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Why Start A Business In Bahrain?

Bahrain was lucky. It was discovered and started refining oil long before most of its neighbours. Unfortunately, now, it is forecast that oil there will be the first to run dry and so efforts have been made to diversify the country's trade. Easy come, easy go.

Although Bahrain's economy stands in the shadow of its vaster neighbours, its diversity and openness continues to present a number of opportunities for starting a business or expanding a business. The Bahrainis have been systematically building up the sectors of tourism, metals, transport and finance, which, hopefully, will be able to take the economic weight once oil is no longer a viable source of income.

With highly developed transport and communications facilities, Bahrain is a fast-growing market at the heart of the Gulf. Bahrain has a stable government with progressive attitudes which has helped to mould the country into a well developed economy. There are numerous development projects underway around the country which makes the prospect of starting a business in Bahrain very appealing. Bahrain offers a variety of incentives to the prospect of starting a business and investing in Bahrain including its tax free economy and no VAT.

The Bahrain lifestyle is cosmopolitan and liberal, and there is a relaxed social environment which makes it a popular area with tourists from the region. It's an essentially Arab culture, adopting many of the traditions and cuisines from across the region, an eclectic mix of fascination and intrigue.

Bahrain has many feats to overcome in the near future, but if it the past is any kind of precedent, it will continue to thrive as impressive little economy and investor market.

Economic Overview

Bahrain has benefitted from strong economic growth in recent years and now holds a prosperous economy, albeit small. Its central location in the Middle East enables good accessibility to the world's business market. Their trade routes to worldwide markets through fast and efficient access by air, sea and road are a big attraction for businesses. Bahrain is also seen as a gateway to the Gulf which has a market of over 100 million people.

Bahrain has the freest economy in the Middle East with a free trade agreement with the US (the US and Bahrain are close allies and Bahrain is the home to the US Navy's fifth fleet) and bilateral trade and economic agreements with 43 other countries. Trade between the UK and Bahrain has increased in recent years. Bahrain's major trading partners are Saudi Arabia, the US, the UAE, Japan, Germany, UK and France.

Bahrain has less dependence on oil than other gulf states and has turned to petroleum processing and refining, as well as transforming itself into an international banking centre. However, despite efforts to diversify, oil and gas are still important to Bahrain's economy and provide much of their exports. In fact, 60% of Bahrain's exports are oil and petroleum. The majority of food is imported with Saudi Arabia as the main trading partner.

Bahrain is home to many multinational firms and the government strongly encourages foreign investment. The emphasis on the development of infrastructure shows the commitment of the government in creating a good base for business. The islands of Bahrain are interconnected by a causeway which makes trade and business very easy and accessible. The highly developed telecommunications also account for Bahrain's success in the business and financial sector.

As a tax free economy, net income is generally more than other European countries; an incentive very appealing to many people thinking of starting a business in Bahrain.

Aluminium-smelting, banking, financial services, ship-repair industries and oil refineries have all been well established in Bahrain. Bahrain has one of the world's largest aluminium smelting plants, and its duty-free industrial areas offer opportunities for all manufacturing industries.

Due to its central location, multi-national companies such as American Express, Citicorp, Investcorp, and Gulf International Bank have all established offices in Bahrain. The real estate market in Bahrain is also becoming more established due to a strong investor demand which is helping the Kingdom's rapidly growing economy. In the Gulf region, Bahrain is regarded as one of the most developed countries in the real-estate sector.

Free Trade Zones

• Bahrain Logistics Zone
  

What are the essentials to know?

Prohibited Activity

The following business activities are prohibited in Bahrain:

• Gambling
• Alcoholic drinks manufacturing
• Narcotics manufacturing
• Weapons manufacturing
• Cigarettes manufacturing
• Import of all waste and treatments
• storage and dumping of radioactive materials and toxic waste
• Import, manufacturing and dealing of asbestos
• Import and industrial use of restricted chemicals
• Import of automatic cigarette vending machines
• Letter post
• Pearl culture
• Drilling artesian wells
• Internet exchange
• The following business activities are only permitted for Bahrainians:
• Press, publishing and distribution
• Car and motorbike rental
• Fishing
• Foreign manpower supply
• Gas bottling and distribution
• Cooker re-filling and repairing
• Gas cylinder distribution

What is the business climate like in Bahrain?

Bahrain has a well-trained workforce and English is the business language.

When doing business with Arabs, there is a lot of hard and expert bargaining involved therefore you will need to be very confident about your agreements and contracts. If there are gaps or flaws in your business propositions, Arabs will find them and exploit them. Arabs never offer a direct 'no' to a proposition, if the response is 'leave it with me' or 'I'll think about it', there is a good chance that the proposition will go nowhere. However, you can be assured that Arabs will meet their business obligations fully and the foundations of doing business with them are built on trusting relationships that will continue.

Labour and workforce

The Labour Law stipulates that every employer is required to offer priority of employment to the citizens of Bahrain and then to Arabs next. It should be noted that employers are not permitted to hire migrant workers or expatriates without valid permits.

Useful Contacts for Setting up a Business in Bahrain

A crucial place to obtain any information regarding setting up business and moving to Bahrain is the Bahrain embassy in the UK:

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