RESTRICTED  
  
WT/TPR/G/294  
18 March 2014  
(14-1596)  Page: 1/17  
Trade Policy Review Body  Original: English  
 
 TRADE POLICY REVIEW 
REPORT BY 
KINGDOM OF BAHRAIN  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Tr ade Organization), the policy statement by 
the Kingdom of Bahrain is attached. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on the Kingdom of Bahrain. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  Contents 
1   INTROD UCTION  .......................................................................................................... 3  
2   NATIONAL DEVELOPMENT ........................................................................................... 4  
3   ENHANCING PRODUCTIVITY AND CAPACITY ............................................................... 5  
3.1   Policy initiatives ...................................................................................................... .. 5 
3.1.1   Developing industry ................................................................................................ 5  
3.1.2   Building on the fi nancial services  sector ..................................................................... 5  
3.1.3   Telecommunications ................................................................................................ 6  
3.1.4   Encouraging in ward invest ment ................................................................................ 6  
3.1.5   Importance of intell ectual property  rights ................................................................... 7  
3.1.6   Privatization ........................................................................................................... 7  
3.1.7   Skilled human resource development ......................................................................... 8  
3.1.8   Fiscal policy ......................................................................................................... .. 8 
3.1.9   Moneta ry policy ...................................................................................................... 9 
3.1.10   Stability ............................................................................................................... 9  
3.2   Growth sectors .......................................................................................................... 9  
3.2.1   Financial services ................................................................................................... 10 
3.2.2   Manuf acturi ng ....................................................................................................... 10 
3.2.3   Ed ucation .............................................................................................................  10 
3.2.4   Healthcare ............................................................................................................  11 
3.2.5   Real estate and construction .................................................................................... 11 
3.2.6   ICT ................................................................................................................... ... 12 
3.2.7   Tourism ................................................................................................................ 12 
4   TRADE POLICY .......................................................................................................... 13  
4.1   Bahrain and the world ............................................................................................... 14 
4.2   Bahrain an d the region .............................................................................................. 14 
4.2.1   GCC membership ................................................................................................... 14 
4.2.2   GAFTA membership ................................................................................................ 15 
4.3   Bilatera l agreements ................................................................................................. 15 
ANNEX 1 TRADE RELATED TECH NICAL ASSIST ANCE ...................................................... 16 
ANNEX 2 CONTRIBUTORS TO THIS  GOVERNMENT REPORT ............................................ 17 
 
 WT/TPR/G/294 • Kingdom of Bahrain 
 
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  1  INTRODUCTION 
1.1.  Bahrain has served for millennia as a hub for investment and trade in the Arabian Gulf and 
beyond. Bahrain’s unique business culture builds on a long-standing tradition of openness to 
people, ideas, and capital. This accounts for its deeply entrenched culture of freedom, tolerance, 
and innovation. Bahrain is strongly committed to regional integration and offers unique 
connectivity with the neighbouring GCC economies. It has, or is negotiating, free trade agreements with a number of major economies, including the U.S. since 2006. The country has a modern 
logistics infrastructure, including its new Khalifa bin Salman Port opened in 2009. 
1.2.  Bahrain has been a regional pioneer of ec onomic development in a number of areas. It was 
the first country in the Gulf to pioneer public education as well as to start producing oil commercially. This in turn engendered a long period of industry-led diversification. Bahrain 
established a regional offshore financial hub in the 1970s and is now home to a full gamut of 
financial and ancillary services. Its locational has allowed it to consolidate its position as a regional logistics hub. 
1.3.  Policy-making in Bahrain is explicitly anchored in a clear long-term vision and driven forward 
through a strategic focus in a fact-based manner. The Economic Vision 2030 is a roadmap for making Bahrain a sustainable, competitive, fair and knowledge based economy. Its 
implementation takes place through government programs with clear, measurable objectives. 
Bahrain is in the category of “highly developed economies” ranking 48th in the Human Development Index according to the UNDP report for 2013. 
1.4.  Bahrain has made significant strides toward diversifying its economy in recent decades. 
Whereas the oil and gas sector accounted for 44% of the Kingdom’s real GDP in 2000, this 
proportion had more than halved to 19% as of 2012. The largest sectors of the non-oil economy are financial services (17%), manufacturing (15%), and government services (approximately 
13%). The process is continuing at a brisk pace with a number of sectors recording double digit 
annual average growth rates between 2000 and 2012.  These included private health care and 
education, construction, and transportation and communications. Also downstream manufacturing 
has expanded rapidly. 
1.5.  Bahrain’s economic diversification is reflected in a diverse national labour force where two-
thirds of economically active Bahraini nationals are now active in the private sector. Following decades, of economic diversification and focused investment in education and training, there are 
Bahrainis active in all sectors of the economy, and Bahrainization rates are strongly correlated with 
economic productivity. 
1.6.  A number of training programs have been developed to ensure ongoing matching between 
the evolving needs of the economy and the country ’s human capital assets. Key initiatives include 
the Tamkeen labor fund and the Bahrain Polytechnic which began its operations in 2008. Teacher training has been boosted through a training co llege and an independent body to monitor the 
quality of education in the Kingdom – Quality Assurance Authority for Education and Training 
(QAAET) – has been established. These initiatives have improved Bahrain’s standing in international rankings with, for instance, the World Economic Forum’s Global Competitiveness Report 2013-2014 ranking Bahrain 48th out of 148 countries worldwide for the quality of its 
educational system.  
1.7.  Bahrain has been repeatedly recognised for the quality and flexibility of its business 
regulation. The 2012 Heritage Foundation Index of Economic Freedom places the Kingdom at the 
12th position worldwide, ahead of a number of advanced economies and major emerging markets. 
Among other things, foreign investors in Bahrain can benefit from 100% foreign ownership. The liberal principles underpinning the Bahraini business climate are not confined to free zones but 
apply to the entire economy, which constitutes a unified jurisdiction. Also the country’s physical 
infrastructure has continued to be modernized with the World Economic Forum’s Global Competitiveness Report 2013-2014 ranking the Kin gdom 20th worldwide in terms of the “quality of 
overall infrastructure.” 
1.8.  Bahrain is a dynamic and resilient economy which has continued to expand throughout the 
global economic crisis. The main structural growth drivers include demographic dynamics, WT/TPR/G/294 • Kingdom of Bahrain 
 
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  connectivity with the broader region, and the ongo ing economic diversification. Real GDP growth 
reached 1.9% in 2011 and accelerated to 3.4% in 2012 and projected to be 4.8% in 2013. 
1.9.  Bahrain’s long-standing status as a financial centre is reflected in the fact that financial 
services account for some 17% of real GDP. Bahrain is home to a number of institutions of 
excellence, such as the Bahrain Institute of Banking and Finance, which has trained a large and 
growing cadre of national professionals. A number of international Islamic finance advisory bodies 
operate from the Kingdom. These include the Ac counting and Auditing Or ganization for Islamic 
Financial Institutions and the International Islamic Financial Market. These entities have been 
instrumental to fostering standardization and product development in a rapidly evolving sector. 
1.10.  Bahrain’s commitment to sustained diversification and inclusive development has 
engendered a number of important initiatives to fo ster entrepreneurship and the growth of small 
and medium-sized enterprises (SMEs). Institutions such as the Bahrain Development Bank and 
Tamkeen play a key role in supporting SME development through financial and non-financial support. While SMEs already account for more than 90% of Bahraini companies and three-quarters 
of private sector employment, the focus of policy initiatives is increasingly shifting toward enabling 
SME growth and progress in areas such as exports and innovation. 
1.11.  Bahrain has significant progress in recent years in terms of modernising its government 
sector and increasing efficiency standards. Key initiatives include targeted education and training, 
increased transparency and accountability through institutions such as the Tender Board and the National Audit Office. The provision of public serv ices has increasingly shifted to state-of-the-art 
electronic platforms to enable timely delivery and greater responsiveness. 
1.12.  Bahrain’s commitment to inclusive development has involved a number of initiatives to 
empower women and foster their active participation in the economy. The Supreme Council for Women was established in 2001 to champion the cause of Bahraini women who have enjoyed full 
rights to participate in the political process since 2002. Women are present at all levels of society 
and the political establishment. They represent 35% of the Bahraini labour force and 72% of 
students in higher education. 
2  NATIONAL DEVELOPMENT 
2.1.  The transition into a constitutional monarchy in 2002 based on a national referendum has 
resulted in political liberalization and strong backing for economic reform programs. Elections in 2010 and the bi-elections of 2011 following on those in 2006 and in 2002 witnessed engagement 
from parties and sections of society, and has brought with them a shift in perceptions of what can 
be achieved at an individual level, with an amplified sense of citizenship. 
2.2.  The launching of Bahrain’s Economic Vision 2030 in 2008, and the new constitutional 
amendments in 2012 have positively impacted th e national business environment towards more 
competitiveness, sustainable development, ski lled employment, economic growth, and social 
fairness. 
2.3.  The commitment to openness and democracy has invigorated economic development 
strengthened Bahrain’s one family spirit. In terms of economic development, the focus has been a shift towards a private-sector driven economy with the Government acting as a policy maker and regulator, with the overall objective of ensuring that growth is inclusive. 
2.4.  A number of public boards and intergovernmental committees have been established to 
ensure full integration of the private sector into the economic development process, with the process being coordinated alongside the Bahrain Economic Development Board (EDB), which is 
focused on attracting inward investment into Bahrain with the aim of creating quality jobs for 
Bahrainis. 
2.5.  The competence of the National Audit Cour t, which was established in 2002 (Law No. 16 of 
2002), has been expanded in 2010 (Law No. 49 of 2010) to include financial auditing in addition to 
administrative auditing of the Government ministries and agencies. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  2.6.  An efficiency drive, spearheaded by the Civil Service Bureau, aims at strengthening the 
performance and efficiency of government departments, whilst at the same time the process of outsourcing will lead to a downsizing of government. 
3  ENHANCING PRODUCTIVITY AND CAPACITY 
3.1  Policy initiatives 
3.1.1  Developing industry 3.1.  Industrialization has formed the backbone of Bahrain’s drive for economic diversification for 
more than four decades. Bahrain's development strategy, Vision 2030, confirmed the importance 
of the manufacturing sector as a key driver for the diversification process, innovation, and knowledge based economy. 
3.2.  Bahrain's diversification plans focus on reducing positively correlated volatilities amongst 
industries, avoiding fluctuation and attracting some optimal combination of industrial investments 
in this pursuit. 
3.3.  Bahrain has made significant infrastructural investments (port facilities, road networks, 
electrical networks), and this can significantly serve its policy ambitions in expanding the pace and 
contribution of SMS through the anticipated expa nsion of regional and international trade and 
investment. 
3.4.  The Ministry of Industry and Commerce mana ges eight industrial areas with a total size of 
22 million m². The history of the industrial areas in Bahrain started in the sixties and currently there are major industrial projects in Bahrain, for example: Aluminium of Bahrain “ALBA”, Gulf 
Petrochemical Industries Company “GPIC” and Gulf Aluminium Rolling Mill Company "GARMCO". 
Salman Industrial City is the latest industrial area with a size of 12 million m² which is home to the 
Bahrain International Investment Park, Bahrain Investment Wharf and the Hidd Industrial Area. 
3.5.  Bahrain is concurrently focusing on developing a competitive SME sector, delivering 
international quality products and services, and contributing to quality employment opportunities.  
3.6.  Micro, small and medium enterprises repres ent a significant part of the Bahraini economy. 
Micro, small and medium enterprises (MSMEs) constitute almost 99% of all business enterprises in 
Bahrain. As per Central Informatics Organisation’s estimates, these enterprises contribute nearly 
28% of total nominal GDP of Bahrain. Manufacturing, trading and construction constitute the main segments of the MSME sector in Bahrain. Micro,  small and medium enterprises also provide jobs 
for nearly 73% of private sector employees. 
3.1.2  Building on the financial services sector 
3.7.  The financial services sector is one of Bahrain’s strongest assets. Not only does it contribute 
heavily to the country’s GDP but it is also one of the most important employers in the economy 
providing around 14,000 jobs with the highest average wage of any sector. 
3.8.  The success witnessed in the financial sector  can be linked to the steps taken by the Central 
Bank of Bahrain (CBB) to enhance the regulatory environment in which financial institutions 
operate. Many important regulations have been issued which are in line with internationally 
recognized standards such as the implementation of Basel II and III. 
3.9.  Over the years, the Central Bank of Bahr ain (CBB) established a system of legislation and 
practices that contributed effectively to the develo pment of the financial sector to keep pace with 
the global developments and maintain its competitiven ess, this in turn contributed to the growth of 
the national economy, particularly through the de velopment of banking and insurance services and 
investment services. This also elevated Bahrain to become internationally recognised as one of the 
world’s leading centres for Islamic finance. Bahrain today is home for around 132 Islamic financial 
institutions. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  3.1.3  Telecommunications 
3.10.  Pursuant to its National Economic Strategy, Bahrain was one of the first GCC countries to 
liberalize its telecommunications market. While Bahrain has the smallest market in the Middle East by population, its telecommunications market is now one of the most competitive. Bahrain has 
been leading regulatory trends in the telecommunications sector among the GCC countries and its 
Telecommunications Regulation Authority (TRA) has been awarded, twice in 2009 and 2011, the 
“Most Progressive Regulator of the Year” award by the South Asia, Middle East, and North Africa 
(SAMENA) Telecommunications Council. 
3.11.  Bahrain's telecommunications sector generates skilled job opportunities, especially for 
youth. Presently, 3,141 people work in the sector, marking a 50% increase since the launch of the liberalization policies in 2003. The number of Bahraini employees in this sector is also amongst the 
highest in Bahrain, standing at 80% as of 2012. This  is mainly due to the sector’s high productivity 
and reliance on skilled employment. The sector also boasts a high female ratio of 29% relative to a Bahraini workforce average of 21%. 
3.1.4  Encouraging inward investment 
3.12.  Bahrain offers various investment incentives to national and foreign investors alike. These 
incentives include short and long-term loans with low interest rates from the Bahrain Development 
Bank for financing capital assets, and a core port ion of working capital for small and medium-sized 
industrial projects; low rents for land in government industrial areas; low energy tariffs for production; and flexible regulations and procedures regarding foreign workforce. 
3.13.  Most recently, and in conformity with the Economic Vision 2030, the Business Licenses 
Information Service (BLIS) pilot phase was launched by the Ministry of Industry and Commerce in 
December 2013, in cooperation with the e-Government Authority, Economic Development Board and other government agencies concerned with issuing trade licensing. BLIS forms a unified and 
comprehensive guide for establishing businesses in Bahrain and aims at facilitating the procedures 
for exercising trade and economic businesses in Bahrain and contributes to raising the level of efficiency, bolsters cooperation among partners and promotes business leadership and innovation. 
3.14.  The e-Government Authority of Bahrain was established in 2007. Its strategy focuses on 
ensuring the effective delivery of government services to citizens, residents, businesses and 
visitors with an aim to improve the quality of life by doing much more than simply implementing technology. The e-Government website ( http://www.bahrain.bh/business ) includes all the 
conditions, procedures, laws and regulations including those related to acquiring business licenses. 
It also provides links to the e-services provided by different ministries and government agencies in Bahrain ( http://www.bahrain.bh/ ). 
3.15.  More incentives are provided in industrial zones. In 2010, the Bahrain International 
Investment Park (BIIP) was established by the Mini stry of Industry and Commerce (MOIC). It is a 
considered a landmark Business Park in Bahrain, a low cost location for value added manufacturing 
and international services projects, is competitive internationally with a world class physical 
environment with high management standards, and is aimed at creating quality employment opportunities for Bahrainis. Incentives offered at  the BIIP, include: 100% foreign ownership; 0% 
corporate tax (with a 10 year guarantee); exemption from import duties on raw materials and 
equipment; duty free access to all GCC markets (unlike free zones in the region); free trade access 
to the United States and Singapore; 100% repatriati on of capital; no recruitment restrictions; and 
no minimum capital requirements. 
3.16.  The BIIP is centrally located near the new seaport, Khalifa Bin Salman Port, the Bahrain 
Logistics Zone, Bahrain International airport with advanced road network that takes only a 30 minutes uninterrupted drive to King Fahad causeway connecting Bahrain by land to Saudi 
Arabia and the region. As of December 2013, the total value of investment in BIIP is around 
US$2 billion including world class manufacturing brands that are taking Bahrain as their regional distribution hub for their goods and services. 
3.17.  Recently, the 2012/13 Global Free Zones of the Future Top 50 Rankings, released by 
Foreign Direct Investment Magazine has included  four zones in Bahrain. Bahrain International WT/TPR/G/294 • Kingdom of Bahrain 
 
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  Investment Park “BIIP” (ranked 15), Khalifa Bin Salman Port (ranked 16), Bahrain International 
Airport (ranked 19) and Bahrain Logistics Zone (ranked 30). Such recognition shows how far Bahrain has gone in establishing its regional supply chain logistics infrastructure. 
3.1.5  Importance of intellectual property rights 
3.18.  Bahrain is party to various intellectual property treaties and conventions. In addition to 
WIPO and other IPR agreements already reported during the past TPR in 2007, Bahrain has acceded to the Patent Cooperation Treaty (PCT) on 18th March 2007, and to the Trademark Law 
Treaty (TLT) on 18th March 2007. On 20th November 2012, Bahrain became a contracting party to 
the Budapest Treaty on the International Recognition of the Deposit of Micro-Organisms for the Purpose of Patent Procedure. Bahrain is in the process of becoming party to: the Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks; and to 
the International Union for the Protection of New Varieties of Plants. 
3.19.  Bahrain authorities are also keen on furthe r developing intellectual property protection, and 
the ability to handle any violations diligently according to a wide spectrum of penalties. During the 
last few years, Bahrain has made significant progress in reducing copyright piracy. The 
Government's enforcement campaign is mainly based on inspections, closures, and improved public awareness. Since then, continuous monitoring by the CPO, both in Bahrain and, in 
cooperation with Customs, at the border, has en sured a decline in rates of piracy. The CPO has 
been granted significant powers, including joint powers with the police to arrest alleged infringers and confiscate goods suspected of violating copyri ght laws. According to the authorities, the CPO 
may also act in an ex-officio capacity in taking action against alleged infringers. 
3.1.6  Privatization 
3.20.  In 2002, the Government passed a privatization law (No. 41 of 2002) which, among other 
matters, established procedures for determining privatization policy, identified the sectors to be 
targeted for privatization and detailed the us e of privatization proceeds. In 2008, a Prime 
Ministerial Edict (No. 10 of 2008) was issued providing the guidelines for privatization and follow-up of privatization and established the High Counci l for Privatization. In 2013, a decision was made 
to amend the Decree, which now includes outsourc ing, and the sale of shares through a public 
offering.  
3.21.  Privatizations accelerated following the enactment of these laws. Private power capacity 
increased significantly following the establishment of the private Al Ezzel, 1000 megawatt power 
and 90 million gallons per day (“gpd”) water plant which began commercial production in 2006. 
Hidd Power plant was privatized in 2008, and Al Dur Power and water plant was established in 2010. Currently the private sector produces around 90% of Power, and 80% of water requirement 
of the Kingdom. In 2007 the Seef Mall was privatized through a sale of government shareholdings 
in the Company through an Initial Private offering (IPO). 
3.22.  As set out in Vision 2030, privatization remains a priority for the Government and includes a 
focus on: deregulation in order to encourage private investment in schools, hospitals and other 
public services. The Government’s strategy is, by 2030, to move away from public sector employment and provide opportunities through the private sector. Accordingly, privatization will 
take centre stage as the private sector w ill remain the focus for economic growth. 
3.23.  The Government has liberalized its telecommunications sector with the telecommunications 
law which came into effect in November 2002. Currently there are 3 private Mobile operators. The Government is also encouraging private sector investment in various sectors such as utilities, 
education healthcare, Housing and has privatized its public transport system. Independent 
operation and management of King Hamad Teaching Hospital, located in Muharraq which serves the adjacent private medical university. This year a public Infrastructure project (Sewage 
treatment plant) based on Public Private Partnership (PPP) model is due for completion. 
3.24.  The airport was also converted into a fully owned Government company, following the 
privatization of the management and operation in 2008. In 2007, a new Holding Company (MUMTALAKAT) was formed to manage the Gove rnment assets in non-oil industrial and 
commercial undertakings, while another holding company (Nogaholding) was formed to manage WT/TPR/G/294 • Kingdom of Bahrain 
 
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  the Government assets in oil such as Gulf Petrochemical industries (GPIC) and Bahrain Petroleum 
Company (Bapco) etc. 
3.1.7  Skilled human resource development 3.25.  Bahrain enjoys one of the highest ratios of working population among developing countries - 
about 60% of its total population. Bahrain's labour productivity has also been rated as the highest 
in the Gulf
1 with available workforce of young (ages between 25-40) bilingual graduates and has 
the Highest Literacy Rate and English skills among the GCC countries.2 Bahrainis are 30% of the 
private sector workforce and up to 80% in key sectors such as Aluminium and Financial Services. 
It also enjoys a respectable level of female participation in public and private sectors. The Labour Fund “TAMKEEN” provides financial support for training. 
3.26.  Unemployment figures in Bahrain are relatively low, estimated at 4.3% in December 2013. 
Out of a total of 716,473 people employed in Ba hrain in 2013 in both the private and public 
sectors, nationals only account for 26.3% of the total, with private sector participation of about 17%. This relatively low participation of Bahrainis in the labour market has led the authorities to 
establish several government organizations to help Bahraini nationals better compete for jobs, also 
known as Bahrainization. One such organization, known as Tamkeen, an Arabic word for "empowerment" was set up in 2006 to foster the form ation and growth of local firms in addition to 
helping Bahraini nationals obtain employment in the private sector by funding training initiatives. 
3.27.  Ministry of labour is active in providing training courses for the Bahraini job seekers and 
aims to make Bahrain one of the most important centres for training and human resources development in the region. 
3.28.  Bahrain is a pioneer in the region in such areas as: providing unemployment insurance 
schemes for both nationals and expatriates, free labour mobility which allows all expatriate 
workers to shift freely from one employer to an other, freedom of association which allows the 
workers to freely establish trade unions, domestic workers are covered by the labour law, and 
many other initiatives and regulations. 
3.1.8  Fiscal policy 
3.29.  The 2013-14 Government Budget was based on a $90 oil assumption which ranges closely 
to the current oil market price. For the 2014 bu dget, spending was budgeted at BD 3.7 billion 
(US$9.8bn) against budgeted revenues of  BD 2.8 billion (US$7.4b) for 2014. 
3.30.  Oil accounts for around 86% of the tota l budgeted government revenue, however with the 
Government keen on diversifying its revenue ba se, non-oil revenues have increased by 27% over 
the years 2009 to 2012, resulting in an average annual growth of 8% per annum over the past 
four years. 
3.31.  Economic diversification has always been a major policy driven by the Government 
throughout the past decades, resulting in the o il sector’s contribution to GDP decreasing from 
55.8% in 1980 to 21.5% in 2011, resulting in a higher contribution of non-oil sectors to the 
economy from 44.2% in 1980 to 78.5% in 2011. 
3.32.  The Government offers subsidized products and services at an estimated amount of 
BD 1.5 billion for the year of 2014 through an umbre lla of social inclusive programs and policies to 
lower the cost of living of all citizens (except for housing and social welfare which are only 
provided to nationals). Such programs include subsidies in the following areas: education, housing, 
health, food, social welfare, el ectricity, water, oil and gas. 
3.33.  GCC leaders have announced in 2011 the establishment of a development fund for Bahrain 
worth US$10 billion. The Development Fund will be pr ovided as a grant and will be distributed over 
a 10 year period. The Government of Bahrain has id entified the following priority sectors for the 
                                               
1 ‘Growing Beyond Oil’ Report, The Conference Board, USA, 2011. 
2 UN Human Development report 2010. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  utilization of the GCC Development Fund: housing, infrastructure, electricity & water, education, 
health, social development, youth programmes. 
3.1.9  Monetary policy 3.34.  The Central Bank of Bahrain is responsible for setting monetary policy objectives, carrying 
out monetary operations and ensuring the health of the financial sector. Its objectives are: 
 Set and implement monetary, credit and other financial sector policies for the Kingdom of 
Bahrain; 
 Provide effective central banking services to the Government and financial sector of the 
Kingdom; 
 Develop the financial sector and enhance confidence therein; and 
 Protect the interests of depositors and customers of financial institutions, and enhance 
the Kingdom's credibility as an international financial centre. 
3.35.  Bahrain follows a policy of maintaining a fixed exchange rate against the United States 
dollar. Bahrain and the other GCC countries all agreed to have their currencies pegged to the 
U.S. dollar, as a first step toward s creating a GCC Monetary Union. 
3.1.10  Stability 3.36.  The Government believes that political and economic stability are the key enablers of 
growth and the principle determinants of the level of inward investment, and that the democratic 
process is fundamental to achieving such stability in the long term. 
3.37.  Monetary stability and a well-developed financial system significantly mitigate Bahrain’s 
vulnerability to economic shocks, as does the demand led nature of developments. 
3.38.  The Central Bank of Bahrain (CBB) defines financial stability as a situation where there is 
continuous and prudent provision of financial services, even in the face of adverse shocks. It believes that financial stability is critical for maintaining Bahrain's position as an international 
financial centre and for ensuring that the sector continues to contribute significantly to growth, 
employment and development in Bahrain. 
3.39.  The pursuit of this objective is the primary responsibility of CBB's Financial Stability 
Directorate (FSD), which conducts regular surveillan ce of the financial system to identify areas of 
concern and undertakes research and analysis on issues relating to financial stability. 
3.2  Growth sectors 3.40.  The structure of the Bahraini economy has been transformed by a rapid process of economic 
diversification since the turn of the century. Wh ile the share of the hydrocarbons sector (mining 
and quarrying) more than halved in relative  terms from 44% to 20% of GDP between 2000 and 
2012, all other sectors with the exception of real estate have shown an increasing contribution to 
Bahrain's GDP. The largest sectors of the non-oil economy are financial services (17% of real 
GDP), manufacturing (15%), and government services (approximately 13%). A number of smaller sectors have achieved rapid growth, led by social and personal services (mainly private education 
and health care), to reach a compound annual gr owth rate of 14.3% in 2000-2012), construction 
(14.1%), and transportation and communication (9.8%). WT/TPR/G/294 • Kingdom of Bahrain 
 
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Sector 2000  2012  CAGR %  2000 share 
of GDP 2012 share 
of GDP  
Social and personal services 111 549 14.3% 2% 5% 
Construction 142 688 14.1% 2% 7% 
Transportation and communic ation 234 716 9.8% 4% 7% 
Other 271 616 7.1% 5% 7% 
Retail 172 461 8.6% 3% 5% 
Government 514 1,235 7.6% 9% 12% 
Finance 781 1,745 6.9% 14% 17% 
Manufacturing 713 1,577 6.8% 12% 15% 
GDP 5,736 10,187 4.9% 100% 100% 
Real estate 289 428 3.3% 5% 4% 
Mining and quarrying 2,510 2,172 -1.2% 44% 20% 
 
3.2.1  Financial services 
3.41.  In 2013, the financial sector represented almost 17.0%. There is a growing market demand 
for financial services and products, particularly for Islamic financial instruments. The Bahrain 
Financial Harbour and the Bahrain World Trade Centre along are some of the witnessed projects that have successfully developed since 2005.  
3.42.  Bahrain is currently home to 415 financial institutions (as of December 2013), with total 
Banking Assets of US$190.9 billion at November 2013. 
3.43.  Bahrain has become host to the largest number of Islamic banks in the world, as well as a 
growing support industry. There are 132 Islamic financial institutions, which includes banks, 
insurance companies and investment funds. 
3.44.  Insurance is a well-developed industry in Bahrain (36 insurance firms), and has an 
important growth potential. 
3.2.2  Manufacturing 
3.45.  Manufacturing experience d 7% average annual growth between 2000-2012, contributing 
15% towards real GDP and 16% of private sect or employment in 2012. Non-oil manufactured 
goods comprised 20% of Bahrain’s total goods exports. 
3.46.  The majority of manufacturing output is concentrated in basic metals, refined petroleum 
products and chemical products, which combined, constitute nearly 60% of total manufacturing 
output. 
3.47.  In the past five years, iron and steel production in Bahrain has increased markedly. In 
2010, one of the leading companies in the industry has nearly doubled its production of iron oxide 
pellets with a new plant, and a new project was launched by its sister steel company to produce 
steel beams as a downstream industry to first company, and which is forecast to create 1,700 new 
jobs. A new rolling mill company also started commercial production of steel rebars in 2008. 
3.48.  The development of the manufacturing se ctor has been increasingly driven by the 
emergence of downstream clusters around some the first generation of manufacturing companies. 
Particular progress has been seen in the aluminium sector where a number of new players have significantly boosted the value added and driv en export diversification and job creation. 
3.2.3  Education 
3.49.  Education is a central growth area in a country where the population growth rate is set to 
remain in excess of 2.0% a year. The working age population is set to reach approximately 65% of the overall population in 2020. Many Bahraini instit utions also cater to broader regional demands, 
capitalizing on similar trends across the GCC. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  3.50.  Private provision of education has grown rapidly. Employment in private sector education 
increased by 20% between 2008-2012, and real outp ut of the sector increased by 69% over the 
same period. While government output still constitutes the majority of real GDP output, private sector share of education service output has ri sen from 36% to 42% in the five year period. 
3.51.  The quality assurance authority, now in its fifth year of operation, is providing external 
assessment of public and private educational establishments leading to enhanced student outcomes. According to the World Economic Forum (WEF)’s Global Competitiveness Report of 
2013–2014 Bahrain’s ranking in educational standards has improved and the Kingdom is now 
placed 48th worldwide in terms of the quality of th e educational system in the latest report. This 
compares to the 56th position in 2008. 
3.52.  The Government actively supports trai ning schemes. As part of its human capital 
development support programs, Tamkeen has reache d a total of 47,053 individuals by end of 2012 
(total as of 2013 is not available at hand). In 2014 it is planning to reached 14,900 at a budget of approximately BD30 million. 
3.2.4  Healthcare 
3.53.  Private sector healthcare employment  increased by 45% between 2008-2012, and real 
output of the sector increased by 69% over the same period. Private health care output has almost 
matched public output as a contributor to GDP, increasing from 42% to 48% in the five year 
period. 
3.54.  The National Health Regulatory Authority (NHRA) was established in 2009 in order to 
separate the Government’s regulatory function from  service provision. The NHRA was set up with a 
view to elevating healthcare standards in the public system through improved monitoring and 
inspection of public healthcare facilities and practitioners. 
3.55.  Since the NHRA’s establishment, public heal thcare facilities devised plans to upgrade their 
operations and gain international accreditation. The regulatory authority has also granted licenses 
to investors in ventures that were previously restricted. Among other things, the NHRA was tasked with the development of a framework for healthcare research and development in Bahrain. As a 
result, a project was launched to conduct genetic screening on approximately 15,000 babies in the 
next two years to support genetic research on prevalent disorders like diabetes (7,059 cases in 2010) and hypertension (7,522 cases). 
3.56.  Despite significant expansion in recent years, growth potential in healthcare in Bahrain is 
enormous in view of population growth and the range of existing services. The most promising 
opportunities exist in tertiary care facilities and research institutions. Since 2007, the private healthcare sector has grown by more than 12% per year, surpassing the pace of expansion in the 
public sector and thereby capturing a large market  share. This movement has been prompted by 
the proliferation of healthcare insurance in the Kingdom upon the adoption of prepaid schemes by corporations and individuals. 
3.57.  King Hamad University Hospital was established in 2010 as part of a medical strategy to 
develop a Centre for organ transplant surgeries and Trauma in the Kingdom of Bahrain. 
3.2.5  Real estate and construction 3.58.  Real estate and construction have beco me important segments of the country’s non-oil 
economy during the past decade. In real GDP term s, the combined contribution of the two sectors 
stood at 11% in 2012, marginally down from 13.7% in 2008. In view of the demographic dynamics and economic diversification, construction has been, and is likely to remain, one of the 
faster-growing sectors of the economy. 
3.59.  Despite the post-boom slowdown, there was a fairly broad-based bottoming out of the 
market in 2012 followed by the emergence of pock ets of renewed growth. The industry has to a 
degree focused away from high-end residential and commercial real estate to ventures more 
closely aligned with the demographic and economic dynamics. The sector was estimated to have grown 4%, mainly due to increased public spending on social housing projects and a refocusing on WT/TPR/G/294 • Kingdom of Bahrain 
 
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  low to middle-income housing projects by priv ate developers. The 2013–2014 state budget draft 
incorporates a BHD 580mn program to build 16,000 new houses. 
3.2.6  ICT 3.60.  In 2002 Bahrain implemented its telecommunications law which included the establishment 
of an independent Telecommunications Regulatory Authority (TRA) as the industry regulator. The 
TRA’s objective is to liberalize the telecommunications sector and protect the interest of subscribers and consumers as well as foster transparency and quality assurance. 
3.61.  Following the launch of the sectoral reforms, there are currently three telecommunication 
companies including existing the national one. Both new entrants began as mobile service providers but eventually expanded to include fixed line and broadband services. 
3.62.  The transport and communication sector em erged as one of the most dynamic sectors of 
the economy toward the end of the last decade mainly due to privatization and liberalization 
initiatives. Its share of GDP increased from 4% in 2000 to 7% in 2012, although the pace of 
growth subsequently slowed down. Going forward, the telecommunications sector is projected to 
grow as the TRA fulfils its licensing targets and executes additional phases of its liberalization 
agenda. Despite the somewhat slower pace of expans ion, the sector was still responsible for 9% of 
the GDP growth in 2012. 
3.63.  Liberalisation efforts in the telecommunications sector have contributed to significant 
employment growth, taking the total number of jobs  in the sub-sector to 2,700 as of 2011. This 
marked a 50% increase since the launch of the libera lization policies in 2003. Bahrainization in this 
sector is also amongst the highest in the country, standing at 80% as of 2011. This is mainly due 
to the sector’s high productivity and reliance on skilled employment. The sector also boasts a high 
female ratio of 28% relative to a workforce average of 21%. 
3.64.  Bahrain ranks 29th in the world for Network Readiness, according to the Global Information 
Technology Report issued by WEF. This shows ho w Bahrain has leveraged advances in information 
and communication technologies (ICT) drive econ omic productivity and social development. 
3.2.7  Tourism 
3.65.  Bahrain seeks to develop its tourism industry as a key platform for sustainable future 
economic growth and diversification. In seeking to maximise the potential of growth in the tourism industry, Bahrain will capitalise on the advantages of its natural environment, cultural heritage, geographical location, moderate and tolerant society and remarkable culture of hospitality. 
3.66.  Bahrain offers great potential as both a re gional and a world touris t destination. Composed 
of 33 islands, a cosmopolitan culture, an attractive  liberal lifestyle and a rich history and culture, 
the Kingdom offers a developed infrastructure of hotels, resorts, shopping malls, and restaurants 
that is being further expanded. The number of ho tels in Bahrain grew by 32.5% between 2001 and 
2012. The number of apartment establishments  surged 142% since 2003. There has been a 
particularly pronounced upward trend for 5-star, 4-star, and 3-star hotels.  
3.67.  Reflecting its rich historical heritage, Bahrain is home to a number of museums as well as 
archaeological and historic sites. 
3.68.  Event tourism has expanded through a num ber of new initiatives, such as the Bahrain 
Grand Prix which became the first Formula One Grand Prix to be held in the Middle East in 2004. 
The Bahrain International Circuit in Sakhir also hosts other races such as drag races, GT races, 
Formula 3 races and the Australian V8 Supercar. The annual ‘Spring of Culture’ festival hosted a variety of dance, music, and theatrical perf ormances and brought internationally renowned 
musicians to the Kingdom. To support such events , the Bahrain National Amphitheatre opened its 
doors in November 2012. The facility is one of the largest of its kind in the region with a seating capacity of 1,001. 
3.69.  Manama held the status of ‘Capital of Arab Culture’ in 2012 as part of UNESCO’s cultural 
capital campaign and was named ‘Capital of Arab Tourism’ in 2013 by the Arab Tourism WT/TPR/G/294 • Kingdom of Bahrain 
 
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  Organization. In celebration of Bahrain’s 2012 ‘Capit al of Arab Culture’ debut, the Ministry of 
Culture planned a year-long program of performances, seminars, and other events showcasing Arab culture. Each month provided a new focus area  ranging from visual arts to poetry, and even 
the environment. 
3.70.  Business tourism plays an increasingly important role in the Kingdom. The Bahrain 
Exhibition and Convention Authority (BECA) host s a number of industry events and exhibitions. 
Landmark events include the annual Bahrain Boat Show and the bi-annual Bahrain Air Show, which 
is the island’s largest exhibition. Other events included Jewellery Arabia – a gold, jewellery, watch 
and clock exhibition – and the Autumn Fair, a co nsumer product exposition. Due to the growing 
importance of exhibitions and conferences in Bahrai n in recent years, BECA is planning to expand 
its exhibition and conference space through the construction of the Bahrain Expo City. This would 
increase the net available exhibition space to 145,000 sq m from the current 16,000 sq m facility 
located in Manama city. This project is scheduled for completion by 2015. 
3.71.  According to the World Travel and Tourism Council, the tourism sector contributed 
BD 538 million to Bahrain’s GDP in 2012, an incr ease of 8.5% from 2011. Tourism accounted for 
an estimated 4.9% of GDP in 2012. Tourism-related employment rose 1.58% from 2011, supporting around 32,100 employees in hotels, travel agencies, airlines, as well as restaurants and 
other businesses dealing directly with tourists. The sector’s contribution to total employment stood 
at 5.2% in 2012. 
3.72.  Total arrivals in the Kingdom rebounded to  8.06mn by the end of 2012. A vast majority of 
tourists were overland visitors from Saudi Arab ia. The King Fahd Causeway accounted for 79.1% 
of the overall visitors to the Kingdom in 2012,  compared to other ports of entry. Bahrain 
International Airport and Mina Salman, along with Shaikh Khalifa Bin Salman Port, accounted for 20.2% and 0.7%, respectively. GCC nationals, Asians, and non-GCC Arabs continued to dominate 
the visitors market in 2012, jointly accounting for 88.2% of the overall arrivals. 
4  TRADE POLICY 4.1.  Being a traditional free market economy, and liberal trading country, Bahrain maintains a 
profound interest in its trade expansion and its investment growth. Accordingly, Bahrain’s trade 
policy objectives are to ensure a fair and predictable international trading environment; allowing liberal access to international markets for its exports, and minimize impediments to the flow of imports. 
4.2.  These goals are pursued through the sust ained maintenance and enlargement of Bahrain’s 
adherence and engagement with its trading partners multilaterally, regionally, and bilaterally. This would also contribute to the attainment of the long term objectives of Bahrain’s Economic Vision 
2030, which aims for attaining sustainable development by moving towards economic 
diversification to increase economic viability; raise productivity levels, and enhance Bahraini competitiveness as a knowledge-based economy. 
4.3.  Bahrain is currently a net importer of manufactured products and food stuffs. The economy is 
services based, but with a growing industrial capa bility, the expansion and diversification of which 
is being actively pursued as a policy objective by the Government. The Government is also a strong supporter of free markets and an open rules based global trading system, advocating 
economic openness as a strong development trigger, to encourage and facilitate export of its 
products and services, as well as to strengthen domestic capacity and competitiveness by encouraging inward investment. 
4.4.  Having maintained its position as the financial capital of the Middle East, Bahrain is also a 
global hub for Islamic Financing. It is also aiming to become a key regional trading hub, and retail trade centre. Bahrain has traditionally cherished trade liberalization and efficient international 
trade transactions, enhanced by its causeway connect ions to Saudi Arabia and eventually to Qatar, 
and a rail road network which would support its Trade Facilitation and supply chain logistics 
potential, not only with its GCC partners, but also with the world at large. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  4.5.  Import trade enjoys duty free entry for most  basic raw materials, industrial inputs and basic 
foodstuffs. Of the remaining goods which are duti able over 90% of these incur very low customs 
duties of between 0 and 5%. 
4.6.  Bahrain’s trading environment is stable and transparent. There are no import restrictions 
except for patrimonial heritage, environmental, health or security considerations. 
4.1  Bahrain and the world 4.7.  Bahrain is a founding Member of the WTO. Bahrain is a signatory to the WTO's Information 
Technology Agreement (ITA). On 9 December 2008, Bahrain became an observer to the WTO 
Plurilateral Agreement on Government Procurement. 
4.8.  Bahrain grants at least most-favoured-nati on (MFN) treatment to all its trading partners. 
Bahrain is an advocate of the multilateral trad ing system and is a member of the Arab Group. 
Bahrain's main interests in the Doha Development Agenda (DDA) include greater non-agricultural 
market access (NAMA) and further liberalization of trade in services. 
4.9.  As a small economy, Bahrain endorses the staunch application of the Special and Differential 
Treatment for developing and small economy countries, and values the fairness and objectivity of 
WTO’s Dispute Settlement Body. 
4.10.  Bahrain’s active participation in the Doha Round of Multilateral Trade Negotiations (MTN) is 
evidenced, by the positive offers and proposals, submitted to different areas of the negotiations, 
especially in the field of services. It has also b een supportive of the successful conclusion of the 
Trade Facilitation agreement as one of Bahrain’s priorities to ensure supply chain logistics’ development, technical and legislative adjustment requirements, standards and conformity 
implications, HRD and trade capacity building. Ba hrain also supports the positive and equitable 
implementation of the Aid For Trade initiative wi th sufficient funds and active involvement of all 
agencies involved with the WTO. 
4.2  Bahrain and the region 
4.2.1  GCC membership 4.11.  Bahrain is a founding member of the Cooperation Council for the Arab States of the Gulf 
(GCC), along with Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Since 1981, 
the free-trade area has been effected among GCC members by eliminating customs duties on all the products originating in the member states. 
4.12.  As of 1st of January 2003 the GCC Customs Unions was established to eliminate the tariff 
and non-tariff barriers among its Member States in order to facilitate intr a-GCC flow of goods and 
creating a collective negotiating power for the GCC states. 
4.13.  In January 2008 the GCC announced the GCC Common Market in order to attain equality in 
treatment of GCC nationals in many economic aspects including: movement and residence, work in 
private and government jobs, pensions and social  security, engagement in all professions and 
crafts, engagement in all economic/investments and service activities, real estate ownership, 
capital movement, tax treatment, stock ownership and formation of corporations, education/health 
and social services. 
4.14.  In June of 2009 four GCC countries (Bahrain, Saudi Arabia, Kuwait, Qatar) signed the 
agreement establishing the Monetary Union, which in line created the GCC monetary council that 
was decided to be positioned in Riyadh in Saudi Arabia, the GCC countries are currently in 
progress of shaping the final characteristics of the Monetary Union. 
4.15.  The GCC has recently concluded a Free Trade Agreement (FTA) with Singapore, which came 
into force on 1st of September 2013 and is waitin g the ratification of the European Free Trade 
Association (EFTA) Free trade agreement. Presently the GCC countries are evaluating the feasibility impacts of negotiating Free Trade Agreements (FTA) with other countries and regions in 
order to finalise the priorities of negotiations in this regard. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  4.2.2  GAFTA membership 
4.16.  Bahrain is also a founding member of the Greater Arab Free Trade Area (GAFTA), which was 
signed on 19 February 1997 and entered into force on 1 January 1998. Currently the Arab league is in discussions about setting the concept of the Arab Customs Union. 
4.3  Bilateral agreements 
4.17.  Bahrain, as of January 2014, has a bilateral FTA with the United States, and maintains over 
110 bilateral agreements in: protection and pr omotion of investment, avoidance of double 
taxation, economic, trade and technical cooperation. 
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  ANNEX 1 TRADE RELATED TECHNICAL ASSISTANCE 
1. While Bahrain, is a small sized economy, yet, it is determined to play a leading Role in the 
Multilateral Trading System, and reaping it’s full rewards, by becoming the region’s trading and investment hub, after successfully, retaining the first position in financial services. 
2. Accordingly, Bahrain’s technical cooperatio n requirements include the following areas: 
 Enhancing Aid for Trade related technical and institutional support, within the WTO and 
other relevant international institutions and funds; 
 Trade Facilitation legislative and logistic requirements, single window, customs valuation 
cooperation, and risk management technical and institutional support, and money laundering, and fraud prevention, support and Human Resource Development (HRD), 
nationally, regionally, and Internationally; 
 Supply-chain infrastructure enhancement, and adjustment needs support; 
 IPR institutional upgrading, and HRD; 
 Sanitary and Phytosanitary (SPS), Technica l Barriers to Trade (TBT), and Standards 
institutional upgrading, notifications, awareness and HRD; 
 Multilateral Trade Negotiations (MTN) and FT As Negotiating Skills upgrading, and HRD; 
 Export promotion technical and institutional support; 
 Trade capacity building, and competitivene ss enhancement, awareness, and networking; 
 Enhancing institutional capacity and export potential for SMEs, as well as in negotiations 
the and implementation of trade in goods and  services agreements; 
 Development of competition policy and legislation; and 
 Ensuring Bahrain’s participation in national, regional and international HRD and training 
programs for government, parliamentarians, and private sector, whether at WTO or other relevant agencies. WT/TPR/G/294 • Kingdom of Bahrain 
 
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  ANNEX 2 CONTRIBUTORS TO THIS GOVERNMENT REPORT 
The Ministry of Industry and Commerce; the Mini stry of Finance; the Ministry of Labour; the 
Central Bank of Bahrain; and Economic Development Board.  
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