BahrainTUESDAY, MAY 13, 2014

200 years of UK relations

The kingdom has a track record of being the regional leader in innovation and social progress Page 2

FIRSTSA benchmark nationSee this report at

worldfolio.co.uk After pioneering the development of Islamic banking, the island nation is now a global reference Page 4

FINANCEIslamic finance innovation

More than 5,000 years of history define the open and global mentality of Bahrain’s modern society Page 6

CULTUREThe pearl of the Gulf

When Britain and Bah-rain signed a first

Treaty of Friendship in 1816, few could have predicted that political and economic ties between the two king-doms would endure for two centuries. This year, the long relationship was marked on January 15 by the Great Brit-ish Week. Staged in Bahrain, the seven-day event was a celebration of the rapport between two island nations intrinsically linked by their peoples and shared purpose.

Under the patronage of King Hamad bin Isa Al Khalifa, the festivities were hosted in conjunction with the third Bahrain International Air-show and received such dig-nitaries as Bahrain’s Crown Prince Salman bin Hamad bin Isa Al Khalifa. UK guests of honour included Prince Andrew, Secretary of State for Defence Philip Hammond, and a 250-strong delegation representing British business.

Prime Minister David Cam-eron entertained King Ha-mad at Downing Street last August and Crown Prince Salman also attended the World Islamic Economic Fo-rum (WIEF), which was held in the UK capital last October in representation of Bahrain’s position as the natural finan-cial hub in the Gulf region.

More recently, at the UK-Bahrain Islamic Finance Sum-

mit, held in London on April 8, Senior Foreign Office Min-ister Baroness Sayeeda War-si and the Governor of the Central Bank of Bahrain, Ra-sheed Mohammed Al Maraj, signed a memorandum of un-derstanding to further foster Islamic finance-driven trade and investment between the two countries. Baroness Warsi described Bahrain as an “innovator in Islamic fi-nance,” a global industry that is expected to exceed $2 trillion by the end of 2014 (source: AlHuda Centre of Islamic Banking and Econom-ics in Pakistan).

Little wonder then that London aims to place itself at the forefront of Islamic bank-ing and has become the first non-Muslim country to issue Sukuk Islamic bonds. The an-nouncement was made by the British Prime Minister at the WIEF, where he spoke of making London “one of the great capitals of Islamic finance.” Bahrain’s stake in the UK banking industry al-ready runs to $11.1 billion in assets.

In the past decade alone, Bahrain and Britain have signed treaties covering the stock exchanges, investment and defence. Much of the onus for cross-border coop-eration falls under the remit of the Bahrain British Busi-ness Forum (BBBF), which

was set up in 1995. “Our role is to promote business between both countries. We meet regularly every month and we usually have a speaker, and our attendance is very high. Our member-ship has jumped from 300 to nearly 500. We believe we will reach 500 soon,” says the head of BBBF, Khalid R. Al Zayani.

“Since I became chair-man, I have introduced more

Bahrainis to the forum [and] we have introduced Bahraini members on the board – I used to be the only one.

Now we have four, which is a great improvement. We need them on the board. We have a very close relation-

ship with the embassy, and the chamber of commerce. We support any business that comes to this part of the world. We introduce them to Bahrainis and vice versa. We are there to pro-mote better business rela-tionships between the UK and Bahrain.”

But the ties that bind the two kingdoms run deeper than the economic-political sphere. Some 9,000 Brit-

ish expatriates call Bahrain home and the UK welcomes thousands of Bahraini stu-dents to its universities each year. Many Bahraini nation-als consider London their second home and such is the mutual respect between the kingdoms that 240 Brit-ish citizens were granted Bahraini nationality this year by King Hamad at their re-quest in recognition of their loyalty and service to the country.

Speaking at the start of the Great British Week, Foreign Secretary William Hague described Britain’s relationship with Bahrain: “I particularly thank His Royal Highness the Crown Prince of Bahrain. You have our warm and sincere respect not only as a great friend of the United Kingdom, but also for your leadership in your own country.

“The relationship be-tween the UK and Bahrain is historic; it goes back nearly 200 years to the East India Company in 1816. It is deep, since thousands of British nationals call this country their home. And it has a great future, with new areas of cooperation developing all the time, such as the af-finity between London as a global financial capital and Bahrain as a major centre of Islamic finance.”

In February, the Lord Mayor of the City of Lon-don Fiona Woolf headed a large business delegation to the Gulf, starting in Bah-rain before heading on to the UAE and Saudi Arabia. During the visit she said: “Our relationship with the Gulf is hugely important and this longstanding partner-ship is one that I hope to continue building. We view this relationship very much as one of sharing skills and experiences to grow both our financial sectors. Closer partnership will support the regional goals of economic diversification, growth and infrastructure develop-ment.”

King Hamad was an hon-oured guest at the Royal Windsor Horse Show last year, where a display of en-durance riding was staged in the presence of Queen Eliz-abeth II. King Hamad spoke during the event of the ties between Bahrain and the UK, which he said were “as strong as ever.” Much like Bahrain’s long tradition in the equine long-haul disci-pline, that 1816 treaty was renewed and reinforced in 1971, the harbinger of a pe-riod of modern cooperation that has served to set Brit-ain and Bahrain on the path of mutual understanding and prosperity.

I am happy to say that the relationship is as strong as ever –

perhaps even stronger

King Hamad bin Isa Al Khalifa of Bahrain,

pictured with Prime Minister David Cameron

outside 10 Downing Street, London

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PROJECT TEAMFabricio Sordoni, Agnese Nardi, Andrea Gomez,

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The UK and Bahrain this year celebrate 200 years of close friendship, strong bilateral commercial interaction, vibrant business links and ever-stronger two-way exchanges of knowledge, technology, innovation and culture

BAHRAIN2

Economic activity expands beyond oilBahrain’s success in tackling economic challenges head on and targeting sustainable prosperity is opening economic opportunities across the board

Bahrain is different. This small island nation is adept at

recognising before others the way forward and in investing resources to adapt and reshape itself to meet new challenges and changing circumstances. Nowhere is this pragmatic na-tional trait more evident than in the business and economic structure Bahrain has built for itself – one that has success-fully diversified far beyond the country’s relatively small hy-drocarbons reserves to suc-cessively embrace and develop a strong and distinctive pres-ence in many different sectors, resulting in a dynamic and of-ten leading position in chosen areas of high-growth potential.

While 87 per cent of the government’s revenues do still come from oil and gas, this sector now represents only 20 per cent of the country’s GDP, followed by 17 per cent from financial activities and 15 per cent from the manu-facturing sector. To overcome what many might consider drawbacks, namely an island location and a small indigenous population, and cleverly turn them into advantages, Bahrain has emphasised universal and high-quality education – to-gether with an attractive fiscal environment and investment in logistical and industrial in-frastructure tailored towards chosen target sectors – to bring about its successful eco-nomic diversification.

Growth since the turn of the millennium has averaged 5 per cent per annum, with GDP growing by 78 per cent between 2000 and 2012 and goods export revenues more than tripling in the decade end-ing 2012. Sustained investment in infrastructure to keep pace with this growth has included the Salman Industrial City and its Bahrain International Invest-ment Park, which has so far cre-ated 11,000 jobs. The nearby Sheikh Khalifa bin Salman Port enhances the attraction of the kingdom as a regional logistical hub, while the Bahrain Interna-tional Airport is also now being expanded and modernised.

Bahrain has been an oil pro-ducer for more than 80 years, but it is still projecting increased

output over the coming years thanks to the use of enhanced oil recovery techniques at its oldest onshore field, as well as to the further expansion of offshore exploration. According to the National Oil and Gas Au-

thority (NOGA), total output by 2020 could reach 250,000 bopd, while gas production, important as an energy source for industrial projects, is also be-ing boosted. Major investments planned include $6 billion to increase and upgrade the capac-ity of the Bapco refinery and to replace the existing pipeline between Saudi Arabia and Bah-rain. Total foreign investment in this sector over the next two decades is expected to reach $20 billion.

The country has the old-est financial services sector in the Gulf region and is home to more than 400 companies, covering wholesale and retail banking, Islamic finance, asset management and insurance. It boasts easy access to a region-al economy worth $1.4 trillion. Regulation is to best-practice international standards and it is ranked first among Middle East countries. With average annual growth of over 8 per cent since the turn of the mil-lennium, the financial services sector now employs close to 15,000 people. Bahrain invest-

ed early in building a presence in Islamic finance and is now a global leader in the field.

While a substantial part of the manufacturing sector de-pends upon the existence of hy-drocarbons as feedstock or as a source of cheap energy – this being the case with producers of refined petroleum, chemical and aluminium products – a wide cross-section of other in-dustrial enterprises is now be-ing attracted to Bahrain’s new industrial parks. These include (according to the Bahrain In-ternational Investment Park) international groups such as Mondelez (formerly Kraft), Kimberley Clark, American Express, NCR, BASF, Siemens and, more recently, Reckitt Benckiser from the UK. Alba, present in Bahrain since 1968 and one of the world’s largest aluminium smelters, continues to grow its production capac-ity with a sixth production line now under consideration.

Bahrain’s success in attract-ing and retaining leading inter-national companies has been earned by creating sound and

efficient physical logistical and investment infrastructure. This has been matched by an ef-ficient regulatory framework for business, in addition to in-vesting in education and human development so as to provide skilled human resources.

There is, however, much more, including a culture of openness to trading with the whole world and one of eco-nomic freedom. Investors in Bahrain find no taxes on per-sonal income, with many busi-nesses also being exempt from taxation and subject to no ex-change controls, no restrictions on repatriation of profits or capital, and very few non-tariff barriers. There is an exchange rate peg of 0.376 Bahraini dinars to the US dollar, low inflation and a strong financial sector. In the Heritage Foundation and Wall Street Journal 2013 Index of Economic Freedom, Bahrain ranks first in the Middle East and North Africa region and 12th in the whole world. A warm welcome awaits in Bahrain, the country doing things right, the easiest place to do business.

A nation of firsts

The benchmark nation maintains pole position

The famous ancient Chinese proverb that “a journey

of 1,000 miles starts with one step” highlights the significance of taking first steps – a philoso-phy consistently embraced by Bahrain, a small island with an indigenous population of less

than 600,000 but with a track record of regional leadership in ideas, initiatives and innova-tion. With its characteristic self-confidence and consistent determination to tread a differ-ent and individual path, taking from the world ideas and inno-

vations, adopting them within traditional national values while still remaining a nation proud of its heritage, Bahrain has racked up a truly impressive list of firsts, revealing a country at the forefront of progressive change within the region.

Bahrain was the very first country in the Middle East to discover oil deposits, as far back as 1932, and of course the economic prospects of the country were transformed at a stroke. However, Bahrain’s record of being “first” in the

region certainly pre-dates the discovery of oil on the island. As an example, more than a decade earlier, the country had been the first in the region to institute public education, for boys in 1919 and for girls in 1928, while the first modern public hospital in the Arabian Gulf, the American Mission Hospital, had opened in Bah-rain in 1903.

So for a century, three strands of development have been interlinked in Bahrain: economic growth, educational and social provision, and open-ness to ideas from the world. The pioneering landmarks clocked up by the country demonstrate the fusion of these different influences to produce the Bahrain of today. In the economic field, Bah-rain did not simply rest on its laurels as an oil producer but instead was the first nation in the region to set out a vision of economic diversification, its success being evident from the fact that today only one-fifth of its GDP comes from oil and gas extraction.

The country built the Gulf’s first airport in 1932 and has consistently led in investing in infrastructure for business. In telecommunications and digital technology, Bahrain has been a traiblazer in the Gulf in just about everything, ranging from the first computers, 3G ser-vices, smart-cards, nationwide wireless network, and the

first (in the world) nationwide next-generation network. In addition, the region’s inaugural colour television service was also in Bahrain. The country has welcomed the first region-al eco-friendly, low-radiation wireless platform, while the twin tower Bahrain World Trade Centre complex built in 2008 was the world’s first skyscraper structure with inte-grated wind turbines.

The Gulf’s first horse-racing track was opened in Bahrain in 1948, as was its first Formula One circuit in 2004. Keeping pace with modern lifestyles

has seen Bahrain also host the region’s first Subway outlet and form the Gulf’s first na-tional women’s football team.

For expatriates, Bahrain was voted the world’s friendliest country in an HSBC survey in 2009, nicely complementing its number one ranking in the 2012 report by the Fraser In-stitute on Economic Freedom in the Arab World.

Bahrain was, in 2002, the first country in the Gulf re-gion to institute democracy with universal suffrage and a year earlier it broke ground by holding an online referendum.

The country can also boast of several firsts in the em-powerment of women in gov-ernment, which include being home to the first woman from the Middle East to chair the United Nations General Assembly, the first Jewish ambassador of any Middle East country (also a woman) to the United States, and the first woman (a Christian) in the Islamic world to chair a parliament, Bahrain’s Shura Council.

Journeys of 1,000 miles – all started with “first” steps by a small country with big ideas.

Bahrain takes pride in its track record of consistently being the regional leader in introducing innovation and social progress

The twin-tower Bahrain World Trade Centre, opened in 2008, was the world’s first to aesthetically incorporate three 29-metre diameter wind turbines into the fabric of the building and is a powerful emblem of the kingdom’s aspirations

A wide cross-section of industrial

enterprises are being attracted

to Bahrain’s new industrial parks and upgraded infrastructure

designed to spur new business and further diversify the

economy

Bahrain International Circuit was the first venue in the Middle East to host Formula One racing

Photo: Habeed Hameed

BAHRAIN 3

A broad vision of life in 2030Bahrain’s Vision 2030

embodies its ambition and determination to build a better life for every Bah-raini within two decades through reshaping govern-ment, society and the econ-omy. It also targets foster-ing ever-greater dynamism and laying the foundations for sustained competitive-ness and sound long-term economic growth. The guid-ing principles of the whole programme are fairness, competitiveness and sus-tainability, with the first National Economic Strat-egy serving as the roadmap. Its goals are centred on key areas for national, eco-nomic, social and personal development, which include education, the creation of employment and futures for young people, infrastruc-ture development, technol-ogy application and foreign investment.

Dr Hassan A. Fakhro, Minister of Industry and Commerce, emphasises the aim of creating “a produc-tive, globally competitive economy, shaped by gov-ernment and driven by a pioneering private sector” and of ensuring that “every Bahraini has the means to live a secure and fulfilled life and reach his or her full potential.” This is a national vision with a very human face, where social values are cherished and enhanced, and human values continue to be nurtured while still ensuring that the country competes with the best. The dynamism of the pri-vate sector, locally and from overseas, will be the engine of growth to create jobs and wealth, while the dy-namism of the government and public policy will create the infrastructure, as well as the conditions and at-

titudes, through which the private sector can flourish and prosper.

Regarding education, Bah-rain’s literacy rate of 91.4 per cent and its long tradi-tion of good-quality public education give it a head start among Arab nations. This advantage is being built upon for Vision 2030 with, for example, the first class having graduated in 2012 from the new Bahrain Polytechnic – a concrete example of the government responding directly to a private sector human re-source requirement.

Dr Fakhro elaborates on the comprehensive char-acter of his ministry’s role

under Vision 2030, singling out the country’s aims to ensure world-class business infrastructure, a transpar-ent regulatory system and simplified business set-up procedures. Besides ben-efiting existing businesses and enhancing their com-petitiveness, Dr Fakhro sees all these elements as essential to success in at-tracting foreign companies to Bahrain – a high prior-ity for his ministry, with export-focused companies being particularly targeted, besides those creating jobs for Bahraini citizens.

Under Vision 2030, par-ticular attention is naturally being given to the power

sector. Up to now, Bahrain has been relying on essen-tially indigenous fossil fuel resources and it is now looking into alternative and sustainable energy sources, including solar power proj-ects now being piloted. The national strategy also focus-es on energy efficiency, en-ergy conservation and bet-ter insulation, an emphasis on intelligent buildings and on the use of more efficient air-conditioning systems. Privately-owned plants al-ready supply 80 per cent of Bahrain’s electricity and Dr Abdulhussain bin Ali Mirza, Minister of Electricity and Water, sees the need for further investment of up to

$2 billion in new plants by 2016.

An outstanding example of Bahrain’s forward think-ing in infrastructure devel-opment is in the establish-ment of Salman Industrial City, comprising three in-dustrial parks and 1,100 hectares of industrial space. The parks have already at-tracted $4 billion in indus-trial investment and cre-ated 11,000 jobs. This latter figure is expected to grow to 30,000 when the nu-merous foreign companies investing there reach full capacity. To follow on from this success, the Ministry of Industry and Commerce aims to expand the Indus-

trial City through land rec-lamation, while a feasibility study is also under way for a New Economic City to be built by 2040. The new-ly built Sheikh Khalifa bin Salman Port near to the Industrial City and the on-going expansion of Bahrain International Airport add to Bahrain’s attractiveness as a regional logistical hub. Vision 2030 is covering all the bases.

Sheikh Hisham A. Al Khal-ifa, Undersecretary for Re-sources and Services at the Ministry of Education, says that “education is the cor-nerstone of Vision 2030” with the objective of equip-ping Bahrainis to take top-

level positions in industry. He adds, “In Bahrain, we do not have a lot of natu-ral resources, not like our neighbours, so we cannot rely indefinitely on oil and gas. The only thing we can rely on 100 per cent is our people, so we are investing in our people and through our people we can achieve Vision 2030.” The radically restructured education system aims to transform the quality of teaching and in particular to improve the critical thinking and problem-solving skills of students.

Samira Ibrahim bin Rajab, Minister of State for Infor-mation Affairs and Official

Government Spokesperson, also highlights the focus on “media excellence” within Vision 2030, emphasising the establishment of the Supreme Council of Com-munication and Informa-tion, based on the French model, as the regulatory body to protect the me-dia and freedom of speech. “Freedom of speech has be-come a part of our life and is protected by our consti-tution,” she adds.

Covering all bases, Vi-sion 2030 is a plan with foresight, a true vision of a prosperous national future, being cleverly and energeti-cally pursued; it is a vision for all.

The kingdom is planning with foresight to bring change and reform, and is committed to a fair, competitive and sustainable future

Citizens connect with eGovernment

The ambitious and far-reaching national Vision

2030 will transform the coun-try into a world-class competi-tive, sustainable, diversified and knowledge-driven economy – and to achieve this objective through the involvement and participation of all its citizens. One of the key pillars in this process is ensuring that all areas of government services are efficient in delivery and responsive to the needs of citizens. The means chosen to bring about this transforma-tion is eGovernment, using 21st-century technology to comprehensively re-engineer all aspects of how people in Bahrain, citizens or not, ac-cess government services. As the CEO of the eGovernment Authority (eGA), Mohammed Ali Al Qaed, states succinctly: “Our slogan of ‘Towards a Bet-ter Life’ goes in line with the country’s economic vision,” delivering services electroni-cally in an efficient, simple and swift manner.

Mr Al Qaed goes on to ex-plain that people today prefer and expect a “one-door ser-vice” and that the eGA pro-vides this through the eGov-ernment portal, as well as via its fast-developing Mobile Portal and other means avail-able for people without their own internet access. More than 300 government services are already provided through

eGovernment and the aim is to extend its reach to cover all government entities. Bah-rain’s success in implementing eGovernment rapidly and effi-ciently has been internationally recognised and Mr Al Qaed proudly states that the coun-try is now placed by the UN “first regionally, in third posi-tion in Asia and seventh in the whole world for online service delivery.” It has also received special recognition for its pro-grammes to constantly engage with users of government ser-vices, including through the use of social media.

However, the eGovernment initiative goes beyond simply making it easier for people to interact with government. As an integral and essential part of Vision 2030, the eco-nomic and social benefits of eGovernment extend to cre-ating an ever-more efficient environment for businesses and entrepreneurs, as well as educating increasingly wider segments of the population, of

all ages, in computer literacy and in the technologies of to-day. The result will be a society open to innovation and the adoption of new and more efficient ways of doing things. Mr Al Qaed highlights that the UN has, in this respect, designated Bahrain as “a role model for other countries to follow” for “its excellent track record in terms of its leading initiatives in eGovernment and public service.”

The eGA’s own vision, within the national Vision 2030, is aptly named “Ad-vance”, summed up as being to “achieve next-generation government by delivering high quality services effectively, valuing efficiency, advocating proactive customer engage-ment, nurturing entrepreneur-ship, collaborating with all stakeholders and encouraging innovation.” The programme is continually evolving with ac-tion plans already extending to 2016 and continuous monitor-ing through key performance indicators. The breadth of the vision is impressive, both now and even more for its future growth, with continuous skills enhancement and the cascad-ing of organisational change being seen as just two of its fundamental benefits. Future areas of application under con-sideration include the Internet of Things, Open Data, Cloud Computing and Green IT.

Mr Al Qaed emphasises once more that the over- riding goal of the ambitious and comprehensive eGovern-ment programme is to bring about a better life for every-one in Bahrain – and sustained prosperity for future genera-tions, a well-founded vision ad-vancing smoothly and steadily.

eGovernment leads the way in harnessing technology to provide better, easier lives today and sustained prosperity tomorrow

More than 300 government services are already available through the eGovernment initiative

Looking to the future with liberal economic policies and a clear roadmap in the form of Vision 2030, Bahrain aims to raise prosperity for everyone in society

Mohammed Ali Al Qaed,CEO of the eGovernment Authority

Freedom of speech has

become part of our lives and

is protectedSamira Ibrahim bin Rajab,

Minister of State for Information Affairs and the Official Government

Spokesperson

Bahrain ranks number one in human capital development in

the regionDr Abdulhussain

bin Ali Mirza, Minister of Electricity

and Water Affairs

for the issuance of sukuk sur-passed $100 billion last year, with double-digit growth pro-jected among borrowers in the Gulf, to finance the large infrastructure projects being planned throughout the re-gion.

“Bahrain laid out the foun-dation and it took about 10 years to put Islamic banking in the right direction,” says Adnan Ahmed Yousif, President and

ments of emerging global fi-nancial markets,” and added that “the market is far below its true potential.”

Bahrain benefits from host-ing the headquarters of the influential Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFFI), whose standards are used by regulators of Islamic finance around the world. In addition, Bahrain is

home to keystone institutions like the Council for Islamic Banks & Financial Institutions (CIBAFI), the International Is-lamic Financial Market (IIFM) and the Islamic International Rating Agency (IIRA). Annual events like the World Islamic Economic Forum, which took place last year in London, and the World Islamic Bank-ing Conference, have over the years deepened Bahrain’s

position at the centre of this expanding network of global Islamic finance.

Illustrating Bahrain’s im-portance to the development of Islamic finance worldwide, IIFM announced in April 2014 the first global standard con-tract template for sukuk, or Islamic bonds, and said that it aims to double the number of its standards by as early as 2015. Worldwide, the market

BAHRAIN4

At the root of Islamic banking and financial innovationThe best regulated and most sophisticated financial services centre in the GCC pioneered the creation of Islamic banking and has the highest concentration of expertise and services in Sharia-compliant finance worldwide

The Kingdom of Bahrain stands at the nexus of

several important move-ments that will shape the future of the region and capture an outsized share of global growth and de-velopment in the coming years. As an economic hub at the centre of the Gulf states, Bahrain has unique access to the largest con-centration of wealth in the world, while as a leader in financial services and global standard-setter in the burgeoning field of Is-lamic finance, it will be an essential player in invest-ment, banking and trade flows. Located at the heart of the increasingly dynamic markets of the Gulf Coop-eration Council, the Middle East and the Arab world, it will also be part of a popu-lation explosion that will fuel economic expansion and require unprecedented infrastructure investments.

The kingdom of just 1.3 million – a former Brit-ish protectorate with a 200-year-old relationship and deep economic ties with the United Kingdom – has served as the Gulf’s finance capital for the past 40 years. It lays claim to the region’s best regulated and most sophisticated financial services centre, as well as the highest concentration of expertise and services in Islamic finance worldwide. Bahrain’s leadership boasts that it is the greatest free market in the region, and one of the most attractive places to do business any-where, which has helped it build an experienced and internationally integrated workforce of over 14,000 financial service profession-als serving more than 400 of the world’s leading finan-cial institutions.

Bahrain’s liberal invest-ment regime allows the free movement of capital and 100 per cent foreign ownership of a business or branch office, while its established legal system meets or exceeds inter-national best practices. With no corporate taxes, no personal income taxes, no wealth taxes, no capital gains taxes and no restric-tion on repatriation of capital profits or dividends, Bahrain is consistently placed at the top of global economic and business

competitiveness rankings. Perhaps most attractive of all, it offers access to the Gulf market, with its vast wealth and rapidly expand-ing market for Islamic fi-nance.

With roots that stretch back at least 14 centuries, Islamic finance aims to gen-erate a fair and equitable profit from transactions that are backed by real assets. This method of fi-nancing avoids usury, short selling and excessive credit whilst encouraging sound risk management proce-dures. These criteria mean that Sharia-compliant inves-tors avoided the opaque in-vestment vehicles that un-did many banks during the last financial crisis. A 2010 study by the International Monetary Fund found that “Islamic banks, on average, showed stronger resilience during the global financial crisis.” The IMF study at-tributed this, specifically, to

“smaller investment portfo-lios, lower leverage, and ad-herence to Sharia principles – which precluded Islamic banks from financing or in-vesting in the kind of instru-ments that have adversely affected their conventional competitors.”

With a potential mar-ket base of more than 2 billion people in some of the fastest-growing coun-tries in the world, and an-nual growth rates of 17 per cent in recent years, it should come as no surprise that Islamic finance invest-ments globally are forecast to break the $2-trillion mark in 2014. The increase in this market has been driven by high demand for Sharia-compliant products, as well as increasing liquid-ity in the Gulf region due to high oil revenues, according to the World Bank, which in a 2013 study concluded that Islamic finance “is one of the fastest growing seg-

The architecturally striking Bahrain Financial Harbour district has been designed to address every possible need of the highly diverse international finance sector

Gain a solid foothold in the GCC

Gulf International Bank (GIB) has always looked

beyond the immediate hori-zon, seeking opportunities for expansion abroad. This global view was the driving force behind the creation, and continuous growth, of one of the Gulf ’s premier financial institutions. Today, GIB has a flourishing sub-sidiary in the UK as well as offices in New York. But the bright lights of the world’s financial markets have not dimmed GIB’s commitment to the GCC bloc: the bank was awarded ‘Best Invest-ment Bank in the Middle East’ and ‘Best Investment Bank in Bahrain’ in the in-vestment banking category of the 2014 Global Banking & Finance Review Awards, adding to an already lengthy list of recognition from the international financial community that includes being named ‘Most Innova-tive Investment Bank in the Middle East’ by The Banker magazine in 2012. Here, Dr Yahya Alyahya, CEO of GIB, discusses the bank’s evolu-tion and role as a cross-border financial bridge.

How would you place GIB in the context of Bahrain and the Gulf?

GIB was established as a

conventional wholesale bank in 1975, during the first oil boom in the Gulf region. As one of the region’s first GCC-owned financial insti-tutions based in Bahrain, the bank’s initial mission was to aid in the recycling of pet-rodollars given the limited investment capacity within the Gulf at the time. This was followed by the financing of ports, airports, industry and infrastructure, and today GIB has built up a broad spectrum of capabilities in finance and investment.

The bank has endured many of the challenges faced by financial institu-tions around the world, in-cluding the Latin American crisis in the 1980s, the Gulf War and the global financial crisis. In all instances strong support demonstrated by the bank’s shareholders en-

abled GIB to recover and continue growing. In 1999, GIB’s merger with London-based Saudi International Bank (which became GIB UK) added asset manage-ment and corporate finance to the portfolio of capabili-ties. This was followed by the launching of corporate finance activities in Saudi Arabia with the establish-ment of a subsidiary in the kingdom, GIB Capital.

Over time and in spite of the many challenges faced, GIB has retained four key competitive advantages.

First, it has an excellent footprint in the GCC re-gion and strong relation-ships with top-tier clients, and we want to build on this.

Second, the bank has global outreach; GIB has been interacting in the in-

ternational financial markets for a long time, and we want to capitalise on this as well.

Thirdly, the bank has de-veloped niche areas such as project finance, a presence on the capital markets and in asset management – an area in which not many lo-cal and regional institutions are active.

Finally, deep penetration into Saudi Arabia has placed the bank in a favourable po-sition for further growth and expansion in the GCC’s largest market.

These inherent advan-tages motivated our share-holders to adopt a new strategy in the aftermath of the global financial crisis. After a period of derisking and deleveraging to elimi-nate external vulnerabili-ties, we have been executing our new business strategy – to become the first pan-GCC universal bank. This includes building on our existing wholesale banking expertise and focus on di-versifying through develop-ing relationship-based busi-ness in large and mid-cap corporate segments rather than long-term project and structured finance. We are also creating a new and so-phisticated retail brand built on technology and innova-tion rather than the old brick-and-mortar model – which is not only outdated but also very expensive. We are now in the process of designing products and ser-vices for our retail segment, as well as continually adding to our portfolio of innova-tive financial solutions for the wholesale segment.

Our healthy capital ade-quacy ratio of about 19 per cent and compliance with most Basel III requirements place GIB in a position of strength that will also en-

Overcoming challenges and retaining four competitive advantages have kept Gulf International Bank in the lead

Dr Yahya Alyahya, CEO of GIB

The Central Bank of

Bahrain’s rules are extremely

robustKhalid Hamad

Abdul-Rahman Hamad, Executive Director at the Central Bank of Bahrain

We have the world’s highest

number of Islamic financial

institutions Mohammed Ebrahim

Mohammed, CEO of BisB

Bahrainis set up Islamic accounting

and corporate governance standards

Adnan Ahmed Yousif, President and CEO of

Al Baraka Banking Group

governments that are as good as the UK and Bah-rain,” says Hassan Jarrar, CEO of Standard Char-tered Bank in Bahrain. “They go back 200 years. To be part of that it is a huge privilege.”

Longstanding ties like these have helped put the UK at the forefront of Is-lamic finance. Today, more than 22 international fi-nancial institutions operat-ing in the UK offer Islamic finance products. Six of

these are fully Sharia-com-pliant banks, more than any other country in Europe.

Islamic finance has al-ready been used to fund several major develop-ments in the UK, including Harrod’s department store, The Shard skyscraper, the 2012 Olympic Village and the redevelopments of Chelsea Barracks and Bat-tersea Power Station.

More than 30 law firms with offices in the UK of-fer expertise in legal ser-

BAHRAIN 5

Gain a solid foothold in the GCC

UK leads the West in Islamic financeStrong bilateral ties are enabling key knowledge and expertise transfer to position London at the centre of the global expansion in Islamic finance

With 716 finan-cial institutions

spread over 61 countries, growth rates approach-ing 20 per cent, and a total volume of assets expected to approach $3 trillion over the next five years, Islamic finance has only just begun to es-tablish itself in the global financial system. Already, crucial knowledge and expertise in this field has concentrated itself in strategic locations, with Bahrain being at the fore-front of the Middle East, and the United Kingdom emerging as the premiere hub to conduct this busi-ness in the West. Just as partnerships between London and Manama were instrumental in Bahrain’s emergence as a global financial centre decades ago, these ties have provided the rela-tionships and the transfer of knowledge that has positioned London at the centre of the global ex-pansion of Islamic finance.

The special role that London has played in this development is per-sonified by the deep re-lations enjoyed by the United Kingdom and Bahrain.

The highly successful World Islamic Economic Forum held in London at the end of October 2013, which was at-tended by Crown Prince Salman bin Hamad Al Khalifa, laid the ground-work for closer bilateral cooperation in the fo-rum’s first ever meeting in a non-Islamic city.

In December of last year, a sizeable delegation of leading finance profes-sionals from the UK at-tended the World Islamic Banking Conference in Bahrain, further solidify-ing ties. In February, the Lord Mayor of the City of London, Fiona Woolf, paid an official visit to Bahrain. Ms Woolf is not only the second woman to be a Lord Mayor in the 824-year history of the post, but also spent three years working in Bahrain in the 1980s with Baker Mackenzie.

Also in 2013, the UK established the first ever ministerial-led Islamic Fi-nance Task Force, jointly chaired by Financial Sec-retary to the Treasury Greg Clark and Baroness Sayeeda Warsi, Senior Minister of State at the Foreign and Common-wealth Office.

Meanwhile, Prime Min-ister David Cameron has expressed his desire to support “the UK’s posi-tion as a global partner

of choice for Islamic finance with the exper-tise, innovation and ser-vices fundamental to the industry’s growth.”

Typical of the intercon-nectedness between the two countries, Standard Chartered Bank, a British bank with nearly a centu-ry of history in Bahrain, has risen to become a major player in the Is-lamic banking sector.

Standard Chartered Bank first came to Bah-rain 90 years ago and helped lay the foundation for the thriving finance sector that exists there today. It was one of the country’s first financial institutions and helped to create the Monetary Authority, which later became the Central Bank of Bahrain.

“There are very few partnerships between

able it to successfully meet its goals.

How will GIB UK and the UK market over-all contribute to GIB becoming a GCC-wide and worldwide univer-sal bank?

GIB UK manages assets for institutional clients in the region. We want to leverage that expertise to create asset management in the region to complement that in the UK. We have the experience to market UK products here. Secondly, we want to build on our corporate finance capabilities to facilitate cross-border investments. We want to help our regional investors,

especially those in areas like real estate and trade finance, to have access to the UK market, while also helping UK investors who want to invest in this region.

In the context of bi-lateral relations, can we consider GIB one of the bridges that need to be consolidated between the UK and Bahrain?

Absolutely. It is one element of our three-pillar strategy: corporate, retail and asset management, and corporate finance. In all three areas we can leverage our presence in the UK to facilitate cross-border activity.

CEO of Al Baraka Banking Group. “They set up Islamic accounting standards, the Sharia standards; they also set up the new corporate gover-nance standards. Bahrain was the pioneer in introducing Is-lamic banking.”

Bahrain’s more than 50 Is-lamic financial institutions now manage more than $47 billion in assets and the country has more Sharia scholars work-ing in finance than anywhere else, according to Thomson Reuters, which ranked Bah-rain second globally in Islamic finance development, behind only Malaysia, and first world-wide in terms of Islamic fi-nance governance and corpo-rate social responsibility.

“Bahrain is a major finan-cial centre,” says Mohammed Ebrahim Mohammed, CEO of the Bahrain Islamic Bank, or BisB. “The number of Islamic financial institutions in Bahrain is the highest in the world. You take the insurance companies, the brokerage, the banks, the representative offices; it is the highest amongst any other country.”

The flagship of Islamic bank-ing in Bahrain, BisB traces its origins to the emergence of Islamic finance on a global scale more than three decades ago. “Islamic banking started in Bahrain with the establish-ment of Bahrain Islamic Bank in 1979,” Mr Mohammed adds. “Since then, the Central Bank of Bahrain has been issuing rules and regulations govern-ing Islamic banking activities and transactions. It has been issuing and practicing these rules and regulations for more than 34 years.”

BisB has maintained its lead-ership position over the years through adopting innovative Islamic investment and financ-ing products, drawing its sup-port from superior retail and corporate banking services. Listed on the Bahrain Stock Exchange, its major share-holders are leading local and regional financial institutions. With 13 local branches and several newly launched Finan-cial Malls, BisB has established the largest network among Islamic banks in the country.

These branches offer quality banking services, and financing and investment opportunities compliant with Sharia law for individual and corporate cus-tomers.

“Our focus has been im-proving service,” Mr Moham-med stresses, “because we all know that it is the service and not the product that makes a difference. The product can be copied in a short time but it is difficult to copy a service.”

This recipe helped BisB swiftly return to profit follow-ing a recent downturn in the market. BisB swung to a net profit of BD6.1 million (£9.69 million) in 2013. Mr Moham-med said the positive results reflect the bank’s strong un-derlying financial position, with more than 90 per cent of total operating income coming from its core finance activities.

Gulf International Bank (GIB) is another Bahraini bank that has garnered interna-tional attention. Global Finance magazine singled out GIB as the Best Investment Bank in the Middle East and the Best Investment Bank in Bahrain for 2014.

Throughout its banking and finance sector, Bahrain has benefitted from one of the most respected and stable regulatory regimes anywhere.

“The Central Bank of Bah-rain’s (CBB) rules are ex-tremely robust,” says Khalid Hamad Abdul-Rahman Ha-mad, Executive Director of Banking Supervision at the CBB. “The CBB was able to work with the banks, moni-tor trends, and to consult as to how problems could and should be tackled.” This has helped Bahrain’s banking sector maintain impressive growth rates of more than 18 per cent over the past two years. In the first quarter of 2013 alone, Bahraini banks reported a doubling of profits.

“What has helped us, in particular, is the fact that when there is a financial cri-sis people seek quality,” says Abdulkarim Bucheery, CEO of Manama-headquartered BBK. “When a person has a con-cern, they will move their de-posit to a better quality bank.”

vices relating to Islamic finance for domestic and international markets, and it is now common practise among the UK’s largest ac-countants, consultants and professional service firms to have Islamic finance de-partments.

Islamic finance will be increasingly relevant as British businesses seek to connect with the so-called rapid-growth markets that are expected to drive an increasing share of growth in the global economy.

British banks have a hand in opening up the quickly evolving international su-kuk, or Islamic bond, mar-ket in the West. A total of $34 billion has been raised through 49 issues of su-kuk on the London Stock Exchange so far, strength-ening the UK’s position in a $100-billion per year worldwide market that is expected to see a 30 per cent expansion in 2014, according to a forecast by Thomson Reuters.

As the world of Islamic finance gains more and more ground, market stud-ies have cited the need for training and education programmes to provide finance professionals with the necessary background. The UK has led the way in this area as well. At least four professional institutes and 10 universities and business schools across the country now offer new standards and qualifications in Islamic finance.

Years of doing business has developed familiar-ity and trust between key market players in the two countries, positioning the UK financial services sector as a springboard for global growth and the partner of choice in the delivery of Is-lamic finance excellence in the Western world.

“We are not just now trying to obtain licences in London. We have been do-ing business there. The reg-ulators know us inside and out,” says Khaled Kawan, CEO of the Arab Bank-ing Corporation (ABC). “They take enormous com-fort from the fact that we are regulated by a decent regulator. The Prudential Regulation Authority has the highest regards for the Central Bank of Bahrain.”

Numerous high-level conferences and summits are strengthening links in the financial sectors of both Bahrain and the UK, particularly in Islamic finance

We have been doing business

in London; the regulators know us inside

and out Dr Khaled Kawan,

Group CEO of the ABC

To be part of the 200-year UK-Bahrain

partnership is a huge privilege

Hassan Jarrar, CEO of Standard Chartered

Bank Bahrain

What has helped us is

when there is a financial crisis

people seek quality

Abdulkarim Bucheery, CEO of BBK

www.albaraka.com

Sheikh Salman bin Hamad Al Khalifa, Crown Prince and First Deputy Prime Minister of Bahrain, with UK Foreign Secretary William Hague in London last May

Photo: FCO UK

Photo: FCO UK

BAHRAIN6

Protecting the unique heritage of the land of eternity

Bahrain was the fi rst coun-try to fi nd oil deposits in

the Gulf back in the 1930s, which sparked rapid eco-nomic development and modernisation. However, instead of depending on oil, Bahrain moved to diversify its economy quicker than its Gulf neighbours with much larger deposits. The result of this has been the creation of a modern and cosmopolitan Bahrain – a fi nancial hub, an

international centre of busi-ness, and the host of the For-mula One Gulf Air Bahrain Grand Prix.

But there is so much more to this archipelago of 33 is-lands – known as the land of two seas and famed for its pearl diving traditions and the quality of its pearls. As a trade hub and the Gulf ’s most important commercial crossroads for 5,000 years, it has a rich heritage that it is

keen to preserve and a thriv-ing art and cultural scene that it is eager to promote and develop.

In any country, preserving national heritage and cultural identity at a time of rapid modernisation and globalisa-tion is not easy. But Bahrain’s Minister of Culture, Sheikha Mai bint Mohammed Al Khalifa, is the woman charged with this diffi cult task. Aside from this, she also wants to develop “cultural” and “not commer-cial” tourism and to make Bahrain a regional centre of Arab cultural preservation.

While commercial tour-ism can often lead to an ero-sion of culture and tradition, the minister wants the devel-opment of cultural tourism to be the main motivation behind developing a thriv-ing arts and culture industry, preserving and enhancing an-cient architecture, and pre-serving cultural heritage by displaying it in museums and other heritage centres.

“If you focus on the most important issues you can

create a story to attract a lot of tourism that will add to Bahrain. I always believe in the creative industry. There is no need to build more shopping malls. Instead, we must benefi t from what we have and automatically we will gain more. This is the most important mission for me and I am always proud of what we present in our museums,” says Minister Sheikha Mai bint Mohammed Al Khalifa.

“The artists in Bahrain are the best ambassadors for Bahrain. Wherever we go, we are very proud of our people, our artists and our ancient history as well. So what we want to do here at the Ministry of Culture is to focus on the most important sites and to have different museums designed by very famous architects.”

While she is eager to pre-serve tradition, the minister is a staunch believer that when it comes to cultural preservation – be it of a traditional dance or physical

renovation of ancient archi-tecture – it is imperative to mix the traditional with the modern.

The minister cites the evolution of the global Irish dancing phenomenon that was “riverdance”: “They used to be limited to traditional

Irish dance, but when they invited the right people for the lighting and to develop an international level group it all changed. It was my dream to do the same with the traditional classic dance here in Bahrain. So we are in the process now. I hope by

next spring I will be able to invite my Bahraini group to dance here in the national theatre with the right tools from people from all around the world to support them.

“It’s always mixed; it’s not only the traditional. You need to mix it with a very high level of expertise of many things, because it’s not only the song or not only the dance, it is also how to mix it. We will never be able to be inter-national if we just stick with the traditional without adding some modern elements.”

National Fund for Culture and HeritageFortunately, the Minister of Culture is not alone in her fi ght to preserve and pro-mote Bahrain’s heritage and culture. An important signal of the government’s intent to support the country’s cul-ture and heritage was made in February, when the Bah-rain Cabinet approved a pro-posal for establishment of a fund to support Cultural and National Heritage.

The government wants the fund to be a partner-ship between the govern-ment and the private sector. It is hoped that the pro-posed fund will provide the necessary funding for the development of arts and literature, preserving the identity of Bahrain as well as highlighting the impor-tance of the role of cul-ture in bringing community members together through their participation in cul-tural activities.

So how important is cul-ture’s role in bringing com-munity members together in Bahrain, particularly af-ter recent divisions that emerged as a result of the 2011 protests? The minister responds: “Culture means a lot for everybody. Culture is the only tool to bring people together. In 2011, our title for the Taa Shabab programme was ‘Restora-tion of the Hearts’. It is the only tool and our duty is to pass the right message to the next generations.”

More than 5,000 years of history define the unique open and global mentality of the modern Bahraini society. PM Communications meets Sheikha Mai bint Mohammed Al Khalifa, Minister of Culture of Bahrain to unveil her vision for the cultural development of the kingdom

Cultural Bahrain

The pearl of the Gulf

Long before the discovery of oil in the 1930s, Bah-

rain’s most important ex-port was its pearls, which have been hailed as the best in the world. For centuries, pearl divers would reach the depths of the sweet water beneath the salty sea (which is believed to give Bahrain’s pearls their unique quality) in search of the precious commodity.

Visitors to the country will now be able to un-derstand more about this longstanding Bahraini tradi-tion, thanks to the opening of the Pearl Pathway in the coastal town of Muharraq. The pathway, incorporating 17 sites in all, will tell the story of “Pearling” and this unique story and its physi-cal testimony in Muharraq is under consideration by UNESCO for a World Her-itage listing.

One archaeological won-der that has already been given UNESCO’s presti-gious World Heritage site status is Qal’at al-Bahrain, also known as the Fort of Bahrain. Located 6km from the capital Manama, the fort

itself dates back to the 16th century, but the site is be-lieved to have been once the centre of power for the ancient Dilmun civilisation from around 2300BC. Orig-inally an Islamic fort, it was, in more recent times, occu-pied by the Portuguese.

From ancient architec-ture to modern: Bahrain’s National Theatre was de-signed by French company Architecture-Studio and opened in November 2012. This beautifully designed building includes a main

1,001-seat auditorium for drama, small symphony con-certs, conferences, jazz and other amplifi ed music events.

And it is in this theatre that the Manama: Asian Capital of Tourism 2014 celebrations will conclude in December with an ever-lasting message of joy with an extravaganza unlike any other, with artists from across the continent coming together to showcase their cultural heritage through music, song, and dance in one dazzling showcase.

Bahrain Fort

From the Pearl Pathway and Fort of Bahrain to the new National Theatre

Promoting Arab culture

Enhancing Bahrain’s position as a cultural hub in the region

Besides preserving Bah-rain’s cultural identity, the

Minister of Culture is also very committed to preserv-ing Arab cultural identity and she has played a prominent role in turning Bahrain into a regional centre of Arab cul-tural preservation.

Thanks to her efforts, in 2012, the Arab Regional Cen-tre for World Heritage was opened in Manama. The cen-tre supports the Paris-based UNESCO World Heritage Centre’s efforts to promote the World Heritage Con-vention in the Arab region, consolidate Arab efforts in conserving natural and cul-tural heritage, and provide support for world heritage sites in Arab countries.

Further cementing Bah-rain’s position as a hub of Asian and Arab culture and cultural preservation were Manama’s nominations to be

the Capital of Arab Culture in 2012, the Capital of Arab Tourism in 2013, and the first Capital of Asian Tour-ism this year.

As the Capital of Asian Tourism, a variety of exhibi-tions, fairs and festivals will be held over the course of 2014 – including the launch of an all-new annual film festival to be held at the Manama Cul-tural Hall. Bahrain’s embassies around the world will also be tasked with promoting Ma-nama and the country as a premier tourist destination by hosting a series of arts and cultural events.

“We have a very full schedule of differing and varied events planned here in Bahrain and elsewhere,” Foreign Minister Shaikh Khalid bin Ahmed Al Khalifa said. “This is an honour for us to have Manama become the first Capital of Asian

Tourism and I feel positive and confident that it will fol-low on from the success of the Arab Capital of Culture events held in 2012.”

Manama will showcase the amazingly wonderful diver-sity of the Asian continent through culture and art. As Asia’s preeminent tourism destination this year, Manama will be a home for one and all, creating bridges, opening opportunities, and bringing the people and civilisations of this continent of Asia to-gether along the way.

“Next year will be the Heritage Year,” says the

Minister of Culture Sheikha Mai bint Mohammed Al Khalifa. “We try to find a theme each year and it hap-pened by chance that 2012 was the Cultural Year, then 2013 was the Year of Tour-ism, and this year is the Year of Art and the Capi-tal of Asian Tourism. Next year will be the Year of Heritage. We have created a name, which in Arabic sounds very appealing: ‘Our heritage is our wealth’. It means that you can be rich through your heritage. Also we always say: ‘Tourism for more enrichment.’”

Bahrain is the epicentre of UNESCO’s activities in the region; its capital, Manama, was chosen in 2012 as the Capital for Arab Culture, Capital of Arab Tourism in 2013 and Capital of Asian Tourism for 2014

It is our cultural heritage that

defi nes not only our past, but our

present and future, it defi nes

who we are

Sheikha Mai bint Mohammed Al Khalifa,

Minister of Culture

Part of the positive returns

on investing in culture is a raised

awareness of the signifi cance of our heritage

and the importance of

its preservation

Sheikha Mai bintMohammed Al Khalifa,

Minister of Culture

RESOLUCION OK PERO MALA CALIDAD

moc.gov.bh

BAHRAIN 7

The best springboard to business in the Gulf

Many people perhaps think of Bahrain as being a pre-

dominantly petroleum-focused state, and while it is true that the government derives 87 per cent of its revenue from the oil and gas sector, it accounts for only 20 per cent of the na-tion’s GDP. The fi nancial sector is close behind, contributing 17 per cent of GDP, and the kingdom has the highest con-centration of Islamic fi nancial institutions in the Middle East. In addition, Bahrain is home to Alba, one of the world’s leading aluminium producers, besides a very large number of other international industrial and service groups, many of which have chosen the country as their regional centres of opera-tions. There is therefore already good infrastructure in place and skilled people available at all lev-els for industry and commerce.

The key phrase in Bahrain’s ambitions is “world class”. The government is investing in piv-otal infrastructure, in education and training, and in the creation of a welcoming and transpar-ent legal, fi scal and regulatory framework to ensure that Bah-rain can compete with the best in the race to attract foreign direct investment. Bureaucracy has been streamlined, trade agreements signed, laws over-hauled and radically simplifi ed, and accountability and regu-lation made transparent and open – to the benefi t of local and foreign businesses alike – so much so that the Economic Freedom Index now recognises Bahrain as the freest economy in the Middle East.

In terms of physical infrastruc-ture, new drivers of growth in-clude the three industrial parks of the Salman Industrial City. To-gether they provide 1,100 hect-ares of industrial space and have already attracted almost $4 bil-lion in investment from the US, Europe and Asia, and created 11,000 jobs in 200 companies. These fi gures are forecast to at least double and the Ministry of

Industry and Commerce is al-ready planning to reclaim more land to extend the area of the Industrial City. Furthermore, a separate feasibility study is also now being undertaken for a completely new Economic City to be built by 2040 that will in-clude industrial, commercial and residential zones, and account for an estimated 20 per cent of the nation’s GDP.

The newly built Sheikh Khali-fa bin Salman Port, conveniently close to the Salman Industrial City, has enhanced even further the attraction of Bahrain as a regional logistical hub for the northern Gulf and for Saudi Arabia – the region’s biggest market and linked to Bahrain by a causeway. The Bahrain In-ternational Airport is also being extensively expanded to benefi t airfreight operations.

With education and youth employment among the stra-

tegic objectives of Vision 2030, the government is investing 11-12 per cent of its budget on education. Already, according to Ausamah Abdulla Al Absi, CEO of the Labour Market Regula-tory Authority, 79 per cent of those working in the fi nance sector are Bahraini citizens.

Among the recent invest-ments from the UK is that by Reckitt Benckiser in the Bahrain International Invest-ment Park, which opened its fi rst manufacturing plant in the Middle East in June 2013. Minis-ter of Works Essam bin Abdulla Khalaf emphasises the natural ties between Bahrain and UK, saying: “Because of our histori-cal relationship, the UK knows Bahrain best and we know UK best… We know each other more than others.”

The experiences of local and overseas investors and contractors testify to a very

positive experience in Bahrain. The Arabian Sugar Company (ASC) has invested $150 mil-lion in a new plant that was designed with European tech-nology to produce the highest quality ‘Icumsa 45’ sugar. Lo-cated in the Bahrain Industrial

Investment Park, it will serve the whole of the GCC market area. “If you come to invest to Bahrain for the Bahraini mar-ket, it is small. Thus you have to invest in Bahrain for the GCC and beyond. Bahrain would be the best place for many rea-

sons,” comments ASC’s CEO, Dr Yves El Mallat.

He says key factors in the decision to invest in Bahrain in-clude its educated labour force, inexpensive energy prices, prime location and tax advan-tages. He also foresees huge

potential for expansion by be-ing based in the kingdom.

“ASC has a designed ramp-up programme,” adds Dr El Mallat. “The fi rst year our in-stalled capacity is 1,800 tonnes per day. This year we aim to reach 80 per cent of this, and by the third quarter of next year we will be able to produce the full amount of 1,800 tonnes per day. Then we are planning to start expansion within two years. There is room: countries in the MENA region import 68 per cent of their needs. I believe that in the next 10 years we can double our production.”

Cebarco, a leading construc-tion and civil engineering group also based in Bahrain, is gar-nering a fi rst-class reputation in the region through its large number of prestigious proj-ects it has completed over the past decade, which include the Sheikh Isa bin Salman Library

and Conference Centre, Ci-tibank’s headquarters, the Dur-rat Al Bahrain highway and the Bahrain International Circuit – home of the fi rst Formula One racetrack in the Middle East.

The company’s Chairman Khalid A. Rahim believes Vision 2030 could usher in a new era for the construction industry, citing low-cost housing as one example. Cebarco is one of the main contractors on the GCC’s fi rst ever public-private partnership (PPP) created to tackle the housing shortage. The $450-million PPP is being handled by Naseej and involves the development of more than 2,800 social and affordable housing units. It is the largest housing project ever to be de-veloped in Bahrain in partner-ship with the private sector and Cebarco is proud to be part of another landmark project shap-ing the kingdom’s future.

The first Middle Eastern country to diversify its economy away from oil serves as an ideal launchpad to regional industry and commerce

If you come to invest only for the Bahraini market, it is

small. Thus you have to invest in Bahrain for the GCC and

beyond. Bahrain is the best

place for many reasons

Dr Yves El Mallat, CEO of the

Arabian Sugar Company

Essam bin Abdulla Khalaf,Minister of Works

Dr Yves El Mallat, CEO of the Arabian Sugar Company

Seef Properties

A cultural transitionsymbolised by Seef Mall

Thirty years ago, the concept and culture of consumer-

ism in Bahrain, and indeed the Middle East, was very different.

Shopping was something rather traditional, to be done at the local outdoor “Souq” marketplace, and where a little bartering could get you any variety of local produce for a small bargain.

While these charming plac-es thankfully still exist, the idea of shopping – just as in much of the rapidly developing world – has altered dramatically.

“Just after the Gulf War there was a big social change in Bahrain and the Middle East,” explains Essa Najibi, Board Chairman of Seef Properties (which owns Bahrain’s most popu-lar shopping centres: the Seef and Isa Town Malls.)

“Of course no-one wants to see conflict in any part of the world, let alone the Middle East, but the global focus on the region following the Iraqi invasion of Kuwait opened people’s eyes, in particular the new retailers, about the possi-bilities in the region.”

However, with the idea of American-style shop-ping malls a very new idea to this part of the world, many people were initially very skeptical about the prospect of retail centres. Yet this was all part of adaptation, or “cultural

transition” as Robert Addison, the Manag-

ing Director of Seef Properties, puts it.

“(Malls) mir-

rored a change in lifestyle. It gave people what they wanted; an air-conditioned social gathering place, where they did not feel pressured,” he says.

And so, it was at the time of these shifting attitudes during the early 90s that the island’s first big indoor shop-ping space – Seef Mall – was opened, and became an in-stant success with locals and expatriates alike, prompting immediate plans to extend the mall.

The popularity of the mall has not only helped attract some of the world’s most well-known and best loved retail brands, but its great success has largely been built by adding to this idea of shop-ping as an “experience” offer-ing not only restaurants and cinemas, the opening of Seef Properties’ “Magic Island” (a family entertainment centre) helped bring in a whole new crowd of consumers.

With the mall now seeing more than 200,000 visitors pass through its door every

week (a 40 per cent jump in visitors numbers compared to 2010) and the group’s operat-ing profit having increased by 21.4 per cent from 2011 to 2012, Seef Properties’ contin-ued success is indicative of the resilience and revival of the retail sector in Bahrain, which was hit badly by the global economic crisis of 2008 and local unrest in 2011.

Now that the industry is certainly on the mend, Seef Properties has not only re-cently unveiled a new im-proved brand identity for its flagship Seef Mall, the compa-ny is now looking to expand and further commit itself to Bahrain with further projects aimed at boosting the hospi-tality and tourism sectors in the country.

“One of the key ingredi-ents of the government’s Vi-sion 2030 plan is to [turn] Bahrain into a tourist desti-nation,” says Mr Najibi.

“To maximise the attrac-tion, the plan has to reflect people’s aspirations and life-style. One of the social main-stays is the mall and therefore you have to integrate leisure and hospitality in the mall. This was our strategy when we decided to develop Fraser Suites (the luxury serviced apartments which adjoin the Seef complex).

“Our latest project is in Muharraq, where we are developing a 70,000 square-metre mall. The mall will open later this year but is already fully leased.

“However, we are not stopping there. We shall lend our expertise and we will drive this sector forward.”

When Bahrain’s first mall opened over 30 years agoon the fringe of the traditional Souk, it was a foreign idea.Today, Seef Properties’ malls with their retail, entertainment and hotel facilities are an icon of the country’s cultural change

eyes, in particular the new retailers, about the possi-bilities in the region.”

However, with the idea of American-style shop-ping malls a very new idea to this part of the world, many people were initially very skeptical about the prospect of retail centres. Yet this was all part of adaptation, or “cultural

transition” as Robert Addison, the Manag-

ing Director of Seef Properties, puts it.

Essa Mohamed Najibi, Board Chairmanof Seef Properties

Khalid A. Rahim, Chairman of Cebarco Bahrain

Photo: Bahrain Bay

BAHRAIN8

Focus on key industries powers drive for diversification and growth

The kingdom is building on its track record of success while remaining alert and responsive to new opportunities

Bahrain’s openness to the new and the challenging is

epitomised by its regional leadership in new technologies

and in it having been the first country in the region to host

a Formula One race. With growth since the turn of the

millennium averaging 5 per cent per annum, Bahrain is the

racer in pole position, reaping the rewards of its consistently

open economic strategy and with all engines revving to reach

the chequered flag.

Bahrain has consistently pursued a national vi-

sion, one of generating prosperity through sensi-bly assessing its inherent resource and geographic advantages, identifying key sectors for long-term growth and investing in quality infrastructure to provide the conditions for those sectors to develop to their full potential.

All this takes place in an

open economy and with a fiscal and regulatory frame-work attractive to interna-tional investment. Remain-ing alert and responsive to new opportunities and ag-ile in anticipating and react-ing to change has enabled this self-confident country to meet the challenge and build a dynamic, resilient, competitive and diversified economy.

The country was the

first in the region to sign a free trade agreement with the United States and continues to invest heavily in logistical infrastructure, building new industrial parks and ports and ex-panding existing facilities, both to attract new invest-ment and to enhance its role as a regional hub.

This material side of Bah-rain’s collaborative and win-win approach to attracting

investment is matched by the country’s insistence on entrepreneurial freedom for business, recognised by the Heritage Foundation awarding the country first place ranking in its Index of Economic Freedom for the Middle East and Africa.

Economic diversifica-tion has been a consistent theme of Bahrain’s devel-opment strategy. The fi-nancial sector, renowned

for its probity and efficient regulation, has been one of the region’s leading finan-cial centres for more than four decades.

Meanwhile the alumin-ium industry was estab-lished in 1971 and has since been followed by a range of manufacturing facilities for downstream aluminium products, each adding value to the use of the coun-try’s resources while often

building Bahrain as a re-gional manufacturing base.

A similar process has taken place in the oil and gas sector with the estab-lishment of petrochemicals plants and other down-stream facilities, adding value, transferring technol-ogy and skills and creating jobs, besides developing a regional role. The applica-tion of advanced recovery techniques has greatly in-

creased output from fields previously considered as in decline, while new offshore exploration licences are expected to give a further sharp boost to oil and gas output.

Bahrain has consistently led the region in telecom-munications technology and now, with the Third Na-tional Telecommunications Plan, is jumping ahead with the implementation of a na-

tional broadband network and the infrastructure for introducing 4G long-term evolution technology. This will give businesses and entrepreneurs in Bahrain an edge over their rivals in other countries, besides radically transforming their access to government de-partments and public ser-vices through the national roll-out of the eGovern-ment programme.

ICTBahrain aims for businesses in the coun-

try to enjoy world-class ICT infrastructure, with priority being given under the Third National

Telecommunications Plan to the national broadband network, complemented by heavy investment by the

mobile operators Viva, Batelco and Zain in 4G LTE sys-tems and by Zain and Menatelecom in WIMAX. Viva has also partnered with BT on a GIPX interoperability hub,

welcomed by Minister of State for Communications, Sheikh Fawaz bin Mohamed al Khalifa, as “strategically

positioning Bahrain...to connect Gulf and Middle East operators to the best-in-class global

IP backbone.” Bahrain, connected and connecting.ALUMINIUM

Bahrain has seen continuous growth in aluminium production since the establishment of Alba’s first

facility in 1971. Downstream growth also still continues apace with notable producers including Gulf Aluminium

Rolling Mill Company and Midal Cables, a joint venture with Saudi and Australian participation and which also operates factories in Turkey and Australia. Midal’s business slogan, explains its Chairman Hamid Rashid al Zayani, is simply

“setting standards that others follow”, reflecting its “leadership in the development and production

of aluminium alloys and the application of new technologies.”

LOGISTICSBahrain’s key logistical investments for business

include the Salman Industrial City with its three in-dustrial parks and the newly built Sheikh Khalifa bin Sal-

man Port, world-class facilities that have already attracted substantial inward investment and reinforced the country’s

position as a leading logistical hub. Priority is also being given to investment in internal logistics, including road infrastructure, links with neighbouring countries and public transportation, to cope with rapid economic

expansion and forecast fast population growth. Opportunities exist particularly for

British transport operators and consultants.

PETROLEUMAlthough Bahrain’s oil industry is already over

80 years old, it continues to grow with investment over the next 30 years estimated at $15 billion. The ap-plication of enhanced recovery techniques onshore will bring rising production volumes, matched by upgrades in refining capacity to 360,000 bpd. Current and planned in-vestments include BAPCO’s $1.2 billion strategic invest-ment programme, offshore natural gas exploration by Occidental Petroleum, BLBOC’s lube base oil plant,

the 1,234MW Al Dur power plant, upgrades to Banagas’ facilities, and the planned

pipeline from Saudi Arabia to Bahrain.