I.
BACKGROUND
Background of Brunei
The Sultanate of Brunei's influence peaked between the 15th and 17th centuries, when its control
extended over coastal areas of northwest Borneo and the southern Philippines. Internal strife over
royal succession, colonial expansion of European powers, and piracy subsequently brought on a
period of decline. In 1888, Brunei became a British protectorate; independence was achieved in
1984. The same family has ruled Brunei for over six centuries, and in 2017, the country
celebrated the 50th anniversary of Sultan Hassanal BOLKIAH’s accession to the throne. Brunei
has one of the highest per-capita GDPs in the world, thanks to extensive petroleum and natural
gas fields.
Background of Malaysia
Malaysia’s location has long made it an important cultural, economic, historical, social, and trade
link between the islands of Southeast Asia and the mainland. Through the Strait of Malacca,
which separates the Malay Peninsula from the archipelago, flowed maritime trade and with it
influences from China, India, the Middle East, and the east coast of Africa. Prior to the 14th
century, several powerful maritime empires existed in what is modern-day Malaysia, including
the Srivijayan, which controlled much of the southern part of the peninsula between the 7th and
13th centuries, and the Majapahit Empire, which took control over most of the peninsula and the
Malay Archipelago between the 13th and 14th centuries. The adoption of Islam between the 13th
and 17th centuries also saw the rise of a number of powerful maritime states and sultanates on
the Malay Peninsula and the island of Borneo, such as the port city of Malacca (Melaka), which
at its height in the 15th century had a navy and hosted thousands of Chinese, Arab, Persian, and
Indian merchants.
The Portuguese in the 16th century and the Dutch in the 17th century were the first European
colonial powers to establish themselves on the Malay Peninsula and in Southeast Asia. However,
it was the British who ultimately secured hegemony across the territory and during the late 18th
and 19th centuries established colonies and protectorates in the area that is now Malaysia. Japan
occupied these holdings from 1942 to 1945. In 1948, the British-ruled territories on the Malay
Peninsula (except Singapore) formed the Federation of Malaya, which became independent in
1957. Malaysia was formed in 1963 when the former British colonies of Singapore, as well as
Sabah and Sarawak on the northern coast of Borneo, joined the Federation.
A communist insurgency, confrontations with Indonesia, Philippine claims to Sabah, and
Singapore's expulsion in 1965 marred the first several years of the country's independence.
During the 22-year term of Prime Minister MAHATHIR Mohamad (1981-2003), Malaysia was
successful in diversifying its economy from dependence on exports of raw materials to the
development of manufacturing, services, and tourism. Former Prime Minister MAHATHIR and a
newly formed coalition of opposition parties defeated Prime Minister Mohamed NAJIB bin
Abdul Razak's United Malays National Organization (UMNO) in 2018, ending over 60 years of
uninterrupted UMNO rule. From 2018-2022, Malaysia underwent considerable political
upheaval, with a succession of coalition governments holding power. Following legislative
elections in 2022, ANWAR Ibrahim was appointed prime minister after more than
20 years in opposition. His political coalition, Pakatan Harapan (PH), joined its longtime UNMO
rival to form a government, but the two groups have remained deeply divided on many issues.
II. Political System
Brunei
- Government Type
absolute monarchy or sultanate
Brunei is a small, oil-rich country on the island of Borneo in Southeast Asia. It has a unique
political system based on a constitutional monarchy. The key features of Brunei's political
system.
Absolute monarchy with the Sultan having absolute power and authority
A constitution introduced in 1959 outlining the role of the monarch, government, and citizens'
rights
The Sultan is the head of state and government, advised by a council of ministers and officials
A single-party system with the ruling Party Rakyat Brunei holding all seats in the Legislative
Council
No political opposition or other parties besides the ruling party
Human rights concern due to lack of transparency and accountability, as well as restrictions on
human rights and freedom of speech
Sharia law was introduced in 2014, punishing crimes with amputation and stoning to death
Overall, Brunei's political system is characterized by its unique blend of traditional Islamic
values and modern constitutional principles, but has been criticized for its lack of democracy and
human rights concerns.
Malaysia
- Government Type
federal parliamentary constitutional monarchy
note: all Peninsular Malaysian states have hereditary rulers (commonly referred to as sultans)
except Melaka (Malacca) and Pulau Pinang (Penang); those two states along with Sabah and
Sarawak in East Malaysia have governors appointed by government; powers of state
governments are limited by the federal constitution; under terms of federation, Sabah and
Sarawak retain certain constitutional prerogatives (e.g., right to maintain their own immigration
controls)
Analysis/ Insights
Brunei and Malaysia are two neighboring countries in Southeast Asia that share similar
cultural and historical backgrounds. While they have distinct political systems, there are some
interesting similarities and differences between them.
Similarities
1. Monarchy: Both Brunei and Malaysia are constitutional monarchies, with the monarch
holding significant symbolic and ceremonial powers. In Brunei, the Sultan is the head of
state, while in Malaysia, the Yang di-Pertuan Agong (King) is the head of state.
2. Islamic influences: Both countries have a significant Islamic influence on their political
systems, with Islam being the official religion of both countries.
3. Multi-ethnic societies: Both Brunei and Malaysia have multi-ethnic societies, with various
ethnic groups coexisting and contributing to the country's rich cultural heritage.
Differences:
1. Governance structure: Brunei has a more centralized governance structure, with the Sultan
holding significant executive powers. In Malaysia, the Prime Minister holds more executive
powers, while the monarch's role is largely ceremonial.
2. Elections: Brunei does not have a parliamentary system of government, and the Sultan
appoints the Council of Ministers. In Malaysia, elections are held every five years to elect
members of parliament, who then form the government.
3. Political parties: Brunei has no political parties, while Malaysia has a multi-party system
with several major parties, including the United Malays National Organisation (UMNO), the
People's Justice Party (PKR), and the Democratic Action Party (DAP).
4. Economic systems: Brunei has a highly centralized economy, with oil and gas revenues
driving its growth. Malaysia has a more diversified economy, with a mix of manufacturing,
services, and agriculture.
5. Human rights: Malaysia has been criticized for its human rights record, particularly with
regard to freedom of speech and assembly. Brunei has also faced criticism for its strict laws
and punishments, including caning and stoning for certain offenses.
Insights:
1. Stability vs. reform: Brunei's stability is often attributed to its monarchic system and lack of
political parties, while Malaysia's more democratic system has led to greater political
instability and frequent changes in government.
2. Economic diversification: Both countries recognize the need to diversify their economies
beyond oil and gas revenues. Brunei has been investing in tourism and financial services,
while Malaysia is promoting industries such as electronics manufacturing and biotechnology.
3. Cultural heritage: Both countries place great importance on their cultural heritage, with
Brunei preserving its traditional way of life and Malaysia promoting its diverse cultural
traditions through festivals and celebrations.
4. Regional integration: Both countries are members of regional organizations such as
ASEAN (Association of Southeast Asian Nations) and APEC (Asia-Pacific Economic
Cooperation), reflecting their commitment to regional cooperation and economic integration.
In conclusion, while Brunei and Malaysia share some similarities in their political systems,
they also have distinct differences that reflect their unique histories, cultures, and economic
contexts. Understanding these similarities and differences can provide valuable insights into
the strengths and challenges of each country's political system.
III. Economic Systems
Economic System of Brunei
Oil and Gas Dominance: Brunei’s economy is significantly shaped by its oil and natural gas
industries, which account for over 90% of its exports and contribute around 60% of GDP. This
reliance has positioned Brunei as one of the richest nations in Southeast Asia in terms of GDP
per capita, but also exposes it to volatility in global energy markets. Oil reserves are substantial,
but there is increasing pressure on the country to diversify in light of fluctuating oil prices and
declining reserves.
Welfare State: Brunei maintains a robust welfare system, where its citizens benefit from free
education, free healthcare, and subsidized housing, all funded by oil revenues. The government
also provides various allowances and subsidies, which help maintain a high standard of living.
This has resulted in a strong social contract between the state and its citizens, where the
monarchy guarantees prosperity and stability in exchange for political loyalty.
Challenges of Private Enterprise: Due to the strong role of the state and generous welfare
provisions, the private sector in Brunei is relatively underdeveloped. There are limited incentives
for entrepreneurship and private sector growth, and much of the private sector is highly
dependent on government contracts and spending. High wages in the public sector also make it
difficult for private firms to compete for labor. As a result, the private sector, especially outside
of the energy industry is small and focused largely on retail, food, and other service-based
industries.
Political Stability: Brunei enjoys long-standing political stability under its monarchy, headed by
Sultan Hassanal Bolkiah. This stability has been crucial for economic continuity, allowing
Brunei to avoid the political turmoil that has affected other resource-rich countries. The Sultan’s
strong influence and wealth derived from oil revenues ensure that economic policies are
implemented with minimal opposition.
Small Population: Brunei has a small population of approximately 460,000 people. This limits
the size of the domestic market and creates constraints for the development of local industries.
Furthermore, a significant proportion of the population is employed in the public sector, which
reduces the available labor pool for private enterprises.Also Due to the welfare system funded by
oil wealth, Brunei enjoys one of the highest standards of living in Asia. The poverty rate is low,
and citizens benefit from extensive social protections. However, this comes at the cost of
economic dynamism, with citizens largely reliant on the state for employ 0ent and services.
Economic System of Malaysia
Balance of Free Market and Government Control: Malaysia’s economic system is a mixed
economy, combining both free-market principles and state intervention. The country maintains
open trade policies and encourages foreign direct investment (FDI), particularly in its key
manufacturing and services sectors. At the same time, the government plays a significant role in
guiding economic development through national plans, state-owned enterprises (SOEs) and
targeted policies, particularly in areas like energy, infrastructure, and education.
Government Role in Economic Development: The Malaysian government has implemented
various economic development policies to promote growth and reduce inequality. Initiatives like
the New Economic Policy (NEP) in the 1970s and subsequent policies have sought to balance
economic growth with social stability, aiming to uplift the economic status of the Bumiputera
population (the ethnic Malays and other indigenous groups). The NEP and its successors, such as
the New Economic Model (NEM), have promoted wealth redistribution, affirmative action, and
poverty eradication, which remain important in shaping Malaysia’s economic landscape.
Manufacturing Sector as an Engine of Growth: Malaysia’s economic transformation has been
fueled by an export-oriented industrialization strategy, particularly in manufacturing. The
country is a major producer of electronics, machinery, and electrical products, which account for
a significant portion of its exports. Malaysia’s role in global supply chains, particularly in
electronics and semiconductor industries, has made it a key player in the regional and global
economy.
Rising Services Sector: Over the past few decades, Malaysia has witnessed a significant shift
from agriculture and manufacturing toward the services sector. Today, services contribute more
than 50% of GDP, with key areas including tourism, finance, education, and
telecommunications. The government has prioritized the development of the financial services
sector, promoting Malaysia as a hub for Islamic finance and establishing Kuala Lumpur as a
regional financial center. Malaysia is also one of the leaders in global Islamic banking, with the
sector contributing significantly to the economy.
Redistributive Policies: Malaysia’s economic policies have long focused on poverty eradication
and wealth redistribution, particularly through affirmative action programs for the Bumiputera
community. The government’s policies, such as quotas in education, business, and employment
for the Bumiputera, have significantly reduced poverty rates and narrowed the income gap
between ethnic groups. However, these policies have also been controversial, with some arguing
that they have led to inefficiencies and have hampered merit-based economic opportunities.
Analysis and Insights
Brunei and Malaysia are both Southeast Asian countries with distinct economic models shaped
by their respective natural resource endowments, governance structures, and development
trajectories. While Brunei’s economy is dominated by its oil and gas wealth under a state-
controlled system, Malaysia operates a more diversified and mixed economic model that has
evolved through industrialization, services, and trade. Both Brunei and Malaysia exhibit unique
economic systems that reflect their respective endowments and governance structures. Brunei’s
economy remains heavily dependent on oil and gas, which has allowed it to build a prosperous
and stable society but has left it vulnerable to global energy markets. In contrast Malaysia has
successfully diversified its economy, transitioning from a resource-dependent country to an
industrialized and service-oriented economy with strong trade links and a growing digital sector.
IV. Legal Systems
A. Legal System of Brunei
The legal system of Brunei is based on British Common law, with a parallel Syaraih law
system for Muslims. Which supersedes the common law system in areas such as family
and property law. Which applies to both Muslims and non-Muslims. Syaraih law or
Sharia law acts as a code for living that all Muslims should adhere to, including prayers,
fasting and donations to the poor. Since 1962 Brunei has been ruled under a State of
Emergency. The Sultan possesses wide legislative powers. The Sultan who is currently
Hassanal Bolkiah has been in power since 1967. He is also the Prime Minister of Brunei
since Brunei gained independence from the United Kingdom in 1984. Hassanal Bolkiah
also has a net worth of $30 billion. Because of said state of emergency in Brunei, the
Sultan may pass any legislation he deems by Emergency Order.
B. Legal System of Malaysia
Malaysia practices the mixed legal system which includes the Common Law, Islamic
Law, Customary Law. Malaysia’s legal system comprises laws which have risen from
three significant periods in Malaysian history. From the era of Malaysia having the
Malacca Sultanate which is a city established around the years of the 1400s. Which was a
kind of headquarters to spread Islam to Southeast Asia. Then the absorption into the
British Colonial rule which introduced a constitutional government and common laws.
Modern Malaysia is based on English common law. Whereas Malaysia is a Federation of
thirteen States, with written and federal constitutions which is the supreme law of the
country. The constitution can only be changed by a two-thirds majority vote of the
members of legislature. Besides the Federal constitution, there is a state constitution
where in each of the states has their own constitution regulating the government in that
state
C. Analysis, Insight
Both countries have similarities in that they share the origins of their modern laws
because of being Colonized by the British. Though they have since grown a bit different
from each other due to different ways in governance, legal frameworks and other political
contexts. Where in Brunei due to special circumstances where basically, one person rules
the country in a way due to the Sharia Law takes more importance compared to the
common law or in short, having a Monarch. While in Malaysia they use a Federal
Constitution as the supreme law in a legal system where both the civil or common laws
coexist with the Sharia law. Even having Sharia courts handling matters related to
personal matters of the Muslim people
Conclusion for Brunei:
Brunei’s political and economic systems are deeply intertwined with its historical roots as an
absolute monarchy. The country's economy is predominantly driven by its oil and gas reserves,
which have facilitated a high standard of living and extensive welfare programs. The strong
central authority of the Sultan has maintained political stability, which, coupled with generous
social provisions, has created a unique social contract where the population largely relies on the
state for economic security. However, this heavy dependence on a single resource poses
significant challenges, particularly as global energy markets fluctuate and as the need for
economic diversification becomes more pressing. The small population and underdeveloped
private sector further complicate Brunei's efforts to build a more resilient and diversified
economy.
Conclusion for Malaysia:
Malaysia, in contrast, has developed a more diversified and complex economic system,
balancing free-market principles with significant government intervention. The country has
successfully transitioned from a resource-dependent economy to one that is heavily
industrialized, with a growing services sector, particularly in finance and technology. This
diversification has been key to Malaysia’s economic resilience, allowing it to integrate into
global supply chains and become a major player in the electronics and manufacturing industries.
However, Malaysia’s economic policies, particularly those aimed at wealth redistribution and
affirmative action, have been both a strength and a source of controversy. These policies have
contributed to social stability and poverty reduction but have also led to debates about their
impact on economic efficiency and meritocracy. Malaysia’s ongoing political instability also
poses challenges to its economic future, as frequent changes in government could disrupt long-
term economic planning and reform efforts.
Reflection
A. Which of the two countries is easier to manage?
Brunei is easier to manage due to its centralized system of governance, where the Sultan has
wide legislative powers and can pass laws through Emergency Orders. This allows for swift
decision-making and implementation, which can be beneficial in times of crisis or when making
quick decisions. Additionally, the Sharia Law system provides a clear framework for governing
personal and family matters, which can simplify decision-making in these areas.
B. Which of the two countries is harder to manage?
Malaysia is harder to manage due to its complex legal system, which combines Common Law,
Islamic Law, and Customary Law. This means that there may be more conflicts and
contradictions between different laws and jurisdictions, which can lead to more complex
decision-making and potential delays. Additionally, the need for a two-thirds majority vote to
change the Federal Constitution can lead to more bureaucratic hurdles and potential stalemates.
C. Most important points a manager should remember in managing a country:
Brunei
1. The importance of Sharia Law: Managers should understand the significance of Sharia Law in
Brunei's legal system and how it influences personal and family matters.
2. Centralized governance: The Sultan's wide legislative powers mean that managers should be
prepared to make swift decisions and adapt to changing circumstances.
3. Flexibility: The ability to pass laws through Emergency Orders allows for flexibility in
response to changing circumstances.
Malaysia
1. Complexity of legal systems: Managers should be aware of the complexities of Malaysia's
legal system, which combines Common Law, Islamic Law, and Customary Law.
2. Need for consensus: The requirement for a two-thirds majority vote to change the Federal
Constitution means that managers should strive for consensus and collaboration between
different stakeholders.
3. Balancing competing interests: Managers should be aware of the need to balance competing
interests between different ethnic groups, religions, and political parties in Malaysia.
