Bahrain has become a significant player in the geopolitics of the Middle East. Despite its small size, Bahrain has a strategic location that makes it a hub for international trade and commerce. Its investment-friendly policies and business-friendly environment make it an attractive destination for foreign investors.
The Ambassador of the Kingdom of Bahrain to Italy, H.E. Nasser Mohammed Y. Al Balooshi, attended the event together with the national deputy secretary of Welcome Association Italy, Franco Abdelkader Omeich, the international relations manager of Assadakah, Talal Khrais, and the First Secretary of the Embassy of the Kingdom of Bahrain to Italy, Sarah Tafweeq Ahmed Khali AlMansoor.
During the meeting, Silvia Boltuc could exchange views and opinion on Bahrain with the Ambassador and other participants. SpecialEurasia has monitored Bahrain’s domestic and foreign politics and national economic performance and investments opportunities since the country’s strategic role in the Middle East.
Indeed, last year, during the 31st World Congress of the International Federation of Journalists, SpecialEurasia met with Bahrain representatives to analyse the country’s economic trends and potentialities as well as assess the cooperation with Italy.
Introduction to Bahrain’s Geopolitical Landscape
Bahrain, a small island country in the Persian Gulf, has a rich history of trade and commerce dating back thousands of years. Today, the country is acknowledged for its strategic position, secure political system, and business-friendly climate. However, like most countries in the Middle East, Bahrain faces a complex geopolitical landscape that affects its investment opportunities.
The Kingdom has a long history of trading with neighbouring countries and was once known as the centre of the pearl trade. In the early 20th century, Bahrain became a British protectorate and gained independence in 1971. Today, the country a constitutional monarchy with a king and an elected parliament and it is known for its relatively liberal social policies, such as allowing women to vote and run for office.
Bahrain is situated in a highly sensitive geopolitical location, surrounded by several powerful countries with competing interests. Iran is situated to the north, while Saudi Arabia is located to the west. The ongoing conflicts in Syria and Yemen also have a direct impact on Bahrain. As a result, Manama has had to navigate its relationships with neighbouring countries carefully, particularly Saudi Arabia, while maintaining its own economic and political stability.
Economic Overview and Investment Climate
Bahrain’s economy is now steadily developing its full potential, and diversifying from the oil & gas sector, which accounted for 42% of GDP twenty years ago (18.5% in 2022). Among government initiatives, it should be mentioned the Economic Recovery Plan which sets an ambitious agenda for the Kingdom and its people, driving growth in five pillars:
- The country has priority sector strategies in Tourism, Logistics, Manufacturing, Telecom, IT and Digital Economy.
- A $30 billion plan of major development and infrastructure projects across multiple industries and focus areas.
- The easing and efficiency of trade procedures to further facilitate trade and exports.
- The creation of 20,000 skilled jobs for Bahrainis and the upskilling of 10,000 citizens per year over the next two years.
- Strengthening economic stability and fiscal sustainability by 2024.
The Kingdom of Bahrain is boosting all of its business districts through a sustained shift to a digital economy. With an open and liberal ICT infrastructure, the country is regionally leading the move towards 5G in order to further enable higher data transmission volumes.
In 2019, Amazon Web Services (AWS) selected Bahrain to be the first MENA country to host a large-scale data centre; a key cloud infrastructure that is now powering the digital transformation of the entire region.
With introducing a corporate tax in June 2023 by another country in the region, Bahrain will be the only GCC country without such a tax on corporate profits; this further solidifies its solid reputation as a tax liberal nation.
The Kingdom is known for its business-friendly environment, with relatively low taxes and regulations compared to other countries in the region. The government has established several free zones, such as the Bahrain International Airport and the Bahrain International Investment Park, to encourage foreign investment.
Manama has identified several key investment sectors that it hopes will help diversify the economy and reduce reliance on oil and gas. Some of the major investment sectors in Bahrain include finance, tourism, manufacturing, and logistics. The national financial sector is strong, with several international banks and financial institutions operating in the country. The tourism sector is also growing, with several new hotels and resorts being built.
While there are numerous opportunities for investment in Bahrain, there are also several challenges. One of the main challenges is the country’s small size and limited natural resources. This makes it difficult to attract large-scale investment projects. This GCC country also faces competition from other countries in the region, such as the United Arab Emirates and Qatar, which have similar investment sectors.
Despite some challenges and risks, Bahrain remains an attractive destination for foreign investors. The country’s strategic location, modern infrastructure, and supportive legal framework make it an ideal gateway to the wider Gulf market. With continued investment in emerging sectors such as FinTech, tourism, and logistics, the Kingdom is well-positioned to attract more foreign capital and continue its economic diversification efforts.
Bahrain offers a pro-business environment with an established legal framework, a supportive government, and a range of investment incentives. The country’s geography and infrastructure make it an ideal location for logistics, tourism, and finance, and its strategic location positions it as a gateway to the wider Gulf market.
With ongoing investments in emerging sectors, Bahrain is poised for growth and presents many investment opportunities. The country’s favourable business environment, coupled with its open market policy and progressive regulatory framework, is expected to continue to attract foreign investors to Bahrain.
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