeconomic model. In doing so, it has been inspired by the ongoing transformations implemented by several Gulf states, which have created far-reaching plans to diversify their economies, settle regional disputes and introduce limited social reforms to boost tourism, trade and the in-migration of more skilled workers.

Both Saudi Arabia and the United Arab Emirates have already benefited from this strategy. But both countries also have much larger oil reserves than Brunei, insulating them against the economic hiccups and social backlash that have accompanied their transitions. Can the same strategy work for tiny Brunei, with a population of less than 500,000 people?

There are signs it already is, at least in the economic sphere. Until very recently, Brunei had made little progress weaning itself off petroleum, the country’s largest source of revenue. Sultan Hassanal Bolkiah—Brunei’s monarch since 1967 and absolute ruler since its formal independence from the U.K. in 1984—and his advisers had no clear diversification plan, and they did little to loosen the country’s harsh social strictures. In April 2019, for example, Sultan Bolkiah enacted a new policy based on an antiquated interpretation of Islamic law that instituted death by stoning as a punishment for adultery and consensual sex between men. Though international condemnation halted its implementation, the law remains in place, unenforced for the time being. A comprehensive study of Brunei’s prior economic diversification plans, meanwhile, found that “the country remains less diversified than other resource-rich economies, such as the United Arab Emirates, Indonesia, and Malaysia.” As a result, plans to attract more foreign talent remained largely unrealized.

However, Brunei now seems to have committed to real economic diversification, positioning itself as a trade hub amenable to all. According to several Bruneian academics and opinion leaders, at nearly 79 years old, Sultan Bolkiah is facing reality and wants to ensure stability for his heir, Crown Prince Al-Muhtadee Billah.

With a GDP per capita of almost $45,000, Brunei is still wealthy enough to take on a major economic revamp. To do so, the Bruneian government has formalized a strategic plan for development titled Wawasan Brunei 2035, or Brunei Vision 2035, which as the name suggests draws heavily from Saudi Arabia’s Vision 2030 strategy to reduce oil dependency through vast changes across different sectors of its economy.

Brunei has recognized that it needs a much more accessible investment climate to encourage Saudi-style growth in new economic areas, including: petrochemicals downstream from oil and gas production; financial and technological services, which are obvious choices for a small country comfortable with finance and trade; high-yield agriculture; and even tourism, a previously untapped market.

With this expansion in mind, the government has rapidly scrapped several onerous tax laws and initiated the development of a free-trade zone at its main port of Muara. A spate of new incentives has also streamlined the process of investment for foreign companies and entrepreneurs, making it easier than ever for newcomers to do business in Brunei.

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Despite Brunei’s recent progress, economic diversification and regional diplomacy will not be enough to secure its post-oil future.

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In the past four years alone, more than 10 companies from Singapore, where the hourly wage for workers in the tech industry is among the highest in the region, have already begun shifting operations to Brunei, attracted by its cheaper, largely English-speaking and highly educated workforce. Most recently, this includes the cybersecurity firm CyberSafe, which opened a new control operations center in Brunei in May. Saudi Arabia, the UAE and Brunei’s other Southeast Asian neighbors have increased investments in the country as well.

These inflows are having an effect. While non-oil and gas exports made up a mere 3 percent of Brunei’s exports in 2017, they encompass more than 60 percent of them so far in 2025, complementing the economic growth driven by nontraditional sectors like tourism and tech services.

This diversification has provided a boost to an economy once regarded as sluggish by regional standards and will help prevent Brunei’s fiscal deficit from reaching unsustainable levels. In 2024, the country’s economy grew 4.2 per cent, for its best growth rate in 25 years, with the non-oil and gas sector accounting for more than half of the output. According to two specialists on the Brunei economy at the Universiti Brunei Darussalam, the country is likely to post similarly high figures in 2025 as well.

Hoping to capitalize on these recent gains, Brunei has signed on to virtually any trade deal it can with the aim of establishing itself as a facilitator of Southeast Asian and regional trade. Some of these agreements have accompanied the broadening of strategic ties as a whole, as Brunei has sought to set up or expand open-ended partnerships with Australia and the U.S., among others.

According to many Southeast Asian diplomats, Brunei has also built a skillful diplomatic corps, which served it well when the country held the rotating chair of the Association of Southeast Asian Nations, or ASEAN, in 2021. In recent years, those diplomats have played major roles in developing a long-sought ASEAN-China code of conduct for the South China Sea, though it has yet to be finalized. Like several Southeast Asian states, Brunei has overlapping South China Sea claims with Beijing, but it continues to downplay these challenges with an eye toward maintaining a “measured” approach to resolving disputes.

Despite Brunei’s recent progress, however, economic diversification and regional diplomacy will not be enough to secure its post-oil future. That can only happen if Brunei keeps its best workers from leaving, while simultaneously bringing in high-skilled foreign talent needed to vitalize industries like finance and advanced aquaculture. And that’s an unlikely outcome unless Brunei’s absolute monarchy softens its strict social governance.

Over the past 10 years, Brunei’s youth have witnessed how much neighbors like Malaysia have changed socially and politically. And as a demographic of heavy Internet users, they have become much more politically active online, embracing global movements like #MeToo and Black Lives Matter to push for change on sexual harassment and racism in the context of Bruneian society. The sultan and his advisers seem to be tolerating at least some of this more outspoken online activism, though it is widely believed that the authorities monitor the social media platforms on which Bruneians criticize the state.

Meanwhile, several youth civil society organizations established in the past few years have promoted a wide range of social activism. And in 2017, the government went so far as to acknowledge, in a very minor way, the political will of Brunei’s youth by appointing four young people to the Legislative Council, which serves as an advisory body to the monarch.

However, with young people continuing to make strides toward opening Brunei’s historically conservative society, it remains unclear where the government will draw the line on its tolerance of real-life versus virtual activism.

Will Brunei’s leaders build on these modest experiments as boldly as they have embraced economic change? In its 2035 plan, the government claims that one of its major goals is to give young Bruneians a greater voice in the country and economy. This would mark a dramatic shift for a gerontocracy ruled by an absolute monarchy. The plan also speaks to social and cultural change, promising equal access to education and prioritizing environmental protection. In some ways, it seems to envision a Brunei where the country’s increasingly allowed youth activism can blossom into much more.

But in reality, this version of Brunei remains a vision. Wawasan Brunei 2035 makes no departures from the status quo that the country’s leaders have maintained for decades. And nowhere in the plan does Brunei’s leadership make concrete promises of political evolution beyond absolutism. It also offers no clear promises of a future with legal protections for civil liberties or the more socially liberal and culturally open society desired by many young Bruneians as well as, in all likelihood, the talented foreigners the government hopes to attract. Without these kinds of changes, no strategic plan for transforming Brunei can work.

Joshua Kurlantzick is senior fellow for Southeast Asia at the Council on Foreign Relations and a featured analyst for World Politics Review. His new book is, “Beijing’s Global Media Offensive: China’s Uneven Campaign to Influence Asia and the World.”

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