Economy
From The Report: Bahrain 2017
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The kingdom of Bahrain has thrived as one of the Gulf’s financial centres for decades. Despite increasing competition from emerging financial centres in the region, its advanced regulatory framework, educated workforce and relatively low-cost environment means that it remains an attractive platform for companies engaging with the wider GCC and beyond. The recent decline in oil prices, however, serves as a reminder of the government’s reliance on its hydrocarbons resources for revenues. Facing a stubborn fiscal deficit, Bahrain is in the process of overhauling its subsidy framework and seeking new income streams, both of which are challenging prospects in an economy renowned for generous social support and light-touch taxation. The kingdom’s long-standing diversification strategy, meanwhile, has taken on a new urgency with the prospect of volatile oil prices for some years to come.

This chapter contains interviews with Khalid Al Rumaihi, Chief Executive, Bahrain Economic Development Board; Mahmood Al Kooheji, CEO, Mumtalakat; and Ebrahim Mohammed Janahi, Chief Executive, Tamkeen.

Articles from this Chapter

Overview

Lasting appeal: Steady growth and a well-regarded business climate have helped maintain the kingdom’s position as a financial centre
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The kingdom of Bahrain has thrived as one of the Gulf’s financial centres for decades. Despite increasing competition from emerging financial centres in the region, its advanced regulatory framework, educated workforce and relatively low-cost environment means that it remains an attractive platform for companies engaging with the wider GCC and beyond. The recent decline in oil prices, however, serves as a reminder of the government’s reliance on its hydrocarbons resources for revenues.…

Interview

Opportunity in disguise: Khalid Al Rumaihi, Chief Executive, Bahrain Economic Development Board, on the encouraging economic diversification
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Interview: Khalid Al Rumaihi How can Bahrain best capitalise on its head start on diversification in comparison to most other Gulf states? KHALID AL RUMAIHI: Encouraging the growth of small and medium-sized enterprises (SMEs) and start-ups is a top priority for Bahrain, as it will help to ensure we are able to deliver high-quality jobs for Bahrainis. The government is committed to continuing to support the development of a strong start-up ecosystem, focused on areas such as education, regulation,…

Analysis

Moving on up: The kingdom continues to improve in international rankings measuring the ease of doing business
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Economic diversification has been a strategic priority for GCC finance ministries for decades, and the recent decline in oil prices has only served to underscore the importance of hydrocarbons-driven economies reducing their dependence on oil and gas to ensure their long-term economic stability. Much of the momentum behind this process in the GCC is derived from direct government investment, with hydrocarbons revenues often diverted towards areas of the economy that government planners consider…

Interview

Setting an example: Mahmood Al Kooheji, CEO, Mumtalakat, on encouraging efficiency and improving transparency
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Interview: Mahmood Al Kooheji How have low oil prices affected investments and the regional economic forecast more generally? MAHMOOD AL KOOHEJI: While oil price volatility may have some impact in the non-oil sector, the long-term picture in the region is strong. The effect has been minimal for Mumtalakat and will not impact our ability to make investments. We finance ourselves in the international capital markets, and do not rely on government oil revenues. Our portfolio is broad, and the sectors…

Interview

Supporting growth: Ebrahim Mohammed Janahi, Chief Executive, Tamkeen, on promoting entrepreneurship and investment in Bahrain
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Interview: Ebrahim Mohammed Janahi What can be done to entice large companies to continue investing in Bahrain? EBRAHIM MOHAMMED JANAHI: All businesses look for growth and development opportunities, regardless of their size. For large international companies, options are evaluated based on the location of their investments to ensure that they return adequate growth. As such, they generally look for well-developed economies that have a high probability of returning good value on their investment.…

Analysis

Without barriers: Closer integration with its Gulf neighbours should bring a host of benefits to the kingdom
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Bahrain has always been one of the more connected centres of the Gulf. It has been a vibrant entrepôt for millennia, boasting a maritime history dating back to the commercial traffic that once plied the waters between ancient Mesopotamia and the civilizations of the Indus valley. Its geographic location has resulted in a particularly close connection with the largest economy in the region. Saudi Arabia occupies an especially prominent position within the array of nations with which Bahrain…

Analysis

Adding it up: The introduction of a GCC-wide value-added tax could boost revenue and provide an alternative to oil revenues
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Bahrain, like other financial centres in the GCC, has successfully marketed itself as a low-tax environment in a bid to attract investment from across the globe. The majority of companies operating in the kingdom face no corporate tax at all, with only gas and oil companies engaged in exploration, production and refining facing a levy on income of 46%. There is no taxation at all on dividends, capital gains and payrolls, and there is no withholding tax on dividends, interest, royalties, technical…