Bahrain attracting investments into manufacturing sector

02/01/2010

Manama;

Already well on the way to a diversified economy, Bahrain is looking to reap the rewards of this policy, while also ramping up efforts to attract further investments into its manufacturing sector.

Bahrain was the first country in the Gulf to start pumping oil commercially, back in the 1930s, and also the first to acknowledge that there would come a day when the pumps would run dry. Though that day is still a long way off, and the Kingdom is planning to invest some $15bn in the coming years to more than treble current output, planning for a post-oil future began a relatively long time ago in comparison to elsewhere in the region and is already showing dividends.

Industry is already a core player in Bahrain's economy, with the manufacturing sector's slice of GDP close to 45% of the total, according to Ministry of Industry and Finance figures.

Central to the Kingdom's industrial development is Salman Industrial City, a manufacturing, a trade and business zone that incorporates the Bahrain International Investment Park, Bahrain Investment Wharf, and Hidd Industrial Zone.

Located in the Hidd district, close to the country's new deepwater port and international airport, the city has already drawn investments of $3.5bn, a figure expected to more than double in the next few years.

While acknowledging that the world wide financial crisis had impacted on the Kingdom's economy, His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa said the government was working to encourage the development of value-added industries.

"The national momentum is continuing unabated although Bahrain is part of the world and is affected by global trends," he said on January 12, when opening the third Gulf Industry Fair. "The tangible opportunities in the industrial sector are proving their capacity to adapt to the global crisis."

The premier's views were mirrored by those of Dr Hassan Fakhro, Bahrain's minister of industry and finance, who said that the country could benefit from the global downturn as both developed and developing countries effected by the economic repercussions begin to look for a base in the growing Middle East region as a means of offsetting the contraction in their domestic markets.

Having remained relatively stable in the face of global financial turbulence, Bahrain was well placed to be at the forefront of any recovery, he told a seminar on January 12.

"At the ministry, we are spearheading the expansion of the manufacturing sector in a three-pronged approach that involves policies aimed at enhancing the productive capability of our manufacturers, in particular small- and medium-sized enterprises, upgrading and expanding our infrastructure offerings and encouraging inward investment," Dr Fakhro said.

And it appears that the government's efforts to attract private investments are paying off, with reports in January that a large-scale sugar processing factory, worth some $150m, is to be built in Bahrain, while Saudi firm Amiantit plans to construct a $60m facility to produce pipes and storage tanks.

Amiantit's decision, announced in mid-January, highlights some of the factors the Bahrain government has been trying to maximise when promoting the country as an investment destination.

According to Dr Solaiman Al Twaijri, Amiantit's managing director and chief executive officer, Bahrain has much to offer as a business base, with the company planning to develop its export hub in the country.

"It is easier and more accessible logistically, closer to our company's headquarters, free from Customs, tax, import and export duties," he said in an interview with financial service Trade Arabia.

It is these tangible benefits that strategists hope will ensure the Kingdom continues to attract significant industrial investment. Though competition has increased in recent years as others in the region look to diversify their economies, Bahrain is relying on the appeal of its merits in order to keep the inward flow of capital flowing.

So far, this policy seems to be working, though competition for industrial investments is likely to heat up as foreign firms start to look beyond the fallout of the global recession and forward towards renewed expansion. Having led the way in oil production, Bahrain is working hard to ensure that its industrialisation process can also be an example to others in the region.

Source: Global Arab Network

This article is published in partnership with Oxford Business Group

For more information, please contact the Office of the Economic Representative via e-mail info@bahraingateway.org or by telephone at (202) 537-7810.