Murad Ali Murad

This is the optimistic view of one of Bahrain's leading bankers, Murad Ali Murad, general manager and chief executive officer of the Bank of Bahrain & Kuwait.

'We have not really seen the effects of higher oil revenue so far for two reasons,' he says. 'First, the high level of investment in technology shares in 1999-2000, with their abnormal returns, had directed some of private sector investment overseas.

'Secondly, the Governments of the region have used their oil money to pay down deficits, but we have noted that new projects are now starting to come through. In Bahrain there is the Alba expansion project, the modernising of the refinery, a new container port, roads and bridge construction, and tourist projects. This is a small economy and it does not need much expenditure to make a big difference, and we will feel the impact of this in 2002'.

But Mr Murad has particular reasons for believing that Bahrain will have a major change in its fortunes in the near future. He is very impressed by the recent economic reforms of the Government, and its ability to tackle multiple changes in a matter of 18 months. There is one more reason to be cheerful.

'An oil find in the Hawar Islands could have a major impact,' he adds. For now that Bahrain has settled its territorial dispute with Qatar, oil and gas exploration can start in this energy-rich area. But will this optimism spill over into the Bahrain Stock Exchange that remains at depressed levels?

'There are three factors to consider,' explains the BBK ceo. 'Interest rates were high in 2000 and are now coming down further which should help. There were also a lot of investors who burned their fingers in US Tech stocks, and it may be a while before they can come back into the local market.

'Finally, we should have more IPOs in Bahrain, and real privatizations, not just the contracting out of services. This will encourage people to invest more. Why should the Government own 50 per cent of the National Bank of Bahrain, for example? The same is true for Batelco and public transport.

'My view is that the Gulf Governments have done an excellent job in establishing basic infrastructure over the past two decades, but now need to share it out in a more equitable way that will create more wealth in the process'.

In Mr Murad's opinion the wave of reforms that have been undertaken in Bahrain over the past 18 months have 'surprised the friends and enemies of Bahrain'. He also notes that recent changes in external relations will have commercial benefits.

'The territorial agreement with Qatar will create a lot of new opportunities for us. They have a good number of projects and need people. Bahrain has a large number of qualified staff and we are very close. Indeed, one of the new projects under discussion is a causeway from Bahrain to Qatar.

'The vision of our leadership is that it has solved a number of hot issues in a very short time, and restored parliamentary democracy, disbanded the security law, released political detainees and allowed exiles to return. It is unprecedented to do so many things, and all of them very positive for investor confidence.

Meanwhile, the BBK is not standing still, and has one of the region's most advance Internet banking systems for both retail and corporate customers. The latter can pay their staff through the Internet, as well as open letters of credit, letters of guarantee and organise their cash management.

'We will introduce more advanced banking facilities, including a call centre offering all the same options as our Internet bank,' says Mr Murad. 'Our new branches will also feature an ATM, PC and an agent, which is a far more cost effective set-up than a traditional branch.'