Bahrain

Ease of Doing Business Rank: 43

Overview

 

Geographic location

The Kingdom of Bahrain is a Middle Eastern nation on a small archipelago in the Persian Gulf.

Saudi Arabia lies to the west, Iran to the north and east beyond the Persian Gulf and Qatar lies to the south. The country is linked to Saudi Arabia by a 16-mile causeway.

Spoken language

The official language of Bahrain is Arabic, spoken by the majority of the population as their first language. Minority languages include Farsi and Urdu.

English is the de facto national working and primary business language.

Population

The 2019 population estimate is 1.64 million.

The capital and largest city is Manama (154,700). Riffa (111,000) and Muharraq (176,583) are the only other cities with populations over 100,000.

Popular industries

The top industries in Bahrain are oil and gas, banking, finance, tourism, aluminum, petrochemicals and plastics, food processing and consumer goods.

Education

The Legatum Prosperity Index ranks Bahrain’s education system 59th out of 149.

Popular entity types

The most common type of business entities in Bahrain are Open Shareholding Company, Closed Shareholding Company, Limited Liability Company, Partnership Company and Single Person Company.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Bahraini incentives for business

Bahrain is tax free for most private companies, excepting those in the oil and gas sector. Unlike many Middle Eastern countries, it also allows 100% ownership of business assets in certain sectors.

As well, the U.S. and Bahrain have a bilateral Free Trade Agreement which allows companies to invest in business activities otherwise restricted for foreign business.

Bahrain also offers investment incentives to the manufacturing sector. These may include subsidies for hiring nationals, reduced electricity costs during the first five years of operation and total land rental rebates for three years in government industrial areas.

Other incentives include a 100% rebate on customs duties of the first fiscal year for all industries.

Bahrain also has several free trade zones for duty-free import of equipment, machinery and raw materials.

History & Features

 

Main cities for business

Manama is the financial and business center of the country.

Popular historical & tourist attractions

The capital city of Manama offers modern amenities including the sprawling Bahrain City Centre. This complex includes shopping, a waterpark, cinemas and games, rides and an arcade. However, Bahrain also has a rich and lengthy history.

Just outside of Manama you’ll find Qal’at Al Bahrain, a UNESCO World Heritage Site which includes approximately 30 acres filled with burial mounds. They offer a glimpse into the many successive layers of human occupation and the enduring importance of this trading port through the millennia. The earliest presence dates to the ancient civilization of the Dilmun around 2300 BC, while the top of mound hosts a Portuguese fort of the 16th century.

The Bahrain National Museum features many of the Dilmun finds from this dig as well as the Hall of Graves and Bahrain’s customs and traditions, exhibits on the Tylos and Islamic periods, and a reproduction of the traditional marketplace called a souq.

The museum of Beit Al Quran pays homage to ancient Qurans. Their collection of holy books includes examples since the advent of Islam in the country in 610 AD. The museum also houses manuscripts, Islamic calligraphy and a library which holds works of ancient Persian poets such as Omar Khayyam and Rumi.

The historic structure of Beit Sheikh Isa Bin Ali Al Khalifa demonstrates how sheikhs lived before oil and gas were discovered in the area. Built in 1800, it was the seat of Bahraini power until 1932.

History

The ancient Dilmun civilization was founded around 3000 BC and endured for over 2,000 years due to their ideal location on trade routes between Mesopotamia (southern Iraq) with the Indus Valley (today’s India and Pakistan).

However, the Indus Valley civilization fell, as did the importance of the Dilmun area for trade. Eventually, they were ruled by the Assyrians and Babylonians.

Around 300 BC, Greeks established colonies in the area and Bahrain became part of the Hellenized world. The region was renowned for its pearls. Later, rule over the region passed between Persian and Arab hands several times. Finally, in the mid-15th century the archipelago came under the control of a Bedouin dynasty that ruled most of eastern Arabia.

In 1521, the Portuguese occupied Bahrain. They were expelled by the Persian Empire in 1602. In 1783, the Al Khalifa family became the ruling royals of Bahrain. After great unrest in the area, Great Britain made Bahrain a protectorate of the United Kingdom in 1820.

In 1932, Bahrain was the first Gulf state to discover large quantities of oil and the region prospered. Bahrain remained as an emirate under the protection of Great Britain until 1968.

In 1971, Bahrain achieved independence as the State of Bahrain. By 2002, they became the Kingdom of Bahrain.

Today, the country is governed under a constitutional monarchy. Bahrain has a diverse economy and is considered the main banking hub for the Persian Gulf and a center for Islamic finance.

Other relevant facts

According to 2010 data, most inhabitants identify as Bahraini (46%), followed by Asian (45.5%), other Arab (4.7%), African (1.6%), European (1%), other ethnicities (1.2%).

Pew Research data from 2010 suggests most inhabitants identify as Muslim (70.3%), followed by Christian (14.5%), Hindu (9.8%), Buddhist (2.5%) and other or no religion (2.9%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Bahrain is the 53rd best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Bahrain 64th globally and states, “The government faces the long-term challenge of boosting the country’s regional competitiveness and reconciling revenue constraints with popular pressure to maintain generous state subsidies and a large public sector.”

World Bank’s “Doing Business” rankings rate Bahrain 43rd for ease of doing business in the world.

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