What is Brunei Investment Agency
The Brunei Investment Agency (BIA), founded in 1983, is a government-owned investment organization that holds and manages the country of Brunei’s general reserve fund and its external assets. Brunei — whose full name is Brunei Darussalam, which in Arabic means “Abode of Peace” — is located on the northwestern edge of the island of Borneo, which is also a part of Indonesia and Malaysia. Brunei is an oil-rich country and a huge exporter of energy resources — oil and gas account for 95 percent of Brunei’s exports, and 90 percent of its government revenue. Hence, the funds deposited with the BIA are primarily surplus revenues from Brunei's oil exports in the form of foreign reserves, which the Brunei Investment Agency manages via a sovereign wealth fund (SWF). In 2009, the Brunei Investment Agency had approximately $30 billion in assets under management (AUM), according to the U.S. State Department.
Breaking Down Brunei Investment Agency
The Brunei Investment Agency (BIA) functions primarily as the central bank in the country. As with most SWFs, the Brunei Investment Agency was created to control Brunei's general reserve funds, grow its external holdings, diversify its revenue base, and hedge export revenues from energy and commodity price volatility. Another objective of the Brunei Investment Agency’s sovereign wealth fund is to accumulate savings for future generations, as energy resources are considered depleting assets that shrink to zero over time. Brunei’s economy is heavily dependent upon exports of crude oil and natural gas; and the combined value of its exports and imports accounts for about 83 percent of Brunei’s gross domestic product (GDP). Yet, these resources generate only a small fraction of the country’s employment, as most of the population works directly for the government.
Among the World’s Last Remaining Autocracies
Brunei is a Monarchy. Here, the royal institution of sultans — the title of Muslim sovereigns — has been in place since the 14th century. And, since Brunei’s independence from British rule in 1984, only one sultan has reigned — His Majesty, the Sultan Hassanal Bolkiah. The Sultan is the head of state and absolute monarch of Brunei, wielding nearly absolute power. The Sultan serves as his own prime minister, minister of defense, foreign minister, and minister of finance. He is advised by several councils, which he appoints. The fact that the Sultan, in his capacity as prime minister, is head of the government means that the Sultan is also the ultimate ruler of the Brunei Investment Agency. His Majesty, the Sultan Hassanal Bolkiah has been ranked as one of the wealthiest individuals in the world. In 2008, Forbes estimated the Sultan's total peak net worth at approximately US$20 billion. And, after Queen Elizabeth II, the Sultan is the world's second-longest-reigning current monarch.
Brunei Investment Agency — Portfolio
Because there is effectively no regulatory oversight in this small nation, there is little public information about the BIA’s governance, assets, investment strategy, or its long-term objectives for the country of Brunei. Moreover, the agency is highly secretive. For example, the Brunei Ministry of Finance's website for the Brunei Investment Agency offers only its hours of operation and an email address for business inquiries. Despite the agency's ongoing opacity, we do know that, apart from investments within Brunei, BIA’s portfolio contains diverse holdings in bonds, equities, currency, gold, and real estate; and that it has substantial investments in the United States.
In 1985, Brunei investors purchased The Dorchester, on Park Lane, in London for US$50 million. In 1996, BIA formed "Dorchester Collection," a conglomerate of luxury hotels in the UK, USA, France, and Italy whose nucleus is The Dorchester. Brunei Investment Agency also owns The Beverly Hills Hotel in Los Angeles, which the agency purchased in 1987 for US$185 million. Other real estate holdings include the Grand Hyatt Singapore. In June 2018, BIA acquired 6.6 percent of London-listed Draper Esprit PLC, a private equity and venture capital firm, for £20 million. The agency also owns a 10 percent stake in Patersons Securities Limited of Australia, and Bahagia Investment Corporation of Malaysia.