Investing in Bahrain Listen to this page using ReadSpeaker

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Introduction

The Kingdom of Bahrain enjoys the components and the expertise necessary to understand the needs of national or international investors. This includes competitive prices, increased accessibility to the GCC market worth more than 1.4 trillion USD and the remaining countries of the Middle East in addition to the modern infrastructure and labor legislations. 

Investment is among the most important keys to achieving Bahrain’s 2030 Economic Vision and which aims at improving the competitiveness of the national economy, creating more specialized work opportunities open to Bahrainis, in addition to improving the standard of living. Bahrain is therefore committed to providing and bolstering the advantages it already enjoys in order to become the most attractive business and investment hub in the Middle East. 

Bahrain offers a number of key and attractive advantages to the business and investment sector in the region such as:

  • Strategic location in the heart of the Arabian Gulf region which makes accessibility and entry into any Middle East market (whether by land, sea or air) fast and economically feasible. For example, Saudi Arabia is only less than one hour away by car and Riyadh, Saudi Arabia’s main business center is only a drive of four hours away. The UAE is a flight of less than an hour away, while Qatar is less than 25 minutes away. Bahrain became a main transit business center after the inauguration of the Khalifa Bin Salman seaport in April 2009. 
  • The Kingdom of Bahrain was rated in the first position among Middle East countries and in the twelfth position internationally in the Economic Freedom Index 2013 compiled by the Heritage Foundation and the Wall Street Journal as a result of the Kingdom of Bahrain’s commitment to maintaining a business environment considered among the most liberated in the Middle East, the waiving of taxes on private companies, in addition to the freedom of capital transfer. The Kingdom of Bahrain also allows foreigners to own business and real estate assets in a majority of the economic sectors, which sets the Kingdom of Bahrain apart from all the region’s other states. 
  • Bahrain enjoys a unique record as the oldest and most developed international business economy in addition to a financial services sector that flourished over the past forty years, making it among the most advanced Gulf financial markets according to the 2011-2012 World Competitiveness Report issued by the World Economic Forum. 
  • Low costs are considered one of the key advantage enjoyed by the Kingdom of Bahrain with the lowest rent rates in the region for offices and industrial plots in addition to mixing privatization and subsidization in the public utilities sector which directly reflects on the costs of electricity, gas and water which are very competitive and which is also reflected on workers’ wages. 
  • The Bahraini workforce is among the most educated and experienced in the Gulf region. This minimizes the burden on investors to recruit and retain foreign expertise and in turn, contributes to building an experienced and committed local work team is retainable on the long run. 

 

Also among the additional advantages Bahrain offers to investors are:

  • The freedom to repatriate and transfer profits and capitals. 
  • The freedom to import and export local and foreign currencies. 
  • No income, capital, sales, real estate, interest, profit or concession rights taxes. 
  • Bahrain hosts the GCC Commercial Arbitration Center, which settles commercial disputes between GCC citizens provided that the value of the dispute is higher than BD 15,000. 
  • The Kingdom of Bahrain allows foreigners own 100% of a majority of business activities. 

Investment Opportunities in the Kingdom of Bahrain

Despite the considerable reliance by the state budget on the oil and gas sector, the Bahraini economy remains a diverse economy as indicated by the percentage of the contribution of the various economic sectors in the gross domestic product. The government of the Kingdom of Bahrain seeks to attract foreign investments in a number of vital sectors, including:

 

Financial Services

All banking and financial services in the Kingdom of Bahrain are monitored by the Central Bank of Bahrain (CBB). Bahrain has in place an integrated package of laws and legislations that regulate this sector. This encouraged more than 400 banks and financial institutions to have their headquarters in Bahrain. The Kingdom of Bahrain is also considered the international capital of Islamic banking and financial institutions as it hosts 24 Islamic banks.

The CBB is in charge of maintaining monetary and financial stability in the Kingdom of Bahrain through implementing policies that rely on the best international practices. The CBB is the only auditing authority supervising the Bahraini financial sector and the scope of its jurisdiction includes all the banking, insurance, investment and financial markets activities. This helped give the Kingdom of Bahrain an excellent international financial reputation.

The CBB is also in charge of the supporting and implementing monetary policies and the exchange rate policies for the Bahraini Dinar in the kingdom. The CBB is also in charge of managing debt instruments, issuing the national currency and supervising the payments and clearance system in Bahrain.

For more information please visit Central Bank of Bahrain.

 

Consulting and Industrial Services

Due to Bahrain’s location at the heart of the Arabian Gulf, the Kingdom of Bahrain is an ideal location for companies seeking to offer consultancy and industrial services to the entire region. This distinctive location is backed by an increase in domestic demand for professional services, low operational costs, availability of skilled workforce and a business friendly legal environment.

 

Logistics Services

Bahrain is an ideal Middle East platform in the field of offering corporate logistics services as a number of the world’s biggest international companies chose Bahrain to be their regional headquarters due to ease of access to the developing and booming Gulf economies, a modern roads network and air and sea transport lines that are close to all the main business centers in the Arabian Gulf region. This is in addition to the fact that Bahrain signed bilateral free trade and economy agreements with more than 60 world countries.

For more information on the logistical advantages offered by Bahrain click here.

 

Education and Training

Bahrain boasts the oldest government education system in the Arabian Peninsula and an excellent reputation when it comes to the quality of the public education and training system. Education and training companies can benefit from Bahrain’s regional pioneering position in the intellectual and educational field in addition to hosting conferences that attract leading academic figures from around the world. The public education system in Bahrain is renowned for its quality level while private schools offer excellent curricula from all over the world. All educational institutions in Bahrain are monitored by the National Authority for Qualifications and Quality Assurance for Education and Training for the purpose of maintaining the required levels and standards. Tamkeen (The Labor Fund) allocates a substantial part of its annual budget to supporting the private education and training sector.

According to UNESCO estimates for 2013, adult illiteracy rates in Bahrain are less than 3%.

For more information please visit the following websites:

The Ministry of Education

Education & Training Quality  Authority

Tamkeen

 

Industry

Bahrain is located at the heart of the Gulf Cooperation Council (GCC) market worth more than 1.4 trillion USD which makes Bahrain an ideal location to meet the increasing demand of GCC countries for manufactured goods.

Bahrain offers a number of advantages for industrial companies including a central location which reduces shipping costs, an excellent network of land, maritime and air transport lines, Bahrain is also the home for the national carrier for the Kingdom of Bahrain Gulf Air, which controls a wide regional network with routes to more than 41 regional destinations. Furthermore, Bahrain is one of the biggest maritime freight centers in the Gulf.

Bahrain is a member in the common GCC market which guarantees the implementation of the free trade agreement. Bahrain is also a signatory to bilateral trade and economic treaties with more than 60 world countries including China, France, India and Singapore in addition to the free trade agreement with the US and the agreement on double taxation with the UK. Bahrain enjoys an abundance of skilled and specialized workforce and competitive labor, industrial land plots and energy costs.

The Ministry of Industry, Commerce & Tourism operates 10 industrial areas with an overall area of 2.288 acres. The ministry offers lease opportunities on these plots subject to contracts of terms up to 25 years. In general, land plots come with all the basic services and utilities such as roads, electricity, sewage, water and telecommunications. Projects established in industrial areas benefit from a tax exemption on the required capital and the raw materials used in the manufacturing of end products in addition to lower electricity tariffs.

For more information please visit the following website:

The Ministry Industry, Commerce & Tourism

Bahrain International Investment Park

 

IT and Telecommunications

Bahrain seeks to attract IT and telecommunications companies by the virtue of the fact that it owns one of the most liberal markets in the Middle East in addition to its excellent infrastructure in this field and the presence of an integrated legal and legislative structure and strict laws protecting intellectual property.

Bahrain enjoys a strong record in this field as it is the first country to shift to digital telephone exchange in 1992 and the first country to launch internet services in 1995. It is also the first country to lift all restrictions on telecommunications in 2004 in addition to winning the first position in the GCC region and the 5th position in Asia and the 24th position worldwide in eGovernment readiness, according to the UN report on the eGovernment readiness index 2016.

For more information please visit the following websites:

The Telecommunications Regulatory Authority (TRA)

The Information & eGovernment Authority

 

Real Estate

The real estate market in the Kingdom of Bahrain witnessed an upward surge during the past decade due to easing ownership and residency restrictions which made the Kingdom of Bahrain more attractive when it comes to real estate ownership.

In 2010, Bahrain showed commitment to housing projects as seen from the hosting by the Kingdom of Bahrain of the first Middle East Affordable Housing Development Summit which aims at addressing the rapid population growth in the Gulf region.The government is working to provide 40,000 housing units that will be built  in various towns and villages in the Kingdom according to a specific timeline. The government will build 70% of these units while the private sector will build the remaining 30%.

The retail sector in Bahrain witnessed strong growth over the past ten years with the total stock of plots increasing from 200,000 square meters in 2000 to 536,000 square meters in 2010. The main driver behind this growth is the strong population growth and the increase in the domestically available income in addition to increased demand from the Kingdom of Saudi Arabia and the GCC countries.

Non-Bahraini and foreign companies are allowed to own lands and real estate properties in the newly developed areas including:

  • The Greater Manama Area, such as the Ahmed Al Fateh area, Al Houra area, and the North of Manama area including the diplomatic area (high-value residential and commercial areas where the construction of buildings ten stories or above is permitted).
  • Al Saif Area (3,5 and 10 stories).
  • The recently developed coastal areas such as Durrat Al Bahrain, Amwaj Islands and Al Arin Desert Resort.
  • The areas located within Bahrain Financial Port, Bander Al Seif and Reef Island.
  • Al Rafa’a Views and Bahrain Gulf Project.

 

Startup a New Business

The Kingdom of Bahrain offers major facilities for startups and new commercial businesses and for this purpose the Ministry of Industry, Commerce & Tourism launched the one station project under the name of Bahrain Investors Center which is an advanced step in the national efforts to create a modern investment environment based on facilitating all the services and the procedures required for investment in the Kingdom of Bahrain in accordance with the international standards. The Bahrain Investors Center aims at simplifying the process of creating a commercial register and the process of obtaining other related government services and licenses and obtaining the immediate approval of the concerned entities from the different governmental departments present inside the center.

The Bahrain Investors Center offers distinctive services, most importantly the prompt determination and identification of procedures, the speedy granting of approvals whether related to the Ministry of Industry, Commerce & Tourism or the other competent authorities. The center completes 80% of the new commercial registration applications in less than 24 hours while the remaining 20% are completed in no more than five working days.

For more information please visit the Bahrain Investors Center

 

Commercial Registration Portal (SIJILAT)

The Ministry Industry, Commerce & Tourism launched the Commercial Registration Portal (SIJILAT). The system includes all the conditions, procedures, laws and regulations related to acquiring business licenses for over 1,800 business activities; creating an integrated database that contains all the information related to commercial registration and licensing. This includes a summary of the business environment in the Kingdom of Bahrain, trade name reservation process, different legal forms of entities and registration requirements, as well as an overview of the corporate governance.

SIJILAT will also provide services related to business activities such as company name, change of address, addition or deletion of a partner, along with the ability to amend authorized signatories.

SIJILAT aims to reduce the time required in obtaining commercial registrations and every business-associated license; reducing the need to visit the Investors Centre or other governmental organizations. It will automatically communicate with applicants via emails or SMS text messaging to inform them of the license’s issuance stages and provide them with all necessary information 24 hours a day, seven days a week.

For more information visit the SIJILAT portal

 

Finance Options

The Kingdom of Bahrain offers a broad range of options for facilities and commercial loans to domestic and international investors through many traditional and Islamic banks and financial institutions. Finance is also available through the Bahrain Development Bank and the Bahrain Bourse (BHB).

 

The Bahrain Development Bank

The Bahrain Development Bank offers many financial services designed to meet the needs of small and midsized businesses in the Kingdom of Bahrain. The bank encourages the development of mid and small-sized projects in the field of industry and services. The state-owned bank encourages current investors or investors seeking to set up new businesses and projects by offering loans at highly competitive rates in addition to consultation, orientation and training services through the entrepreneurship development program.

Foreign companies are entitled to partial funding upon meeting some requirements such as the training and recruitment of a number of Bahraini citizens.

For more information please visit  the Bahrain Development Bank website.

 

The Bahrain Bourse

Bahrain Bourse (BHB) offers funding opportunities to investors through stocks if such stocks meet the listing requirements. The CBB regulates and monitors the financial markets in the Kingdom of Bahrain and among its main priorities are maintaining transparency and integrity and regulating these markets through adherence to the best international standards and practices and protecting investors and consequently protecting Bahrain’s reputation as a regional financial hub.

The CBB regulates and monitors and approves all the applications for the public offering of any securities or financial instruments based on compliance with all the disclosure requirements and conditions.

The CBB also applies the international disclosure standards with the aim of improving market transparency, monitoring the stock exchange, clearance transactions, deposit systems, brokerage companies and the market makers.

For more information please visit the BHB website

 

Mumtalakat Holding Company 

The Government of Bahrain has minority and majority stakes in a wide range of enterprises in diverse sectors. With the aim of improving the performance, governance and transparency of state-owned assets, the Government has grouped its non-oil and gas related commercial assets under the control of Mumtalakat, a wholly state-owned holding company.

Bahrain Mumtalakat Holding Company (“Mumtalakat”) was established in June 2006 as an independent holding company to actively manage and grow a diverse portfolio of commercial assets. Mumtalakat manages its portfolio with the objective of enhancing the performance and returns of its assets. Furthermore, it actively seeks to invest in commercially sound and sustainable opportunities locally, regionally and internationally. Mumtalakat also invests in companies with growth potential across multiple industries and geographies to achieve sustainable investment returns.

Mumtalakat holds stakes in over 40 commercial enterprises spanning a variety of sectors, including industrial manufacturing and services, financial services, tourism, telecommunications, real estate, logistics, consumer, and healthcare.

Mumtalakat plays a vital role in developing the economy. The local investments will collectively generate over 1,400 jobs in the Kingdom and make a significant contribution to the economy.

For more information, visit Mumtalakat Holding Company website

 

Relevant Entities

Economic Development Board

Central Bank of Bahrain

Bahrain Logistics Zone

Labor Fund (Tamkeen )

Ministry of Industry, Commerce & Tourism

Bahrain International Investment Park

Information & eGovernment Authority

Bahrain Investors Center

Bahrain Development Bank

Bahrain Bourse

Bahrain Exhibition and Convention Authority

Tender Board

Bahrain Chamber of Commerce and Industry

GCC Commercial Arbitration Centre

 

Page Last Updated: 19 March, 2017

 

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