Bahrain - COUNTRY PROFILE
Country profile
This section provides a quick overview of the country, its history, geography, population, religion, natural resources, climate and languages.
Politics
The kingdom has a constitutional monarchy with an elected parliament and an independent judiciary. The leader is King Hamad bin Isa Al Khalifa, while Crown Prince Salman bin Hamad bin Isa Al Khalifa also serves as deputy supreme commander of the defence forces and chairman of the Economic Development Board. The state has long maintained a keen focus on issues involving economic diversification and modernisation, and the democratic reform process continued in 2009. This chapter includes interviews with HRH Prince Salman bin Hamad Al Khalifa, Crown Prince of Bahrain; and Katsuya Okada, Japanese Minister for Foreign Affairs.
Economy
Bahrain managed a healthy growth rate of 3.1% in 2009, even through the worst months of the global economic downturn. The Kingdom is focused on creating jobs and preparing Bahrainis to fill them, attracting foreign investment into new economic sectors, gradually reducing subsidies and introducing taxation, and protecting the progress already made. The expected deficit for 2010 is $1.87bn, and the government will make up the shortfall with debt and securities sales as it continues to push ahead with various projects. Vision 2030, the long-term national economic strategy, foresees a shift in focus away from the public sector towards private enterprise and further economic diversification. The Kingdom leads the way in the region in terms of labour market reform, and also has the region’s most open and transparent economy. Bahrain’s business climate is a crucial part of its offering to foreign investors, along with its adoption of global best practices in many fields. This chapter includes interviews with Sheikh Ahmed bin Mohammed Al Khalifa, Minister of Finance; Doris Leuthard, President of Switzerland; Pascal Lamy, Director-General, WTO; and Talal Al Zain, CEO, Mumtalakat. Also included is a viewpoint from Sheikh Mohammed bin Essa Al Khalifa, CEO, Economic Development Board.
Banking
The year 2009 brought a return to profitability, and 2010 is widely expected to see growth. Manama has an advantage in the niche of Islamic financial services, as one of two centres worldwide that dominate in sukuk issuance. Retail banks managed overall growth in 2009. While the sector has witnessed few mergers and acquisitions in recent years, consolidation is expected in the near future. This chapter includes interviews with Rasheed Mohammed Al Maraj, Governor, Central Bank of Bahrain and a round table featuring Patrick Gallagher, CEO, HSBC Bahrain; Abdulkarim Ahmed Bucheery, CEO, Bank of Bahrain and Kuwait; Adnan Ahmad Yousif, President & CEO, Al Baraka Banking Group; and Jonathan Morris, CEO, Standard Chartered Bank Bahrain.
Capital markets
The Bahrain Stock Exchange (BSE) benefits from the firm regulatory hand and prudent control of the Central Bank of Bahrain (CBB), and the bourse is a growing regional centre. Following the planned opening of the new Bahrain Financial Exchange (BFX) towards the end of 2010, the BSE will remain the place to trade stocks while the BFX will become a platform for trading in stocks, commodities, derivatives, sukuks and other Islamic securities. This chapter includes an interview with Fouad Rashid, CEO, Bahrain Stock Exchange and a viewpoint from Anthony Mallis, CEO, Securities & Investment Company.
Islamic financial services
Sharia-compliant financial products could be set for rapid growth as consumer awareness spreads and conventional banks roll out Islamic services. Bahrain is already home to four of the top five Islamic banks in the world, and local banks are gearing up to capture an increasing share of the local and MENA marketplaces. The opening of the BFX in 2010 is expected to provide a major boost to the sukuk market. This chapter includes a round table with Majid Al Refai, MD and CEO, Unicorn Investment Bank; Mohamed AR Hussain, CEO, Ithmaar Bank; Mohammed Ebrahim, CEO, Bahrain Islamic Bank; and Nabil Mohammed Hadi, CEO, Capivest.
Insurance
Premiums for 2009 are forecast to come in at $469m, with $290m in general insurance and $179m in life policies. However, this should expand rapidly thanks to the low penetration rate, increasing awareness and the expected arrival of compulsory health insurance for expatriates. Major international providers are continuing to arrive, and regulators have been focusing on creating the legal framework to allow the development of the Gulf’s first domestic market in captive insurance.
Energy
Tenders for offshore exploration and production, the redevelopment of the Bahrain field, and a deep gas exploration project were three milestones in 2009. Expanding use of enhanced oil recovery techniques and upgrading refining capacity are areas of focus going forward, while decreasing dependency on oil is also a priority. Bahrain’s industrial heavyweights are increasingly focusing on energy efficiency, with wind and solar among the options under consideration. A new pipeline is set to expand crude oil transportation capacity, while the Kingdom is teaming up with other GCC members to increase electricity generation. At the same time, the continuing growth in interest in shale gas continues to have ramifications for hydrocarbons producers around the world. This chapter includes an interview with Dr Abdul Hussain bin Ali Mirza, Minister of Oil and Gas Affairs, Chairman of the National Oil and Gas Authority, and Chairman of the Bahrain Petroleum Company.
Transport
Premiums for 2009 are forecast to come in at $469m, with $290m in general insurance and $179m in life policies. However, this should expand rapidly thanks to the low penetration rate, increasing awareness and the expected arrival of compulsory health insurance for expatriates. Major international providers are continuing to arrive, and regulators have been focusing on creating the legal framework to allow the development of the Gulf’s first domestic market in captive insurance.
Construction and real estate
Several large-scale developments are continuing to progress, such as the Qatar-Bahrain Causeway, expansion of the international airport, a port project and a new logistics zone. With a government stimulus measure expected to inject some $955m into the construction industry, further growth seems likely. The real estate market is shifting focus to underserved and potentially profitable areas, such as low-cost housing and infrastructure, while the move towards increased sustainable building practices continues as environmental concerns become more prominent.
IT
Bahrain’s e-government programme is a regional leader, providing a portal that allows citizens to perform 124 tasks online, a number that will be increased to 200 by the end of 2010. The Kingdom also boasts the highest broadband penetration rate in the GCC. This chapter includes an interview with Mohammed Ali Al Qaed, CEO, eGovernment Authority Bahrain.
Telecoms
The introduction of number portability and local loop unbundling are set to shake up the sector, which is already set to welcome a third mobile operator sometime in 2010, boosting competition and increasing employment opportunities. Meanwhile, the African market, with its low penetration rate, continues to attract interest among GCC providers. This chapter includes interviews with Peter Kaliaropoulos, Group CEO, Batelco; Mohammed Zainalabedin, General Manager, Zain; Ibrahim Abdulrahman Al Omar, CEO, VIVA Bahrain; and Mohammed Ahmed Al Amer, Chairman, Telecommunications Regulatory Authority.
Industry
Major industries were challenged to cut costs in creative ways during the global downturn, leaving them with more efficient operations. Bahrain’s location remains a major asset, allowing it to supply the markets of the northern Gulf with manufactured goods. Bahrain International Investment Park continues to grow, while the search for an alternative to natural gas an industrial feedstock is becoming more pressing. This chapter includes interviews with Hassan A Fakhro, Minister of Industry and Commerce; Mahmood Hashim Al Kooheji, Chairman, Aluminium Bahrain; and Khalid Rashid Al Zayani, Chairman, Al Zayani Investments.
Tourism
The government wants the industry to contribute 25-30% to GDP by 2020, and with annual growth expected to hit 6.5% over the next decade this goal seems feasible. Bahrain has been making a major effort to turn itself into a cultural destination in a region known more for its malls than museums and monuments, while the F1 Bahrain Grand Prix – along with many other spectator sports – is a major economic contributor. The government is also looking to the medical tourism niche as a significant potential contributor for the future.
Education
Primary and secondary school enrolment is among the highest in the GCC, between 95% and 100%, as is literacy, at 89%. The National Education Reform Initiative (NERI) – the education component of Vision 2030 – is a central tenet of the overall reform plan. The programme is focused on introducing international standards in schools and universities. This chapter includes interviews with Nezar bin Sadiq Al Baharna, Minister of State for Foreign Affairs, and Chairman, Tamkeen; and Garry Muriwai, Director, Bahrain Institute of Banking and Finance.
Health
The Ministry of Health, in partnership with the Economic Development Board, is establishing a new regulatory environment and making efforts to attract further private investment. Lifestyle-related illnesses have become more prevalent, and the sector is adapting to this, while the ministry’s response to the H1N1 virus has been considered a success. In the private sector, there is an increasing focus on health tourism. This chapter includes an interview with Mohammed Khalil Alsayed, CEO, Ithmaar Development Company.
Retail
Various ambitious retail developments were under way in 2009 just as the global recession put a dampener on demand. However, many retailers have been able to capture market share by repositioning themselves in what is now a highly competitive area. The opening of Bahrain City Centre has brought with it brands like DKNY, Galliano and Carolina Herrera. Over the next two years, more than 190,00 sq metres of mall space is expected to come on-line nationwide, while blueprints for nearly 130,000 sq metres of projects are on the books for after 2012. This chapter includes an interview with Farouk Yousuf Almoayyed, Chairman, YK Almoayyed & Sons.
Business Guide
The government is implementing the latest international standards through the adoption of Basel II, and the tax burden remains low, making the kingdom an attractive location for investment. Bahrain’s developed real estate laws, readily available home financing and liberal tax system have all helped buffer it from the worst effects of the global downturn, and further strong price growth is expected in the real estate market. This chapter includes viewpoints from Qays H Zu’bi, Managing Partner, Qays H Zu’bi Attorneys and Legal Consultants; and Rupert Dodds, Partner, BDO
The Guide
Bahrain is aiming to position itself as a family-friendly destination for visitors, through the development of water and amusement parks, and cultural attractions. The government is also aiming to develop the kingdom’s public beaches. This chapter includes listings of the country’s leading hotels and resorts, useful telephone numbers, and helpful facts for visitors, including information about etiquette, language, visas, currency, transport and more.
