The Economic Growth Project
The reform project of His Majesty King Hamad bin Isa Al Khalifa endeavored to achieve the highest level of progress and growth in the Kingdom of Bahrain in all fields, most importantly the economic to attain a descent life for Bahrainis by virtue of benefiting from the gains achieved; and hence develop the same and create more tributaries to promote the national economic by diversifying revenues to counter all regional and international challenges by supporting the role of the private sector, opening to the global economy, advance the capabilities of Bahrainis and improve living standards. The aforementioned has been fulfilled despite the various challenges, most importantly: the scarcity of natural resources, water shortages, limitation of land, and the density of population.
Modern standards of the Kingdom of Bahrain economy were built on solid foundations that were manifested in focusing on the true wealth of the country, which is the Bahraini citizen; who demonstrated an extraordinary capability in cultural and scientific achievements. The same was followed by polishing the skills of citizens by virtue of continual training and retraining that is aimed at renewing the work force market expertise, as well as availing job opportunities to Bahrainis.
Such relentless economic endeavors positively reflected on the economic position of the Kingdom, whereas it assumed advanced rankings in international economic reports, in terms of the economic freedom availed, vitality and capacity to encounter crisis and hardships; last of which was the Kingdom of Bahrain ranking first regionally and 18 globally in the economic freedom index 2016, issued by the Heritage Foundation due to its organizational efficiency, financial freedom and economic resilience.
Economic Achievements of the Reform Project
First: Adopted steps to develop the financial and economic sectors in the Kingdom of Bahrain
- Establishing the Economic Development Board headed by HRH Prince Salman bin Hamad Al Khalifa – the Crown Prince and Deputy Supreme Commander in 2000. The Board mandate was amended by virtue of a Royal Decree in 2005, whereby it assumed the key responsibility of addressing economic issues; economic, strategic, sector planning and privatization undertakings; in addition to promoting the distinguished investment climate in the Kingdom
- The economic vision of the Kingdom of Bahrain until 2030 was launched by His Majesty the King on 23/10/2008. The National Economic Strategy (2009-2014) was endorsed aimed at supporting the foundations of sustainability, competitiveness and fairness in economic development.
- Establishing the Administrative and Financial Audit Directorate, and the Tender Board in 2002 to assure regulatory monitoring of public funds and to guarantee transparency as the basic approaches in governmental undertakings.
- Issuing the Central Bank of Bahrain and Financial Institutions Law No. (64) for 2006, to replace Bahrain Monetary Agency in line with international developments, and to enhance Bahrain’s position as a key financial and banking hub in the region.
- Develop downstream industries by endorsing the Decree Law No. (28) for 1999 with regard to incepting and regulating industrial zones under the directives to increase contribution of the downstream industrial to the GDP to 35%. “Salman Industrial City” was officially inaugurated in January 2010 to provide industrial and logistic services, comprehensive business services on an area of 12.1 million square meters of available industrial land that encompasses three zones: Bahrain International Investment Park, Bahrain Investment Wharf, and the Hidd Industrial Area.
- Building Bahrain International Circuit in 2004, which further cemented the Kingdom position as the home of motor sport in the Middle East region, and one of the mega strategic projects; in addition to hosting the Formula One races in past years.
- The Kingdom signed the Free Trade Agreement with the United States, being the first such agreement to be concluded in the Gulf region, and the third at the level of Arab countries, which went into effect in August 2006.
- Issuing Decree Law (41) for 2002 with regard to privatization policies and controls. Public transport was privatized in addition to the Equestrian and Horse Racing Club in 2004, liberating the communications market, and participation of the private sector in developing water and electricity projects; as well as other schemes.
- The Telecommunications Law issued by virtue of Decree Law No. (48) for 2002.
- Inaugurating the new “Port of Khalifa Bin Salman” in April 2009, and officially opened on 6/12/2009. It constituted a qualitative leap in the status of seaports in the Kingdom, and in the region.
Second: Outcomes of His Majesty the King Reform Project, Financially and Economically:
- Bahrain economic sustained record growth rates over the past few years that reached in average 7%, while the GDP rose at fixed prices to BHD 12.7 billion in 2014 compared with approximately BHD 12.3 billion in 2013. The economic growth ratio in 2015 was estimated at 3.2%.
- Bahrain economy is regarded the most diverse in the Gulf region, whereas the non-oil sector observed a growth average rate of 4.6% in 2014. This reflected resilience of the economic growth drivers, particularly with regard to the income sources and implementation of strategic projects.
- A rise in the number of banking and financial institutions in Bahrain from 322 in 1999 to 412, according to the most recent CBB statistics. The consolidated budget of the banking sector rose to USD 216 billion at the end of November 2010, which is 11.2 times in excess of the GDP. This reflected on the banking and financial sector advancement, whereas it became the largest tributary of the GDP with over 16% in 2014.
- The tourism sector witnessed a large revival in light of the numerous tourism attractions such as political and security stability, diversity of tourism services such as historic, archeological, medical, and exhibitions tourism; in addition to sophisticated hotel services and sports tourism. The number of foreigners visiting the Kingdom via Bahrain International Airport reached 5.8 million in 2015 compared with 5.4 million during the same period in 2014.
- The volume of foreign direct investments (FDI) flow into the Kingdom in 2014 amounted to USD 957 million, according to the International Investment Report 2015, announced by the MENA Investment Center and the Economic Development Board report in cooperation with The United Nations Conference on Trade and Development (UNCTAD). The report further showed that the percentage of FDI inflows as a percentage of gross fixed capital formation amounted to 22.4% in 2014 compared with 19.3% in 2013. It also underlined that Bahrain share of FDI inflows as a percentage of nominal GDP amounted to 55.4% compared with 54.3% in 2013. This reflected the Kingdom economic attractiveness, the encouraging investment climate, soundness of procedures undertaken to promote the national economy and enhance its coherence.
- A rise in the number of fixed telephone landlines from 165.4 thousand in 1999 to 251,000 in 2013; in addition to a rise in the number of mobile phones subscribers from 133.5 thousand in 1999 to over 2.2 million in 2013.
- A rise in the number of internet service subscribers from 5.2 thousand in 1999 to over 1.6 million in 2013.
Third: Repercussions of His Majesty the King Reform Project on the Economic and Financial Aspects
- Bahrain was ranked 27 globally amongst 189 world economies with regard to insolvency cases in 2014. As such, it maintained the same ranking received in 2013 according to the Doing Business report issued by the World Bank Group. The Kingdom of Bahrain was also ranked third in the Gulf region, after the UAE who came first, and the Kingdom of Saudi Arabia who came second.
- The World Bank flagship report issued in 2014, ranked Bahrain 46 amongst 189 countries compared with the ranking of 47 in 2013. This reflects Bahrain’s advancing one step amongst the strongest economies in the world due to the quality of electricity supplies, easy access to registering new properties; and other aspects, which the World Bank envisaged as attractive elements of Bahrain, according to the report.
- The Ease of Doing Business Index 2015 issued by the World Bank Group showed that the Kingdom of Bahrain maintained its position at 53 compared with 2014, whereby it achieved 69 points in the distance to performance frontier, with a rise of 0.99 points from 2014.
Estimates show that the GDP growth at fixed prices is expected to reach 3.2% in 2016, and grow by a percentage of 3% next year compared with a growth ratio of 3.2% in 2015.
Previous figures show that the Bahraini economy is moving with steady steps toward more dynamic momentum despite the numerous fluctuations encountered by the global economy since 2014, most of which is the deterioration in oil prices and the geopolitical troubles. Bahrain developed a unique pack of investment projects that will be implemented over the coming four years, in which the total value of investments will amount to USD 22 billion. This pack of investment projects will contribute to promoting the national economy, and push forward growth that will positively reflect on the living standards of citizens, and promote the position of Bahrain as a competitive trade hub in the region.
The pack shall encompass investing billions in the industrial sector, infrastructures, tourism services sector which are envisaged to increase competitiveness of the national economy. Some of the projects are: developing Bahrain International Airport, developing Al Jazaer Beach and water front, investment projects in Durrat Al Bahrain, launching the Line 6 Expansion Project of ALBA, modifying Bahrain Petroleum Refinery (BAPCO), in addition to continued new marine and land oil and gas prospecting in the foreseeable future. There are many elements that make Bahrain an attractive point for investors and world firms. The strategic location of Bahrain in the heart of the Arabian Gulf gives easy access to all Middle Eastern countries, whether by sea, land or air.