AT A GLANCE
Map Source:www.cia.gov/library INTRODUCTION The Kingdom of Bahrain is an archipelago of 33 islands which lies in the Arabian Gulf between Saudi Arabia and Qatar. Frequently called the “Pearl of the [Arabian] Gulf”, Bahrain has a history of over 5,000 years of civilisation. Bahrain’s history is that of a humble past which lead to a vibrant present under a stable and prosperous government. Bahrain is already linked to Saudi Arabia by causeway and is soon expected to be connected by the same means to Qatar. The capital, Manama, is situated in the north-eastern tip of the archipelago’s largest island, Bahrain, and is linked by a causeway to the neighbouring island of Muharraq, where Bahrain’s modern international airport is located. GOVERNMENT Bahrain is a constitutional monarchy headed by HM King Hamad bin Isa Al Khalifa. The head of government is the Prime Minister, HE Shaikh Khalifa bin Salman Al Khalifa, who presides over a cabinet of 15 members. Bahrain has a bicameral legislature with a lower house (the Chamber of Deputies; elected by universal suffrage) and the upper house, the Shura Council, appointed by the King. ECONOMY With its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with branches in the Gulf. Petroleum production and refining account for over 60% of Bahrain's export receipts, over 70% of government revenues, and 11% of GDP (exclusive of allied industries), underpinning Bahrain's strong economic growth in recent years. Aluminium is Bahrain's second major export after oil. Other major segments of Bahrain's economy are the financial and construction sectors. Bahrain is focused on Islamic banking and is competing on an international scale with Malaysia as a worldwide banking centre. Bahrain is actively pursuing the diversification and privatization of its economy. IMPORT AND EXPORT Imports are estimated at US$ 9.858 billion and consist of crude oil, machinery, and chemicals. Major import partners are: Saudi Arabia, Japan, US, and UK Exports are estimated at US$13.44 billion and consist of petroleum, petroleum products, aluminium, and textiles. Major export partners are: Saudi Arabia, US, and UAE. Importers must be registered with the Ministry of Commerce and with the Bahrain Chamber of Commerce and Industry. Imports are governed by the Bahrain Custom Law and Regulations and are further subject to the specific laws enacted by the Ministry of Commerce and Agriculture and the Ministry of Health. CUSTOMS FACILITIES AND INCENTIVES The Bahrain Customs provides various facilities to the different sections of the trading and business industries, which can be availed by the foreign investor. These include:

• Customs duties exemption on goods of Arabic origin.
• Priority release of goods with high value.
• Duty Free transit facility.
• Duty drawback system.
• Bonded warehouse facilities.
• Duty exemption for goods of GCC origin.
• Priority clearance of consignment.
• Facility for temporary importation.
• Import of goods for exhibition on refundable customs deposit.
• Duty free shops.

FINANCIAL SECTOR Bahrain is the leading international financial centre in the Gulf region. It has a developed a wide range of products and services in commercial, investment and corporate banking, project finance, foreign exchange and money brokerage. It is now the world’s leading centre for Islamic financial institutions and is a hub for the region’s insurance industry. Financial services amount to 27.6% of Bahrain’s GDP. The new Bahrain Financial Harbour (BFH) is expected to enhance Bahrain’s reputation in this field and attract a wider range of institutions and practitioners. The financial sector is the largest single employer in Bahrain; 72% of its employees are Bahraini. The commercial banking sector assets currently stand at around US$100 billion, a GDP multiple of approximately fourteen. LABOUR MARKET Bahrain offers a diverse labour market, consisting of skilled locals and expatriates. New initiatives are constantly being introduced in order to improve the local labour regulations. As of 2008 all labour market matters are now dealt with by the Labour Market Regulatory Authority (LMRA). INFRASTRUCTURE Bahrain is able to boast a modern infrastructure. There is an excellent telecommunication network, including direct trunk dialling, plus telex and internet facilities. The country is well connected by modern roadways. Public transportation, through a government-owned bus service, and private taxis are available. Bahrain is well connected on the international air map and has direct or connecting flights from and to every major city in the world. The major sea port of Mina Salman, strategically located at the heart of the Arabian Gulf, is self sufficient and provides its own range of support services - from engineering and maintenance to security, fire and medical facilities. The government has recognised the need to promote an expanded industrial base and encourages the development of capital-intensive industrial establishments, as well as small and medium-scale industrial enterprises. INVESTMENT PROMOTION Although at present wholly or partially government-owned enterprises dominate the economy, laws and regulations are being streamlined to make the business climate conducive for foreign investment. Investors are welcome to set up licensed export industries and commercial firms are encouraged to set up their regional offices and distribution centres in Bahrain. The Economic Development Board (EDB), a dynamic Government agency, has an overall responsibility for formulating and overseeing the developmental strategy of Bahrain, and for creating the right climate to attract direct investment into the country. The EDB is also responsible for attracting inward investment into Bahrain, and is focusing on six target economic sectors, namely financial services, downstream industries, tourism, business services, logistics, health, and education. FOREIGN INVESTMENT Companies fully owned by foreign corporate entities are encouraged in Bahrain. Nevertheless, certain restrictions still exist in the real estate, construction sector and retailing industry. In general, Bahrain encourages foreign investment but investments remain subject to approval from respective authorities. The authorities in each sector supervise the implementation of the respective legislation. The sector authorities are: the Ministry of Industry and Commerce, the Ministry of Labour and Social Affairs, the Bahrain Monetary Agency, and the Bahrain Stock Exchange. INVESTOR INCENTIVES A host of incentives are offered to the foreign investor, such as:

• 100% foreign ownership for certain categories of business.
• No personal, corporate, or withholding tax.
• No VAT nor any form of sales tax on goods or service.
• long term and soft loans to priority sectors such as agricultural establishments, industrial projects, and small industries provided by the Bahrain Development Bank (BDB).
• Duty-free access to GCC member states for products manufactured in Bahrain.
• Duty-free import of materials and machinery for manufacturing, and duty-free merchandise for re-export.
• No restriction on capital and profit repatriation.
• Absence of any exchange control.
• Cost efficient, trained, and bilingual human capital

TAX Bahrain, like some of the other members of the GCC, does not have a regime of collecting personal, corporate, withholding, sales, or value added taxes. However, certain taxes are imposed on oil, gas and petroleum companies. Municipal taxes are also payable by individuals or companies renting property in Bahrain. TYPES OF BUSINESSES Bahrain offers numerous trade and investment opportunities in a number of sectors. In order to conduct business activities in Bahrain, entities have to have a legal presence in the region. The following types of companies can be established in Bahrain:

• Limited Liability Company (W.L.L.)
• Joint Stock Company (Closed) (JSCC)
• Single - Person Company (SPC)
• Holding Company (HC)
• General Partnership Company (GPC)
• Simple Commandite Partnership (SCP)
• Public Joint Stock Companies (PJSC)
• Branch or Representative Offices
• Bahrain Shareholding Company (BSC) (Public or Closed)

CURRENT GROWTH INITIATIVES The projects department within the EDB supports and monitors initiatives to improve the economic and business environment in Bahrain. Working closely with both the public and private sectors, the team aims to improve economic opportunities within the country and remove barriers to growth. Individual projects are developed based on four core themes which will deliver a better economic environment for business:

• From red tape to red carpet: creating a business friendly environment
• Government as regulator not operator: reducing the role of government in the economy and allowing the private sector to drive growth
• Fairness and accountability: reforming the regulatory and judicial system, and improving enforcement
• Stimulating private sector opportunities: launching targeted initiatives to stimulate private sector growth

Each initiative has a project team and a project board, with each group comprising representatives from relevant public sector organisations (Ministries, other government agencies, etc.) and related private sector groups. Entry visas are required for all visitors except for GCC citizens. 72-hour or seven-day visas are available at the Immigration counters at the Airport and on King Fahad Causeway. Entry visas may be obtained from all of Bahrain's embassies and consulates abroad. Residence permits may be renewed through the Immigration and Passports Directorate in Manama. USEFUL WEBSITES www.bahrain.gov.bh
Official government website www.bahrainedb.com
Website of the Bahrain Economic Development Board www.bdb-bh.com
The Bahrain Development Bank