The Report: Bahrain 2023
Bahrain consolidated its recovery from the Covid-19 pandemic by achieving 2.2% GDP growth in 2021 before accelerating to 4.9% in 2022. To leverage the advantage of elevated oil prices, the country introduced an Economic Recovery Plan in late 2021 in an effort to stimulate sustainable and broad-based growth. This plan aims to improve public finances, catalyse investment in major infrastructure projects, and enhance economic competitiveness through the development of human capital and high-potential industries.
Country Profile
The strategic location of the island country of Bahrain, combined with its business-friendly ecosystem and diversified economy, has seen it emerge in recent decades as an attractive destination for foreign investment. The kingdom’s economic resilience during the disruption that came with the Covid-19 pandemic, aided by stable governance and a commitment to economic reform, has positioned the country as a competitive player in the GCC and broader Middle East. The country’s guiding plan, Bahrain Economic Vision 2030, aims to enhance private sector growth and promote government investment in infrastructure, affordable housing, human resource development and digital transformation. The kingdom maintains a developed industrial sector and hosts the world’s largest single-site aluminium smelter outside of China, Aluminium Bahrain, with downstream firms creating products for export. This chapter contains an interview with Shaikh Khalid bin Abdullah Al Khalifa, Deputy Prime Minister.
Explore chapterEconomy
Bahrain’s economy rebounded from the impact of the Covid-19 pandemic and more recently successfully avoided the worst of global inflationary pressure, largely due to the fact that its currency, the dinar, is pegged to the US dollar. Bahrain’s recovery was also aided by forward-thinking policy formulation. While the country faced economic headwinds following the global drop in oil prices in 2014, a $10bn financial aid initiative from Kuwait, Saudi Arabia and the UAE in 2018 helped stabilise the economy and enabled the government to embark on a major fiscal reform programme. In light of economic challenges related to the pandemic, volatility in energy markets and the fallout from Russia’s invasion of Ukraine, deadlines for macroeconomic targets such as eliminating the fiscal deficit have been postponed. This has allowed key public and private operators to reset to new realities and refocus on achieving the goals of Bahrain Economic Vision 2030. This chapter contains interviews with Khalid Humaidan, Chief Executive, Bahrain Economic Development Board; Maha Mofeez, Chief Executive, The Labour Fund (Tamkeen) and Hala Al Ansari, Secretary-General, Supreme Council for Women.
Explore chapterBanking
The financial services industry plays a crucial role in Bahrain’s economy, contributing 16.8% to GDP. Recognising the need to reduce dependence on oil, the government has prioritised the development of the sector. In order to strengthen the local economy and facilitate recovery from the Covid-19 pandemic, the government introduced the Economic Recovery Plan. The plan is centred around securing over $30bn for investment and financing infrastructure projects. Additionally, the Central Bank of Bahrain devised the Financial Services Development Strategy 2022-26, which outlines five pivotal priorities: job creation, legislation and policies, financial markets, financial services and financial technology, as well as the insurance segment. This strategic framework aims to achieve medium-term goals, including raising the sector’s contribution to GDP to 20% by 2026 and further expanding it to 25% over the longer term. This chapter contains interviews with Usman Ahmed, Group CEO, National Bank of Bahrain and Yaser Alsharifi, CEO, Bahrain Islamic Bank.
Explore chapterInsurance
With the countdown to full implementation of the new national health insurance programme (Sehati) well advanced, FY 2023/24 could see a major boost for Bahraini insurers, with opportunities in health for both conventional and takaful (Islamic insurance) firms. The private medical segment has already benefitted from enhanced awareness of the scheme, while other non-life lines of business showed growth during FY 2021/22. Meanwhile, life and life takaful continue to be constrained by relatively low awareness. This was made particularly acute by the Covid-19 pandemic and the economic uncertainty that followed, which led to a drop in policy retention rates. This chapter contains an interview with Abdulla Sultan, CEO, Bahrain Kuwait Insurance Company (GIG Bahrain).
Explore chapterCapital Markets
Bahrain’s capital markets are being revitalised as the kingdom and the broader Middle East emerge from the Covid-19 pandemic-induced downturn. New regulations, partnerships with neighbouring countries and a national plan to boost the economy are all set to help drive growth in capital markets. The Central Bank of Bahrain is the single regulator of securities trading in the kingdom, and its Capital Markets Supervision Directorate is responsible for supervising and regulating capital markets. The CBB rulebook includes a separate section that covers the activities undertaken on Bahrain Bourse. Although Bahrain’s capital markets have yet to enjoy the same wave of listings seen on neighbouring exchanges, the bourse has taken steps to update regulations and boost investor confidence. This chapter contains an interview with Sheikh Khalifa bin Ebrahim Al Khalifa, CEO, Bahrain Bourse.
Explore chapterEnergy & Utilities
Bahrain, known as the birthplace of the Arabian Peninsula’s oil industry, is navigating the challenges and opportunities of the energy transition. While focusing on renewables production, energy efficiency and sustainability, the kingdom is also leveraging its remaining hydrocarbons resources. The country has made promising hydrocarbons discoveries that indicate the potential for further expansion in the sector. The industry is receiving a boost from downstream developments, including the modernisation of the Sitra refinery, located south of the capital Manama. Bahrain’s utilities segment is driving demand for new infrastructure and investment due in part to renewable energy and efficiency strategies. The government is restructuring its oil and gas holding company, Bapco Energies. This endeavour entails the potential spin-off of significant assets in transport, logistics and infrastructure in the coming years. This chapter contains an interview with Mark Thomas, Group CEO, Bapco Energies.
Explore chapterTourism
Bahrain is implementing a long-term strategy to transform its tourism sector into a major engine of growth under Bahrain Economic Vision 2030, the kingdom’s blueprint for economic diversification. The country is seeking to leverage its location at a continental crossroads and its unique position as the region’s sole island nation to bolster the sector. The kingdom identified tourism development as key element of the Economic Recovery Plan launched in 2021 to guide its recovery from the economic slowdown brought on by the Covid-19 pandemic. In order to boost the number of tourists, as well as increase daily spending and overall time spent in the country, Bahrain is making targeted efforts to diversify and promote its tourism offerings – both to better serve visitors from the Gulf, and to attract and engage tourists from further afield. This chapter contains an interview with Fatima Jaafar Al Sairafi, Minister of Tourism.
Explore chapterTransport
With Bahrain’s 780-sq-km landmass stretching across 33 islands, efficient transport connectivity between the country’s four main islands – Bahrain Island, Al Muharraq Island, Sitra Island and Umm Al Nasan Island – is integral to economic development. National strategy has focused on establishing Bahrain as an international tourism destination and logistics centre. That drive has resulted in significant government investment in general and commercial transport infrastructure, with a new port, a high-capacity causeway connecting Bahrain with Saudi Arabia and a new airport all launched over the last 15 years. The positive socio-economic impact of those projects has encouraged additional enhancements, with stronger multi-modal linkages with the broader Gulf region a central goal of the next wave of strategic developments. This chapter contains interviews with Mohamed bin Thamer Al Kaabi, Minister of Transportation and Telecommunications, and Mohamed Yousif Al Binfalah, CEO, Bahrain Airport Company.
Explore chapterConstruction & Real Estate
Bahrain’s construction and real estate sectors contributed a combined 12.5% to GDP in 2022, with the two recording growth of 1.4% and 5.5% for the year, respectively. They are engines for job creation, as the country’s economic diversification agenda includes major infrastructure projects. The development of high-value sectors has resulted in significant construction activity, with new and existing businesses establishing and expanding factories and facilities. Bahrain’s economy makes it an attractive investment destination in the GCC, and its growing population means that there is a need for a greater volume and more diverse range of residential properties. A number of new affordable homes have hit the market in recent years, and the government continues to work with the banking sector to launch new mortgage products to help Bahrainis in the low- to middle-income brackets buy homes. This chapter contains interviews with Ahmed Alammadi, CEO, Diyar Al Muharraq and Mohamed Abdulghaffar Al Kooheji, CEO, Kooheji Contractors.
Explore chapterIndustry
Bahrain’s manufacturing industry is a key contributor to non-oil GDP and is one of the priority sectors targeted by the government to drive economic diversification. Aluminium manufacturing, led by the majority government-owned enterprise Aluminium Bahrain, is the country’s largest industrial segment. The kingdom’s globally competitive capabilities and output will be further leveraged through downstream infrastructure expansion. The government has identified increased investment and activity in the manufacturing segment as a critical component of its plans to establish the country as a competitive logistics centre. This will also enable the kingdom to supply its major ongoing infrastructure development programmes with locally produced materials. This chapter contains interviews with Abdulla bin Adel Fakhro, Minister of Industry and Commerce and Sameer Abdulla Nass, Chairman, Bahrain Chamber of Commerce and Industry.
Explore chapterICT
ICT sector development forms a central element of Bahrain’s economic growth and innovation plans, enabling the development of multiple sectors and enhancing public service provision. Owing to a favourable business environment, advanced digital infrastructure and a deep talent pool, the kingdom has emerged as an attractive proposition for international ICT companies seeking a base in the region. The local sector is now pursuing a medium-term strategy designed to propel it into the next phase of development. In response to the Covid-19 pandemic, the Bahrain Economic Recovery Plan listed ICT as a priority sector for enhancing growth, diversification and resilience. Key objectives include strengthening cybersecurity resilience and advancing the digitalisation of government services, including through the use of artificial intelligence. This chapter contains interviews with Philip Marnick, General Director, Telecommunications Regulatory Authority and Mikkel Vinter, CEO, Beyon.
Explore chapterHealth & Education
Bahrain was the first Gulf country to establish government-sponsored education in 1919 and it continues to invest in strengthening its education system. With Bahrain Economic Vision 2030 – the country’s national economic diversification blueprint – and the Bahrain National Higher Education Strategy 2014-24 guiding the kingdom’s schooling strategy, Bahrain is expanding its public education infrastructure, and backing technical and vocational education and training programmes to upskill its workforce for the future. In the health care space, Bahrain has a long life expectancy and its disease burden is mostly related to non-communicable diseases, a trend common among wealthier countries. With continued investment in both public and private health care, the kingdom continues to improve its health service delivery. This chapter contains interviews with Dr Sheikh Mohammed bin Abdullah Al Khalifa, Chairman, Supreme Council of Health and Ghassan Fouad Aouad, Former President, Applied Science University
Explore chapterTax
Bahrain has long enjoyed its status as a tax-free jurisdiction prior to the introduction of excise tax in late 2017, followed by the introduction of value-added tax (VAT) in 2019. The kingdom is now home to an evolving tax landscape, with several notable tax and reporting regulations introduced since 2017. Bahrain is well established as a financial leader in the Middle East, and in recent years the authorities have diversified the economy to include technology, manufacturing and logistics. The country welcomes international investment, allowing 100% foreign ownership in various sectors. Additionally, Bahrain is consistently ranked as one of the best places in the GCC for expatriates to live and work. This chapter contains a viewpoint from Mubeen Khadir, Head of Tax and Corporate Services, KPMG Fakhro.
Explore chapterLegal Framework
The legal framework analyses the introduction of a revised code of conduct for auditors; the commercial law that improves the ease of doing business; new rules on the retirement age and pension eligibility, and updated resolutions that aim to enhance data privacy. This chapter contains a viewpoint from Hatim Zu’bi, Partner, Zu’bi & Partners, Attorneys & Legal Consultants
Explore chapterThe Guide
The Guide contains listings of accommodation options throughout the capital city for both business and leisure travellers. Helpful information is provided on visa regulations and business etiquette, as well as public and private transport options for navigating the country during your stay.
Explore chapterContents
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Shaikh Khalid bin Abdullah Al Khalifa, Deputy Prime Minister
Khalid Humaidan, Chief Executive, Bahrain Economic Development Board (Bahrain EDB)
Mark Thomas, Group CEO, Bapco Energies
Mikkel Vinter, CEO, Beyon
Abdulla bin Adel Fakhro, Minister of Industry and Commerce
