International series Bahrain: Safe haven in the wild sea?

Author M. A. Benedikt Hofmann

As a market, the gulf region is attractive and equally challenging for many companies. With its geographical location and progressive society, Bahrain intends to present itself as a perfect access to the Middle East.

There is an increased demand for various raw materials in the entire Gulf region. Bahrain exports aluminium among other things.
There is an increased demand for various raw materials in the entire Gulf region. Bahrain exports aluminium among other things.
(Bild: EDB)

The Arabic term “al-Bahrain” translated means two oceans, which can be interpreted as not only geographical but also economical description of the kingdom of Bahrain. Situated in the Persian Gulf between Qatar and Saudi-Arabia, the island state is understood as the gateway to the Middle East and especially in the big market of Saudi-Arabia. But even the riots which have been unsettling the Arabic world since 2011 could not change anything. Backed by the regional location, the government today seeks to attract logistics and industrial enterprises from the West.

To turn this goal into reality, the country of only around 750 km²has to make certain trade-offs. More than 32 billion US dollars are said to be investedin the infrastructure among many other things as a part of the strategy of 2030. The goal of the long-term strategy is to reinforce the private sector and increase the standard of living of the Bahrainis as well as the economic development and productivity. “We can see growing demand for Fast Moving Consumer Goods and materials like aluminium, chemicals and plastic in the entire sphere of the Gulf Cooperation Council”, explains Vivian Jamal, Executive Director Marketing & Communications at Bahrain Economic Development Board (EDB). “It gives rise to big opportunities for international and regional enterprises and Bahrain is striving hard to lay the infrastructural foundations, so that these enterprises can flourish and meet the demands.”


Free market in more turbulent region

One of the arguments, with which the Bahrain enterprises interested in the region, are hoping to convince is its long history of commerce and the liberal economy of the present.“According to the index of Economic Freedom of the Heritage Foundation, Bahrain has the freest economy in the Middle East and North Africa and ranks 18th place worldwide”, says Jamal. With this, the country follows Germany by just one place and in addition, is followed by Japan, Belgium or Spain. Jamal still leads some additional aspects, which support their country as a business location. It includes the low operating costs and the well qualified, multilingual staff, most of which are employed in the private sector. Even the high availability of workforce plays an important role and is one of the reasons for the economic offensive of the country. At present, around 4000 Bahrainis with at least one degree at a college arise on the job market annually according to the government and adequate jobs are created for this. “Also our regulatory environment approaches foreign enterprises since it allows a 100% foreign ownership and ensures protection of intellectual property. That was, for instance, one of the key reasons why BASF, a company which applies for more than 1000 patents a year, has established an office in Bahrain”, says Jamal.

As evidence of the progressive economic and society of the country, Jamal cites the role played by women since then. According to it, this represents a large number of the workforce. Even in the 1920s, women were allowed to receive education in schools, to step up and choose a vocational training. That, according to Jamal, makes the country a pioneer in the region. However, these rights did not exist until the present day and only since the political reforms of King Hamad, did the women’s rights get greater importance once again.

In the meantime, women of various official bodies were encouraged to set up their own start-ups and to participate in the business world. “Today women represent more than 70 % of the university students and more than 35 % of the total workforce in Bahrain”, explains Jamal. “I would like to give you an example: Muna Al Hashemi, a trained electrical engineer, was the first lady CEO of the Bahrain Telecommunications Company (Batelco) in 2015. These developments shape the economic culture of our country and shall strengthen the reputation of women as an integral part of the business world. In this way, Bahrain shall once again become a pioneer in the region.”

Logistics is gaining all the benefits

The situation mentioned already and the planned investments in the infrastructure mean that Bahrain is an attractive location from the logistics viewpoint. The World Economic Forum is already leading United Kingdom in terms of its transport infrastructure on 29th rank worldwide and the ports attain a high position in the area of Gulf Cooperation Council (GCC). These also have a share in the effective further distribution of merchandise, which is the fastest in the entire region and provides the shortest transport routes between port, airport and the logistics centres. If, for instance, a lorry leaves a facility in Bahrain’s International Investment Park (BIIP) in a special free trade area, there are only three traffic signals until the border of Saudi Arabia.

The reason for this is the King Fahd Causeway, a 25 km long series of bridges and causeways connecting Bahrain and Saudi Arabia. Furthermore, the construction of another bridge was announced, which shall further strengthen the bond between both the countries. The Bahrain International Airport is also refurbished currently, which shall increase its current capacity of 9 million to 14 million passengers in the year. “Both the projects aim at creating an excellent transport network and to strengthen our regional location as transport hub. We intend to make the most of our strategic, geographical location at the heart of the lucrative Gulf region. Arailway network should also improve the transport within the country”, explains Jamal.

Free trade areasas start-up support

An additional key aspect in the economic strategy of Bahrain is the free trade areas like the Bahrain Logistics Zone (BLZ). Thereby, it deals with a multimodal hub, which focuses on the Re-Export and Value-added Services. In a former interview, the businessman Dr. Tawfeeq Almoayed stated sound reasons for companies from the DACH-region as well to establish themselves locally: “The BLZ offers itself as an efficient way to ship goods in and then out in the entire Gulf region. In the free trade area intermediate duties must not be paid here, but, for example, only after shipment in Saudi-Arabia.”