BAHRAIN BUSINESS ENVIRONMENT DR MARIA CECILIA P LAGARAS
BAHRAIN BUSINESS ENVIRONMENT DR. MARIA CECILIA P. LAGARAS, CPA
Bahrain is an archipelago made up of 33 islands located off the coast of Saudi Arabia. The 25 km King Fahd Causeway provides a direct road link between the two countries. In five years’ time, a causeway will also link Bahrain with Qatar, to the southeast. At 45 km, the ‘Friendship Causeway’ will be the world’s longest land bridge. Most of the population lives in Manama, the capital, which is located on the northern tip of Bahrain island, itself the largest of the 33 islands.
THE POLITICAL ENVIRONMENT Kingdom of Bahrain is a constitutional hereditary monarchy Five governorates: � Asimah (the Capital) � Janubiyah (South) � Muharraq & Shamaliyah (North) � Wasat (Centre) Ruled by the Khalifa family since 1783 Legal system is based on both Islamic law and English common law.
THE POLITICAL ENVIRONMENT The Kingdom of Bahrain is a fully sovereign, independent Islamic Arab State whose population is part of the Arab nation and whose territory great Arab homeland. Its sovereignty may not assigned or any of its territory abandoned. System of government: democratic, sovereignty
THE POLITICAL ENVIRONMENT 3 branches of government: Executive – 1. a. b. c. d. Legislative 2. a. 3. all executive authority rests with the Council of Ministers Oversee the country’s interests Formation and implementation of general government policy Supervision of the course of business in the government system Bicameral legislature consists of Consultative Council (Shura) and Council of Representatives of Chamber of Deputies (Majlis an-Nuwab) – lower Judicial system
THE BUSINESS ENVIRONMENT A globally-oriented country with a distinctly local flavor, the Kingdom of Bahrain has established itself as the undisputed financial center and knowledgebased services hub of the Arabian Gulf region. Bahrain's progressive outlook and international perspective are reflected in its social and economic diversity. Bahrain's primary industry sector is dominated by government owned and operated enterprises. The government owns, either partially or wholly, businesses related to oil and gas (overseen by the National Oil and Gas Authority), as well as aluminum smelting and, to a certain extent, related downstream businesses.
WHY BAHRAIN Bahrain has grown successfully over the past 10 years, due its liberal economic policies, and has a clear roadmap for improving the prosperity of all in society. The country’s annual real GDP growth ranged between 2. 1% and 8. 3% over the period, according to the Central Informatics Organization. Looking to the future, the Economic Vision 2030 is a roadmap for making Bahrain a more sustainable, competitive and fair economy, with the aim of doubling household income by 2030. The National Development Strategy is a regularly updated action-plan that will turn the Vision into reality, setting specific milestones in the public and private sectors including education and training, the economy, health and society.
THE BAHRAIN Area: Bahrain is an island nation, with an area of 770 sq km (archipelago consisting of 33 islands) Capital city: Manama, our capital, is based in the north of the main island Religion: Many religions are practiced. Islam is the state religion and we are also home to Christians, Hindus and Jews. Currency: Bahraini Dinar (BD) (USD 1 = 0. 376 BD, fixed peg) Time zone: Situated between east and west, we are three hours ahead of Greenwich Mean Time (GMT+3) Languages: Arabic, English (used as the business language)
THE BAHRAIN Legal - contracts are important Business hours – � Manufacturing and govt - 7. 00 am – 2. 00 pm � Commerce: 10. 00 a. m. – 1. 00 p. m & 4. 0 -8. 0 pm Women in business – women are empowered Dress – decent and appropriate clothes Families – dominated by a number of trading families Customs – imported goods are by land, sea and air
GATEWAY TO THE MIDDLE EAST
ACCESS TO GULF MARKETS
Labor Force • Employed persons in Bahrain increased to 610437 (2 nd qtr, 2015). • The total population was at 1. 3 million people in 2014
INTERNATIONAL TRADE Importance of International trade
BAHRAIN ECONOMIC FACT BOX:
DEVELOPMENT PRIORITY The following sectors have been prioritized for development: � Financial Services � Professional & Industrial Services � Logistics � Education and Training � Manufacturing (Aluminium, Food & Beverage, Chemicals & Plastics) � ICT Tamkeen, Bahrain’s national labour fund, is investing in improving Bahrainis’ skills through training programmes, further enhancing both our competitiveness and the prosperity of local people.
INTERNATIONAL RECOGNITION WORLD INVESTMENT REPORT 2014 This report shows that the FDI inflows to Bahrain have increased by 11% in 2013 as compared to 2012. Bahrain ranks 9 th among West Asia in terms of FDI inflow and 5 th in the GCC. However, relative to the size of the economy, Bahrain had the highest FDI inflow in the GCC accounting for 3% of its nominal GDP.
INTERNATIONAL RECOGNITION 2015 INDEX OF ECONOMIC FREEDOM the freest economy in the Middle East/North Africa region. currently the 18 th freest economy in the world, having achieved high scores in the fiscal freedom, labour freedom and financial freedom factors established Municipal One-Stop Shop, which has eased the process of obtaining permits Source: 2015 Index of Economic Freedom
INTERNATIONAL TRADE EXPORTS In 2013 Bahrain exported $9. 6 B, making it the 94 th largest exporter in the world. During the last five years the exports of Bahrain have decreased at an annualized rate of -9. 1%, from $15. 5 B in 2008 to $9. 6 B in 2013. The most recent exports are led by Refined Petroleum which represent 43. 9% of the total exports of Bahrain, followed by Raw Aluminium, which account for 8. 41%. The top export destinations of Bahrain are Saudi Arabia ($1. 67 B), the United States ($597 M), South Korea ($561 M), India ($538 M) and Mozambique($525 M)
INTERNATIONAL TRADE IMPORTS In 2013 Bahrain imported $9. 4 B, making it the 112 th largest importer in the world. During the last five years the imports of Bahrain have decreased at an annualized rate of -12. 9%, from $18. 7 B in 2008 to $9. 4 B in 2013. The most recent imports are led by Cars which represent 12. 8% of the total imports of Bahrain, followed by Tug Boats, which account for 3. 82%. The top import origins of Bahrain are Saudi Arabia ($1. 55 B), China($1. 24 B), Japan ($754 M), th e United States ($712 M) and India ($681 M).
PRINCIPLE TRADE – RELATED LAWS The Cooperation Council for the Arab States of the Gulf known as the Gulf Cooperation Council (GCC) is regional intergovernmental political and economic union for the harmonization of economic, financial and monetary policies with a view to achieve more economic integration through the establishment of the Gulf Common Market (GCM) and Gulf Monetary Union. Its member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Investment in Bahrain is regulated by Commercial Companies Law
GREATER ARAB FREE TRADE AREA (GAFTA) In February 1997, the League decided to create an Arab Free Trade Area, also known as the Greater Arab Free Trade Area or the Pan-Arab Free Trade Area, by 2008. This would be achieved through a 10% reduction in customs fees each year as well as the gradual elimination of trade barriers. Eighteen of the 22 Arab League states signed on to this agreement, which came into force on 1 January 1998. In March 2001, it was decided to speed up the liberalisation process, and on 1 January 2005 the elimination of most tariffs among the GAFTA members was enforced. The GAFTA includes in its membership 17 Arab countries: 1. Bahrain 7. Libya 2. Egypt 8. Morocco 3. Iraq 9. Oman. 4. Jordan 10. Palestine 5. Kuwait 11. Qatar 6. Lebanon 12. Saudi Arabia 13. Sudan 14. Syria 15. Tunisia 16. United Arab Emirates 17. Yemen
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