Robert Edge Bahrain Presentation - Emita

emita.org.uk

Robert Edge Bahrain Presentation - Emita

An introduction to Bahrain

Presentation at

EMITA

11th February 2008


A modern Gulf economy


Introduction to Bahrain

Source: Central Informatics Organisation 2007

3

Capital: Manama

Head of state: H.M. King Hamad

bin Isa Al Khalifa

Population: ~ 1,000,000

Area: 770 km2 / 10 times area of

City of Plymouth

Languages: Arabic, English

(used as business language)

Currency: Bahraini Dinar (BD)

(USD 1 = 0.376 BD)

Time zone: GMT+3

Religion: Islam (85%, state

religion); Christian, Hindu,

Jewish and other minorities

enjoy freedom of religion

Governmental system:

Constitutional monarchy with

a bicameral parliament


A modern, stable country

Bahrain has been a regional pioneer, with a constant drive for further

improvements. It was first in the Gulf …

1919 to start male education

1928 to start female education

1931 to discover oil

1960s to start an economic diversification strategy

that favoured non-oil industry sectors

1970s to establish a banking sector

2001 to introduce democratic reforms

2002 to embark on privatization programs

2004 to fully liberalize the telecoms sector

2006 to sign an Free Trade Agreement with the USA

2008 co-founded GCC Common Market

4


A very pro-British country

• HM the King attended Leys School Cambridge &

Sandhurst

• HRH the Crown Prince awarded MPhil in Philosophy and

History from Queens College in 1994

• No Bahraini accounting or insurance qualification

• They do the UK chartered accountancy and insurance exams

• 7000 Brits live in Bahrain / 2000 Bahrainis live in the UK

• But 7000 Brits alone can’t support a Marks & Spencer ,

Debenhams , BHS , La Senza , Clarks , Laura Ashley ,

Country Casuals , 10 Costa Coffees ,a Harry Ramsden’s

, and a Harvester !

• Most Bahrainis follow British football

5


One of the top 20 free economies of the world

Important reforms and regulatory

improvements have made

Bahrain the freest economy in

the Arab world, for 14

consecutive years

Index based on assessment of

independent economic

variables that describe the

adverse effects on companies

and their entrepreneurial

freedom

162 economies assessed for 2009

rankings

Source: The Heritage Foundation / Wall Street Journal

Index of Economic Freedom 2009

8

19.

Japan


Key indicators of Bahrain’s economy

Sovereign rating*:

S&P: AA-

Moody’s: A2

Fitch: A

Bahrain is the financial

centre of the Middle

East with more than

400 financial

institutions.**

Bahrain was placed at

11th globally in the

UNCTAD performance

rankings in the 2007

World Investment up

from 23rd the previous

year.***

Real GDP Bahrain**

US$ billion

Rate of inflation 2008 ****

Saudi

Arabia

Bahrain

Oman

Sources: * S&P Credit Rating 2007, Moody’s Credit Rating 2007, and Fitch Issuer Rating 2007

** Central Bank of Bahrain Report2007

*** UNCTAD Report 2007

**** Central Informatics Organisation 2008 9

*****IMF Annual Report 2007

CAGR

5.9%

Kuwait UAE Qatar


The most diversified economy in the Gulf

Non-oil vs. oil GDP

contribution* %, 2006

Bahrain

UAE

GCC

overall

Oman

Saudi

Arabia

Kuwait

Qatar

100%

Sources:* IMF Annual Report 2007

** Central Informatics Organisation 2007

10

Contributors to GDP %, 2006 **


Opportunities in a range of sectors

Financial sector

Project finance

Asset management

Fund Administration

Islamic banking

(Re-)Insurance

ICT

IT systems development and

support

Telecommunications

Global contact centres

ICT consulting

High value manufacturing

Aluminium downstream

Automotive

Product assembly

Food processing

Light manufacturing

Healthcare

Pharmaceuticals

Specialized medical centres

Rehabilitation & geriatric

11

Business Services

Business consulting

Executive search

Marketing and advertising

Logistics services and consulting

Education and training

International schools

Specialized training centres

Education management

education consulting


An attractive regulatory environment


Businesses can be 100% foreign-owned

Companies allowed 100%

foreign ownership

In more than 95% of private

sector activities

No ‘free zone’ restrictions

Individuals may purchase landfreehold

in prime locations for

residential usage and

accordingly obtain permanent

residency

Companies may purchase landfreehold

throughout Bahrain

for commercial usage.

Types of 100%-owned commercial

operations in Bahrain:

Limited Liability

Single Person Company

Private Joint Stock Company

Holding Company

Other means for international investors to

register their operations in Bahrain:

Public Joint Stock Company (up to 49%

foreign ownership in any activity / sector)

Branch Office

Regional Office

13


The most liberal tax regime in the Gulf

Bahrain tax rates

No corporate income tax

No personal income tax

No tax on capital gains

No withholding tax

No restriction on repatriation

of capital, profits or

dividends

Few indirect taxes e.g. 10%

municipal tax on rents

Source: * Ernst & Young Worldwide Corporate Tax

Report 2007

Corporate income tax rates in GCC countries

Percent *

14

0

Bahrain

0–30

0–35

0–55 0–55

20–85

Oman Qatar UAE Kuwait Saudi

Arabia


Developing international trade ties

More than 65 trade agreements

US-Bahrain FTA signed in 2006 offers huge opportunities

Financial, industrial, services and agricultural 96% duty exempt; Tax-free benefits for

textiles and garments

With 35% value-added manufacturing in Bahrain, products get duty-free access to the US

market

Opportunity for low-cost operations for American companies and for access by Asian

companies

15


Competitive factor costs


A cost-efficient business base

Average monthly salaries for

General Manager- Multinational

Company, US$*

Bahrain Dubai Doha

Average monthly lease rates for new

prime office space, US$ / sq m***

Bahrain Dubai Doha

Sources:* Annual Salary by Gulf Business 2007

` ** Gulfairco.com, Qatarairways.com, and emiratesair.com 2007

*** Global Investment House Real Estate Report 2007

17

Average business class return

ticket to Frankfurt, US$**

Bahrain Dubai Doha

Average monthly lease rates for 3

bedrooms apartments in prime

locations, US$***

Bahrain Dubai Doha


A centre-point between East and West

Flight time to major

business destinations

in hours

Location advantage

7.5

3.5

Easy access to a large regional market

More than 36 million people living in the Gulf region

Around 440 million people living in the MENA region (comparable to the size of

the population of the European Union)

1

18

Bahrain


Strong transport infrastructure

By road

By sea

By air

Dense network of domestic highways after

huge infrastructure investments

Connection with neighbouring countries

25 km King Fahd Causeway linking Bahrain

and Saudi Arabia provides easy access for

manufacturers to mainland markets

Causeway to Qatar planned (40 km over-sea

route)

Existing deepwater harbour Port Salman

14 berths (including one roll-on/roll-off berth)

Container terminal

New Sheikh Khalifa bin Salman Port under

construction (completion by August 2008)

More than USD 600 million total investment

volume

The port management is privatized and

outsourced to APM Terminals

Bahrain International Airport upgrade

recently approved

Capacity of 15 million passengers per year

after first phase and 45 million after final

phase

Major extensions of the cargo terminal

Hub of Gulf Air, Bahrain Air, and DHL

19


Best value for the region

Cost of living

index

%, Manama =

100%

General

Index

Food

Utilities

Recreation

Transport

Source: Economic Intelligence Unit 2007

20

151

131

138

Manama Dubai Riyadh Kuwait

City

Doha Muscat


Entertainment in Bahrain

A wide range of leisure facilities across the island

21


Bahrain’s new developments


Do’s and don’t’s of doing business in

Bahrain

• You’re more likely to be doing business with a local

person than in the other Gulf States

• Arabic coffee - if offered – always have 2 cups

• Some Muslims won’t touch non-believers ; will touch their

right chest with left hand as greeting– not offensive

• Some Muslim women won’t shake hands with men , men

should not extend their hand first on introduction

• Business cards – study / comment give/receive with right

hand

• Do expect social chat to last much longer than in a UK

meeting 23


Do’s and don’t’s of doing business in

Bahrain

• A few words of basic Arabic helpful , interpreters not

normally needed outside Saudi Arabia

• Don’t go to the Middle East on the expectation of flying in,

visiting some companies and then deciding whether or

not to go again based on whether you get business or

not.

• Expect tough negotiations on price

• Feign an interest in British football and/or Formula One

(ladies included) if you don’t have a genuine one

• No need for ladies to cover heads in Bahrain

24


Do’s and don’t’s of doing business in

Bahrain

• Try to avoid visiting

• During late July/August (temperatures 50deg C plus so even too

hot for locals)

• During Ramadan unless you already have business there which

needs your attention (most companies close between 2.00-3.00)

• During December – Eid al Adha Festival is 3-day Muslim holiday

approx from 8 th December , followed by Bahrain National Day on

16 th & 17 th so many people take annual leave between the two

• Do talk to UK Trade & Investment (we work closely with

British Embassy in Bahrain)

25


World class commercial developments…

Including Bahrain Financial Harbor, World Trade

Centre, and Bahrain Bay

26


…and cutting-edge leisure and residential

developments

Including Riffa Views , Durrat Al Bahrain, Amwaj

Islands and Reef Island

27


World leaders already in Bahrain include

28

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