flag Bahrain Bahrain: Investing

In this page: FDI in Figures | What to consider if you invest in Bahrain | Procedures Relative to Foreign Investment | Investment Opportunities


FDI in Figures

Global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to an estimated USD 1.65 trillion, from 929 billion in 2020, surpassing their pre-COVID19 level. FDI flows in developing countries increased by 30% but almost three quarters of the total increase in global FDI (USD 500 billion) was recorder in developed economies, with developing economies showing a more modest recovery growth. FDI inflows to West Asia and the middle East increased by more than 49% in 2021 to 90 billion USD (UNCTAD, January 2022).

The Kingdom of Bahrain is very open to foreign investment and has one of the highest FDI stock-to-GDP ratios in the region. According to UNCTAD's 2021 World Investment Report, FDI in Bahrain contracted by a third to USD 1 billion in 2020, following the global economic crisis triggered by the Covid-19 pandemic. In the same period, FDI stocks reached USD 31.7 billion. The government has announced plans to continue implementing wide-ranging reforms to attract foreign investment and link it to national development and economic diversification plans. Foreign investment in 2020 was mainly directed at the country's manufacturing, education, healthcare and information technology industries. The main investor countries are Saudi Arabia, Kuwait, India and United Arab Emirates.

The Kingdom of Bahrain was ranked among the top 20 global economies in attracting direct investment, according to the Financial Times’ Greenfield FDI Performance Index 2021. Bahrain ranked 15th among 84 countries from around the world that were included in the report. The Kingdom also ranked 2nd in the Gulf and 3rd in the Middle East and North Africa (EDB Bahrain, 2022).

Bahrain enjoys an open and attractive economic and regulatory environment for international companies looking for a gateway to Gulf and Middle East markets.  The country has the lowest corporate and personal taxes in the Gulf, without any restrictions for free trade zones. Foreign business ownership is fully permitted in more than 95% of all economic activities, eliminating the need to resort to a local partner in most cases. The excellence of the country’s logistical infrastructure is also a major factor of attraction. Moreover, Bahrain offers a large, highly skilled pool of financial workers, a regulatory structure that is both advanced and internationally well-regarded, and a physical connection to Saudi Arabia – by far the largest economy in the Gulf. Beside a strong regional competition, FDI in Bahrain have been limited by the slow advancement of the privatisation programme and a rigid labour market. The absence of true reconciliation between the Sunni monarchy and the predominantly Shiite opposition constitutes a hindrance to FDI. Moreover, new emerging trade centres in the Gulf increased the competition to become a regional financial crossroad. The country ranked 43rd out of 190 countries in the last World Bank's Doing Business 2020 Report, up by 19 spots from a year earlier. There was a number of prominent local, regional, and international investments in the kingdom in 2020, including from GCC, European, and Asian companies. These companies invested in a number of major sectors including financial services, manufacturing, logistics and retail services, education, healthcare services, real estates, tourism, and ICT.

Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 1,5011,0211,766
FDI Stock (million USD) 30,68431,70533,471
Number of Greenfield Investments* 292430
Value of Greenfield Investments (million USD) 1,0511,0901,061

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Return to top

What to consider if you invest in Bahrain

Strong Points
The advantages of Bahrain in terms of attracting FDI include:
-A largely English-speaking educated and skilled population;
-A tradition of cultural openness based on trade and the country's strategic location in the northern Gulf, with good communications links with Saudi Arabia and an easy access to other Gulf markets;
-Operating costs among the most competitive in the region;
-The most attractive tax regime in the Gulf;
-A solid reputation in the regulation of financial services;
-Excellent quality of life;
-Relatively (in a regional context) diversified economy, with oil, manufacturing (including aluminum and petro-chemicals) and financial sectors;
-Financial and other support from larger regional states, particularly Saudi Arabia.
Weak Points
The potential factors hindering foreign investment include:
- The period of political and civil upheaval that hit in Bahrain in February 2011 and resulted in sporadic outbreaks of unrest fueled by demands for political and social reforms and questions such as housing, employment and sectarian discrimination, all based on tensions between the ruling Sunni minority and the Shia majority;
- Regional instability, including potential for contagion stemming from events in Iran, Iraq and/or Syria;
- The use of official travel bans, which prohibit an individual from leaving the country until a business project or a dispute is resolved; periodically, foreign companies have also experienced difficulties in obtaining work permits and residence visas for expatriate employees due to the policy of promoting the employment of Bahraini citizens;
- Corruption or government intervention in tenders and disputes can be an impediment to FDI;
- Despite economic diversification, there is still a high dependence on oil revenues, directly (own output) and indirectly (regional influence);

- Sharply deteriorated public finances since 2015.
Government Measures to Motivate or Restrict FDI
The Government of Bahrain has a generally liberal approach to foreign investment and actively seeks to attract investors and foreign companies in a competition to be the most attractive country in the Middle-East. Various measures have been taken in this direction, such as the formation of a Supreme Council for privatization in the spring of 2001, the creation of the Bahrain Mumtalakat Holding Company in 2006, whose role is to manage all public investment, and the creation of the Bahrain Investors Center (BIC), designed as a "one stop shop" and providing all business services, licensing and registration. However, the labour policy of "Bahrainization", a quota system which requires employers to hire a minimum percentage of Bahrainis, can cause potential delays and confusion when issuing work permits and renewals.
Bilateral Investment Conventions Signed By Bahrain
See the list of the bilateral agreements signed by Bahrain on the UNCTAD website.

Return to top

Procedures Relative to Foreign Investment

Freedom of Establishment
There are essentially eight options available to foreign investors who are looking to undertake business/commercial activities in Bahrain:
-With limited liability company
-Partnership company
-Bahrain shareholding company (BSC) - public
-Bahrain shareholding company (BSC) - closed
-Simple commandite company
-Single person company
-Branch of a foreign company
-Holding company

The WLL is the most commonly used form of company. To find out more, please visit the government website.
Acquisition of Holdings
In most of the cases (around 95%), a 100% foreign ownership is possible.
Obligation to Declare
All business registrations have to be approved by the Ministry of Industry and Commerce. To find out more, please visit the commercial registration portal.
Competent Organisation For the Declaration
Ministry of Industry and Commerce
Requests For Specific Authorisations
Some activities are limited to nationals of the countries of the Cooperation Council for the Arab States of the Gulf (CCASG): Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia, for example accounting services; import; export and/or sale of race car fuel; cargo clearance; fishing.

Some activities are limited to nationals of Bahrain, such as certain real estate services, press and publishing; printing; film and TV services; the land transport of goods, passengers and tourists; inland sea cruises; car rental, the Hajj and Umra services; services providing foreign labor; trade agencies; small businesses.

Any business registration must be approved by the Ministry of Industry and Commerce (MIC).

Return to top

Investment Opportunities

Investment Aid Agency
Economic Development Board of Bahrain (EDB)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Bahrain
DgMarket, Tenders Worldwide
Other Useful Resources
Bahrain eGovernement Portal
Bahrain Ministry of Foreign Affairs website
Ministery of Industry, Commerce and Tourism of Bahrain
Bahrain's labour market regulatory authority

Return to top

Any Comment About This Content? Report It to Us.


© Export Entreprises SA, All Rights Reserved.
Latest Update: November 2022