2011 Bahrain Country Commercial Guide - US - Export.gov

Bahrain's underdeveloped insurance market possesses significant profit potential for
investors. Total insurance premiums for companies operating in Bahrain increased 5.7
percent to $389 million, up from $368. As of 2011, the industry included 177 companies,
compared to 179 in 2009. This decrease is due to heavy competition and consolidation
as a response to the financial crisis.
The Government of Bahrain (GOB) has identified Islamic banking as one of the main
economic growth areas in the coming five years. Islamic banking principles are similar
to those of conventional banking, with the exception that Islamic banks must conform to
Sharia, or Islamic law. Islamic finance prohibits charging interest for the use of money,
and disallows dealing in certain commodities. Islamic banking falls under four main
categories:
Murabiha: cost-plus financing – i.e., buying a product from a supplier and selling
it to a customer for a profit;
Musharraka: a profit sharing system that is similar to equity participation;
Ijara: leasing;
Istisna: the financing of construction or manufacturing.
Islamic banking attracts investors because of its profit potential, as well as its religious
and ethical approach. While the sector is still small, it has registered strong continual
growth despite regional uncertainties that hindered growth in conventional banking.
Islamic Banking became an engine of growth in the Kingdom of Bahrain and continues
to attract high net-worth individual investors from GCC countries. This sector has grown
by an average of 8 percent over the past three years. The Crown Prince and other
government officials have voiced Bahrain's commitment to developing the sector further.
Due to the financial crisis and shortage of liquidity in the GCC region, growth in the
financial and the insurance sector decreased sharply. During the financial crisis, the
CBB played a major role in directing, monitoring, and advising Islamic banks to prevent
failures.
Web Resources Return to top
Bahrain Bourse (Stock Exchange)
http://www.bahrainbourse.net/bhb/default.asp?language=en
Central Bank of Bahrain (CBB)
www.cbb.gov.bh
Ministry of Finance (MOF)
http://www.mof.gov.bh/
Bahrain Economic Development Board (EDB)
http://www.bahrain.com/
Bahrain Exhibition & Convention Authority Authority (BECA)
www.bahrainexhibitions.com
U.S. Embassy Bahrain Commercial Section
37