With a strong pipeline of infrastructure projects and a non-oil sector that is growing apace, Bahrain benefits from a strategic geographical location at the heart of the GCC Market.
In an interview with ACE Update, Ms Dharmi Magdani explains how Indian companies can win in Bahrain. She further assures, “Indian engineering companies will find in Bahrain a business-friendly environment.”
In the infrastructure domain, how do you look at the opportunities for Indian engineering companies?
Bahrain is committed to encouraging economic diversification in the Kingdom, a process that has been very successful thus far given that the oil industry now accounts for less than a fifth of GDP. To support this growth, the government is set to invest over $32 billion, a figure comparable to Bahrain’s annual GDP, in key infrastructure projects across a range of sectors over the coming years. These include an inter-GCC rail network, for which a feasibility study has just been completed, and an extensive airport modernisation programme which is set to dramatically increase passenger capacity and the volume of cargo that the airport can process.
As such, there is a wealth of opportunities for foreign investors, including Indian companies. A large number of Indian businesses have already established operations in Bahrain to serve customers in the region. These included manufacturing companies such as Electrosteel, JBF, Chemco, Ion Exchange and Synergies Castings in addition to long-established financial services and ICT companies such as State Bank of India, ICICI Bank, HDFC, Canara Bank, TCS, Tech Mahindra, Rolta and Equinox.
Why more and more Indian engineering companies should venture in to Bahrain?
With a strong pipeline of infrastructure projects and a non-oil sector that is growing apace, Bahrain benefits from a strategic geographical location at the heart of the GCC market, a market which is currently valued at approximately $1.5 trillion and is expected to reach $2 trillion by the end of 2020. An effective transportation and logistics network connects Bahrain to its neighbours by sea, road and air, including a 25-km causeway direct to Saudi Arabia, the region’s largest market. A second causeway is planned which will further improve access between the two nations. This strategic location is of particular advantage to manufacturing and logistics companies – Manama is 40 per cent closer to more major cities in the region in comparison to other GCC countries, thereby lowering the logistics cost considerably.
Indian engineering companies will also find in Bahrain a business-friendly environment which is home to a vast number of international companies and organisations such as the Bahrain Economic Development Board (EDB) that are dedicated to looking after their needs.
Not only that, but Bahrain offers investors a number of competitive advantages including 100 per cent foreign ownership in most sectors and a highly-skilled, bilingual local workforce, around 60 per cent of which are employed in the private sector Bahrain’s mature regulatory system and free trade access throughout the GCC and to the United States, Singapore and Northern Europe via bilateral FTAs are especially advantageous to manufacturing and engineering companies.
Cost-wise, Bahrain is extremely competitive with some of the lowest operating and setting up costs in the region. Companies will also find utility and land rents very reasonable.
What are the major areas/segments they can look for?
Bahrain offers a wide range of engineering opportunities within the manufacturing and technology framework, allowing companies to access customers in the wider Gulf region and the large regional manufacturing companies such as Awal Gulf & Awal refrigeration, Carrier, AL-Zamil, LG-Shaker and Al-Essa, to name but a few.
Specific areas of interest include downstream oil and gas services, which are required by producers in the GCC. These include opportunities in pipes, compressors, pumps and turbines, electrical transmitters, drilling and producing equipment etc. These also include maintenance services such as coating, specialised scaffolding, insulation services, and chemical cleaning among others. The need to transition to energy efficient operations also opens doors for engineering companies.
A series of opportunities exist to work in conjunction with Bahrain’s rapidly expanding construction industry. Heating, ventilation and air conditioning (HVAC) is another area that is witnessing growing demand in the region. The market for energy efficient air conditioners, estimated to be worth approximately US $ 2 billion, is also on the rise. We think there is a great opportunity to tap into the gap which exists in GCC HVAC component market, to include motors, blowers, plastic moulds, copper tubes and capacitors.
Bahrain also has a strong and long-established aluminium sector and an aluminium park is currently being established in the Kingdom, offering huge possibilities for casting, extrusion industry using the molten aluminium from ALBA.
Companies with expertise and experience in Engineering Design (CAD, CAM PLM) can offer support to the manufacturing industry in the region via a base in Bahrain. Opportunities also exist for such companies to support this with simulation based training or to create centres in Bahrain to support the growth of the regional sector and enhance local skills.
What are the primary challenges they may face? And how will the EDB going to facilitate?
Normally companies find setting up in Bahrain a relatively smooth process and there are numerous institutions on hand to help. The EDB, for example, offers advice and assistance to companies setting up in Bahrain, liaising with the relevant government departments to obtain the necessary licenses and to register the company, and provides an aftercare service once the company is established. We are also able to put companies in touch with key stakeholders in Bahrain, such as the Bahrain Development Bank or Mumtalakat, the Kingdom’s investment.
There are also a number of grants and subsidies available to foreign companies which can assist them in setting up their operations here in the Kingdom.
The EDB also has a number of international offices whose purpose is to be a point of contact on the ground for foreign companies. The EDB has two Indian offices, in Delhi and Mumbai, to provide interested companies with detailed information about Bahrain, its business environment and its welcoming and liberal lifestyle.