Bahrain is often described as one of the best kept secrets in the Middle East, but it won’t stay that way for long, according to Simon Galpin, Managing Director of the Bahrain Economic Development Board.
“We’re trying to let the cat out of the bag,” he said, during a Country Briefing Series roundtable luncheon at the Chamber on 23 November.
Galpin, the former head of InvestHK, gave a presentation that highlighted how Hong Kong and Bahrain can combine their unique strengths.
The island nation of Bahrain is the smallest economy in the Gulf Cooperation Council (GCC), but its key selling point is its location “right at the heart of the Gulf,” Galpin said.
Its size can be a strength, especially for SMEs. “If you’re a company setting up there, you don’t have to be a big multinational,” he said. “Being small means that we provide access.”
This means access to decision-makers, customers and investors, but also access to Saudi Arabia, the largest economy in the GCC and only a 30-minute drive across a connecting bridge.
The local population is another major draw, Galpin said. “The quality of the workforce in Bahrain and the friendliness of the people is something that you have to experience. They are amazingly warm, hospitable people and really well educated – a great labor force to draw on.”
The attractions of choosing Bahrain as a base in the region are plentiful, Galpin explained. It is 30 to 40% less expensive than Dubai in terms of doing business, and allows full foreign ownership of companies, giving overseas firms a springboard to work across the entire GCC.
“For a short window, we are still a no-tax economy,” he added. VAT is coming, he said, at a rate of 5%, but there will still be no corporate or income tax.
Galpin highlighted three areas of opportunity for overseas investors.
First, the soft infrastructure is changing. The country is rewriting its laws to make them more business friendly, and opening up more sectors.
Second, physical infrastructure is being developed. Bahrain is investing US$32 billion in infrastructure – equivalent to the country’s annual GDP. Projects include a major expansion of the airport and investment in oil refineries.
The third opportunity is Bahrain’s “burgeoning high-growth start-up ecosystem” that has a healthy mix of Bahraini, Saudi and overseas entrepreneurs.
Bahrain also has the potential to become a source of funding. “Because Bahrain is so small, we have a tremendous concentration of high-net-worth individuals,” he said. “We believe we can persuade many of these families to start to become angel investors.”
A recent move that shone a spotlight on the nation was the announcement that Amazon Web Services plans to open a data services centre in Bahrain.
“This suddenly changes the landscape for little Bahrain and puts us on the map for cloud computing,” Galpin said. Other international names in the country include Mondelez, DHL and Huawei.
There are also plans to expand the country’s tourism sector. Many Saudi families already travel over the bridge to visit restaurants and go to the cinema. Bahrain hopes to encourage these visitors to stay longer and to attract more overseas tourists. It also has its eye on capturing some of Dubai’s MICE market.
Bahrain’s close ties with its neighbor mean that the current reforms in Saudi Arabia will inevitably have an impact. The Saudi Vision 2030, announced last year, aims to move the country away from its dependence on oil and gas.
“We are all watching very carefully to see what the Crown Prince is doing,” Galpin said.
The quality of the workforce in Bahrain and the friendliness of the people is something that you have to experience.