The Bahraini delegation at the World Economic Forum’s 12th Annual Meeting of the New Champions (AMNC) in Tianjin, China, was a true reflection of the Team Bahrain philosophy. Along with Bahrain EDB and the Central Bank of Bahrain, we were joined by members of the Global Shapers Manama Hub (A WEF initiative for young leaders) and prominent Bahraini startups – exemplifying Bahrain’s commitment to a collaborative approach to business and investment that includes stakeholders from across the public and private sectors.
This kind of multilateral approach has never been as important as it is today. During the conference, I took part in a panel to discuss the pressing issue of ‘Getting Digital Globalisation Right’ – a crucial area of focus for those of us concerned with building a successful digital economy. As businesses are increasingly being pushed to reinvent their products and services to adapt to a rapidly changing global market, they need a supportive environment developed in tandem with government entities with a close understanding of those challenges.
For those who do get it right, digitalisation will be a huge force for prosperity – in the Middle East and elsewhere. According to a report from WEF itself, between 2016 and 2025 digitalisation could create up to six million jobs worldwide in the electricity and logistics sectors alone. But increasing automation will also mean many workers will be displaced – particularly in traditional manufacturing. The jobs of the future will require high digital literacy and an entirely new suite of skillsets.
So what is Bahrain doing to get digital globalisation right?
1. Bahrainis are early adopters
Bahrain is one of the top countries in the world for consumer adoption of technology, with 100% smartphone penetration and more than 70% social media adoption – higher than the United States.
The Kingdom also has one of the highest mobile and broadband penetration rates in the GCC, 213% and 172% in 2016 respectively. A young, tech-savvy population is the essential foundation for future innovation and growth in this area.
2. Bahrain has invested heavily in its ICT infrastructure
Bahrain is actively developing its infrastructure to increase its readiness for a digital economy. The country is consistently ranked among the top in the region in ICT preparedness – including 1st in the GCC for ICT readiness by WEF, and 1st in MENA for ICT development by the International Telecommunication Union (ITU).
In addition, we are rolling out a nationwide 5G network, with plans to lay an additional 60,000 km of fibre-optic cable in a programme totalling $2.5 billion. This investment will have knock-on benefits not just for businesses across the board, but for the development of new growth industries such as autonomous driving and IoT technology.
Not to mention last year’s announcement that Amazon Web Services (AWS) would be launching their first Middle Eastern Region in Bahrain – which introduced a new era for Bahrain’s cloud-based infrastructure, making it available to a wider pool of businesses. Research at Stanford university showed that cloud computing is being disproportionately adopted by smaller, newer companies, helping them to challenge incumbents.
3. Bahrain is home to a thriving startup ecosystem
Those smaller and newer businesses are crucial drivers of innovation and digitalisation. Bahrain is building a vibrant and internationally connected ecosystem for digital startups – supported by strategically developed accelerators and incubators, including the region’s first cloud-based accelerator.
Clusters are developing around certain subsectors, enabling key decision makers, mentors, other companies, and potential clients to be located in one place. Last year saw the launch of Bahrain FinTech Bay, which brings together members of the fintech community in the largest dedicated fintech hub in the MENA region.
To support that community, Bahrain’s regulatory environment is continually monitored and updated to ensure it is as startup-friendly and digital-friendly as possible. Last year, the Central Bank of Bahrain launched the region’s first onshore regulatory sandbox – enabling new products to be tested free of regulation before bringing them to the wider market.
4. Bahrain has one of the region’s most liberal business environments
Bahrain recognises that in a world of accelerating technological change, the government must adopt policies that empower new forms of digital commerce.
Bahrain’s government has a strong track record of reform and deregulation, and is committed to minimising operational costs and tax burdens for ICT firms. The government does not collect corporate or personal taxes, and allows 100% foreign-owned enterprises in the ICT sector.
Our robust and open business environment, strong connectivity, and low costs of doing business have already attracted international tech giants such as AWS, who are basing their first Middle Eastern Region in Bahrain, and Huawei, whose regional headquarters are based in Bahrain – not to mention a growing number of promising startups.
5. Bahrain leads the way in diverse funding options
As home to the region’s longest established financial centre, Bahrain has a head start when it comes to developing new funding avenues for powering growth sectors. At the Gateway Gulf Investor Forum in Manama this year, the Bahrain Development Bank announced the establishment of the $100m Al Waha Fund of Funds, set up specifically to target venture capital funds in Bahrain, thereby drawing new capital into the Kingdom to fuel our growing FinTech and startup sectors.
6. Bahrain is committed to training and education
We know that in an increasingly competitive global labour market, the resilience of our own labour market depends on continuous investment in education and training programmes.
Almost 60% of the Bahraini population is under 30, which presents a huge opportunity to provide a young workforce with the skills and capabilities to thrive in what is becoming known as the Fourth Industrial Revolution.
Tamkeen, the Kingdom’s Labour Fund, provides training, technical and financial support for businesses, and manages initiatives to bring those in need of experience into the workplace. This approach is in line with research by WEF which found that talent development and future workforce strategy have become more essential to business success than ever before.
A history of trailblazing
Just as we have recognised that a digital economy will be the engine for future growth, in past decades we saw that the private sector would be the key to Bahrain’s economic advancement.
When the recent period of low oil prices prompted economic transformation across the Gulf, Bahrain’s government had already done much of the hard work of reorienting from operator to regulator.
That’s why we have one of the most diversified economies in the GCC, with non-oil sectors contributing 80% of GDP. And it has paid off – Bahrain now employs 75% more people than it did when liberalisation was first initiated.
Our task now is to take full advantage of the foundations we have laid out in our infrastructure, our regulation, our financial services, and our workforce – as well as our unique location as the gateway to the booming Gulf market.
The Fourth Industrial Revolution is underway, and we’re poised to blaze a new trail.