Wawasan 2035: What the Numbers Don't Say — Part Two of Four

Brunei’s diversification story looks impressive on paper.

But look closer, and a harder question emerges: are we truly building a broader economy — or has one major downstream success story made the headline numbers look stronger than the wider economy beneath them?

When four priority sectors remain largely flat while one industrial giant carries much of the growth story, the issue is no longer just about GDP.

It is about resilience.

It is about jobs.

It is about whether Wawasan 2035 is being built on many strong pillars — or leaning too heavily on one dominant pillar.

 

KopiTalk with MHO — Part Two: The One-Company Story

 

 KopiTalk with MHO

THE ONE-COMPANY STORY

When one joint venture moves the needle — and four sectors do not.

By Malai Hassan Othman | Investigative Journalist & Policy Analyst, Brunei Darussalam

 

In 2019, something shifted in Brunei's trade data that attracted little public attention at the time.

 

Crude oil — a negligible import for decades — suddenly became the country's single largest import category. By 2024, it accounted for 55 percent of everything Brunei brought in from abroad.

 

Brunei, an oil-producing nation, had become one of the region's significant crude oil importers.

 

This is not a sign of failure. It is the direct consequence of Hengyi Industries' refinery and petrochemical complex at Pulau Muara Besar — a facility with Phase 1 capacity to process up to 175,000 barrels of crude per day, well above Brunei's domestic output of less than 100,000 barrels. The plant needs more oil than the country produces. So it imports.

 

The question this column poses is not whether that arrangement is commercially rational. It is. The question is what it reveals about the nature of Brunei's much-cited economic diversification — and whether the story we have been telling ourselves holds up under examination.

 

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THE HEADLINE AND WHAT IS BEHIND IT

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Brunei's most-repeated diversification statistic is this: the non-oil and gas sector now accounts for 54 percent of GDP.

 

That number appears in the Brunei Economic Outlook 2026. It is accurate. On its own, it is also incomplete.

 

The 54 percent figure includes the downstream petrochemical sector — Hengyi, Brunei Methanol Company, Brunei Fertilizer Industries, and related activities. All of them convert hydrocarbons into other products. All run on gas or crude oil as their primary input. All remain exposed to energy and chemical markets. When oil prices fall, their margins can come under pressure. When gas supply tightens, their output can be affected.

 

Classifying these activities as "non-oil and gas" is technically correct by accounting convention. But calling their growth "diversification" in the Wawasan 2035 sense — reduced dependence on hydrocarbon cycles, new income streams uncorrelated with oil prices, and genuine resilience against commodity shocks — is a different matter entirely.

 

The BEO 2026 acknowledges this with precision. It states that Brunei's trade diversification "has occurred within the hydrocarbon value chain rather than away from it." It describes the external position as "feedstock dependent."

 

These are important qualifications. They appear deep in the report's trade analysis. They do not appear in the headline summary.

 

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THE JOINT VENTURE THAT MOVED THE NEEDLE

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Hengyi Industries is a Brunei-China joint venture. Zhejiang Hengyi Group of China holds 70 percent. Damai Holdings holds the remaining 30 percent — a wholly owned subsidiary of the Brunei government's Strategic Development Capital Fund. It is the largest single foreign direct investment in Brunei's history.

 

Let us be precise about what this joint venture has done.

 

In 2015, downstream oil and gas accounted for 26 percent of GDP. By 2023, it accounted for 59 percent. That shift is driven overwhelmingly by one company.

 

CSPS estimates Hengyi's GDP contribution at approximately 10 percent since operations began in 2019. With Phase 2 raising refining capacity from 8 million to 20 million tons per year — a US$13.6 billion expansion officially launched in January 2026 with financing that includes Brunei Islamic Bank — that contribution could reach 30 percent by 2030.

 

Thirty percent of the economy. One joint venture. Capital-intensive. Running largely on imported crude.

 

Now examine the employment picture carefully — because two figures both apply, and both are accurate.

 

Within its own operations, Hengyi employs approximately 675 Bruneians — 40 percent of its total workforce. That is a meaningful commitment within the company itself.

 

In national terms, however, the downstream oil and gas sector as a whole employs 1 percent of Brunei's total workforce.

 

One percent.

 

A sector accounting for more than half of GDP — potentially a third on Hengyi's share alone by 2030 — provides direct employment to one in every hundred Bruneian workers.

 

Tourism, which CSPS rates the most challenging of the five priority sectors, employs eight times as many. Services, which has flatlined, employs seventeen times as many.

 

GDP tells one story. The labour market tells another.

 

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DEEPENING, NOT DIVERSIFYING

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True diversification reduces a country's vulnerability to its primary commodity risk. It builds revenue streams that move independently of oil prices. It spreads employment across sectors. It limits the fiscal damage a price shock can cause.

 

Hengyi, despite its scale, does not deliver these outcomes.

 

It captures more value per barrel — turning crude and gas into petrochemicals, methanol, and fertilizers rather than exporting them raw. That is commercially impressive and economically rational.

 

But it does not reduce exposure to the barrel. It deepens it.

 

Consider what Phase 2 means in aggregate. Refining capacity rising from 8 to 20 million tons per year. Crude imports rising accordingly. Industrial power demand at Pulau Muara Besar roughly doubling.

 

By 2030, adding upstream oil and gas to a potential 30 percent Hengyi contribution, total hydrocarbon-linked activity could account for 70 to 75 percent of GDP — while official statistics, by standard accounting convention, will continue to show Brunei as a majority non-oil economy.

 

The BEO 2026 is clear-eyed about this. External resilience, it states, depends "increasingly on keeping downstream plants supplied, powered, and connected to markets." Feedstock security, port efficiency, and maintenance discipline are described not merely as industrial concerns, but as trade policy issues.

 

Academic researchers have drawn the same conclusion independently. A 2023 peer-reviewed study published in the Asian Journal of Social Science — authored by Guanie Lim, Chang-Yau Hoon, and Kaili Zhao, examining Brunei-China economic relations — states that the Hengyi investment "seemingly entrenches Brunei in its longstanding hydrocarbon-centric development trajectory" and "ironically creates even greater dependence on hydrocarbon."

 

The same study observes that Brunei's participation in the venture has been largely as regulators, investors, and employees — rather than as holders of the technology and process knowledge that drive production itself.

 

This is a more sophisticated version of oil dependency.

 

It is not an exit from it.

 

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A NOTE ON OWNERSHIP AND INDEPENDENCE

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Hengyi Industries' joint venture structure is publicly known and has always been transparent.

 

Zhejiang Hengyi Group holds 70 percent. The Brunei government holds 30 percent through Damai Holdings, a wholly owned subsidiary of its Strategic Development Capital Fund.

 

The national development fund benefits directly when Hengyi performs well. This is by design. Alignment of commercial and national interest is precisely the purpose of a sovereign development fund.

 

What this ownership structure underscores, in a broader sense, is the value of independent analytical voices in a small, concentrated economy.

 

When a single company's performance accounts for much of what is reported as structural economic progress, the role of institutions like CSPS — and of public discourse more broadly — becomes correspondingly more important.

 

Numbers that carry multiple meanings in a concentrated economy are worth examining from multiple angles.

 

That is what this series intends to do.

 

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THE SUBSTITUTION EFFECT

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Between 2015 and 2025, while Hengyi generated impressive GDP figures, the four sectors that were intended to build new income streams — ICT, food, tourism, and services — held their collective position at 2 to 6 percent of GDP each, year after year, without meaningful movement.

 

The Hengyi story provided what might be called narrative relief.

 

When the diversification question arose, the answer could point to a massive complex on Pulau Muara Besar, to a 59 percent downstream share, to 54 percent non-oil GDP. The question, having been answered with data, often went no further. The urgency to push harder on the other four sectors eased — not by deliberate decision, but by the quiet logic of a story that seemed, on the surface, to be proceeding well.

 

The BEO 2026 states what the data shows: the four non-downstream sectors "have yet to significantly impact on the structure of the economy."

 

After eighteen years. After successive national development plans.

 

If Hengyi had never arrived — if Brunei had faced the decade from 2015 to 2025 without that downstream anchor and its reassuring headlines — would the pressure to build genuinely diversified sectors have been greater?

 

Would the absence of a headline figure have forced a harder, earlier reckoning with what ICT, food, tourism, and services actually needed?

 

We cannot know.

 

But the question is worth sitting with.

 

The masking effect, if that is what it has become, was not designed. It arose from individually rational decisions compounding: attract a large anchor investment, support downstream, count the GDP contribution as diversification progress, and report accordingly.

 

No single decision was necessarily wrong.

 

The cumulative effect, however, has been a set of statistics that can be read — without misrepresentation — as evidence of structural progress, while four of five priority sectors have barely moved.

 

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WHAT THE NEXT COLUMN ASKS

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Wawasan 2035 was always a five-sector story.

 

It has become, in practice, a one-company story.

 

In the next column, we go further in. Not investment policy or sector strategy, but the deeper reasons why genuine diversification has been so difficult to build — the institutional design, the cultural expectations, and the quiet consequences of a social contract built on oil wealth that has, over two generations, reshaped how Brunei thinks about risk, work, and enterprise.

 

These are the conversations that institutional reports approach with measured care.

 

KopiTalk will approach them plainly.

 

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Next: Part Three — "What Nobody Wants to Say"

 

Data sources: Brunei Economic Outlook 2026 (CSPS, April 2026); NS Energy Business, Hengyi PMB Project Profile; Wikipedia, Hengyi Industries (February 2026 edition); Biz Brunei, Hengyi Industries 2020 Revenue Report; Lim, G., Hoon, C-Y., & Zhao, K. (2023). Foreign Investment, State Capitalism, and National Development in Borneo: Rethinking Brunei–China Economic Relations. Asian Journal of Social Science, SAGE Publications. DOI: 10.1177/18681034231186441; BEO 2026 Trade Analysis; DEPS quarterly reports.