Manama: A comprehensive package of reforms to strengthen Bahrain’s long-term development and achieve a balanced budget is being implemented, said Economic Development Board (EDB) chief executive Khalid Al Rumaihi.
Speaking in an interview with Euromoney Conferences following the Euromoney GCC Financial Forum 2016, Mr Al Rumaihi reflected on how Bahrain is addressing challenges presented by the current macroeconomic and market environment, as well as the EDB’s strategic priorities for the years ahead.
“Clearly, these are challenging times, as highlighted by the recent downgrades by ratings agencies, linked to the fall in oil prices, but governments across the region are taking sensible steps to help address the broader challenges, including accelerating diversification efforts, continuing to invest in core infrastructure, and streamlining and redirecting
government expenditure,” he said.
“Bahrain is working on implementing a comprehensive programme of structural economic and fiscal reforms to further strengthen the country’s long-term development and achieve a balanced budget within three budgetary cycles.
“The government is making headway in its consolidation plan, introducing price increases on fuel, accelerating fee increases on tobacco and alcohol, and cost cutting at the ministry level,” he said.
“From an economic investment perspective, we continue to focus on our core strengths, which have helped drive forward diversification over the past few decades. We have a well-educated and motivated workforce, strong connections to the rest of the region and a business environment that allows the private sector to thrive.
“We see the benefits of this in the financial services sector, where we are global leaders in areas such as Islamic finance and have a strong regional offering in financial sub-sectors that benefit from our lower costs – KPMG recently reaffirmed that Bahrain offers the region’s lowest cost environment for the financial services sector – and wider local talent pool, including areas such as ancillary services and wealth management,” he said.
Mr Al Rumaihi said board is focused on five key sectors where Bahrain has particular competitive advantages and which offer strong potential for growth – financial services; ICT; tourism; manufacturing; and transportation and logistics.
“The link between them all is that Bahrain has something to offer businesses and there is a real demand for investment in the coming years. These sectors also have high potential to create high quality local jobs – this is important for the kingdom, but it is also important for international businesses for which one of the main attractions of investing here is often the quality of the local workforce.
“The EDB is also focused on encouraging investments that work for Bahrain but also work in the long term for the businesses involved – we don’t just want them to set up, we want them to thrive.
“Financial services is obviously something that Bahrain has long been known for – and also an area where we have seen other centres emerging in the region in the last decade or so. However, it is a mistake to view the financial sector as a ‘winner takes all’ tournament – we think there is great scope for complementary growth,” he said.
“While we will remain a full service financial centre, there are areas – such as Islamic finance, ancillary services and asset management – where Bahrain’s particular strengths will lead to more rapid growth.
“The EDB certainly has the right team to achieve this, and have a clearly defined strategy that will help attract investment, create jobs, and contribute to the growth and development of Bahrain’s economy.
“Ancillary services are one area where we expect more rapid growth. The growing importance of the GCC market means that businesses are increasingly focused on building back and mid-office support in the region and disruption within some of the traditional markets for these services have created opportunities for Bahrain, where there is the local expertise and where the value proposition works for international businesses. For example, reflecting this trend, in recent years both Citi and Standard Chartered have located regional call centre operations in Bahrain,” he said.
On global and regional financial services developing in the light of changes in regulatory oversight and technological disrupters, Mr Al Rumaihi said regulation has will need to continue to develop and evolve, reflecting both global trends and challenges, but also the regional situation and evolution of the sector.
“This is an area where the Central Bank of Bahrain has shown clear leadership over the past forty years.
“The FinTech sector offers exciting opportunities in the region, and is an area where we hope Bahrain makes real progress.
“As well as having a long track record in the financial services sector, Bahrain has a liberal and advanced ICT infrastructure, an established regulatory framework and policies, and one of the highest mobile and broadband penetration rates in the world,” he said.
“This means the kingdom offers an ideal testing ground for new technologies and ideas.
“A recent survey by Ernst & Young found that 70 per cent of young Bahrainis were interested in the idea of starting their own business, twice as much as anywhere else in the Gulf, and helping to support and encourage this is an important area for the EBD moving forward.
“We’re focused on helping address some of the major barriers for entrepreneurs, including mentorship and funding, demonstrated by recent announcements such as the launch of an accelerator programme in partnership with C5 Capital and Amazon Web Services,” he added.