bahrain

Bahrain

Bahrain is a natural gateway to the Gulf Cooperation Council’s (GCC) $1.5 trillion market, with particularly favourable access to Saudi Arabia, the region’s single largest market.

This guide was last updated in April 2022.

Welcome to Bahrain

Its central location provides unrivalled entry in to other GCC markets via road, air and sea. Besides acting as an ideal entry point into the Middle East, it has become an operational hub for major organisations with business interests in GCC, and the broader Middle East & North Africa.

HSBC’s presence in the Middle East dates back to 1889 when the bank was known as The Imperial Bank of Persia. Our first branch in Bahrain opened in 1944. Today, HSBC in Bahrain provides a wide range of banking services for both corporate and individual customers.

In fact, HSBC has been a leader in financial services in the GCC states, opening branches in Kuwait (1942), Bahrain (1944), the area now known as the UAE (1946), Oman (Muscat 1948), Saudi Arabia (Al Khobar and Jeddah 1950) and Qatar in 1954.

HSBC Bahrain has a talented and diverse workforce with international expertise and in-depth knowledge of the Bahrain market. The bank is leading the conversations about sustainable finance and ESG and works closely with the decision makers in the country to support the sustainable growth agenda.

I look forward to offering my personal service as we discuss how we can support your business growth in Bahrain.

christopher-russell
Christopher Russell Chief Executive Officer,HSBC Bahrain

Building 2505,
Road 2832,
Seef 428,
Kingdom of Bahrain

Essentials

Population
1,793,515
Size
780 square km
(30.16 squared miles)
Main languages
Arabic and English
Commercial capital city
Manama
Other major cities
Muharraq, Riffa, Hamad Town
Currency
Bahraini dinar (BHD)
pegged to USD
Dialling code
+55
GDP
US$43,181.2 per capita1
Top exports
Oil, aluminium, chemical products, transport equipment, electrical equipment, textiles
Top imports
Cars, electrical equipment, chemical products, transport equipment, metals, plastics
Unemployment rate
4.9%2
Corporation tax
0%3
Typical office hours
8am to 4pm (Sunday-Thursday) or (Saturday-Thursday)
Time zone
GMT + 3hours
Emergency numbers
999 (police, ambulance, fire services)

1 World Bank Group, 2020
2 Trading Economics, 2020
3 KPMG, 2022

Bahrain: The Middle East’s island nation

Ranked

# 43

for ease of doing business (in a survey of 190 measured economies by The World Bank)

  • Island State

    Bahrain is an island state located east of Saudi Arabia and northwest of Qatar. A main island and several smaller islands constitute the Middle Eastern archipelago. Since the second century, pearling has been a significant local industry.

  • Political system

    Bahrain is a constitutional hereditary monarchy. The nation has been ruled by the House of Khalifa since the 18th century.

  • Diversification

    As oil revenue has declined in recent years, Bahrain has diversified into the communication and transport sectors with the aim of attracting foreign multinational corporations. While this has been a successful strategy so far, oil still provides 85% of government revenue.

  • Start your engines

    Bahrain has also diversified into tourism by hosting international sporting events, such as the Formula One Grand Prix which attracts 100,000 spectators to the compact island state.

Country profile

With a name meaning ‘two seas,’ Bahrain was one of the first Gulf nations to discover oil and establish a refinery, in 1932. However, as a result of dwindling oil reserves, the nation has now become one of the most diversified Arab states in the region.

Although mentioned in the writings of ancient Greek, Persian and Roman geographers, Bahrain has been Arab and Muslim since the 7th century AD. Occasionally, during Bahrain’s history, the British have intruded to foil the power plays of rivals such as Russia and Germany. This relationship led to Bahrain becoming a protectorate of the United Kingdom in 1861. For 110 years, Britain assumed responsibility for Bahrain’s defences and foreign policy.

Arabic is the official language of Bahrain. English is widely and commonly used, and it is a compulsory second language in schools. Persian or Farsi is also spoken, although this is mainly among family.

When oil was discovered in Bahrain in 1932, the nation became the first Arab state to open a refinery and begin production. More recently, with weaker barrel prices bringing less predictable revenues and fears of an end to their oil reserves (since proven unfounded after the discovery of new oil fields), the nation has been steadily diversifying its economy with the aim of developing non-oil sectors. For instance, the government has encouraged growth of the banking and tourism sectors.

Today Bahrain has one of the most varied economies in the Arab world and boasts a Formula One Grand Prix event, a series of innovatively engineered water parks, state-of-the-art shopping malls and high rises. Opened in 2008, the Bahrain World Trade Centre features two 50-storey, sail-shaped office towers linked by sky bridges. The 9,600-square-metre MODA shopping mall is found within, housing more than 200 boutique and luxury stores. The skyscraper’s smart and environmentally intelligent design saw it win the NOVA Award in Innovation in 2009.

5 reasons to do business in Bahrain1

  1. Infrastructure projects
    The launch of several large-scale infrastructure projects opens opportunities for foreign investors in Bahrain. The Bahrain International Airport Modernisation Program, the Saudi Causeway, the Bapco Modernization Programme and the Bahrain Metro project are just some of the many developments underway.
  2. Attractive business environment
    Bahrain imposes no corporate taxes on most business activities and allows 100% foreign ownership for many endeavours. Operating costs are about 30% lower than many neighbours in the region, while the country offers an engaged and educated workforce.
  3. Diversified economy
    Bahrain has already made significant progress towards diversifying its economy, with key initiatives in place to support growth in the coming years, including Bahrain Vision 2030, the Bahrain Metro Project, the Saudi Causeway and the BAPCO Modernisation Programme. $30 billion in spending is planned to help stimulate the economy and drive investment.
  4. Financial technologies
    Bahrain is the leading FinTech hub of the Middle East, with a regulatory sandbox allowing fintech firms to test new products and services. The government’s ambition to be a leading financial hub has seen the creation of Bahrain FinTech Bay.
  5. Growth sectors
    Bahrain has a variety of exciting growth sectors, including manufacturing, logistics and professional services. With the move away from oil, sustainable energy options such as solar have great promise here.

5 key challenges2

  1. 1

    Sovereign rating

    Standard & Poor's lists Bahrain as B+ with stable outlook, while Moody's credit rating for Bahrain is B2 with negative outlook and Fitch's credit rating for Bahrain was last reported at B+ with stable outlook.

  2. 2

    Bahrainisation

    Launched in 2019, the National Employment Program encourages employers to show preference to Bahraini nationals. This new initiative also means an increase in charges associated with work permits for foreigners.

  3. 3

    Small Market

    With a population just under two million people, Bahrain offers a small domestic market to companies looking to do business there.

  4. 4

    Rising costs

    Climbing electricity prices and challenges around receiving financing from local banks means costs involved in doing business in Bahrain have risen since 2019.

  5. 5

    Barriers to business

    The introduction of certain laws and regulations have altered Bahrain’s business environment, although none are overwhelming. As in most territories, there are specific demands of commercial registration, quality standards and import restrictions that must be recognised by foreigners wishing to do business in Bahrain.

1US Department of Commerce, 2021