The changing face of Bahrain

The globalization has changed the norms of trade by squeezing the world into a global village. In the changed global trade scenario, the location of any country has much to do for the country as well as the international investors.

Nowadays, the countries having important trade routes are important irrespective of their size or political influence. Arabian Gulf Region has been providing trade routes throughout the history. Most of the GCC countries are import oriented having an estimated population of more than 19 million, and added 100 million to adjoining neighboring countries that leads to enormous sales attractions.

As active partners of the world community, the GCC countries are also introducing many structural changes in a bid to attract more FDI to layoff burden on the traditional oil driven economies. The diversification program alone does not attract entrepreneurs to invest in a country. To establish or expand the business ventures, entrepreneurs always remain in search for a place having easy access to other regions.

Bahrain is a place that not only offers plenty of trading opportunities to the business community but its location has been facilitating entrepreneurs to establish their regional base in the country to reap the trading benefits of the entire Middle East. Located half way between the time zones of East and West, Bahrain is enabled to communicate virtually with the entire business world during the working day.

The country comprises smaller and larger islands with total land area of about 706 square kilometers. Its fresh springs made it an early haven for sailors crossing the salty gulf in which Bahrain is located.

Shaikh Hamad bin Isa Al Khalifa of Bahrain (Amir) is ruling since March 1999 with the assistance of his uncle, the Prime Minister Shaikh Khalifa bin Salman Al Khalifa. A Cabinet comprising members from the ruling Al-Khalifa family and a group of experts administers the Government. The country's leadership is determined to turn Bahrain into a constitutional democracy.

In this regard a referendum was held in February 2001 and 98.4 percent of Bahrain's electorate approved a revised constitution. The constitutional transformation program includes a well-defined separation of legislative, judiciary and executive powers by 2004. The reforms are the first of their kinds in the Gulf, granting the right to freedom of speech, expression, and religion, as well as the right to vote and a free trial.

Owing to the fact that the country's oil resources will be maximized by next 10-15 years, the leadership of the country is determined to discover new areas of investment. Accelerating the diversification program, the leadership of the country has been keen to abide by the policy of economic liberalization and openness to stimulate a prosperous and dynamic environment and create appropriate climate to attract private investments.

The government's strategy targets five primary areas for expansion. These are business & financial services, tourism, information technology, telecommunications, healthcare & education. The highest standards of financial regulations, political stability, and strong legal framework have transformed this small country into a high standard commercial area with which other Gulf countries are hard-pressed to compete.

Despite longstanding efforts at diversification, oil and gas continue to play a dominant role in Bahrain's economy. According to Bahrain Monetary Agency (BMA), the trade volume of the country has increased to BD3.76 billion from BD3.71 billion at the end of 2002. The exports surpassing the imports, at the end of the year stood at BD2.0 billion as against total imports of BD1.74 billion.

The major contributor to exports was oil that accounted for BD1330.9 million; whereas, non-oil exports were BD654.4 million and re-exports were BD33.4 million during the same period. On the other hand, non-oil imports reached at BD1741.7 million at the end of 2002 and the oil imports reached at BD496 million during the same period.

Today, there are 180 financial institutions operating in Bahrain and financial services sector has contributed by 19% in 2001 to GDP as compared with 21% from the hydrocarbons industry and 12% from manufacturing. Currently, the banking sector assets stand around US$100bn.
Having diversified business leverages, the country offers a variety of incentives to the investors.

Significant among these are no taxation on personal or corporate income and no withholding and VAT tax. Other competitive advantages include duty free merchandise for re-export, duty free import of materials and machinery for manufacturing, duty-free access to Gulf Cooperation Council (GCC) member states provided that 40% of the content has been added locally, low costs for energy, utilities and rents, 100% repatriation of capital and profits, fast track registration service, 100% ownership of business to foreigners and more importantly 100% ownership of land to foreigners in designated areas.

The diversification program of Bahrain mainly targets the non-oil manufacturing sector to establish large-scale energy-intensive and export oriented industries by taking advantage of the relatively cheap natural gas. Petrochemicals, aluminum-related industries and ship repairing dominate the country's manufacturing sector.

Light industries with 94% establishments represent the major part of industrial sector in the country. Favorable investment policies and financing plans to encourage young entrepreneurs have also given a growth to light industrial sector by attracting local investors and joint ventures with the participation of foreign companies. Bahrain's first private sector industrial park the Ras Zuwayyid Industrial Park will also benefit the sector.

Telecommunications are intrinsic to Bahrain's success as an international business and financial center. The government of Bahrain has issued a new telecom law in October 2002 that stipulates to open up Bahrain's communications market to other companies. Bahrain's e-government strategy spells out the transformation process by implementing a series of related projects to improve the effectiveness of systems and technology within the Government of Bahrain.

The infrastructure development projects show the commitment of the government in creating a sound base for business. The islands are interconnected through causeways, and some new are at developmental stage. A causeway between Manama & Hidd, and a causeway between Qatar and Bahrain will bring positive effects on trade and investments.

In a bid to increase the share of tourism sector, the government has started to construct tourist friendly attractions that include world-class golf course, an ice rink, Aqua Park, a go-cart facility and a Kids World fun center.

The real estate market in Bahrain is booming in terms of both new construction and refurbishment with a strong investor and occupier demand. The private developers are increasingly active in taking on infrastructure projects in developing areas and then selling serviced plots.

he decree of 2001, allowing foreigners to own a land in Bahrain has changed the scenario of country's real estate market. International investors can also own high-rise commercial and residential properties, as well as property for tourism, banking, financial, health and training projects in specific areas.

The tourism sector of Bahrain is important attraction after country's strategic location. During the year 2002, 4.4 million tourists visited comprising 94% tourists from neighboring GCC countries entered into Bahrain via King Fahad Causeway. Making more attractions for the tourists, new constructions can be seen everywhere in the country.

The constructions include tourist friendly attractions as well as residential houses for the foreigners. The Government is actively promoting private sector to participate in mega ventures to expand the tourist and recreational facilities, hotels and other infrastructure projects. Taking bold steps, the Bahrain government has allowed foreigners the right of 100% land ownership in specific areas such as Durrat al Bahrain, Dannat Hawar and Amwaj Islands.

With fascinating cultural heritage and natural beauty, the Amwaj Islands are surrounded by delightful waves and breeze. The project is co-owned by Ossis Property Developers and Amwaj Property Developers. Non-GCC nationals can also purchase the property on the island. The plot sizes vary from 450 square meters to 800 square meters and can accommodate 2-storey 3 to 4 bedroom villas (300 sq. m. to 400 sq. m.) with sufficient area for garden and garage.

Durrat Al Bahrain is the most ambitious project of Bahrain. This resort city will have both residential and recreational facilities including construction of numerous high-rise condominiums, two hotels including a 350-room five-star facility, an exhibition center, an 18-hole golf course and village, a shopping mall, a marina with an associated residential area and a yacht club, an art city, commercial complexes, restaurants, a tennis club, several beaches and recreational facilities.

A number of other projects are underway and soon will be offered for sale. Property, today is still relatively inexpensive compared to other GCC markets, but once these projects are completed, the prices will see an unprecedented hike promising a high return over investment for the investors.

The advantages of a country identified, the next step for entrepreneurs is how to register a business and what type of company it should be; do they need a local agent; how much it will cost to register a company, branch or a regional base? The current communications changes have reduced the gaps. Through Internet, we can access any information from any corner of the world.

But making an investment plan to invest in a country needs a complete research and understanding of the legal laws and environment of the country. The communications developments have also changed the concepts of services. Online consultants are offering business solutions that entrepreneurs can utilize to their interests.

eEntrepreneur.biz has been helping entrepreneurs by providing cooked information to shape up their future plans. The guide on "Doing Business in Bahrain" has attracted a large number of entrepreneurs/individual investors world over. The Guide presents a comprehensive look at Bahrain's business environment using economic, political and market analysis in order to evaluate the future opportunities for international as well as local investors.

Development projects are everywhere in the Bahrain. It is impossible not to notice the development-taking place in the country. The guide provides practical information on current massive infrastructure and other development projects in Bahrain with allied areas of investment. It is the wisdom of the entrepreneurs how they utilize this information to their objectives.

Real estate market is considered a major pillar of Bahrain's rapidly growing economy. Foreigners are allowed to own property in business and tourist areas of Bahrain. This is high time to avail this opportunity and secure a beachfront home at prices below market level either as a secondary home for vacation or to stay while doing any business, because, once the projects are completed, the prices will rise beyond expectations.

The guide provides detailed information on the current housing and commercial projects, especially, those having investment opportunities for GCC and international investors, with their pricing trends and future return over investment. Finally, the guide also provides detailed information on legal forms of business with simplified procedures of formation. A business start up toolkit will give an idea on investment required to set up a business in Bahrain.

The online guide is available on: www.eentrepreneurs.biz