Bahrain II: two seas to prosperity

Aired August 2006

Welcome to Bahrain, two seas to prosperity.

The Kingdom of Bahrain is an archipelago of 33 islands located in the Arabian Gulf. The island nation whose name means two seas is just off the east coast of Saudi Arabia, with Qatar to the south and across the Persian Gulf.

Bahrain has been ruled by the Al Khalifa dynasty since 1783. Sheikh Hamad bin Isa Al Khalifa became ruler after his father’s death in 1999. In 2002, Bahrainis voted in a referendum making him the first king, and Bahrain a kingdom. Recently the country has been enjoying increased freedom of expression, and today is recognized as aliberal and modern Persian gulf state.

Bahrain joined the United Nations and the Arab League in 1971. Since 1981 it has maintained close ties with its five neighbors in the Gulf Cooperation Council. With its well-managed economy and large expatriate community, Bahrain is the ideal springboard to the GCC for overseas investors.

Already the financial capital of the Middle East, Bahrain is developing fast across several sectors, with many opportunities for investment. A number of large-scale infrastructure projects are attracting global attention, and Bahrain’s profile is rising as a business and leisure destination. Bahrain is truly on the move.

FINANCE

Bahrain has been the pre-eminent financial centre for the Gulf region and much of the Arab world for the past two decades. The oil boom in the 1970s and the war in Lebanon were the catalyst for the sector’s growth.

Today the financial sector contributes around 25 per cent to the Kingdom’s GDP and is the largest single employer in Bahrain.

Bahrain’s stable, well regulated and liquid banking system has made it a regional hub for banking, financial and insurance services.

The Bahrain Monetary Authority or the BMA is the Kingdom’s equivalent of the Central Bank, governed by His Excellency Mr. Rasheed al-Maraj. It plays the role of the central bank and is the single regulator and licenser of financial institutions across the country.

The BMA is known globally for its strict regulation, maintenance of stability in the financial sector and transparency. It is extremely well respected by bankers across the world.

The new face to Bahrain’s downtown business district is the 1.4billion USD Bahrain Financial Harbor. This landmark project, located on a prime waterfront site in the heart of the capital Manama will inflate the platform from which the Kingdom’s dominance as the Middle East’s leading financial center can be skyrocketed.

Another financial niche that Bahrain has become a global leader, is in Islamic banking, ever since the first Islamic bank was founded in Bahrain in 1979.

There has been a surge of interest in Islamic banking in recent years, as consumers demonstrate more product awareness and investment know-how. International investors interested in regional Islamic banking operations should be looking at Bahrain.

TRADE AND INDUSTRY

The end of the hydrocarbon era is approaching for Bahrain much faster than the rest of the Gulf, and diversification has become less of a good business strategy and more of a necessity. Bahrain was quicker at seeing this eventuality than other states, and has stayed ahead of the curve in terms of diversification. One of the main ways the Bahraini government sees to better its chances in diversifying is by providing an investor-friendly environment.

Bahrain signed the groundbreaking Free Trade Agreement with the United States in September 2004. For Bahrain, the FTA confirms its commitment to free market principles and offers great benefits to the local business community. The removal of trade barriers gives Bahraini companies valuable access to the Amerian market. The Bahrain FTA also serves as a regional anchor for the Gulf. The agreement has positive implications both for Bahrain and for the GCC region.

In particular, it opens up opportunities for Bahrain to serve as a re-export hub for its GCC neighbors.
Investors choosing Bahrain can access a large financial pool through high net worth individuals in the region, and a sophisticated customer base across the GCC. Alternatively the U.S.-Bahrain free trade agreement provides new market access for American consumer and industrial products.

Bahrain is already home to a skilled and flexible workforce, meeting the needs of new and traditional businesses. Over the last 18 months, however, new initiatives have been progressed to ensure the strengths of the workforce develop even further in the future.

Under legislation currently passing through Parliament, there will be support for businesses investing in training and development of core and specialist skills for Bahrainis, as well as Government-led initiatives to encourage the development of sector-specific skills within Bahrain.

TELECOMMUNICATIONS

The Bahraini government recognizes the need for world-class communications infrastructure to fulfill its ambition of becoming the region’s knowledge-based services hub. Bahrain’s attractiveness as a place to live and work depends on the availability of state-of-the-art information and communications technologies.

As a result the telecom sector is undergoing a radical liberalization process, set out in the National Telecommunications Plan. The monopoly held by the Bahrain Telecommunications Company Batelco has ended and the market has since opened up. A new independent regulatory body, the Telecommunications Regulatory Authority TRA, has been established.

Bahrain's Ministry of Commerce is pursuing a scheme to bring people closer to the institutions of national government. The public face of the e-government scheme will be the Bahrain Internet Exchange - a 'one-stop shop' situated in the Seef Mall, Bahrain's largest shopping centre. The facility will provide a comprehensive public network, which will enable citizens to interact with Bahrain's ministries, allow them to make enquiries, pay bills and complete other government-related transactions without having to travel to separate offices.

Foreign investors have been able to compete for local and international fixed voice and data services licenses since July 2004. Bahrain has a strategic location as a gateway to the rapidly expanding telecom markets of Saudi Arabia and the Gulf, making it particularly attractive to investors.

REAL ESTATE

Traditionally investing in real estate has always been a popular form of investment across the Middle East due to the Sharia Law, which prohibits the earning of interest on money. As the Gulf is currently home to large amounts of cash and high net worth individuals looking for an outlet within the region to invest, the real estate market across Bahrain and the GCC is booming.

Bahrain is a very popular market for second home owners, both locals and expatriates in the GCC. Many expatriates live in Bahrain with their families and commute to Saudi Arabia for work. Bahrain is an attractive place for homeownership because it is democratic, free, liberal and accepting.

Because of its position as a low-lying island in the Arabian Gulf, it is very easy and cheap to reclaim land in order to ensure a prime location for a mega real estate project. Land is being reclaimed at an unprecedented rate to meet the demand of apartment buildings, residential developments and recreational facilities.

Constituting much of this development is the ever popular joint resort and residential developments that offer all amenities to residents and guests from spa and gym to restaurants, shopping and leisure. Various projects across the Kingdom boast a variety of attractions from island life real estate away from the bustling downtown Manama, to the true desert spa and wildlife experience in the middle of the country. Each development is focused on a particular niche, thus creating investment opportunities for all types of investors and homeowners.

TOURISM

An intoxicating mix of eastern and western cultures, in Bahrain one looks both to the past and the future.

One of the most popular historical sights in Bahrain, is the 16th Century Fortress built by the Turks and later occupied by the Portuguese. It has been restored using original materials. Quite a sight at sunset, it offers a grand sea view, and an escape from the modern architecture of downtown Manama.

Bahrain also hosts the 3rd largest sporting event in the world, the formula 1. Every year all eyes are on Bahrain when the racing elite sets foot on the Bahrain international circuit.

The circuit was built in a record time of 22 months.
And last year the BIC was recognized as the best organized motors sport event in the world. This is why they call it the home of motors sport in the middle east.

After a hard days work, one can relax in the many bars and clubs Bahrain has to offer. One of the most famous bars is J.J.’s, a classic Irish pub with traditional Irish dishes and great service. Bahrain also has a great variety of clubs. Club seven boasts the ambiance of an Arabic flavored night. At the famous B.J.’s or Likwid, people dance to the latest club tracks. And where more than often famous DJ’s from all over the world are invited to Bahrain.

Bahrain is undergoing unprecedented tourism development with new multi-billion dollar projects being announced frequently. This accelerated momentum has drawn the international spotlight on the island and helped to reinforce its position and importance as one of the leading tourism destinations in the region.