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Bahrain’s underlying growth fundamentals have remained unchanged, despite a challenging macroeconomic environment
during the third quarter of 2016. In fact, the strong Q3 national accounts data makes it highly likely that 2016 as a whole will match 2015 in terms of economic growth. Unemployment remains as low as 3.1 per cent. Financial services remains one of the largest contributors to the Kingdom’s GDP, at just under 20 per cent in 2015. Similarly, manufacturing, transport and logistics is a high performing sector, supported by large-scale flagship infrastructure projects such as the modernisation of the Bahrain International Airport. We are also rapidly developing into a regional hub for start-ups, which are thriving despite the challenging global economic environment. As a compact market but with a young, dynamic and highly skilled local population, Bahrain offers a perfect testing ground for new products, services and technologies, and the government has worked hard to create a supportive environment that will allow start-ups to flourish. A survey by Ernst & Young found that 70 per cent of young Bahrainis were interested in the idea of starting their own business – twice as many as anywhere else in the Gulf. This entrepreneurial drive and determination is part of what makes Bahrain such an exciting place to be for SMEs. What is the current GDP of Bahrain and what are the projections for this year? Bahrain’s economy has maintained steady growth; the current GDP is USD31 billion as of 2015, with a real growth rate of 2.9 per cent. We anticipate a growth of 3.4 per cent during 2016. What positive steps can Bahrain take to build a sustainable economy? Looking ahead, Bahrain is investing over USD32 billion in key infrastructure projects over the coming years, across a range of sectors including transport, housing, manufacturing, energy, healthcare and education – a figure comparable to the Kingdom’s GDP. This will have significant positive impact for further growth opportunities in our economy. www.bahrainthismonth.com
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But it is not just the large construction projects that we have to get right. Perhaps more important is making the laws and regulations that are going to encourage investment and that are going to protect investor rights. We need to enact the policies and procedures that are going to remove the red tape and improve the business environment. The rewards, in terms of economic growth, will be huge. There was a recent Bahrain business delegation roadshow to China and Hong Kong. What was the outcome of the visit and are there any such visits planned for other countries? Boosting ties with China is of vital importance to the Kingdom’s economy, and Bahrain is a strong supporter of China’s ‘One Belt, One Road’ policy to renew trade collaboration between China and the Middle East. During the roadshow last November we signed a number of agreements to strengthen economic and business ties. These include: • An agreement with Invest Shenzhen, a governmental body, to develop investment practices and policies to further strengthen trade between China and Bahrain • An agreement with Shenzhen Capital Group Co. Ltd., a venture capital company, to help provide more entrepreneurship opportunities for businesses in China and Bahrain • An agreement with BYD Auto Industry Company Limited, a Chinese company which specialises in four industries – (IT, automobile, new energy and rail transit) – and is looking to establish a regional manufacturing hub in Bahrain • Chinamex Bahrain and China Handicraft Art Work Committee signed an agreement to hold a Chinese cultural products exhibition at Bahrain’s Dragon City in December 2017 During 2017, we will build on the success of the previous few years. Our international offices, which are based in target markets, continue to promote Bahrain as an investment destination to potential stakeholders at
international events. As well as China and Hong Kong, we look to India, Malaysia and Singapore, in addition to select European markets such as Turkey, the UK and Germany. We believe Bahrain has much to offer, and we want to get the message out there as loudly as possible. There was a new law introduced recently to support partnerships in Bahrain (Limited Investment Partnership Law). Could you briefly explain what this entails and what are its benefits? This new law will allow partnerships to be regarded as a legal personality in place of companies. Activities encompassed within the law include: collective and private investment undertakings, securitisation [the process through which a number of assets are pooled and then repackaged into new interestbearing securities] and insurance captives [a licensed insurance company that is owned by its insured(s)]. Such partnership laws are a longstanding staple within common law jurisdictions such as London, New York and Singapore. The new law will allow financial firms from these jurisdictions to be able to operate within a legal framework they are familiar with. Furthermore, the law will support financial firms in establishing financial investment funds, and grant them access to new funding mechanisms. What plans are in the pipeline to make Bahrain an attractive destination for foreign investors? As the freest economy in the Middle East and North Africa, with 100-per-cent foreign ownership in most sectors, a strategic geographical location and high levels of connectivity with our neighbouring markets, Bahrain is already an attractive destination for foreign investors. By continually introducing policy reform and supportive legislation that make Bahrain an even more business-friendly environment, the EDB and other government bodies will collectively work to create further opportunities for new entrants to our market. Is there anything else you would like to add? Let me leave you with one final thought. Soft infrastructure – the supporting policy and regulation that is essential to creating a successful business environment – can be even more important than the bridges and the roads that we so often focus on. If we get the policies right, we can create new businesses, grow our economy and create new and better jobs for Bahrainis. March 2017 45