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 World Investment Report 2023, FDI in Bahrain increased by 9.7% year on year in 2022, to USD 1.95 billion. In the same period, the FDI stock reached USD 35.4 billion, around 79.8% of the country’s GDP. According to governmental data, FDI inflows in 2022 were dominated mostly by electricity, gas steam & air conditioning supply, manufacturing and financial & insurance activities sectors. Kuwait was the main investor, followed by the UAE and Guernsey. Data from the Bahrain Economic Development Board show that the agency secured USD 1.7 billion in FDI projects in 2023. In the same year, the financial services sector saw unprecedented investment, showcasing its robustness and capacity to attract top global players, overtaking oil and gas to become Bahrain's leading economic contributor, comprising 17.5% of real GDP. The ICT sector also garnered significant investment interest, with manufacturing following closely behind.
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. There are no limitations on the repatriation of capital, profits, or dividends, except for income generated by companies in the oil and gas sector, which are subject to a 46% tax rate on profits. 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. Overall, Bahrain is a significant economic hub in the Gulf Cooperation Council (GCC) area and offers one of the most accommodating investment climates to draw in foreign companies. The national currency is freely transferable and tied to the U.S. dollar. Bahrain ranks 67th among the 132 economies on the Global Innovation Index 2023 and 54th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 1,021 | 1,779 | 1,951 |
FDI Stock (million USD) | 31,705 | 33,484 | 35,436 |
Number of Greenfield Investments* | 24 | 30 | 30 |
Value of Greenfield Investments (million USD) | 1,044 | 1,007 | 2,242 |
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.
Country Comparison For the Protection of Investors | Bahrain | East Asia & Pacific | Estados Unidos | Alemanha |
Index of Transaction Transparency* | 8.0 | 5.9 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 5.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
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