‘We Want To Emulate India In Venture Funding’

Khalid Al Rumaihi, Chief Executive, EDB spoke to BW Businessworld's Roy Varghese on the sidelines of the recently concluded GCC Financial Forum 2017, Manama, Bahrain about the 10 year-old quasi agency and its way forward.

Excerpts:

What is EDB’s role in boosting the economy of Bahrain?
We focus on several economic sectors which capitalise on Bahrain’s competitive advantages and provide significant investment opportunities. These sectors include financial services, professional services, manufacturing, ICT, logistics and transport. The financial service sector comprises approximately one-quarter of the GDP. Therefore, the EDB works to support the continued growth of the banking industry and key sub-sectors, including Islamic finance, insurance, re-insurance, asset management and wealth management.

We (EDB) also played a pivotal role in a number of important recent initiatives. These include establishing the Gulf’s first Free Trade Agreement with the United States, Bahrain’s hosting of the Middle East’s first ever Formula 1 Grand Prix, bringing about the privatisation law, particularly in power generation which started the process of the Government shifting from operator to eventually being a regulator, as well as becoming the first country in the Arab world to fully liberalise its telecom industry. Bahrain boasts unrivalled access to the markets of the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, the Kingdom of Saudi Arabia, Qatar and the United Arab Emirates, along with the wider MENA region.

What are your areas of focus now and reasons for that?
EDB is now focused on promoting five sectors mainly. They are financial, manufacturing, tourism, IT and logistics. The reasons why we want to promote these sectors are due to our existing infrastructural facilities. Bahrain is having one of the best banking infrastructure in GCC. As a country, we have the second largest number of Islamic banks operating in a country (around 130), second only to Malaysia. So we want to explore this opportunity and accelerate the financial services sector. We want to attract manufacturers from all over the world since we have a tradition of manufacturing aluminum. Now we are encouraging other sectors too. As a country, we are blessed with good beaches, hotels, resorts and moreover, Bahrain is a peaceful and safe country and we want to explore our tourism potential. Why IT, because a good bank of educated English speaking young population is available in the country. This offers ample opportunities for IT and BPO sector. Logistics, of course we want to utilise our Sea Port facility as a hub for the entire Gulf region. Bahrain is one of the most diversified economies in the Gulf region and was the first of the six GCC countries to pioneer a number of important non-oil activities in the region, for instance, financial services.

How the recent decline in oil prices impacted your economy? What are the repercussions in the future?
Well, $50 a barrel is something which we can’t afford to sell for a longer term considering the exploration costs. But the fact is that 80 per cent of our GDP is from non oil sectors and that is exactly why we are promoting the sectors which I mentioned earlier.

We attract FDI from the US, France, Malaysia and Europe. We will be able to get $ 500 billion FDI in 2017-18. Last year it was $ 350 billion.

Moreover, Bahrain is a banking and aviation hub since the ‘70s. Now we are looking at our export side of aluminum to far-east countries like China along with European countries. We also want to establish Bahrain as a logistic hub now. In tourism, last year alone, we witnessed over 12.5 million tourists visiting our country. Medical tourism is another sub-sector we are trying to develop in this segment.

Why should other nationals come and invest in Bahrain. What are the advantages for them?
Even though, we are a Muslim nation, our population is a kind of mixed culture — almost 20 per cent of the population is a mix of Christians and Jews, especially in Manama. As a nation we are very liberal. We have the best infrastructure to offer along with educated English speaking young population. We do not charge any personal or corporate income taxes here. Moreover, it is very easy to get permissions and clearances from the government if your business/intentions are clean and thus, ease of doing business. Locally also, we are encouraging our nationals to enter into business and we are funding them. We want to emulate India in venture funding in our country soon.

What is your road map for the financial services sector?
As I mentioned, we want to follow the venture funding India implemented in one side. On the other side, we are also going to accelerate the insurance sector. Fintech is another aspect we are working on with the help of banks, by introducing various financial instruments etc.

Let me add it here, the Gulf and the wider MENA region are one of the world’s most important economic blocks. The GCC economy is worth approximately $1.5 trillion and is projected to reach $2 trillion by 2020. The economy will continue to expand as the world’s energy hub through increasing investment in infrastructure and economic diversification. The GCC common market remains one of the fastest growing economic areas in the world with real GDP growth of 3.3 per cent in 2015, according to the International Monetary Fund (IMF).

Moreover, the Bahrain Kingdom has strong regional transport links (road, sea, and air) and its strategic geographical position, at the heart of the Gulf, provides easy access to the wider region. Bahrain is connected by a 25km causeway to Saudi Arabia. A causeway is also due to be built linking Bahrain to Qatar. In addition, Bahrain is further served by the Bahrain International Airport, home to Bahrain’s national carrier, Gulf Air, which has a comprehensive regional network of destinations, and hosts over 40 other airlines, including cargo and charter flights, connected to over 50 international destinations.

In recent years member states have taken greater advantage of the opportunities the GCC alliance creates. Bahrain is a major beneficiary, most notably for banking and related financial services, and will continue to benefit from further trade and business integration efforts.