BAHRAIN COUNTRY PROFILE
Key Facts
Location: Bahrain is an archipelago of 36 islands located off the eastern coast of Saudi Arabia. Its strategic location is such that much of the Western world's petroleum must pass to reach open ocean
Capital city: Manama
Total Area: 741 sq km
Population: 727,785 (July 2009 est)
Currency: Bahraini dinar
GDP: $26.7bn (2008 est)
GDP Growth rate: 6.1 per cent (2008 est)
Languages: Arabic, English, Farsi, Urdu
Ethnic make-up: Bahraini 62.4 per cent, non-Bahraini 37.6 per cent (2001 census)
Religions: Muslim (Shia and Sunni) 81.2 per cent, Christian 9 per cent, other 9.8 per cent (2001 census)
Introduction
Boasting well-developed communication and transport facilities, Bahrain is home to many multinational firms which have business in the Gulf. Petroleum production and refining make up more than 60 per cent of Bahrain's export receipts, 70 per cent of government revenues, and 11 per cent of GDP. This, historically, has been key in underpinning Bahrain's strong economic growth.
Other major sectors include aluminium, the construction industry and banking, Islamic banking being a fast growing facet of the country’s economy. Indeed, financial services generally are a significant growth area in Bahrain which is currently pursuing the diversification and privatisation of its economy to reduce its dependence on oil. That said, it has been anticipated that the global financial crisis will result in slower economic growth for Bahrain during 2009, with tighter credit lines and a contracting global economy causing funding for many non-oil projects to dry up.
Continued strong economic growth rests on Bahrain's ability to acquire new natural gas supplies as feedstock to support its expanding petrochemical and aluminium industries.
The Government of Bahrain adopts a generally liberal approach to foreign investment, and, more pertinently, has taken steps to improve the attractiveness of the Bahraini financial sector to international investors. Indeed, as part of its diversification programme, the Government of Bahrain encourages foreign private investment, especially in export-orientated sectors.
Most businesses in Bahrain are owned by the state, large private families or corporations. The development of the Bahrain Stock Exchange and improvements in the Bahrain Monetary Agency are aimed at allowing and encouraging the structural changes necessary in Arab economies - namely, privatisation, and the attraction of capital to projects and investment products.
Investment climate and opportunities
Bahrain is an important Gulf trading partner for the UK. UK exports of goods increased from £217m in 2007 to £278m in 2008, representing a 28 per cent increase.
However, moving forward, it is the non-oil sector that will be the key driver of the Bahraini economy, led by sectors such as financial services, telecommunications and real estate. Bahrain is establishing itself as a regional banking hub. The financial services sector generally has been made more robust by a number of mergers, acquisitions and share offerings.
Key sectors for exporters
Communications
Transport
Electricity and water
Ports and airport services
Financial services
Education and training
High value manufacturing
Healthcare
Business services (including ICT)
Construction
Sectors up-close
Financial services
Bahrain is a leading financial services hub of the Gulf and has many of the region’s best established banking and insurance institutions. Bahrain has, for many years, been an attractive place for UK investors. Moreover, it provides an ideal conduit into the wider Middle East markets.
There is a growing confidence among investors to look at Bahrain, largely because Bahrain is the most established financial centre in the Gulf with a reputation for effective regulation at international standards. Indeed, the Central Bank of Bahrain (CBB) is widely acknowledged and respected as the best and most comprehensive regulator in the region.
The government is receptive to foreign investment and indeed, Bahrain already enjoys high levels of foreign direct investment (FDI). A number of foreign banks have announced plans to establish operations in the Kingdom, aided by the lack of capital restrictions on non-Bahraini firms and the ongoing liberalisation of the insurance market.
