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This publication is available at https://www.gov.uk/government/publications/exporting-to-bahrain/exporting-to-bahrain
1. Bahrain export overview
Bahrain is a small, but prosperous economy. It’s business friendly, ranking 53rd in the World Bank’s Ease of Doing Business report.
Contact a Department for International Trade (DIT) Bahrain export adviser for a free consultation if you’re interested in exporting to Bahrain.
Bahrain has the most liberalised economy in the Gulf Cooperation Council (GCC). The 2015 Index of Economic Freedom ranked Bahrain as having the freest economy in the Middle East and 18th freest in the world.
Bahrain is an important partner and base for UK companies in the Gulf given its position as a major trading hub in the region.
There are over 500 active UK commercial agencies and over 90 branches of British companies in Bahrain. In addition, over 350 Bahraini companies have UK partners.
British businesses already operating in Bahrain include HSBC, Standard Chartered, Atkins, National Express and Ordnance Survey.
Benefits for UK businesses exporting to Bahrain include:
- good communication links
- direct access into Saudi Arabia via causeway
- most liberal tax regime in the Gulf
- 100% foreign ownership of business assets and real estate allowed with no ‘free-zone’ restrictions
Strengths of the market
- competitive operational costs
- well regulated financial services sector
- advanced logistics services
- dedicated industrial zones
- educated and skilled local workforce
- high quality of life for foreign residents recorded by HSBC Expat Explorer Survey
Bahrain is a relatively easy place to do business. However, there are a number of challenges including:
- delays in payment
- bureaucracy within government agencies, especially for getting licenses
- need to employ a certain quota of Bahrainis to comply with Bahrainisation rules, which aim to improve local employment prospects and reduce reliance on imported labour
- government documentation in Arabic
British goods and services are well regarded for quality, but price is normally a determining factor of sale.
3. Growth potential
3.1 Economic growth
Bahrain has grown steadily over the past few years with a 5-year compound growth rate of 3.4%. The economic outlook remains largely positive. Bahrain’s Gross Domestic Product (GDP) grew by 4.7% in 2014. 2.5% growth is forecast for 2015.
Bahrain’s economy is relatively small in comparison to other GCC countries and is the most diversified in the Gulf. It’s now one of the acknowledged banking, financial services, and human resource development and training centres of the Gulf.
Growth in Bahrain’s economy comes primarily from the oil sector which is also the largest contributor to government revenues. The oil and gas sector in 2014 accounted for:
- 20% of GDP
- 87% of government revenues
- 73% of export income
The government has an increased focus on economic diversification as part of the Economic Vision 2030 goals. It aims to enhance private sector growth. Non-oil industries have been steadily growing over recent years, with an average growth rate of 5.3% in 2014.
Bahrain has undergone a surge in infrastructure development in recent years, following allocation of funds from the GCC Development Programme. This aims to improve public services and address socio-economic issues.
The main contributors to GDP apart from oil and gas are:
- financial services (16.5%)
- manufacturing (14.4%)
- construction (6.8%)
- transport and communications (7%)
- real estate and business services (6%)
Other positive measures for growth include:
- new infrastructure developments
- free trade agreements
- development of strong banking system
3.2 Free trade agreements (FTAs)
Bahrain is a member of the Greater Arab Free Trade Area (GAFTA) giving it duty free access throughout all GAFTA states.
Bahrain has free trade agreements with:
- European Free Trade Association (EFTA)
4. UK and Bahrain trade
The total value of bilateral trade in 2014 was about £451.4 million, up by 2% from 2013.
Bahrain is one of the UK’s largest export markets in the GCC. The UK exported £295.5 million in goods to Bahrain in 2014, a 9% increase on 2013.
The top 5 UK exports to Bahrain in 2014 were:
- nuclear reactors, boilers and mechanical appliances
- road vehicles
- electrical machinery and equipment
- optical, photographic and cinematographic, and medical instruments
- articles of apparel and clothing accessories
5. Opportunities for UK businesses in Bahrain
DIT provides free international export sales leads from its worldwide network. Search for export opportunities.
The British schooling system is considered to be the benchmark in Bahrain, both at secondary and higher education levels. Demand for UK degrees is high with the UK being the preferred choice for Bahraini students pursuing higher education abroad.
Bahrain’s spent 2.6% of GDP on public education in 2014 with the aim of improving standards across the educational spectrum.
There are opportunities for cooperation in the education sector, including:
- programme development within healthcare, social sciences, energy, technology and creative sectors
- higher education partnerships
- vocational education and training
- financial services qualifications, including Islamic Finance
- training and Continuing Professional Development (CPD) for staff
- special education needs
- collaborative research with universities
Contact Trade Officer email@example.com for more information on opportunities in the education sector.
The Bahraini government allocated 2.8% of its overall spending towards healthcare in 2014, aiming to improve the quality of healthcare.
A number of hospitals are undergoing modernisation with UK products held in high regard. Opportunities for UK companies include:
- medical equipment
- facilities management
- training courses for staff
- establishing nursing homes
- Information and Communications Technology (ICT)
Contact Trade Officer firstname.lastname@example.org for more information on opportunities in the healthcare sector.
5.3 Financial and professional services
Bahrain is regarded as the best regulated financial services centre in the Middle East. It’s an attractive location to set up operations and has a leading edge in the region in the Islamic finance and insurance sectors.
Financial and professional services are currently the fastest growing sector in Bahrain’s economy. It has just over 400 financial institutions, which account for 16.5% of Bahrain’s GDP. It’s already home to a number of British financial and professional services firms.
There are opportunities for providers of:
- Islamic finance
- legal services
- infrastructure finance
- insurance and reinsurance (both conventional and Islamic)
- education, training and qualifications
- asset management
- private banking
- capital markets
Contact Deputy Head of DIT Bahrain email@example.com for more information on opportunities in the financial and professional services sector.
The majority of the USD10 billion GCC Development Programme fund has been allocated towards infrastructure development.
Infrastructure projects include:
- school, hospital and social housing construction
- road network development
- GCC rail network and other land transportation projects (eg expanding bus network and a Light Rail Rapid Transit scheme)
- Bahrain International Airport expansion
- Bahrain Petroleum Company (BAPCO) oil refinery expansion
- aluminium downstream manufacturing
- transport and engineering consultancy
- provision of specific products or materials
- project and programme management
- operation and maintenance
- technical road knowledge and expertise relating to bridge engineering, road safety, training and intelligent transport systems (ITS)
Contact Trade and Investment Officer firstname.lastname@example.org for more information on infrastructure opportunities.
6. Start-up considerations
You can export directly to Bahrain, but working with a carefully chosen Bahraini partner or advisor is easier. A local agent will be more familiar with the business environment and will find it easier to:
- keep in contact with customers
- seek new business
- get information on the latest market trends
The Kingdom of Bahrain permits 100% foreign ownership of businesses in most sectors although sector and entity-specific restrictions may apply. Bahrain.com offers further information on various start-up options.
Companies setting up in Bahrain will need to register with the Bahrain Investors Centre to obtain official Commercial Registration (CR). Companies are required to renew their CR on an annual basis.
7. Legal considerations
Companies operating in Bahrain are expected to follow international accounting and corporate governance standards.
Bahrain hosts the Bahrain Chamber of Dispute Resolution in association with American Arbitration Association (BCDR-AAA).
Contact the DIT team in Bahrain to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
Bahraini law requires all labelling and packaging to be in Arabic and/or English. Stickers are not accepted as an adequate form of labelling. Companies will need to check exact requirements for their products with the Ministry of Industry and Commerce (MOIC).
Major government organisations also involved in the regulations include:
- Ministry of Health for medical devices and medicines regulation
- Ministry of Works, Municipalities and Urban Planning for plants and seeds
- Ministry of Interior for security equipment
7.2 Intellectual property (IP)
The Industrial Property Directorate in the MOIC has created a framework of legislation for patents, design and trademarks. However, there are no specialist IP courts and there is a lack of specialist local advocates.
8. Tax and customs considerations
Bahrain has a double taxation agreement with the UK.
Bahrain has the lowest corporate and personal taxes in the GCC. There are very few indirect taxes and no:
- personal income tax
- wealth tax on capital gains
- withholding tax
British companies wishing to export goods into Bahrain for sale or consumption must obtain a general licence from the Customs Affairs Directorate of the Ministry of Interior.
The GCC’s Common Customs Law sets the framework for the GCC’s import regulations. However, each member state administers its own list of prohibited, restricted and exempted products. Exporters who want to re-export within the other GCC markets must refer to individual member states’ lists for full information.
A Certificate of Origin is needed for all exports to clear customs.
Goods manufactured in Israel cannot be imported into Bahrain.
More detailed information on export and import requirements, procedures and restrictions can be found on the Bahrain Customs website.
Customs duties are usually 5% for imported goods, with the exception for alcohol and tobacco where higher duties apply. Numerous food and medical items are entirely exempt from customs duty, but may require special licensing.
Exemptions also include:
- goods for re-export
- capital goods
- raw materials for manufacturing imports required for development projects
You can find more about import tariffs in the Market Access Database.
Product specific documentation is usually required for imports of:
- drugs and medicines
- food products
- live animals
- meat, poultry, animal products and bi-products
Special permits may also be required for certain products, for example special breed horses, armaments, and insecticides.
You should contact Bahrain Customs if you have any documentation enquiries.
9. Business behaviour
English is widely spoken throughout the country. Although it’s common for written correspondence to be in English, Arabic is often preferred within government.
Bahrain is the most liberal of GCC states and is tolerant of all faiths. Islam is the national culture and should be respected.
The working week is Sunday to Thursday.
10. Entry requirements
You can obtain a single entry visit visa on arrival at Bahrain International Airport or at the King Fahad Causeway. The visa is valid for 3 months and fees apply.
You must possess a valid, up-to-date passport and a return or onward ticket. You cannot work with a visit visa. You must get a work permit.
10.1 Travel advice
If you’re travelling to Bahrain for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.
Contact the DIT team in Bahrain for more information and advice on opportunities for doing business in Bahrain.