quality:corruption
Japanese occupation

The Japanese invaded Brunei on 16 December 1941, eight days after their attack on Pearl Harbor and the United States Navy. They landed 10,000 troops of the Kawaguchi Detachment from Cam Ranh Bay at Kuala Belait. After six days' fighting, they occupied the entire country. The only Allied troops in the area were the 2nd Battalion of the 15th Punjab Regiment based at Kuching, Sarawak.

Once the Japanese occupied Brunei, they made an agreement with Sultan Ahmad Tajuddin over governing the country. Inche Ibrahim (known later as Pehin Datu Perdana Menteri Dato Laila Utama Awang Haji Ibrahim), a former Secretary to the British Resident, Ernest Edgar Pengilly, was appointed chief administrative officer under the Japanese Governor. The Japanese had proposed that Pengilly retain his position under their administration, but he declined. Both he and other British nationals still in Brunei were interned by the Japanese at Batu Lintang camp in Sarawak. While the British officials were under Japanese guard, Ibrahim made a point of personally shaking each one by the hand and wishing him well.

The Sultan retained his throne and was given a pension and honours by the Japanese. During the later part of the occupation, he resided at Tantuya, Limbang and had little to do with the Japanese. Most of the Malay government officers were retained by the Japanese. Brunei's administration was reorganised into five prefectures, which included British North Borneo. The Prefectures included Baram, Labuan, Lawas, and Limbang. Ibrahim hid numerous significant government documents from the Japanese during the occupation. Pengiran Yusuf (later YAM Pengiran Setia Negara Pengiran Haji Mohd Yusuf), along with other Bruneians, was sent to Japan for training. Although in the area the day of the atomic bombing of Hiroshima, Yusuf survived.

The British had anticipated a Japanese attack, but lacked the resources to defend the area because of their engagement in the war in Europe. The troops from the Punjab Regiment filled in the Seria oilfield oilwells with concrete in September 1941 to deny the Japanese their use. The remaining equipment and installations were destroyed when the Japanese invaded Malaya. By the end of the war, 16 wells at Miri and Seria had been restarted, with production reaching about half the pre-war level. Coal production at Muara was also recommenced, but with little success.

During the occupation, the Japanese had their language taught in schools, and Government officers were required to learn Japanese. The local currency was replaced by what was to become known as duit pisang (banana money). From 1943 hyper-inflation destroyed the currency's value and, at the end of the war, this currency was worthless. Allied attacks on shipping eventually caused trade to cease. Food and medicine fell into short supply, and the population suffered from famine and disease.

The airport runway was constructed by the Japanese during the occupation, and in 1943 Japanese naval units were based in Brunei Bay and Labuan. The naval base was destroyed by Allied bombing, but the airport runway survived. The facility was developed as a public airport. In 1944 the Allies began a bombing campaign against the occupying Japanese, which destroyed much of the town and Kuala Belait, but missed Kampong Ayer.

On 10 June 1945, the Australian 9th Division landed at Muara under Operation Oboe Six to recapture Borneo from the Japanese. They were supported by American air and naval units. Brunei town was bombed extensively and recaptured after three days of heavy fighting. Many buildings were destroyed, including the Mosque. The Japanese forces in Brunei, Borneo, and Sarawak, under Lieutenant-General Masao Baba, formally surrendered at Labuan on 10 September 1945. The British Military Administration took over from the Japanese and remained until July 1946.