The name Bahrain means “two seas” in Arabic. It is unclear what two seas the term specifically refers to, and for much of its history, Bahrain was the name for the eastern coast of Arabia. Only recently has it come to identify the islands of the Awal archipelago.
HISTORY: The island’s first notable inhabitants were of the Dilmun civilisation, approximately 6000 years ago, but its geographically strategic location has attracted the attention of numerous empires over the centuries, including the Persians, Sumerians, Assyrians, Babylonians, Arabs, Portuguese and the British. As a commercial centre during the period of ancient Mesopotamia, its key location for trans-Gulf trade drew merchants and imperial administrations for millennia to come.
ECONOMY: Bahrain pioneered the Middle East’s oil production in 1932, thus establishing the region’s initial framework for the petroleum industry. The new resource enabled Bahrain to modernise its economy by moving beyond traditional industries such as pearl diving and fishing. However, the kingdom sought to diversify its economy at an early stage and consequently established itself as a leading regional financial centre in the 1970s and 1980s. Its highly regarded regulatory system encouraged various regional banks looking to move their capital out of Lebanon during that country’s civil war and set up base in Bahrain.
Today, the country’s national plan, Bahrain Economic Vision 2030, aims to enhance private sector growth while the government invests in infrastructure, affordable housing and human resources. The kingdom maintains a developed industrial sector and hosts one of the world’s largest aluminium smelters, Alba, with downstream businesses creating products for export. Other industries in Bahrain include downstream oil and gas products as well as a growing food industry, serving both the Saudi market and the global economy.
In the World Bank’s 2017 “Doing Business” report, the country ranked 63rd in the world for the ease of doing business and 4th for paying taxes, and its GDP was recorded at $33.2bn in 2015. In the World Economic Forum’s 2016-17 Global Competitiveness Index, the kingdom ranked 48th globally, mainly due to its strong institutions, infrastructure, market efficiencies and business sophistication.
Bahrain’s model of development has been studied and formalised by the UN Industrial Development Organisation (UNIDO), in partnership with the Arab Regional Centre for Entrepreneurship and Investment Training based in Manama, the nation’s capital. The UNIDO Entrepreneurship Development and Investment Promotion programme, developed in Bahrain, has been implemented, with UNIDO support, in 42 developing countries around the world with strong results. In a bid to facilitate increased privatisation and to improve efficiency, a fully independent body, the Tender Board, is working to increase government transparency and clarity to both bidders and purchasers of the system by creating pre-certification, online tracking and standardisation of the tenders.
GOVERNMENT: Bahrain gained independence from the British government in 1971. The kingdom has been ruled as a constitutional monarchy since 2002 under the leadership of King Hamad bin Isa Al Khalifa, who is the country’s current ruler. King Hamad came to power in 1999 following the passing of his father, Sheikh Isa bin Salman Al Khalifa, who began to rule in 1961. Sheikh Khalifa bin Salman Al Khalifa, the country’s prime minister, has served as head of government since 1971. The crown prince, Sheikh Salman bin Hamad Al Khalifa, is the deputy supreme commander of the Bahrain Defence Force, the first deputy prime minister and chairman of the Economic Development Board. Executive authority is entrusted with the king and his appointed Council of Ministers.
A bicameral legislature, known as the National Assembly, was re-established after its suspension in 1975. The assembly consists of a 40-seat lower house, the Council of Representatives, whose members are elected to four-year terms; and the Consultative or Shura Council, a 40-seat upper house, whose members are appointed by the king. The Shura Council has veto power over the lower house. The latest parliamentary elections took place in November 2014 and, though met with boycotts by the Al Wefaq party, garnered over 52% voter turnout. Six women were elected to the 40-member lower house of Parliament, the most since elections began in the kingdom.
POLITICS: Due to a wave of protests throughout the Arab world in 2011, civil unrest reached its height in Bahrain during February and March of that year. The demonstrations, predominantly by Shiite Muslim citizens, related to grievances surrounding the country’s democratisation process. By mid-March 2011 the kingdom had received GCC security assistance in order to uphold political stability, and the country’s businesses managed to maintain positive growth in the following years. As a result of a national dialogue with the aggrieved parties, the king authorised the Bahrain Independent Commission of Inquiry (BICI) to investigate the crisis and develop recommendations moving forward. The final report highlighted various instances of police brutality and demonstrator violence during the unrest and provided recommendations for political reform. As of late 2016 the government has remained under pressure from the opposition party and the international community regarding the implementation of the BICI report recommendations.
FINANCIAL SERVICES: Bahrain’s rise to prominence as the region’s key financial centre occurred in the 1970s. The banking sector benefitted significantly from the kingdom’s economic diversification programme and is highly regarded for its regulatory framework under the Central Bank of Bahrain (CBB). According to the CBB, there were 404 financial institutions in the country as of November 2016, and the sector contributes 16.7% of overall GDP. In addition, Bahraini nationals comprise approximately 66% of employees in the financial sector.
ISLAMIC FINANCE: Bahrain was home to the highest number of Islamic financial institutions in the Middle East as of December 2016, according to the ICD-Thomson Reuters Islamic Finance Development Indicator, ranking second globally only to Malaysia. The kingdom also hosts a number of regulatory institutions that provide international standards for the sector such as the Accounting and Auditing Organisation for Islamic Financial Institutions, the International Islamic Financial Market, the Islamic International Rating Agency, and the General Council for Islamic Banks and Institutions. The kingdom regularly issues sukuk (Islamic bonds) that are met with full subscription rates. The kingdom is also home to seven takaful (Islamic insurance) companies.
ENERGY: The energy sector is a pillar of Bahrain’s economy, accounting for the majority of government revenue but a shrinking proportion of GDP. Upstream recovery technology enabled Bahrain to increase its oil production rate to over 58,000 barrels per day (bpd) in 2015, up from 48,000 bpd in 2013. The government’s target to reach 100,000 bpd in 2017 was likely reevaluated with the onset drop in global oil prices as Tatweer, Bahrain’s exploration and production company, froze new drilling in 2016. Presently, the country refines approximately 260,000 bpd, with the majority of crude resources coming from the Abu Safa field, which the country shares with Saudi Arabia. A new pipeline, with a capacity to transfer 350,000 bpd from Saudi Arabia to a Bahraini refinery, is expected to be operational by 2018, replacing an ageing 230,000 bpd pipeline. Gas production is also expected to increase from 1.5bn to 2.7bn cu feet per day within the same time frame.
TRANSPORT: The island’s geographic location is a key strategic asset, enabling it to serve as a transportation hub for the region. The Khalifa Bin Salman Port has enhanced the country’s role as a primary supplier of goods to Saudi Arabia, the region’s largest market. Bahrain is also linked to Saudi Arabia via the 25-km King Fahd Causeway, which will soon be expanded to handle increased traffic by trucks, commuters and tourists. Additionally, the Bahrain International Airport is in the midst of an extensive expansion and modernisation programme, which is expected to further improve the country’s status as a tourist destination and a centre for logistics. Bahrain Customs Affairs is currently undergoing a phase of modernisation with eCustoms initiatives and increasing pre-clearance capabilities.
TOURISM: Due to its vibrant history, rich culture and diverse population, Bahrain attracts a large number of tourists, particularly from other GCC states. In 2012 the Arab League named Manama the Capital of Arab Culture, and the kingdom hosted a wide array of events relating to Arabic art, music, architecture and literature. Manama was also designated as the Capital of Arab Tourism for 2013, boosting the industry after a decline in tourism numbers following political unrest in 2011, and named Capital of Gulf Tourism 2016 by the tourism minister of the GCC. The Formula 1 Gulf Air Bahrain Grand Prix also remains a significant driver of annual tourism revenue.
In addition, Bahrain is investing in infrastructure to support the meetings, incentives, conferences and exhibitions segment, and the kingdom’s Ministry of Tourism was absorbed by the Ministry of Industry and Commerce to push development of the sector ahead. The newly established Bahrain Tourism and Exhibitions Authority, meanwhile, has begun work to formalise the sector and spearhead its development with a new identity, “Ours. Yours. Bahrain”, fashioned to highlight the hospitable and welcoming culture of the country.
CLIMATE: Bahrain’s climate consists of two seasons, a hot and humid summer and a mild winter. April through October generally mark the summer months, when the average temperature hovers around 40°C, with highs of up to 48°C. During the winter months – generally November through March – the temperature ranges between 10- 20°C. The country’s annual rainfall averages 77 mm, typically coming during the winter season.
GEOGRAPHY: Due to land reclamation projects, the country has increased its overall landmass to more than 765 sq km, up from its original size of 665 sq km. The total archipelago consists of 33 islands and is situated off the eastern shores of the Arabian Peninsula. The four predominant islands include Bahrain Island – accounting for 76% of the total landmass – Al Muharraq Island, Sitra Island and Umm An Nasan Island, which are all interconnected by causeways. Bahrain Island is also connected to Saudi Arabia via the 25-km King Fahd Causeway. Plans were in the works for a new 40-km causeway to Qatar, the kingdom’s second-closest neighbour, which would be the world’s longest fixed link, but there has been no new development for several years. A newly-announced second causeway to Saudi Arabia including both road and rail links is likely to come to fruition earlier.
Manama, the capital city, sits at the northernmost part of Bahrain Island and is the country’s most populous city. Other major cities include Riffa, Muharraq, Isa Town and Sitra. The Bahrain International Airport is located in Muharraq. Jebel Al Dukhan is the kingdom’s highest point, at 122 metres, while the majority of the landmass consists of low-lying desert. Less than 3% of land is arable, and the primary agrarian area is situated on a 5-km strip on Bahrain’s northern coast, which produces dates, almonds, figs and pomegranates.
NATURAL RESOURCES: The country’s primary natural resources include oil, gas, fish and pearls. The traditional industries of fishing and pearl diving have diminished substantially ever since Bahrain began oil production but still remain culturally significant. Although the kingdom was the first GCC state to discover oil, it has smaller petroleum reserves than its neighbours. Water is another finite local resource for the kingdom, and the island’s primary aquifer is now becoming salinised due to overuse. Bahrain currently depends on desalination for approximately 90% of its potable water, as fresh water sources are scarce.
POPULATION: The kingdom hosts a diverse, multicultural population that, according to an estimate by the Central Informatics Organisation in 2014, totals around 1.25m people: 614,830 of whom are Bahraini nationals and 638,361 expatriates. The percentage of foreign nationals in Bahrain has increased from 38% of its total population in 2001 to about 55% in 2014, with the majority hailing from Asia. Due to the large size of the expatriate workforce, males account for approximately 62% of the population. Almost 90% of people live in urban areas, with most in the Capital Governorate covering Manama. A 2016 report by Euromonitor states that the population is likely to reach 2.6m by 2030, with 53% of foreign citizens hailing from South and South-east Asia.
LANGUAGE: The official language of the kingdom is Arabic. There are several colloquial tongues however, one a similar dialect to Khaleeji (Gulf) Arabic and the other closer to Iraqi Arabic (Baharna). Still, English is widely spoken because of the extensive expatriate community and business environment. The majority of street signs and documentation include English, which is also a compulsory second language in the school system. However, laws require most signage to include an equal amount of Arabic at a minimum. Other common languages heard in the country include Farsi, Urdu, Hindi, Malayalam and Tagalog.
RELIGION: Islam is the official religion of Bahrain. Approximately 98% of Bahraini nationals are Muslim and are adherents to either the Shia or Sunni sects, but the kingdom is considered to be tolerant regarding the practice of different religious beliefs. The 2010 census stated that, at the time, 70% of the country’s population classified themselves as Muslim and 30% as members of other religions. The expatriate population includes substantial Christian, Hindu, Buddhist and Sikh communities. The country is also home to a small indigenous Jewish community that originally emigrated from Iraq in the late 19th century. Bahrain’s freedom of faith is considered a defining characteristic of the Gulf state, and the travelling delegation, “This is Bahrain”, has been promoting awareness of Bahrain’s culture internationally since May 2014, stressing the kingdom’s ethnic and religious diversity.
EDUCATION: Bahrain was the first Gulf state to initiate public education – for boys in 1919 and for girls in 1928. Since then, Bahrain has invested heavily in education and the government currently spends approximately 11-12% of its budget on education development. Bahrain’s literacy rate is second-highest in the Arab world at 94.6%. In line with Bahrain’s Economic Vision 2030, the government launched the Quality Assurance Authority for Education and Training to develop and implement standards for institutions. Mandatory contributions to Tamkeen – the state agency charged with development and funded by companies for each expatriate worker employed – are invested in Bahrain’s education and training system to cultivate a competitive local workforce. On the government side, the Bahrain Institute of Public Administration is a body that focuses on improving the ability of public administrators in technical and in soft skills, focusing on sharing knowledge by bringing in outside experts and offering its services to foreign governments across the GCC.
HEALTH CARE: As has been the case with other sectors, Bahrain has historically led the GCC in health care. The American Mission Hospital (AMH), established in 1902, is the region’s oldest. Bahrain created its Ministry of Health in 1973 and modelled its policies on the operations of AMH. The government also subsidises health care costs for all citizens.
The Supreme Council of Health is currently streamlining an e-Health initiative with the objective of linking hospitals across the country to a central databank of medical records in order to reduce costs and improve the service quality. Plans are also under way to increase the privatisation of the health sector, with discussion of rules requiring expatriates to carry health insurance.