Bahrain is truly a cosmopolitan, which has a modern and liberal approach, and is a haven for entrepreneurs. Being single-mindedly focused on economic diversification, Bahrain is the perfect choice for investors because of various competitive advantages it offers.
The upward trend in investments in Bahrain:
The statistics show that Bahrain has been one of the fastest growing economies in the GCC showing a growth of 3.9%. This upward trend comes with the fact that the non-oil sector expanded by around 5% in the year 2017. In addition, Bahrain’s location is another advantage, as it offers convenient connectivity by road, air and sea to all the expanding $1.5 trillion Gulf economies. Add to it the fact that Saudi Arabia is only a 30-minute drive, all the business set-ups here get the advantage of the most competent gateway to the area’s largest market.
The data shows that the total foreign investment done in Bahrain last year crossed the $730m mark. Bahrain also won the title of Expats’ favorite destination to live and work in the year 2017. This rank is also proven by the fact that the total expats working and dwelling in Bahrain are much more than the Bahraini citizens. Let’s see some more important factors and amendments that could affect the incoming foreign investment in Bahrain.
The law regarding Bahrain residency sponsorship:
The law dealing with the residency sponsorship laws acts as a major influence affecting the investments flowing into Bahrain.
To help further economic growth, the Kingdom of Bahrain is coming up with a new residency sponsorship law. A very similar residency law has been already announced by UAE and Qatar to deal with the negative impact of falling oil prices since 2014, and also to encourage higher volumes of foreign investments with the help of newer policies.
To understand this better, let’s take a quick look at the existing Residency sponsorship law operating in Bahrain.
The differences between the old and new residency sponsorship laws:
Presently, Bahrain residency sponsorship can be easily extended to up to three years to a max. The new residency sponsorship, however, can be extended up to 10 renewable years.
In line with this, Qatar also plans to let the expats living there to enjoy the rights to have permanent residency sponsorship. UAE too announced that the new residency law will allow the foreign investors to have 100% ownership of a company.
New regulations of Bahrain:
As per World Bank’s report in 2017, the Kingdom of Bahrain ranks as the world’s 66th best country to set up and run a business in. It also scored very high on various other important factors such as ease of starting or setting up a business and fetching construction permits, electricity, etc.
Bahrain has also taken some major steps or changes by launching Bahrain’s Real Estate Regulation Authority (RERA) in the month of March 2018.
The main purpose of RERA is to oversee Bahrain’s property market, which is the kingdom’s main economic sector. RERA has taken many important steps to achieve its aim in initial few months like putting regulations around the real estate investments in Bahrain, planning advanced training and development courses for real estate professionals and managing investors’ complaints in a better manner.
The kingdom’s non-petroleum economic sectors:
The GDP of the kingdom has gone up by 3.9%. This proves the sustainable growth rate that this nation has been able to maintain over the past few years. The GDP growth rate last year was 3.6% as compared to 3.2% growth rate in 2016.
There are numerous reasons for this increasing growth rate including kingdom’s ever-increasing concentration on developing the non-petroleum sectors as they contribute about 80% of the GDP, and which also have shown a growth of 5% in 2017. The data shows that in 2017, the kingdom’s tourism and hospitality sector grew by 9.5%, the real estate sector expanded by about 5.5%, and the financial services’ sector expanded by approximately 5%.
What’s the future of investments in Bahrain?
Due to all the positive moves, we can say that the foreign investments flowing into Bahrain will continue at an increasing pace in the coming years.
Having said that, the GCC region is also a dynamic and competitive region, which offers multiple attractions for investors. Therefore, it is imperative to offer solutions to existing roadblocks and also adopt various initiatives, which can help to get ahead the competitors.
Let’s take an example here. Talking about the new residency sponsorship laws; extending the duration of the residency sponsorship of Bahrain to a maximum of 10 years is surely a winning step. However, if we see the example of UAE, it has gone an extra mile by enabling foreigners to enjoy 100% ownership of its companies.
This year has seen some crucial changes and updates in the economy of Bahrain and it is quite predictable that there are some more changes planned in the near future.
