Industrial investment in Bahrain has traditionally been driven by the government, which has sought to develop national champions that can then expand abroad. One of these, Aluminium Bahrain, a smelting company in which the state holds a 77% stake, is not just one of the world’s top 10 producers of the metal; it has also become a household name, Alba, achieving a degree of name recognition usually reserved for the region’s large oil companies.

Yet increasingly – and in line with Economic Vision 2030, the national development plan launched in 2008 – the government has sought to shift its role in the industrial sector to primarily that of a regulator, thus opening new doors for the private sector. Many of the 2500 new businesses that enter the Bahraini market each year are geared towards exploring opportunities in industry. In recent years the country’s manufacturing base has diversified greatly and currently includes businesses in everything from refining sugar to, more recently, producing pharmaceuticals – a sector that now makes up some 0.6% of the nation’s GDP, the highest portion among GCC countries (see analysis). Many of the same competitive advantages that drove the creation of Alba in 1968 – the low cost of raw materials, competitive energy prices and skilled labour – continue to draw manufacturing interests to Bahrain.

By The Numbers

The manufacturing sector is the country’s third largest after hydrocarbons and financial services, making up 15% of GDP and 13% of total employment in 2012, as well as 20% of non-oil exports. It is also highly concentrated, with three industries comprising almost 60% of nominal output in 2011: basic metals (23%), refined petroleum products (21%) and chemical products (15%), followed by food and beverages (9%), non-metal mineral products (9%), metal goods (6%) and 3% each for clothing, publishing and vehicles/vessels.

Over the past 10 years, manufacturing output grew by 90% in real terms, according to the 2013 annual report by the Bahrain Economic Development Board (EDB), a semi-private autonomous agency. Much of this has been recent: the EDB says the sector grew by 80% in the five years to 2013, while figures from the Central Informatics Organisation, the state statistics office, show real year-on-year growth of 5.6%, 7.4%, 0.8% and 4.4% in the four quarters to the second quarter of 2014, the latest available. The EDB expects the sector to grow further in the coming years to reach 20% of GDP within the next decade.

This expansion is reflected in other data. The value of industrial-sector shares traded on the Bahrain Bourse reached some BD1.6m ($4.2m) in the third quarter of 2013, a rise of BD637,000 ($1.7m) compared with the same period a year earlier, according to the Central Bank of Bahrain (CBB). In another positive sign, the Ministry of Industry and Commerce issued 736 new business licences for manufacturing in 2012, and 305 more in the first quarter of 2013 alone. The EDB, meanwhile, reports that 10.6% of Bahraini workers and 12.5% of the total workforce in 2011 were employed in manufacturing.

Sector Financing

The increasingly low borrowing rates for industry suggest that banks are keen to finance projects in the sector. Average interest charged on business loans in manufacturing dipped as low as 2% by the third quarter of 2013 – the lowest level since mid-2009 and well below those for construction and real estate (4.9%) and trade (3.9%), as the most recent CBB figures show. The sector’s borrowing rates for the same period in the previous three years, by contrast, were 5.1%, 4.6% and 3.7%. As of September 2013, loans and advances to the manufacturing sector reached BD615.4m ($1.6bn), or 8.5% of total business lending.


Outside the GCC, the chief destinations for Bahrain’s non-oil exports by value are the US, India and Australia, according to the CBB. Non-oil exports reached BD1.72bn ($4.6bn) in 2012, the latest year for which data were available. The country’s exports in 2012 were dominated by petroleum products at 62.1%, followed by raw aluminium (11%), aluminium wire (4.2%), iron ore (3.3%), aluminium plating (3.1%) and fertilisers (2.6%), according to UN Comtrade, a UN data unit. Bahrain is the world’s second-largest exporter of stranded aluminium wire, with a 13% share of the global market to China’s 23.1%.

The large percentage of exports coming from aluminium products is one indicator of Alba’s importance to the broader economy. Bahrain’s success in achieving a globally important position in the aluminium trade is even more impressive given that the country lacks natural reserves of both iron ore and coking coal. Typically, Bahraini companies have offset this somewhat by signing long-term contracts – as much as 25 years for iron ore imports.

Promotion Efforts

Further expansion is being pursued from many angles. The sector’s chief regulator, the Ministry of Industry and Commerce, has put increased emphasis on business “e-solutions”, and everything from registration tasks to checking daily food price indices can now be done online.

The EDB, established in 2000, deals with attracting foreign direct investment to the country and can serve as a matchmaker for companies looking to do business in Bahrain. It has sought to encourage businesses in pharmaceuticals and other industries.

Mumtalakat Holding Company, which was set up in 2006 as a state investment arm, recently entered the pharmaceuticals sector. In a move designed to diversify the economy even further, it signed a deal with Japan’s SBI Pharmaceuticals in 2013, signalling an interest in developing a new industry in Bahrain (see analysis). The largest stakeholder in Alba, Mumtalakat held assets of about BD2.7bn ($7.2bn) as of end-2013, in industries ranging from aluminium to financial services, telecoms, real estate, tourism, transport and food products.

Tamkeen, another entity set up in 2006, plays a key role in developing the labour market. In line with Economic Vision 2030, it is an independent authority that receives 80% of labour fees from the Labour Market Regulatory Authority and then channels these funds into a range of programmes to develop human capital and support the private sector. With a focus on Bahrainisation, Tamkeen trains workers, helps finance business ventures, and is a key driver of small and medium-sized enterprises (SMEs). According to its new 2015-17 strategy paper, manufacturing is expected to continue to grow and “maintain its foothold among other sectors”, meaning that skills development, specialisation and vocational training will be in high demand.

Tamkeen and the EDB work jointly to help diversify Bahrain’s industrial sector by promoting the country’s competitive advantages to firms and investors. According to Vivian Jamal, executive director of business development at the EDB, the perks of doing business in Bahrain include “some of the region’s lowest operating costs, a highly skilled national workforce and an excellent location as a natural gateway to the $1.5trn GCC market, which is expected to reach $2trn by 2020”. The country, she says, is a good location for manufacturing both durable goods and non-durable ones that need to be made close to the end-user. Designated areas, such as the 2.5m-sq-metre Bahrain International Investment Park (BIIP) that hosts 63 companies, grant easy access to the country’s services, enhancing its appeal as a base for operations (see analysis).

Particular industries that Bahrain is keen to attract are plastics, food processing and downstream chemicals. The plastics industry currently accounts for 11% of total manufacturing in the GCC, a figure that the EDB expects to reach 18% by 2015. The presence of companies like Abahsain Fiberglass, Germany’s BASF, BFG International, Lauscha Fiber International, Hempel Paints, Berger Paints and Ilium Composites attests to previous successes in attracting internationally known plastics and downstream chemical companies to do business in the country.

Global Rankings

Bahrain ranked first in the MENA region in the Heritage Foundation’s 2014 Index of Economic Freedom, and 46th out of 189 countries in the World Bank’s “Doing Business 2014” report. In the latter, it ranked as high as fourth for ease of getting a construction permit and seventh for ease of taxation procedures. This last is unsurprising since Bahrain currently taxes at 0% and allows 100% foreign ownership of companies.

Transport & Logiistics

Bahrain’s small size (780 sq km) and strategic location in the Gulf are important advantages to the rising industrial sector. For logistics, this means that goods can be both moved within and exported from the country swiftly. Because its harbour area and industrial zones are all within 35 km of Saudi Arabia via the King Fahd Causeway, Bahrain is well located for companies looking to gain quick access to that country, the GCC’s largest by both GDP and market size. Of the 35 entry points into Saudi Arabia, the causeway has the lowest average wait times, noted GAC Bahrain, a shipping firm that runs a logistics centre in Muharraq and a freight station at Mina Salman Port. Bahrain’s main harbour, the Khalifa Bin Salman Port, opened in 2009 and quickly established itself as an important regional logistics centre. According to the EDB, when importing to Saudi Arabia it is often 15-20% cheaper to unload goods at Jebel Ali in Dubai, distribute them via feeder boats to Bahrain and ship from there to Saudi Arabia, rather than from the UAE directly – the cost difference largely due to shorter wait times at the King Fahd Causeway. In 2014 the harbour will complete a new dredging of its main approach channel, allowing access for large ships with shallow draught. Plans are also under way for a $980m upgrade to the Bahrain International Airport.

Trade Agreements

Besides being a member of the GCC common market, which gives its products access to 47m consumers, Bahrain has signed a number of trade deals. In 1995 it became, jointly with Kuwait, the first GCC state to join the World Trade Organisation. It is also the first GCC state and third Arab country to enter into a free trade agreement (FTA) with the US, in 2006. Under the terms of the latter, a product with at least 35% value added within Bahrain enjoys duty-free entry into the US. (Under local law, a product may be labelled “made in Bahrain” at 40%, a figure that can include the costs of storage, industrial, space, labour and materials.) Also, US products receive preferential treatment if re-exported from Bahrain to the GCC region. The agreement is up for review by both parties every five years.

Other bilateral economic agreements have been reached with a total of 63 countries, and through the GCC, Bahrain also enjoys FTAs with Singapore and the four-country European Free Trade Association. Future trade deals are more likely to be agreed at the GCC level, where talks on FTAs with Pakistan, India and the EU are progressing and have been discussed in the local press. If successful, such agreements would hold many benefits for Bahrain.

Indeed, many recent direct investments into the country were designed to take advantage of Bahrain’s favourable trade policy. In November 2013 JBF India opened a $200m polyethylene film plant that will be able to produce 90,000 tonnes a year of polyester for export. It chose Bahrain as a location with the specific goal of exporting 60% of its production to the US. With a similar objective, a joint venture between Saudi Arabia’s Abahsain and China’s CPIC aims to build a new fibreglass plant in Bahrain by 2016. Attracting such business is key to the country’s development plan, notes the EDB’s Jamal: “Bahrain is keen to attract companies looking to trade with the US, especially given its FTA with the US, which can provide a direct benefit to companies looking to invest in the kingdom.”


When Alba began producing aluminium in 1971 with a capacity of 120,000 tonnes a year, the global market was highly concentrated, with the six largest producers accounting for 73% of world output. It was also vertically integrated: most companies supplied the smelters from their own alumina plants, and the alumina plants from their own bauxite mines, according to a 2013 paper by industry analyst Carmine Nappi. Over the next four decades, new players entered, suppliers diversified and competition surged. By 2012, the market share of those same six had nearly halved to 38%.

Alba has nonetheless held onto a strong position. Owned by Mumtalakat (69.4%), Saudi Arabia’s SABIC Industrial Investments Company (20.6%), and holders of its 10% of shares listed on the Bahrain Bourse and London Stock Exchange, it currently produces 912,000 tonnes a year of high-grade aluminium, making it the sixth-largest aluminium smelter site in the world by output. Following the 2013 merger of two state-run companies in the UAE to form Emirates Global Aluminium, it is now the second-largest aluminium smelter in the Middle East.

Though such rankings may soon change, the industry on the whole is on track to grow. Aluminium production across the GCC is set to rise from 3.7m tonnes a year in 2012 to 5m by 2015, raising its share of global output from 11% to 17.5%, then double to 10m by 2020, according to the Gulf Aluminium Council. On a global scale, while consumption has grown at about 3% a year since the early 1970s, according to the World Bureau of Metal Statistics, Nappi expects a compound annual growth rate of 4% over the next two decades, mostly due to rising demand from emerging markets like China and Brazil.

Alba has responded to new competition in a number of ways. First, it diversified its product line to include not only standard and T-ingots but also extrusion billets, rolling slab, properzi ingots and molten aluminium. Second, it has worked to increase efficiency, launching Project Titan in 2014, a two-year efficiency programme with the goal of reducing cash costs by $150 per tonne by the end of January 2016. Third, it has upgraded its equipment: in the past year, it installed new pot line technology expected to boost output by 4000 tonnes a year, and recently completed a major IT upgrade that uses cloud computing to reduce man-hours and enhance plant safety. As a result, Alba’s quality control and product test laboratories ranked in the top five of 41 metal producers surveyed for the “Baked Anode Round Robin 2012-13” report released by Switzerland’s R&D Carbon, an industry research outfit. The market has responded positively: Alba reported a 3.1% growth in sales in the first quarter of 2014.

Cluster Effect

The company’s success with aluminium has encouraged the clustering of several downstream businesses in Bahrain. Next to the Alba foundry is the Gulf Aluminium Rolling Mill Company (Garmco), the Middle East’s largest facility for making aluminium sheets and coils. Mumtalakat holds the largest share in Garmco (37.3%), with a host of smaller GCC entities holding the rest. Also located near Alba is the Bahrain Aluminium Extrusion Company (Balexco), which was the first company to produce high-quality aluminium extrusions and systems to international standards within the GCC. Balexco has 16% market share in the GCC for these products. The 2005 opening of the BIIP has attracted other businesses to Bahrain to take advantage of cheap raw materials. Such companies include Germany’s RMA Middle East, a maker of steel pipeline equipment, and Singapore’s MTQ Corporation, which produces components for the oil and gas sector.

The competitive edge, therefore, remains. Bahrain’s push to develop an import terminal for liquid natural gas will help ensure energy prices remain low enough to encourage the industry in the future. Meanwhile, the clustering of aluminium-related business in Bahrain has meant that the downstream sector is significantly diversified, a key advantage for the kingdom compared to the rest of the region.

This should bode well for future deals. At a business forum in April 2014, Kazakhstani and Bahraini officials signed a memorandum of understanding, hinting at a future partnership in the sector. Kazahkstan is home to sizable mining reserves and Bahrain suggested the two countries were looking for mutual business opportunities involving aluminium.

Mwtal Cables

One example of successful direct investment in the country’s aluminium sector is Midal Cables. Founded in 1977 as a partnership between Bahrain’s Intersteel and Australia’s Olex Cables, it became the first company to export alloy rods, overhead conductors and aluminium wire within the GCC. Saudi Cables joined the enterprise in 1984.

Success in Bahrain has led Midal to launch new operations abroad. The company now operates similar factories in Turkey and Australia, and in 2014 announced plans to open a factory in Mozambique through Midal Cabos, a local subsidiary.

Much like its business model in Bahrain, the new plant will be located near a large aluminium smelter, in this case Mozambique’s Mozal, the second largest such smelter in Africa. As with Blaxco and Garmco, the key to Midal Cables’ business model has been its proximity to Alba, which gives the company ready access to quality aluminium and allows it to save time at the production line by using a minimum of scrap “remelt” (recycled melt).


The primary steel producers in the Middle East have traditionally been Iran and Egypt, partly due to their historically lower labour costs and larger market size. According to the World Steel Association, Iran produced 14m tonnes of steel in 2012 (15th in the world) and Egypt 6.6m (24th), compared to the combined GCC production of roughly 10.1m tonnes that year. Demand for the metal in the GCC stands at more than 40m tonnes a year, and over the next decade is projected to grow at 5-6% annually. In another sign that bodes well for steel production, the construction sector in the MENA region is projected to see $4.3trn in investments by 2020, a significant part of which will come from construction and energy projects within the GCC.

One such project that will have important ramifications for Bahrain is the GCC railway. Combined with smaller rail projects, such as linking Salwa in Qatar to Saudi Arabia, and a clutch of light rails, a total of some 6000-8000 km of new railway track will be laid by 2020. The demand for steel that this will generate – and given that steel factories are increasingly more capital intensive than labour intensive – should help drive concomitant increases in production capacity in the GCC.

Bahrain’s Foulath Holding is in a position to benefit from this growth. Foulath, which means steel in Arabic, is the nation’s leading producer of the metal, owned by Gulf Investment Corporation (50%), Qatar Steel (25%), National Industries Group (10%), Kharafi Group (10%) and the Kuwait Foundry Company (5%). Of these shareholders, all but Qatar Steel have links to Kuwait. In November 2013, Kuwait Finance House, a bank, agreed to invest $115m over the next five years into Foulath and its various subsidiaries to take advantage of rising demand.

The Foulath steel complex is a fully integrated manufacturing plant located at the Al Hidd Industrial Area. Established in 2008, the company now has a number of subsidiaries, including Bahrain Steel, which makes iron ore pellets; USCO, which makes rolled stainless steel; and United Steel Company, which makes steel beams. At United Steel, a first phase of expansion was finished in 2012, while a second one in 2015 will add a rebar mill with a capacity of 600,000 tonnes a year, bringing total steel beam production at the facility to 1.2m tonnes a year. Bahrain Steel, meanwhile, runs two pelletising plants with a capacity of 11m tonnes a year. The pellets, used to make direct reduced iron, are exported both within the GCC and to East Asia.


Bahrain is well-suited for the development of an automobile parts cluster or even a boutique automotive industry. According to Ducker Worldwide, an industry research firm, aluminium is increasingly the leading material for making US automobile engines, wheels and exterior body components. Usage of aluminium for automobiles, Ducker reports, has risen every year for nearly four decades, partly due to mandated increases in standards for fuel economy and carbon emissions. Given Bahrain’s status as a major aluminium producer, small-scale or boutique auto production should be commercially possible, especially if geared towards export to the US, where environmental standards are high and with which Bahrain has an FTA.

A small cluster of automotive businesses already exists in Bahrain. Midal Cables, in partnership with Germany’s BBS Kraftfahrzeugtechnik, owns AluWheel, a company that makes aluminium wheel casings. Bahrain Alloys Manufacturing Company, established in 1996, supplies alloys to the die casting and automotive industry. Ruf Automobile, which specialises in retooling Porsches and other premium vehicles, also has a facility in Bahrain.

One company that is taking advantage of market conditions is Alwardi Transport, one of Bahrain’s biggest logistics firms which also runs operations in Saudi Arabia and the UAE. Alwardi plans to open a trailer manufacturing division in Bahrain in 2014 that will create more than 40 jobs for Bahrainis and be able to produce as many as 30 trailer units a year, ranging in size from 20 feet to 40 feet. The new production facility, it says, will be the first such unit in the GCC. Bahrain is already a centre for a different type of transport construction: in late 2013, Arab Shipbuilding and Repair Yard completed a $188m investment programme and remains an important dry dock in the northern Gulf.

Food Processing

Bahrain’s business-friendly environment is also spurring the development of domestic food manufacturing. This sector has long been driven by generous subsidies, especially on three products that are considered strategic: red meat, flour and poultry products. Subsidies for these amount to $180m a year or about 5% of the country’s subsidy budget. As a result, retail prices for meat imports, for instance, are fixed at BD1 ($2.65) per kg of lamb and BD1.2 ($3.18) per kg of beef.

Bahrain has recently been exploring ways of ensuring food security with less direct market interventions. In 2013, the Ministry of Municipalities and Urban Planning Affairs (now under the Ministry of Works, Municipalities and Urban Planning) was tasked with looking into ways of supporting local livestock farmers. It is unclear, however, if this is meant as an alternative or addition to current practices. Such subsidies are unsurprising given that the GCC states have long been net importers of food. The government has sought to enhance food security by subsidising the Bahrain Flour Company. Located near Mina Salman Port and founded in 1970, the company’s operational costs (including cost of sales) in the nine months to September 2014 were BD12m ($31.8m) while its government subsidy was BD8.4m ($22.3m). The Bahrain Flour Company has plans to relocate. In 2014, however, the new coastal location it had chosen had to be changed in order to accommodate the Mina Salman Naval Base; it is now looking to move closer to the Khalifa Bin Salman Port or Bahrain Investment Wharf (BIW). This move has had minimal impact on the planned new facility, raising building costs from BD12m ($31.8m) to a projected BD14m ($37.1m). The new flour mill, which will be a standalone facility with both operations and warehousing, is to begin production in 2015 with a capacity of 600 tonnes a day. Bahrain Flour saw a net profit of BD219,275 ($581,078) in 2013, down from BD788,388 ($2.1m) in 2012, and hopes to offset this 72% decline in profits with higher production when the new mill opens. There is also increasing pressure from businesses to raise the flour subsidy. Anmar Jalil Al Arrayed, managing director of the Arabian Sugar Refinery Company, told OBG, “The government will need to slowly remove the subsidy and grant new licences to entities that can afford it.”

Bahrain has already managed to attract a host of firms in the food industry to move nearer to the country’s industrial centre. The Arabian Sugar Refinery Company, which recently began production at its BIIP factory, sent its first shipment – roughly 5500 tonnes to Um Kassar in Iraq – in April 2014. Regular shipments from Bahrain to the GCC and Iraq are likely to continue, as the sugar refinery is one of three operating in the GCC. Using Brazilian cane sugar as feedstock, the site has the capacity to produce some 600,000 tonnes of high-quality sugar a year.

The idea is to seize opportunities to sell to food and beverage companies operating in Bahrain. One such company is Mondel e z International, formerly Kraft Foods, whose factory for cheese and Tang (a powdered drink) began Bahrain operations in 2008 and produced its billionth unit for each in 2014. In all, the plant has a capacity of 110,000 tonnes a year for export across the Middle East and Africa – making it the kingdom’s largest food production facility – and adds more than $50m a year to the local economy. With a workforce of 250, the company’s goal is to raise its Bahrainisation to 35% over the next two years. Mondel e z chose Bahrain as the base of its operations specifically to target the Saudi market, where 60% of its Bahrain-made products are sold.

In October 2014, Mondel e z announced it would launch phase 1 of a new $90m facility on a reclaimed site of 250,000 sq metres, presented by the government. The plant, whose construction began in January 2015, is set to produce 90,000 tonnes a year of biscuits and snack foods, employing 300 people when it begins production in early 2016. There are opportunities, too, for smaller players – Chocolate & Company, for example, opened a $1.85m confections factory in the BIIP in 2014.

Consumer Goods

The consumer goods sector in the GCC is expected to grow by 7.9% in 2014, pushing its total value to $221bn in 2015. Bahrain is already home to international manufacturers, including Kimberly-Clark, Reckitt Benckiser and MRS Fashions. In addition, US textile manufacturer WestPoint, whose clients include Walmart, has opened a research centre in Bahrain and is seeking to begin making compacted ring-spun yarns.

Sport Equipment

In the world of sport, Bahrain is best known for hosting a Formula One Grand Prix championship race each spring, an event that is starting to affect the business world. On the final day of the 2014 race, Bell, a helmet-maker, announced its plan to move a globally strategic factory to Bahrain, as well as its research and development centre. As a result, Bell Racing Europe will shift some 100 jobs to Bahrain, reducing its workforce in Italy, China and Belgium. The new facility is being built in a special investment zone near the Bahrain International Circuit in Sakhir, which aims to become a regional centre for the motor sports business.

SMEs & Industry

The Bahrain Economic Vision 2030 calls for a more diversified approach to Bahrain’s economy through the development of SMEs. In recognition of the innovative spirit found in the country’s capital city, the UN Industrial Development Organisation, in cooperation with the Arab International Centre for Entrepreneurship and Investment and the Arab Thought Forum, selected Manama as the Arab Capital for Entrepreneurship and Innovation in 2014, the first city to be so named.

The definition of an SME in Bahrain is occasionally updated by the Ministry of Industry and Commerce. At present, a small business is defined as one employing 11-50 people and having a total capital investment of BD500,000 ($1.3m). A small manufacturing business is defined as having an annual turnover of less than BD1m ($2.7m), while a medium-sized manufacturing business can have up to 250 employees, BD3m ($8m) in capital investment and an annual turnover of BD5m ($13.3m).

One of the key state entities involved in the push to develop SMEs is Tamkeen – named after the Arabic for “empowerment” and designed to train and support the next generation of Bahraini entrepreneurs. “Tamkeen supports the development of the industrial sector in Bahrain in a number of ways and assists Bahrainis to become employees of choice,” explained Robin Walton, manager of engineering and export initiative at Arabian International Mechanical Contracting, an engineering firm. “It provides financial contributions for machinery, marketing drives and exhibition purposes, both locally and overseas, and provides consulting advice that is critical for companies who are both doing business within Bahrain and looking to use the island as an export base.” Funded primarily through fees collected by the Labour Market Regulatory Authority, Tamkeen counts 2500 new businesses registered in the kingdom per year and says that since its 2006 founding it has helped 100,000 Bahraini nationals.

3D Bahrain

One emerging opportunity in the SME industrial sector is in 3D printing. iClone, the first 3D printing service in Bahrain, began operations in 2013, and can now print 3D models from detailed specifications in written form and computer-aided design files. The company is specifically targeting customers in the construction and health care sectors.

One of the more intriguing uses of commercial 3D printing technology in Bahrain involved the installation of 3D printed artificial coral reef units designed to conserve the environment. Reef Arabia, based in Bahrain’s Hidd Industrial Area, has installed the first 3D printed reef units approved by the GCC, and is now exploring opportunities to use 3D printed reefs elsewhere in the region.


For much of its history, Bahrain’s economic policy has led to the creation of large national champions in strategic industries. Companies like Bahrain Petroleum Company and Alba are good examples of this policy’s success, and each has large stakes owned by the government.

To encourage heavy industry, Bahrain could take a number of routes. One is to impose tariffs on targeted products – much as, for example, the UAE imposed a 5% import duty on reinforced steel bars from Turkey in early 2013. However, for a country like Bahrain that has a number of FTAs and similar international agreements, such a move may have little effect, and merely encourage more imports from the countries with which it has signed agreements. It could also prove counterproductive, as the countries with which it does not have agreements may impose their own tariffs in response, or simply cease to export to Bahrain, thereby reducing competition and pushing up prices.

In the long term, Bahrain is looking to develop a $3bn Economic Industrial City on 95 sq km of reclaimed land, a project that will likely continue until 2040 when it is projected to reach full occupancy. At such a time, it is likely that with careful management and prudent policies, Bahrain’s low costs, logistics infrastructure and skilled labour will still be attracting industrial investors.

The SME sector also holds promise, especially given the continued support of Tamkeen. Indeed, while the prospect of ending energy subsidies may worry Bahrain’s smaller manufacturers in the short term, in the long run this will lead to more efficiency in the sector. Bahrain’s light regulatory environment and excellent logistics facilities will continue to attract business to the kingdom for the foreseeable future.