Experts Column

Bahrain Calling

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The Kingdom of Bahrain, the only country in the Gulf region that permits 100% foreign ownership of businesses, is becoming an investors’ paradise due to investor-friendly policies and state-of-the-art infrastructure. OEM Update was invited to take a stock of what opportunities it has in store for Indian manufacturers.

Opportunities are big in Bahrain! The Kingdom of Bahrain permits 100% foreign ownership of businesses, without the need for a local partner; no other Gulf state allows this. The country also benefits from a strategic geographical location at the heart of the GCC market, a market which is currently valued at approximately $1.5 trillion and is expected to reach $2 trillion by the end of 2020.

Why invest in Bahrain?
A better attractive investment location which provides wide range of opportunities and advantages to potential investors that are based on its sophisticated market infrastructure and strong growth prospects. In addition, it offers financial and commercial incentives and other amenities of its lifestyle.

Talking about the market perspective; this is considered to be one of the strategic locations in Western Asia, which is situated at midway between eastern and western time zones with a regional market of 100 million people. Apart from this, it’s been the hub of aviation in Western Asia along with a modern integrated air, sea and road transportation system available.

Various financial advantages
No personal, corporate or withholding tax (also called retention tax) is not required to be paid in Bahrain. Further, no exchange control restrictions on repatriation of capital, profits and dividends, labour costs one third of those in industrialized countries. The U.S. dollar is also freely convertible to all currencies with minimal rate. Another important advantage which has a long subsidized low-cost utilities, low-cost fuel, telecommunications, and airfares.

Industry-friendly environment to set up projects
Over the years, the government of Bahrain has maintained a decent business friendly industrial relation to encourage industrial investors and entrepreneurs to set up likely industrial projects in Bahrain. Has been ranked highly by various international organisations and has tremendous reputation for offering attractive industrial opportunities to local and international investors from all over the globe. With an efficient banking and communication system, absence of taxation and exchange controls, and a business friendly society makes Bahrain, an ideal place to invest in and do business.
The Kingdom of Bahrain has got a strong presence in industrial sectors like – Aluminium and Petrochemicals and a good network of light industries with all raw materials available and is further looking to create an enabling environment with maximum support and minimum intervention with the private sector to play a key role as a driver of economy. Talking more about the well developed industrial areas, Bahrain International Investment Park (BIIP), compares with the best industrial parks in the region.

The recent free trade agreement with the USA has also thrown up great opportunities to access the burgeoning North American market. The investors from USA will equally find tremendous opportunities by creating a manufacturing base in Bahrain to do business in GCC and Arab countries.

The Ministry of Industry & Commerce has been bringing out detailed information about a particular subject relating to industrial project opportunities from time to time, generally, to highlight attractive project profiles for the benefit of investors and entrepreneurs. This latest effort contains industrial project profiles in separate sectors and is well presented by experts at the ‘Invest in Bahrain’ Forum organised by the Ministry of Industry & Commerce with an intention to provide all possible assistance to investors to accelerate the formalities needed to realise these opportunities into industrial projects within the shortest possible time frame.

Ease in setting up business
The Bahrain Ministry of Industry, Commerce and Tourism (MOICT), is generally responsible for registering and licensing businesses in the Kingdom of Bahrain. Talking about the ease of setting up business in Bahrain, Bader Fareed Alsaad, Director, Industrial Areas Operations Managements, MOICT, said, “We are committed to help industries setting up their businesses without much effort. Our continuous effort is to minimise the cost on investor while giving them the assurance.”

Further he adds, “One can setup his/her business in Bahrain easily if the project gets environmental clearance. There is a simple process of setting up the company in Bahrain; we have an automated system by the Ministry of Industry & Commerce. We look into a simpler process which begins somehow like we can sign a lease in the beginning of the process itself before getting into the license-related matters.”

Single-window approval
Bahrain has introduced a commercial registration platform that helps in obtaining all requisite permission electronically in one go – under one roof! “Our new commercial registration platform ‘Sijilat’, we assure commercial registration issuance process takes less than two minutes,” says Alsaad.

Explaining his Ministry’s objectives, he says, “Our primary motto is not to create any hurdle for the potential investors even before they submit an application. Once the commercial registration is issued electronically, he/she will be granted the preliminary approval to sign the lease with us.”

Bahrain is being better location to access other GCC countries mainly the Saudi market because whichever company comes and establishes their business in Bahrain considered being Bahraini company, he adds.

Advanced transportation infrastructure
Bahrain has state-of-the-art infrastructure that facilitates efficient logistics movement. “The Bahrain Logistics Zone (BLZ), the Kingdom’s dedicated customs-free value-added logistic boutique, has become the ideal location for many businesses, and offers high quality environment to companies that meet its tenancy requirements,” informs Hamad M Fakhro, Director Logistics Zone Directorate, Ministry of Transportation and Telecommunications.

Operated by Ports and Maritime Affairs (PMA) at the Ministry of Transportation and Telecommunications, the BLZ offers world-class services for the companies a base to operate in a bonded area to take advantage of Bahrain’s market potential. “BLZ is not only a world-class facility for operating businesses it also offers the most cost-effective base for doing business in the Northern Gulf, claims Fakhro.

EDB facilitates
Economic Development Board (EDB), the investment promotion arm of the Kingdom, continues to play a key role in attracting investments and supports initiatives that enhance the Kingdom’s investment climate. EDB offers advice and assistance to companies setting up in Bahrain, liaising with the relevant government departments to obtain the necessary licenses and to register the company, and provides an aftercare service once the company is established.

Husain bin Rajab, Director of Manufacturing, Transport & Logistics, EDB says “Our mandate over the years has covered so many things from public sector firm to economic firm, attracting foreign direct investments and enhancing the daily requirements. To be more specific, our mandate today, is more towards the foreign direct investment, working with the government on improving the policies and regulations, and to enhance the business environment.”

EDB has 16 representations overseas from the US all the way to the other side of Asia. It has two offices in India – Mumbai and Delhi. Apart from this, EDB has presence in China, Hong Kong, Malaysia, Singapore, Japan, Korea, Saudi, USA, UK, France, Italy, Germany and Netherlands etc.

Bahrain’s GDP is the most diversified in the gulf region and is dependent upon the oil and gas contributed to GDP. Rajab says, “Only 20 per cent of our GDP comes from oil and gas and the rest comes from the main economic contributors like financial services, manufacturing, logistics and construction sector. Within manufacturing we focus more on the aluminium sector as around 12 per cent of our GDP comes from this.”

A country with big opportunities
With a strong pipeline of infrastructure projects and a non-oil sector that is growing apace, Bahrain becomes the home for businesses involving downstream oil and gas services which are required by producers in the GCC. It also brings opportunities in pipes, compressors, pumps and turbines, electrical transmitters, drilling and producing equipment, HVAC, construction etc. Companies with expertise and experience in Engineering Design (CAD, CAM PLM) can offer support to the manufacturing industry in the region via a base in Bahrain.

There are plenty of opportunities In association with Indian businesses in these specific sectors. A large number of Indian businesses have already established operations in Bahrain to serve customers in the region. These included manufacturing companies such as Electrosteel, JBF, Chemco, Ion Exchange and Synergies Castings in addition to long-established financial services and ICT companies such as State Bank of India, ICICI Bank, HDFC, Canara Bank, TCS, Tech Mahindra, Rolta and Equinox.

With its strategic geographic location, at the heart of the GCC, Bahrain has become a perfect platform for Indian companies to launch their regional operations and access the entire Gulf’s markets. So, fasten your seat belt and fly to this land of emerging opportunities!

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