Interview: Khalid Humaidan
What are Bahrain’s primary economic competitive advantages, and how can these factors be best leveraged in a cooling investor climate?
KHALID HUMAIDAN: As the world competes for foreign direct investment (FDI), Bahrain has worked to build on its history of trade and business opportunities. The kingdom boasts operating costs around 30-40% below neighbouring cities. What is more, the costs for technology companies is around 16% less than the rest of the GCC, and the average cost of living is about 23% below our neighbours. This low cost of doing business is even more valuable when you consider our standing as the gateway to the Gulf, which alone is worth $1.5trn. Our transport and logistics services offer unparalleled ease of access to surrounding markets, including Saudi Arabia, the largest market in the GCC. As such, one can see that Bahrain is an exception to the rule in the current investor climate. Despite the 19% drop in worldwide FDI in 2018, Bahrain experienced a 6% increase. That year the EDB alone attracted a record $830m, representing a 13.2% increase from 2017 and translating into 92 new and expanded companies and 4700 new jobs.
To what extent is the Fiscal Balance Programme 2018-22 shaping the medium- to long-term goals and expectations of the board?
HUMAIDAN: The Fiscal Balance Programme 2018-22 aims to balance the budget by 2022 through a number of initiatives. We are already seeing results: the Ministry of Finance announced that there was a 37.8% decrease in the deficit in the first half of 2019 compared to the same period of 2018. While there will certainly be some changes in government spending, there will also be substantial savings coming from the continuing transition to e-government and the Cloud First strategy. For example, some 90% of registrees on the national portal, Bahrain.bh, were migrated to the Amazon Web Services’ cloud, which supported the development of advanced and efficient systems across government services.
Part of our job at the EDB is to design and create the most conducive operating environment possible to both attract investment and benefit the bottom line of those that are already doing business here. The investment and companies that we attract become part of an ecosystem that creates jobs and stimulates growth, which is our ultimate goal.
In what ways can the GCC further reduce barriers and increase collaboration in order to boost FDI flows into the region as a whole?
HUMAIDAN: There are reforms under way in all GCC countries, but making those reforms uniform across all countries would be enormously beneficial. Allowing 100% foreign ownership of companies and real estate – except, of course, in some sensitive sectors – would be a significant advantage. We allow that in Bahrain, and Saudi Arabia has recently made it possible. In Dubai there are economic zones that allow full foreign ownership and have their own visa regulations.
Improving trade relations between GCC countries is also a must. By increasing intra-regional trade – which now stands at a low 10% of the total – we can incentivise FDI. We must overcome both tariff and non-tariff barriers by increasing cooperation between border agencies and simplifying and harmonising procedures. Intra-regional trade agreements must be fully enforced and implemented. Lastly, economic diversification will afford more varied FDI opportunities.
How can the education sector learn from the startup ecosystem and culture of data-led innovation?
HUMAIDAN: Bahrain has the oldest public education system in the region. Traditionally it has been based on rote learning and driven by exams. While this may have worked in the past, today’s world demands tech skills that cannot be learned in this manner. As such, we are looking to online and offline trainings in Arabic and English to allow people to transform their careers.
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