Recent years have seen direct investment growing in Bahrain’s manufacturing sector. According to the Economic Development Board (EDB) – the kingdom’s export promotion agency – investment in manufacturing rose by 18% in the five years to 2018, and by 4.3% during the first half of 2018. Figures for full year 2018 show that the manufacturing, transport and logistics sectors accounted for a combined 24% of total direct investment to the country, amounting to around $200.3m. This figure was second only to the tourism, real estate, education and health care category, which together accounted for 63% of direct investment, or $526.4m, but ahead of financial services (8%, $64.4m) and ICT (5%, $39m). Much of this is due to various investor incentives and advantages offered by the kingdom. Bahrain is the only GCC state that permits 100% foreign ownership of manufacturing and distribution businesses outside of free zones, while all manufacturing, raw material imports, plant machinery and equipment, and spare parts are exempt from Customs duties.

Through a number of free trade agreements, businesses in Bahrain also enjoy duty-free access to the rest of the GCC, the US, Singapore, 14 Arab countries, Norway, Switzerland, Iceland and Liechtenstein. Access to Saudi Arabia in particular has been a major draw for foreign investors, as have the country’s cost competitiveness, with the EDB reporting that Bahrain offers the lowest start-up and operating costs in the GCC.

Established Roots

Although the kingdom’s aluminium and petrochemical industries continue to dominate the manufacturing and industrial landscape, Bahrain has also witnessed notable investment in its food and fast-moving consumer goods (FMCG) segments. Several major international corporations have established operations in the kingdom over the years. In June 2013, for example, UK-based pharmaceuticals company Reckitt Benckiser officially opened the first phase of its manufacturing facility at Bahrain International Investment Park (BIIP). The facility manufactures liquid FMCG, including Dettol soap and sanitiser, as well as laundry detergent and cleaning supplies. While in 2011 hygienic paper products manufacturer Olayan Kimberly-Clark launched a $50m paper plant in Askar. The project was a 50:50 joint venture between Saudi and Bahraini business partners, according to a company statement. At the time of opening, Olayan Kimberly-Clark held nearly one-third of the family care and tissue paper market. Combined with upgrades at its facilities in Dammam, Saudi Arabia, the plant enabled the company to triple its production capacity and implement quality control improvements across existing facilities.

International Facilities

More recently, the world’s second-largest food and beverage company Mondeléz International, formerly known as Kraft Foods, moved to expand its Bahraini operations in April 2018 with the opening of a $90m biscuit factory. The project includes a new 250,000-sq-metre plant producing 20,000 tonnes of Barny Cakes, and Oreo and BelVita brand biscuits and cookies annually. The facility’s 3-km production line can create 10,000 Oreo cookies per minute. According to the EDB, the factory created 300 new jobs, of which one-third are filled by Bahraini citizens. The EDB reports that government agencies worked closely with Mondeléz to reduce the transit time required to ship goods from its factory in Bahrain to Saudi Arabia by 70% as part of broader aims support value-added manufacturing and local job creation.

Meanwhile, the Ministry of Industry, Commerce and Tourism, the EDB and Tamkeen, a semi-autonomous government agency tasked with supporting private sector growth, collaborated to reduce transport and export costs. The following month, Malaysian instant coffee manufacturer Power Root announced plans to invest $14m in a new production facility to be located at BIIP in the Al Hidd industrial area. The investment was announced during the Gateway Gulf Investor Forum, with the company publicly stating in June 2018 that it chose the kingdom due to its lower operating costs.