The Hindu Business Line : Aiming for inclusive growth, balanced development

Bahraini leaders have not viewed economic growth as an end in itself. Instead, they have tried to balance development, with sound political reforms. Thirty six years after its independence, Bahrain is emerging as a unique model of a constitutional mo narchy, where demands of stability and growth are being blended with genuine political freedoms and cultural accomplishments. The country has now become known for meeting its major challenges, both political and economic, with the rule of law and transparency.

Bahrain celebrates December 16 as its national day, as it was on this date that it formally shed its erstwhile status of a British protectorate.

From an economic standpoint, a combination of circumstances gave independent Bahrain a head start. Independence came at a time when oil prices were about to surge. Consequently, Bahrain benefited greatly from the oil boom of the eighties. Banking also soon became one of the pillars of the Bahraini economy. This became possible mainly because of the Lebanese civil war of the seventies. Bahrain benefited from the flight of capital from Lebanon that followed the civil war. As a result, it soon became the premier financial hub in West Asia.

Economic progress

While it grapples with its political issues, Bahrain has been simultaneously making steady economic progress. It has now developed institutions, acquired resources and skills in order to grow rapidly in the coming years.

With oil resources depleting fast, Bahrain has made a conscious decision to speed up diversification of its economy.

It is currently investing heavily in tourism, services and industry. It has taken the strategic decision of signing a Free Trade Area (FTA) agreement with the US. Together with this move, Bahrain has been developing the Hidd economic free zone. Its purpose is to draw international investors, so that they can take advantage of the FTA.

Bahrain is also modernising its existing Mina Salman port. The Dutch giant APM Terminals (APMT) is now revamping this port. Experienced in handling ports in the region, this company also manages operations in Oman and Jordan.

However, Bahraini planners are well aware that there are limits to the modernisation of Mina Salman. A deeper channel that would allow big ships to dock cannot be dredged in this area. Consequently, ships having a draft exceeding 10 metres cannot be berthed at this port. There have been difficulties in the replacement of outdated equipment at the port as well.

With a view to overcoming these problems, Bahrain has embarked on the rapid development of the Shaikh Khalifa bin Salman Port (KBSP) — its new facility at Hidd. This port would have the capability of accommodating fourth generation container vessels. The APMT will also run this brand new port, which is being billed as the Bahraini equivalent of Dubai’s giant Jebel Ali facility. The KBSP is expected to begin operations in the third quarter of 2008.

locational advantage

The KBSP will enjoy a tremendous locational advantage. It is close to the Hidd industrial area and Saudi Arabia. A 25-km long causeway links Bahrain with Saudi Arabia, providing the land corridor for the cross-border movement of containers.

Access to Saudi Arabia has also other major advantages. Since Saudi Arabia shares common borders with a large number of countries in the Middle East and North Africa (MENA) zone, goods landing at KBSP can be sent to a huge regional market. Consequently, the KBSP can emerge as a major transport hub, having a large regional footprint.

Recognising the importance of establishing physical links with its neighbours to promote growth, Bahrain and Qatar have decided to build a “friendship bridge” that would link the two countries. Once constructed, the causeway would be 45 km long. It will start from a location north of Aksar village in Bahrain and end at Ras Ashairij area, five km south of the city of Al Zubara, in Qatar.

The link is expected to combine several bridges and roads. Together with the Bahrain-Saudi causeway, the new link would speedily connect Bahrain with the entire region.

Bahrain’s Economic Development Board (EDB) is playing a crucial role in guiding the country‘s growing economy. The Crown Prince, Sheikh Salman bin Hamad Al Khalifa, chairs the EDB, ensuring that the board receives continuous political attention. The EDB also includes seven key ministers and seven leading executives from the private sector, among its board of directors.

The board’s composition has been carefully charted to ensure that Bahrain’s public and private sectors coordinate their activities and work together in harmony. The EDB is leading a three-pillared reform programme that addresses the issues of the economy, labour market, and education sector. The EDB is paying considerable attention to Asia and India. It has located its offices in Hong Kong, Tokyo and Bangalore.

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