Bahrain’s manufacturing industry is a key contributor to non-oil GDP and is one of the priority sectors targeted by the government to drive economic diversification. Aluminium manufacturing, led by the majority government-owned enterprise Aluminium Bahrain (Alba), is the country’s largest industrial segment. The kingdom’s globally competitive capabilities and output will be further leveraged through downstream infrastructure expansion. The government has identified increased investment and activity in manufacturing segment as a critical component of its plans to establish the country as a competitive logistics centre. This will also enable the kingdom to supply its major ongoing infrastructure development programmes with locally produced materials.

Bahrain’s focus on manufacturing, together with its favourable business environment and relatively efficient administrative procedures, has made the country a regional centre for an increasing number of multinational manufacturing companies. Utilising the presence of such entities to enhance the domestic talent pool and strengthen value chains for local producers is another important objective. Looking ahead, broadening the country’s base of small and medium-sized enterprises (SMEs) and increasing the value attached to the Made in Bahrain trademark remain key priorities for stakeholders.

Structure & Oversight

The manufacturing segment is guided by various government bodies and publicly-owned conglomerates, with the Ministry of Industry and Commerce (MoIC) serving as the primary regulator. The Industrial Sector Strategy 2022-26 aligns with Bahrain Economic Vision 2030, which aims to reduce the country’s dependence on hydrocarbons revenue by diversifying the economy. To achieve this goal, the MoIC is focused on developing relevant infrastructure, digitising procedures, streamlining administrative processes and eliminating bureaucratic barriers to investment. These efforts are part of the broader Economic Recovery Plan launched in 2022 in the aftermath of the Covid-19 pandemic, to boost economic diversification, as well as enhance its international competitiveness.

The MoIC actively collaborates with various public and private entities as part of the Team Bahrain initiative to foster economic growth, including the Bahrain Economic Development Board (EDB), the kingdom’s investment promotion agency; Tamkeen, the semi-autonomous government labour fund; Export Bahrain, the government’s dedicated support arm for companies selling overseas; the SME Development Board; and financial institutions. The Bahrain Chamber of Commerce and Industry serves as a bridge between the public and private sectors. With the support and assistance of such entities, the government is working to address the challenges being faced by the private sector.

“Too much of the Bahrain and GCC private sectors are not export-oriented, and the prevailing market fragmentation with a preponderance of small businesses in some sectors has put pressure on margins as businesses compete on price,” Jarmo Kotilaine, chief strategy and data analytics officer at Tamkeen, told OBG. “One of the keys to unleashing productivity is harnessing technology more systemically and enabling companies previously focused on the domestic market to expand beyond Bahrain.”

In July 2022 Bahrain joined the Industrial Partnership for Sustainable Industrial Development, which includes the UAE, Egypt and Jordan. The partnership facilitates science and technology sharing, industrial partnerships and multilateral trade among participating countries. In February 2023 the partnership’s higher committee shortlisted 12 major industrial projects worth a combined $3.4bn, which is expected to further boost economic growth.


Significant laws for manufacturing entities operating in Bahrain include Legislative Decree No. 28 of 1999 on the establishment and organisation of industrial zones, which underwent significant amendments in both 2015 and 2018. This law, consisting of 36 articles, covers issues such as the establishment and organisation of industrial zones, construction regulations within these areas and penalties for offenses related to their operation.

Another important regulation is Law No. 81 of 2006 approving the Unified Industrial System Law of Cooperation Council for the Arab States of the Gulf. The primary purpose of this law is to promote industrial and economic cooperation among GCC countries, establish regional synergies in critical areas such as industrial strategy and policy formulation, facilitate access to shared inputs, encourage development and transfer of technology, create employment and training opportunities, and develop environmental standards.

Government-Owned Enterprises

As is the case across the GCC, the government holds significant interests in the country’s heavy and light industrial activities. Several firms specialising in petrochemicals and fertilisers production, including Bahrain National Gas Company and Gulf Petrochemical Industries Company (GPIC), are among the portfolio companies under Bapco Energies. Meanwhile, the kingdom’s sovereign wealth fund, Mumtalakat, holds controlling or significant stakes in Alba, Middle Eastern gas supplier Gulf Cryo and leading European metal producer Aleastur, among other major manufacturers from a range of product lines.

Hydrocarbons remain the primary single source of revenue for Bahrain, with aluminium being its strongest non-oil industry. Bapco Energies-owned Bahrain Petroleum Company (Bapco) and Alba play key roles in the kingdom’s economic development plans. Both companies are currently undertaking significant expansion works to enhance downstream production, create new value chains, generate more revenue and provide additional job opportunities.

Industrial Zones

Bahrain has seven industrial zones – Salman Industrial City, and the Mina Salman, Ma’aneer, Sitra, Al Mazara, Al Lhaasay and Haffera industrial parks – which attract significant local and international investment. These zones, strategically located along Bahrain’s coastline, are served by the kingdom’s advanced logistics infrastructure, including the King Fahd Causeway, which provides efficient road access to Saudi Arabia, the GCC’s largest consumer market. All of Bahrain’s industrial zones were established between 1960 and 1984, and they are home to major manufacturers such as Bapco, Alba and Bahrain Steel, among others.

The Bahrain International Investment Park (BIIP) is another noteworthy initiative launched in 2005. The free zone aims to attract both foreign and domestic investment to emerging sectors like food and beverages, fast-moving consumer goods and pharmaceuticals. To enhance Bahrain’s export profile, the government is actively identifying entities that have the ability to bring value to the country’s economy.

Bahrain’s logistics strategy seeks to significantly increase both air and maritime freight capacities (see Transport chapter). As part of the plan, the multi-modal logistics centre Bahrain Sea-to-Air Logistics Hub began operations in December 2021, shortening transit and Customs processing times between Khalifa Bin Salman Port and Bahrain International Airport. More recently, Bahrain began construction on the US Trade Zone in February 2022. This, along with the March 2022 signing of agreements between the US and Bahrain relating to industry, logistics and space sciences, signals a strengthening of the trade and diplomatic ties between the two countries. The 22 free trade agreements (FTAs) stand to benefit all operators in Bahrain’s industrial zones.

Size & Performance

The manufacturing segment experienced fluctuations in GDP growth in 2021 due to the economic disruptions caused by the pandemic. However, the sector posted 1.8% year-on-year (y-o-y) expansion during the fourth quarter of 2021. In the first quarter of 2022 the sector witnessed 5.3% y-o-y growth, followed by further expansion of 7.6% and 5% in the second and third quarters, respectively. The sector has consistently been the third-highest contributor to GDP, trailing behind the oil and gas and financial services sectors. Throughout the first three quarters of 2022 the sector accounted for 14.2%, 13.9% and 14.2% of GDP, respectively.

The value of exports increased by approximately 22% in 2022 from $12.4bn to $15.1bn, according to preliminary figures from the Information and eGovernment Authority. This growth was primarily driven by an increase in the value of products of Bahraini origin, which rose from $10.6bn to $13.2bn. Although the overall export value remained consistent in December 2022 and January 2023, at $1.1bn, the value of exports of Bahraini origin declined slightly from $988m to $948m during that same period.


Incentives for investing in Bahrain include its advanced logistics, digital and financial infrastructure, competitive energy and utilities prices, 100% foreign company ownership across most types of businesses, unrestricted capital repatriation, currency exchange and transfer of dividends, no corporate or personal income tax – except for oil companies – and duty-free access to the GCC market.

In 2021 foreign direct investment (FDI) in non-oil sectors corresponded closely to the GDP contributions of each sector. Manufacturing emerged as the second-highest recipient of FDI stock, following financial and insurance activities. According to the Ministry of Finance and National Economy’s annual FDI roundup for the fourth quarter of 2021, the manufacturing segment experienced a 19% y-o-y increase in FDI stock, reaching a total of BH1.9bn ($5bn), which represented the highest proportional increase across all categories.

In October 2022 the Bahrain EDB announced that it had facilitated around $290m worth of foreign investment in manufacturing and logistics industries during the first three quarters of that year. This included expansions by global corporations such as FedEx, BASF and Racing Force Group. Several new players also entered the market, including Bahrain Sugar Refinery, packaging solutions firm Hoover CS and iCool, a refrigerant producer from China. iCool launched its production facility in Bahrain in May 2022. The company estimates that it will create around 150 jobs and generate an annual revenue of $31m in the first three years of operation. Its products will supply the Bahraini market, while a proportion will also be exported to Middle Eastern, the US and European markets. The company selected Bahrain as its regional base due to its favourable business environment and the access to global markets provided by the country’s 22 FTAs.

The government’s Industrial Sector Strategy 2022-26 aims to position Bahrain as a manufacturing centre for vehicles, leveraging the country’s strategic location. In line with this, in February 2023 Marson Group, a Bahraini project development company, announced plans to establish the kingdom’s first electric vehicle manufacturing plant, in partnership with Gauss Auto, a US-based manufacturer. The new company, Gauss Auto Bahrain, will be located in Salman Industrial City and will produce various types of electric vehicles for local and international markets.


As the world’s sixth-largest aluminium producer, Bahrain benefits from a variety of business incentives and FTAs. Alba, the dominant player in the segment, achieved a new production record in 2022, increasing its output by 38,889 tonnes, or 2.5%, and surpassing the record set the previous year. This improvement is attributed to recently completed expansion works, which made Alba the largest single-site smelter outside of China. The company is undergoing further upgrades, with a consortium that includes Mitsubishi Power and SEPCOIII awarded the contract to undertake the Alba Power Station 5 Block 4 expansion works. The project will increase the capacity of the combined-cycle plant from 1800 MW to 2481 MW, with commercial commissioning set for the fourth quarter of 2024. In addition, Alba has begun commissioning its forced cooling network project on potlines four and five, which will increase production by 17,000 tonnes a year.

The MoIC partnered with Alba to establish the Aluminium Downstream Park, which aims to utilise Alba’s new production capacity to encourage investment in value-added aluminium production and develop new value chains. In June 2022 Alba’s leadership met with German government officials to discuss potential investment in the park.

Key downstream aluminium players in Bahrain include Aleastur, Bahrain Aluminium Extrusion Company, Bahrain Mechanical Construction Company, Gulf Aluminium Rolling Company and Midal Cables, which provide aluminium alloys, cables, sheet, foil, coil, architectural system products, coatings and fabrications to local and international markets. As aluminium production is emissions-intensive, Alba and other downstream aluminium producers are taking steps to address the sustainability of their operations. “A sustainable and decarbonised world is one of intersections – between the environment and societies, technology and innovation, collaboration and action. And at Alba, our vision goes beyond the aluminium we produce or the manufacturing processes we rely on. Our ambition today, being the largest smelter in the world outside China, is to deliver what is best to all our stakeholders: our people, communities, customers and, most importantly, to Bahrain,” Ali Al Baqali, CEO of Alba, told OBG.

Iron Ore

Bahrain Steel, a wholly owned subsidiary of the investment group Foulath Holding, plays a significant role in the national economy, contributing approximately 4% to GDP and accounting for 25% of export trade by value. The company specialises in the production of iron ore pellets, which are the primary ingredient required for steel production, and procures the majority of its raw materials from Brazil.

Bahrain Steel’s annual production has experienced significant growth, increasing from 8m tonnes in 2019 to 12m tonnes in 2021. This growth can be attributed to the company’s strategic partnership reinforcement, which included a 20-year pellet feed agreement with Anglo American, a global mining company. In anticipation of the increased production, Bahrain Steel expanded its storage capacity in 2021 by entering into a land lease agreement with the Industrial Areas Directorate for a 369,000-sq-metre plot adjacent to its stockyard in Al Hidd. This expansion more than doubled the company’s storage space.


Petrochemicals is another segment with potential. GPIC, a joint venture between Saudi Arabia’s government-owned petrochemicals company SABIC and Kuwait’s Petrochemical Industries Company, is the kingdom’s sole petrochemicals producer. The firm plans to make significant upgrades to its urea and ammonia plants, in addition to its production of methanol. GPIC’s Sitra-based plant caters to several value chains, including construction chemicals, water treatment chemicals, polymers and plastic additives, paints and coatings additives, and oilfield chemicals. The company is seeking partnerships and joint ventures to expand its business across these and other lines, signalling opportunities for investors. In 2022 GPIC exported 1.1m tonnes of ammonia, urea and methanol, resulting in a record profit of $303m. The majority of these exports were directed to Asian markets.

The Bapco Modernisation Programme, slated to conclude in 2024, aims to increase refining capacity, expand its range of product offerings and improve energy efficiency. Under the programme, the refinery’s capacity is expected to increase from 267,000 barrels per day (bpd) to 380,000 bpd, providing feedstock for GPIC’s planned production expansion. Furthermore, Bapco’s final facility expansion phase will enable it to initiate its own petrochemicals production. The plant has been designed to be regionally competitive and will employ naphtha as its feedstock. With marketing and technical studies for the project complete, Bapco has begun seeking investors and technology providers.

Food Production & Processing

Food and beverage manufacturing was identified as a key growth area in Bahrain Economic Vision 2030. This has led to the expansion of operations for major international brands such as the US snacks company Mondelez International and Danish company Arla Foods. Other notable players in the food-processing industry include Saudi Dairy and Foodstuff Company, US-based Fine Foods, Bahrain’s Trafco Group and Jannaty Bahrain Food Industries.

The pandemic prompted many countries to review their food security strategies. In January 2023 the Bahrain Agricultural Foods Storage and Security Factory was launched in the Bahrain Business Incubator Centre in Al Hidd. The factory is designed to process and package local grains, strengthening supply chains for producers. A significant portion of output is intended for export, and its diverse capabilities are expected to attract investment in local food production and processing industries, bolstering food security.

“The government is working to enhance national food security by investing in the expansion of the country’s storage capacity and infrastructure. Although priorities may vary depending on the cost of food and imports, the focus on ensuring domestic food security remains strong,” Henry Craig, CEO of the Bahrain Flour Mills Company, told OBG.

In 2022 the Bahrain EDB facilitated an investment in the sugar industry by Bahrain Sugar Refinery. The company purchased a new 107-sq-metre factory in Al Hidd for $21.2m. The facility, set to begin operations in the first quarter of 2023, is expected to create approximately 200 jobs and produce 600,000 tonnes of refined sugar, 7600 tonnes of molasses and 10,000 tonnes of yeast annually.


Looking ahead, Bahrain has numerous opportunities to bolster its non-oil sector. The country’s strategic location, business-friendly policies and highly skilled workforce make it an attractive destination for investors. Although some smaller companies may be hindered by outdated business models, a rising tide of entrepreneurs, start-ups and SMEs has the potential to invigorate the manufacturing segment. To achieve this, it is crucial for relevant entities to strategically integrate emerging players into the economy.

Bahrain’s reputation as a conducive environment for investment is expected to grow, despite rising competition from neighbouring GCC countries, particularly Saudi Arabia. This should continue to draw the attention of prominent international manufacturers looking to establish operations in the GCC and MENA, boosting FDI in the country. At the same time, several leading manufacturing conglomerates in Bahrain are undertaking ambitious expansion plans to ramp up production as well as to diversify operations.