Investment Treaties with Brunei

I have just been told that approval has been granted for me to lead a team from Brunei for an investment treaty negotiation with an Asian country. Negotiations will start Tuesday and I have to fly there on Monday with officers from the investment, legal and tax agencies for the third round of negotiations. It will be my second time leading the team. About a couple of weeks ago, a country from the middle east was here and that was the first time that I led a negotiation. On that occassion we managed to conclude the negotiations and the treaty is now awaiting for the process for it to be signed officially at the highest level.

Why do we have investment treaties with other countries and what's the history of these treaties known as BIT - Bilateral Investment Treaties? Historically the first modern BIT was entered into nearly fifty years ago between Germany and Pakistan. At first it was the European countries that concluded such treaties with developing countries. The treaty helps to protect the developed countries' investors when they invest in developing countries by making sure that the investors will be able to transfer its earnings and also to recover losses should its investment be nationalised or expropriated (taken over by the government).

However since the 1980s, practically everyone has been negotiating and signing treaties and BITs have come to be universally accepted instruments for the promotion and legal protection of foreign investments. Modern BITs have retained broad uniformity in their provisions. In addition to determining the scope of application of the treaty, that is, the investments and investors covered by it, virtually all bilateral investment treaties cover four substantive areas: admission, treatment, expropriation and the settlement of disputes. Almost all modern BITs include provisions dealing with disputes between one of the parties and investors having the nationality of the other party.

For Brunei, it is of utmost importance that we have treaties with as many countries as possible. For us these treaties are to protect Brunei's investments abroad, to encourage trade and investments flows, to ensure the repatriation of returns and investments from abroad and to ensure the settlement of any investment disputes. So far we have signed bilateral treaties with a few countries including Germany, Oman, China and Korea as well a multilateral treaty with all ASEAN countries.

Without these treaties too, investors will not want to invest in Brunei as they will not be protected and similarly our government owned companies and our private companies may want to be protected when they invest overseas. If that's the case, why not sign as many treaties as possible?

Unfortunately, negotiations take time. Each country has its own set of criteria and negotiations are held to narrow and iron out the differences. A process of give and take at the national level. As for me, I have to make sure that our interests are protected but at the same time trying to accommodate the other side. Sometimes it can be quite hard to balance everyone's needs but we try. Negotiation skills come in handy and I have the feeling that the ability to play poker too sometimes help. Wish us luck.


Anonymous said…
Interesting additional knowledge. Perhaps you would continue with an extension to this entry probably on the examples and practicality of investing at any of these countries for our enterprises.

Isn't it the case that it's always easy for foreign investors to explore opporunities in Brunei despite its relative scarcity than the vice versa unless on large economic scale. But then most of our businesses lag behind in many respects not because of competency but in terms of diversity, exposure, competitiveness and complexity. If so, are these investments primarily meant for large corporations or state industries only then or otherwise?

By the way, Good Luck!

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