Interview: Khalid Al Rumaihi
How can Bahrain best capitalise on its head start on diversification in comparison to most other Gulf states?
KHALID AL RUMAIHI: Encouraging the growth of small and medium-sized enterprises (SMEs) and start-ups is a top priority for Bahrain, as it will help to ensure we are able to deliver high-quality jobs for Bahrainis. The government is committed to continuing to support the development of a strong start-up ecosystem, focused on areas such as education, regulation, funding and mentorship. Government initiatives include improving the process for registering new companies and updating the bankruptcy law.
The kingdom is also updating its laws and regulations to support economic growth, and has enacted an Investment Limited Partnership Law, a Trusts Law, and a Protected Cells Companies Law. A number of organisations such as Tamkeen (the country’s labour fund), Tenmou (Bahrain’s first-ever angel investor group) and the Bahrain Business Incubator Centre offer platforms for education, guidance and financing to local entrepreneurs.
To what extent has the private sector been empowered to take more responsibility in investment and development?
AL RUMAIHI: The private sector is the main driver of job creation and growth in Bahrain. In fact, today, more than 60% of Bahrainis work in the private sector. This has been supported by the freest business environment and lowest operating costs in the region, while public-private partnerships in a number of sectors are also creating opportunities for the private sector to play a bigger role.
This is evident as the kingdom saw growth in its non-oil sector reach almost 4% in 2015, with overall growth reaching 2.9%. Today, more than seven different non-oil sectors contribute 5% or more to Bahrain’s GDP. Looking ahead, we see a change in the model of growth for the region in general, where governments are responsible for ensuring a productivity-driven economy and implementing policies that support this.
How have international investors reacted to the drop in oil prices when considering Bahrain as an investment destination?
AL RUMAIHI: Bahrain has consistently had one of the world’s highest inward foreign direct investment stocks as a percentage of GDP. While it clearly poses challenges, we see the lower oil price as an opportunity in disguise. It is prompting governments to implement reforms that will diversify their economies and create investment opportunities. In Bahrain, the resilience of the non-oil sector, which is expected to grow by around 3.4% in 2016, helps underscore the kingdom’s attractiveness as an investment destination. The Bahrain Economic Development Board has directly attracted over $700m of investment over the past five years.
What needs to be done to further increase and encourage entrepreneurship and investment in the kingdom’s ICT sector?
AL RUMAIHI: Bahrain has a strong start-up ecosystem, with its skilled and entrepreneurial workforce, excellent connectivity, and growing support from investors and government. But to make the most of this potential, we know we need to do more. And we have a number of further initiatives in place to do this, including a new bankruptcy law, which will increase dynamism in the economy. In addition to these initiatives and the bankruptcy law were the recent announcements by Amazon Web Services, which released plans to set up an office in Bahrain in 2017, as well as by the technology investment firm C5 Accelerate, which launched the region’s first Cloud Accelerator in the kingdom in 2016.