Following the mass disruption caused by the global pandemic, businesses are reassessing their global footprints and the viability of different locations around the world – particularly those away from traditional commercial centres that can offer continuity if regular trade routes are again disrupted. For US firms, Bahrain offers an interesting case study. The island Kingdom not only acts as a regional hub for global businesses seeking a gateway to the $3.7 trillion Middle East market, but is also a logical base for production and testing in a low cost, pro-innovation environment.
A long-standing partnership
The United States (US) in particular has a strong and long-standing relationship with Bahrain. Official ties date back to the Kingdom’s independence in 1971, but there has been an American presence in Bahrain since the 1890s, seeing the establishment of an American school and the American Mission Hospital. Today, Bahrain is an important strategic and business partner for the US and hosts the US Navy’s Fifth Fleet and US Naval Forces Central Command for the region.
Direct access to the US market…
The relationship has grown from strength to strength, cemented by a far-reaching Free Trade Agreement (FTA) in 2006 -the first US FTA signed with a GCC member country. The US- Bahrain Free Trade Agreement facilitates commercial trade between both countries providing a boost for American companies and Bahrain service providers seeking access to the US markets. It removes all investment barriers – thus creating opportunities for partnership and exchange of tech, expertise, goods and services. In 2019, bilateral trade reached $1.63 billion, with an additional $340 million of Foreign Direct Investment.
… and beyond
And yet while easy access to the US market via US-Bahrain Free Trade Agreement is an obvious draw for American companies seeking a regional base, it is not the only one. Bahrain offers trade and economic agreements with more than 40 countries, including France, India, Singapore, and the UK, not to mention unparalleled access to the fast-growing US $1.5 trillion GCC opportunity. Bahrain is connected directly to the GCC’s largest market, Saudi Arabia, via a 40-minute drive over the King Fahd causeway, and has been able to maintain the flow of commercial freight over this causeway with minimum disruption despite the pandemic. Savvy application of emerging technologies including blockchain and AI played a key role here, ensuring that Bahrain’s customs processes remained some of the most quick, efficient and safe in the entire region.
Produce in Bahrain, export to the world
A number of American companies are already taking advantage of Bahrain’s enviable market access. Examples include Bell Racing Helmets, the world’s top manufacturer of protective gear for Formula 1 and motorsport drivers, which relocated its headquarters to Bahrain in 2014 after turning down other options in Southeast Asia. The company cited Bahrain’s “business-friendly environment” as “a real draw. Another notable American company in Bahrain is global confectionery giant Mondelez International. The firm opened its “Factory of the Future” in Bahrain – a US $90 million facility, which produces the company’s flagship “Oreo” brand cookies, among other products. Mondelez can use Bahrain’s geographic location at the nexus of the Middle East to access the GCC’s FMCG market – one of the fastest growing in the world. At the time of setting up, Mondelez noted Bahrain’s “business-friendly environment, skilled local workforce and excellent transport links”. Mueller Industries is another recent US entrant to the Bahrain market, where it established the region’s first Copper Pipe manufacturing plant, from which it exports 75 per cent of its products back home to the US. And 205-year-old US home textiles producer Westpoint Home exports 95 per cent of its products to the US from its Bahrain plant.
Yet it is not only in manufacturing that Bahrain offers strong international connections for US firms. Spurred by a robust and long-standing financial sector – the most established in the Gulf – the Kingdom is home to regional headquarters for major institutions like Citibank, American Express and Mastercard. More than 65% of Bahrain’s highly skilled and educated local workforce work in financial services, and the Kingdom sits right in the middle of global timezones, ideal for global financial market access. That interest is echoed in the fast-growing FinTech ecosystem, where startups have set up shop as a way to access the regional market. A major factor in this trend is the launch of the Bahrain FinTech Bay hub, which continues the tradition of working closely with the US via direct consortium links to Detroit and Silicon Valley.
Another American firm benefitting from the Kingdom’s focus on tech is Amazon Web Services, which last year launched its first Middle East data centre region in Bahrain. Now, the facility is powering thousands of the world’s top websites and games, as well as the Bahraini government’s concerted shift to the cloud. The investment illustrated the Kingdom’s collaborative approach to addressing the needs of overseas investors, with regulatory reforms including new data protection laws, cloud-first policies and dedicated frameworks for e-transactions – all critical elements in sustaining a thriving digital economy. The region is firmly on-board, too, with startups and major corporates – including Careem, Aramex, Flydubai and Virgin Middle East – all now using the technology.
As well as unparalleled global and regional market access, as well as a tech-first approach and dedicated regulation, almost all of these foreign companies and others have cited Bahrain’s “business-friendly environment” as a major draw. The Kingdom offers 100% foreign ownership in most business sectors, no free zone restrictions and a favourable tax regime, not to mention one of the region’s most highly skilled and bilingual workforces. For example, the Kingdom ranked first amongst all Arab countries for English proficiency in Education First’s latest English Proficiency Index (EPI).
How to set up
Moreover, Bahrain has made itself one of the easiest countries in the world for setting up a business – a seamless and frictionless experience owing to a supportive and accessible government and almost all necessary processes and services, from commercial registration to public and private notaries, are available online. And the Bahrain EDB is on hand to support at every step of the way, including legal support, registration guidance, networking and more.
For more information on how to set up in Bahrain, click here.