Brunei's all-powerful and fabulously wealthy sultan marked 50 years on the throne in lavish style Thursday, travelling in a gilded chariot through the streets and holding a tradition-filled ceremony at his golden-domed palace.

Tens of thousands of well-wishers waving the country's flag lined the streets and cheered as Sultan Hassanal Bolkiah, the world's second-longest reigning monarch, passed by in a chariot pulled by dozens of his subjects. 

Marching bands took part in the colourful procession as it made its way through the streets, the highlight of about two weeks of celebrations to mark the golden jubilee of one of the world's richest men.

An absolute monarchy with strict Islamic laws, Brunei is one of the world's wealthiest nations thanks to abundant oil and gas reserves, although analysts warn it faces serious challenges to diversify the economy as oil prices fall and its reserves dwindle.

Among the crowds was Melissa Ibrahim, an airline employee, who sang Hassanal's praises.

"His majesty cares about the people, their welfare, education and health," she told AFP. "Everything is subsidised by the government, so for that we are very, very thankful."

Celebrations got under way earlier at the sultan's sprawling palace, where an honour guard performed a 21-gun salute and the ruler and his wife sat on golden thrones for a royal audience.

The 71-year-old ascended to the throne of the Muslim country perched on the north of tropical Borneo island in October 1967, and comes from a royal family that has ruled the country for over 600 years.

His decades ruling Brunei have seen the country gain full independence from Britain and living standards soar to among the highest in the world.

- Islamic law, high-priced harem -

But his reign of Brunei, which has a population of about 400,000, has also been marked by controversies. 

These include the introduction of tough Islamic laws in 2014, which will eventually include penalties such as severing of limbs and death by stoning, a move that sparked rare domestic criticism as well as international condemnation.

The royal family was also deeply embarrassed by a sensational feud between Hassanal and his younger brother Prince Jefri Bolkiah over the latter's alleged embezzlement of $15 billion during his tenure as finance minister in the 1990s.  

During the scandal, salacious details emerged of the prince's jet-set, un-Islamic lifestyle, including allegations of a high-priced harem and a luxury yacht he owned called "Tits".

There are also challenges for the younger generation, who fear their futures may not be secure as the oil-dependent country struggles to find new revenue sources.

They still have not really made any significant headway moving beyond this major sector (oil and gas)," said Bridget Welsh, a Southeast Asia expert from John Cabot University. 

Still, the jubilee stood out as a rare source of excitement in the sleepy sultanate, which is known for its slow pace of life and lack of nightlife -- alcohol is largely banned under Islamic practice.

Thursday's festivities began with Hassanal, dressed in yellow and gold royal finery and accompanied by his wife Anak Hajah Saleha, inspecting a guard of honour in the grounds of his palace, before the gun salute.

The couple then held the royal audience in the throne room of the palace, a vast complex of resplendent white buildings with golden domes and almost 1,800 rooms, before heading to take part in the procession.

The festivities will continue Friday when Southeast Asian leaders, from countries including Indonesia, Malaysia and the Philippines, and Middle Eastern royalty attend a banquet to mark the jubilee.

The sultan only comes behind one sovereign in terms of having the longest reign -- Britain's Queen Elizabeth II, who ascended to the throne in 1952.

She became the world's longest serving monarch a year ago following the death of Thailand's King Bhumibol Adulyadej, whose reign spanned seven decades.