Interview: Kamal bin Ahmed
What needs to be done to ensure that Bahrain’s growth potential is communicated to investors and that perceived risks are adequately addressed?
KAMAL BIN AHMED: EDB’s focus is on what we call “smart foreign direct investment”. These are businesses that will create quality jobs for Bahrainis, fit with our economic model and help support long-term, sustainable growth. The past few years have seen the financial services, logistics, manufacturing, healthcare, and information and communications technology sectors carry on expanding, which we expect will continue.
The kingdom is strategically located on important trade routes in the northern Gulf and, as a result, it has developed a sophisticated, modern infrastructure for channelling trade flows across the region. In particular, Bahrain is uniquely positioned as the natural gateway to the economies of the GCC, which are worth $1.6trn today and are expected to reach $2trn by 2020.
The past two years have shown that Bahrain’s business fundamentals are strong and that economic stability is assured. The government is committed to strengthening the country’s core business advantages, which include a highly skilled workforce, competitive operating costs, stable and transparent regulation, an open business environment and sustainable growth.
How would you characterise progress to date in terms of economic diversification? What policies are being developed to ensure this continues?
AHMED: The hydrocarbons sector’s share of real GDP has declined from 44% in 2000 to less than 20% in 2012. The financial services and manufacturing sectors are now comparable to hydrocarbons in terms of their contribution to the national economy, while a number of other sectors, including private education, healthcare, communications and downstream manufacturing, are experiencing rapid growth.
Bahrain offers a strong regulatory environment, built around tried and tested institutions. The kingdom has minimal restrictions on foreign investment, with 100% foreign ownership common throughout the economy. Such benefits are not confined to free zones. The kingdom also has a low-cost tax regime and it acts as a gateway for investors seeking access to the Gulf region.
The government sees exports as an opportunity to drive economic development, especially in view of the limited size of the national economy. This means fostering regional integration and encouraging Bahraini companies to seek growth opportunities elsewhere, while enabling foreign investors to utilise Bahrain as a hub for tapping broader regional opportunities. In order to achieve this, Bahrain is constantly working to upgrade its connectivity with the rest of the region through better infrastructure and regulations.
What reforms are being implemented to improve investment efficiency across the public sector?
AHMED: Bahrain’s approach to public investment is focused on transparency, which has undoubtedly contributed to its effectiveness. The kingdom has undertaken a number of important infrastructure projects on a public-private partnership basis, in areas ranging from power generation to public housing. This practice has led to well-defined, bankable projects that have reduced the burden on the public purse. At the same time, the government has actively encouraged the development of private sector provision of key services in areas such as education and health care. Growth in the private provision of services has been rapid in recent years, with the government regulating private providers to ensure that they meet quality standards.
Looking at the near-term investment strategy, a number of infrastructure projects approved by the Gulf Development Programme are due to be launched in 2014. According to the Ministry of Finance, Bahrain is due to implement projects worth around $4.43bn in the coming years, including in the housing, education and utilities sectors. Bahrain’s public investments have helped create core infrastructure that is a vital platform from which we can continue our economic growth.
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