HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements…Bahrain

# 					2019 Investment Climate Statements: Bahrain			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

The investment climate in Bahrain is generally good and has remained relatively stable in the last year.  Bahrain takes a liberal approach to foreign investment and actively seeks to attract foreign investors and businesses.

In an economy largely dominated by state-owned enterprises, the Government of Bahrain (GOB) aims to promote a greater role for the private sector in economic growth.  Government efforts focus on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, and tourism sectors.  Inbound FDI into the Kingdom jumped 138 percent to a record USD 830 million in 2018, compared to USD 733 million in 2017. Manufacturing and logistics comprised most of the new investments into the country, as investors sought to take advantage of Bahrain’s close proximity to Saudi Arabia’s large and diverse market.

To strengthen Bahrain’s position as a startup hub and to enhance the Kingdom’s investment ecosystem, the GOB in 2018 launched Bahrain FinTech Bay, the largest FinTech hub in the Middle East & Africa; issued four new laws covering data protection, competition, bankruptcy, and health insurance; established the USD 100 million Al Waha venture capital fund for Bahraini investments; and a USD 100 million ‘Superfund’ to support the growth of start-ups.

The U.S.-Bahrain Bilateral Investment Treaty (BIT) entered into force in 2001.  The BIT provides benefits and protection to U.S. investors in Bahrain, such as most-favored nation treatment and national treatment, the right to make financial transfers freely and without delay, international law standards for expropriation and compensation cases, and access to international arbitration.

Bahrain permits 100 percent foreign-ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without local sponsors.  In 2017, the GOB expanded the number of sectors in which foreigners are permitted to maintain 100 percent ownership stakes to include tourism services, sporting events production, mining and quarrying, real estate activities, water distribution, water transport operations, and crop cultivation and propagation.

The U.S.-Bahrain Free Trade Agreement (FTA) entered into force in 2006.  Under the FTA, Bahrain committed to world-class Intellectual Property Rights (IPR) protection.

Despite the Government of Bahrain’s transparent, rules-based government procurement system, U.S. companies sometimes report operating at a perceived disadvantage compared with other firms when competing for certain government procurements.  Many ministries require firms to pre-qualify prior to bidding on a tender, often rendering firms with little or no prior experience in Bahrain ineligible to bid on major tenders. 

Since 2017, the Central Bank of Bahrain (CBB) has operated a financial technology (FinTech) regulatory “sandbox” that enables the testing and launching of non-conventional FinTech startups in Bahrain, including cryptocurrency and blockchain technologies.  The CBB also issued regulations to enable conventional and Sharia-compliant financing-based crowdfunding businesses.

*Table 1: Key Metrics and Rankings*