Island economy booming
In the build up to November 25 parliamentary elections, Bahrainis’ attention has been focused on the state of the kingdom’s economy—and wrenching social changes to the kingdom’s gender balance in government.
In the social arena, Bahrain will have its first female deputy after the election. This is known before a single ballot has been cast, given that Lateefa al-Geood is unchallenged in her bid for a seat in parliament. Reformists have broadly welcomed her accomplishment, but some women’s activists have expressed some discomfort given the way in which she will win her seat.
On the economic front, the recently-published World Investment Report 2006 indicated that last year, Bahrain had the fourth-highest outflows of foreign direct investment (FDI) of any country in the West Asian region.
With over $1 billion in outflow for the kingdom, only the UAE, Kuwait and Saudi Arabia recorded higher outward FDI. This placed the kingdom within the overall pattern of FDI behavior in the Middle East and Gulf Cooperation Council (GCC) areas. Receipts from hydrocarbons are increasingly being used by Gulf economies to invest in projects that aim to diversify the economy. The result is not only internal investment, but also regional and beyond, with Asia and Africa benefiting from much of the Gulf’s FDI.
In all, GCC outflows more than doubled in 2004-2005.
Money flows out, flows in
At the same time, the GCC’s booming economies have continued to be major recipients of FDI. The same report showed that of the Gulf States, the UAE and Saudi Arabia attracted the highest volume of inward investment, followed by Turkey. The UAE pulled some $12 billion in 2005, while the Saudis received some $4.6 billion. Somewhat surprisingly, the Turks blew away a history of poor past performance in FDI by attracting some $9.7 billion. These three economies attracted more than 75% of the West Asian area’s total FDI inflow. The figure on inflows for West Asia rose 85% year-on-year.
The other interesting factor that became visible in 2005 was the importance of FDI to gross fixed capital formation in the Gulf. In the West Asian region overall, 15% of this formation was due to FDI, making the region a bigger draw for foreign investment than both Asia and Oceania for the first time ever.
Much of this inflow was in service-sector industries, such as finance and telecoms. Yet it has also been good news for local projects hoping to arouse foreign interest in other areas.
As an example, one of Bahrain’s largest real estate projects, the Bahrain Investment Wharf (BIW), recently announced that it had signed a dredging and land reclamation supervision contract with Dar Al-Handasah Consultants-Shair and Partners. This came after BIW had assigned the task of carrying out the dredging work to Great Lakes Dredge and Dock Company.
Unique privately-owned project
When completed, BIW will be a mixed-use estate, featuring industrial, business, logistics, warehousing, commercial and residential property. Built on around 1.7 million m2, it will be the only privately owned, operated and managed project of its kind in the country. The project is currently a public private partnership (PPP) between the Bahraini Ministry of Trade and Tameer.
The project runs through several phases, with the award of the Great Lakes contract signalling the completion of a major stage in the plan.
The reclamation work on 55% of the remaining land of the Bahrain Investment Wharf will be completed in about 11 months, BIW chairman Ahmed al-Qattan told reporters on October 14.
A number of different complexes will be developed on the new land, with the industrial park expected to house light, medium and convertible industries. The services complex will see transport, cargo and storage investors as well as other support companies. A logistic base and residential and commercial quarters will also be provided to help lure international firms operating in transport and warehousing.
