Bahrain is showcasing how to build a sustainable digital economy through digital foreign direct investment
As the digital economy becomes increasingly central to every country’s competitiveness, creating a more digital-friendly investment climate is a critical strategy for sustainable economic growth.
Recognising the importance of digital foreign direct investment (DFDI), the World Economic Forum and Digital Cooperation Organisation launched the Digital FDI Initiative in 2022 to guide countries in their approach. The two organisations identify four pillars of DFDI, with Bahrain now serving as a model in each.
Enabling investment in new digital activities
The first pillar involves enabling investment in activities that were not possible before the widespread adoption of digital devices and infrastructure. Bahrain’s approach is built on Vision 2030, the government’s forward-looking commitment to creating a regulatory environment that is attractive to investors in all sectors, including digital.
As part of this vision, Bahrain was the first country in the region to launch a Cloud-First policy back in 2017, which paid dividends when AWS selected Bahrain as the site of its first “region”, or collection of data centres, in the Middle East and North Africa (MENA). Also in 2017, the Central Bank of Bahrain’s introduction of a regulatory sandbox paved the way for fintech firms to innovate in digital financial services, testing ideas in a partially deregulated environment that still protects consumers.
As a result, Bahrain has become a regional leader in fields such as crypto and blockchain, with the Bahrain FinTech Bay hosting such innovative firms as Singapore Gulf Bank and Binance.
Attracting DFDI depends in part on how easy foreign companies find it to set up in Bahrain. The Kingdom’s online registration system Sijilat has removed barriers, while the “Golden License” – launched in 2023 and targeting companies able to invest at least $50 million or create 500 local jobs – offers benefits such as streamlined licensing procedures and priority allocation of land and building permits. By 2024, nine Golden Licenses had been issued, attracting around $2.4 billion in investment.
Enabling digital transformation in existing companies
The second pillar of the Digital FDI Initiative is enabling existing firms to invest in adopting digital services – for instance, established banks offering mobile banking services, healthcare providers moving into telemedicine, or telecom companies converting to FinTechs as the issuing of new licenses allows strong integration with other industries. Bahrain is home to many examples, from Gulf Air’s flight-reservation system to Bapco’s use of the Internet of Things to monitor its facilities and enable preventive maintenance.
Firms can invest in digital transformation only if they have access to employees with the necessary skillsets, which is where Bahrain’s Labour Fund, Tamkeen, plays a pivotal role. Its portal, Kawader, connects companies to skilled tech workers, and the organization is also working with AI and cloud solutions specialist Array, to introduce AI into the process of matching talent with job openings.
Tamkeen builds the skills of the Bahraini workforce in areas such as cloud computing and coding, and has recently partnered with companies including Amazon Web Services and Apple. Bahrain ranked second in MENA for digital and technological skills in the World Digital Competitiveness Ranking 2024.
Employers capitalising on the talented Bahraini workforce now include PwC, which set up a regional service delivery centre in the Kingdom, J P Morgan Payments, which is hiring Bahraini software engineers for its global payments business; food delivery platform Talabat; and Citi, whose Global Tech Hub already employs more than 100 Bahrainis, recently added a state-of-the-art new floor, and is on course to employ more than 1,000 software developers in the next decade.
Enabling investment in digital infrastructure
The third pillar of DFDI is enabling investment in digital infrastructure. Bahraini technology group Beyon has invested $250 million in infrastructure such as undersea cables and data centres. Such investments help to attract DFDI, for example from the Saudi Telecommunication Company, stc Group, which is investing in Bahrain as part of its construction of a regional cable system.
stc has also announced plans for a data center park. Meanwhile Beyon has announced further plans to build a Digital City spanning 380,000 square metres that will include its own new headquarters, described by its CEO as “a vision and benchmark for the future of urban living built upon the core tenets of Bahrain’s Vision 2030”.
Bahrain’s investment in digital infrastructure has made it a regional leader in high-speed broadband network coverage and mobile connectivity. One of the first to roll out a 5G network, in 2019, it now has a mobile penetration rate of 137% – that equates to 1.37 mobile connections per person. Bahrain also ranks first globally Bahrain ranked first globally in internet usage in the FM Global Resilience Index 2025.
Enabling outward digital FDI
The fourth and final pillar is outward digital FDI, which recognises the importance of countries taking measures that not only help home-grown companies to invest domestically but also to expand internationally in ways that further national development goals.
For example, Bahrain’s ABC Bank launched its digital banking service ila Bank in 2019. After starting its international expansion in Jordan in 2022, it was quickly named the region’s fastest-growing digital bank. Likewise, Bahrain-based digital payments provider AFS has expanded to operate across the MENA region and beyond. Another example is Tarabut Gateway, which has helped the National Bank of Bahrain to provide open banking services.
These examples show how Bahrain is succeeding in attracting inward DFDI to grow the national digital economy, while also supporting domestic companies to expand and have a positive impact across the wider region.
