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 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 top positions among Middle East in the Economic Freedom Index which is compiled by the Heritage Foundation and the Wall Street Journal, as a result 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 apart from all the region’s other states.
  • 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 (PDF, 702KB, 2 pages), gas and water (PDF, 702KB, 2 pages) 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, or concession rights taxes.
  • Bahrain hosts the GCC Commercial Arbitration Center , which settles commercial disputes between GCC citizens if 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.
  • Industry Sector.
  • Logistics Services.
  • Real Estate.
  • IT and Telecommunications.

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 Central Bank of Bahrain issues its conditions and regulatory requirements in the CBB Rulebook . This Rulebook is divided into six separate volumes, each dealing with a different segment of the financial system. It contains requirements relating to both the licensing and on-going regulation and supervision of licensees, covering areas such as licensing requirements, capital adequacy, risk management, business conduct, reporting and disclosure requirements, as well as enforcement actions. Current and previous versions of the directions folder can be found here .

Activities permitted by Licensees:

Industry Sector

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 is a member in the GCC common 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 (PDF, 702KB, 2 pages).

The Ministry of Industry, Commerce & Tourism deals with the procedures for obtaining industrial licenses . For more information please visit the following website:

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:

  • The ease of access to the developing and booming Gulf economies,
  • a modern roads network
  • air & 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.

The Bahrain Logistics Zone was launched in 2008 and occupies 1Km2 of prime real estate close by Khalifa Bin Salman Port , Bahrain’s newest and biggest port. It offers customized and tailor-made services, ensuring there is a package to suit the operational needs of every business.

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.

The government is working to provide 40,000 housing units that will be built  in various towns and villages in the Kingdom. 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. 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.

The Survey and Land Registration Bureau is the governmental body in charge of land, aerial, and hydrographic survey services, and the registration of real estate properties in the Kingdom of Bahrain.

 

Laws regulating the real estate sector can be found here .

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.

 

Category Number of Employees Capital Investment (BD) Annual Turnover (BD)
Micro Up to 10 Up to 20,000 Up to 100,000
Small 11-50 (up to 100 for construction sector) 20,001-500,000 100,001 - 1 Million
Medium 51-250 (up to 400 for construction sector) 500,001 - 3 Million 1,000,001 - 5 Million

Definition of Small & Medium Businesses 

Source Ministry of Industry, Commerce & Tourism

 

Commercial Registration Portal (SIJILAT)

The Ministry Industry, Commerce & Tourism launched the Commercial Registration Portal (SIJILAT) , A system that 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 issuing and managing commercial registrations and licensing.

The system also 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.

To start your business, visit the SIJILAT Portal. Or view the SIJILAT” User Guide (PDF, 422KB, 22 pages) to take advantage of system services.

 

Virtual Commercial Registration (SIJILI)

In 2016, the Ministry of Industry, Commerce & Tourism launched a new initiative under the name of "Sijili" to register institutions that do not require an office location or a permanent address. 39 business activities are included under Sijili initiative.

Sijili is a virtual commercial registration that came in response to the government's expectations of supporting a knowledge-based economy and increasing competition in the eCommerce sector. The virtual commercial registration is only available for Bahraini citizens.

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 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, 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.

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