Q: Oil prices recovered in 2016, but across the Gulf Co-operation Council (GCC) region economic growth remains weak and, to some extent, Bahrain is no exception to this. How have you adjusted your investment proposition in this environment?
A: Bahrain was one of the first GCC economies to really start focusing on diversifying away from oil and gas, even when oil prices were relatively high. But now with oil prices at their current level, there’s even more political will to drive through reforms that are going to help us diversify further. In some respects, it’s a blessing in disguise because it’s enabling us to push through things that are going to make Bahrain even more business-friendly.
Q: Can you mention any specific reform tailored to promote diversification?
A: Certainly there are three main areas of opportunity. The first is a $32bn infrastructure spending programme. Most of this investment is not coming from the government – it’s coming through the private sector and so on. So it is quite an interesting development and most of these projects are already underway and should be finished in the next five or six years.
The second main area is really into soft infrastructure. By that, I mean the changes we have made in the regulatory landscape in Bahrain to make sure that we live up to our tagline as ‘business-friendly Bahrain’. We have opened up a whole range of industrial activities for 100% foreign ownership.
Bahrain is certainly special in that you don’t need to be in a zone to have 100% ownership in a company. Then, you can export right across the GCC. You are not restricted to exporting outside the GCC.
We are also introducing a lot of new laws, so we have laws that are going to attract private equity firms. We have unlimited partnership laws coming on stream this year. We have revised our trust law. We are revising our bankruptcy law as well because it is very important that we have a good, working bankruptcy law.
The third area of opportunity is start-ups, in particular financial technology. We are working very closely with our central bank to develop a regulatory environment that attracts crowd-funding, peer-to-peer vending and a range of different fintech products, so that’s underway.
Of course, Bahrain isn’t unique in trying to develop that, but we do feel that we have some real niche opportunities, particularly when it comes to our lifestyle. Bahrain is a very open, very welcoming economy, so we can attract founders and entrepreneurs, not just from the rest of the GCC, but from across the wider world.
Q: Where do you see a niche for development and where has Bahrain got an advantage over GCC and other countries in the region?
A: Bahrain is the smallest economy in the GCC. That, in some ways, is good. We are literally a sandbox, where people can try out new ideas in a small, focused environment. We also have the best connectivity, the best access, to the largest economy in the GCC, Saudi Arabia. So from being based in Bahrain, founders and entrepreneurs, can develop products, services that they can then offer to the rest of the Gulf.
The other untapped opportunity is that like many GCC countries, we have a lot of high-net-worth individuals. We want to work with those wealthy individuals with investor education to help them learn from seasoned, experienced angel investors and venture capital firms, so that they can also become engaged and support the start-up ecosystem.
Q: In terms of political stability, there are ongoing tensions between the Shia majority and the ruling Sunni elite. Do you think that this is affecting business in Bahrain? What is the sentiment of investors?
A: The key thing for us is to get people to visit Bahrain: seeing is believing. Once they visit they get an understanding about what it is actually like to live here – the fact it is a very safe place, the fact that we have remarkable high rankings when it comes to quality of life. This normally means that they understand the advantages of being based here.
That quality of life is very important for us because of the type of business that we want to attract. Whether it is a regional headquarters activity or even a start-up that is basically choosing to vote with their feet and move to Bahrain to start a brand new business with their life savings. That quality of life becomes a very important factor. We believe this is a major selling point for Bahrain. Particularly when compared to other countries within our region.
Q: So you don’t see any long-term risks stemming from political tensions?
A: No, I don’t see those as risks. It’s more of a perception risk than a reality. It is important, as I say, for people to come and see, talk to people here. Talk to expats that have lived in Bahrain for many years, so that they can weigh up those considerations.