Bahrain’s foreign direct investment (FDI) has increased dramatically over the past few years, thanks in part to government programs liberalising the country’s economy and encouraging FDI. Bahrain’s cumulative FDI value is the highest rated in the Gulf Cooperation Council (GCC), reaching approximately US$ 18.8 bn in 2014 (representing 55.4% of the country’s GDP). FDI inflows as a percentage of nominal GDP (3%), and FDI inflows as a percentage of gross fixed capital formation (15.7%) were also the highest in the GCC.
Attracting foreign investment remains an important priority for the government of Bahrain, and the country has developed an extremely favourable investment climate. The country has an open and attractive economic and regulatory framework for international companies. Bahrain has the lowest tax regulation in the Gulf, but is not constrained by the restrictions of a free-trade zone. Foreign business ownership is permitted 100% in more than 95% of all economic activities. Furthermore, Bahrain’s logistical infrastructure is top-notch, facilitating many business endeavours.
The Bahraini government is a positive influence on the FDI sector. It has an overall liberal approach to foreign investment and is actively seeking to attract investors and foreign companies. The government has taken steps to ensure this, including the formation of the Supreme Council for privatisation in the spring of 2001. Another important step has been the creation of the Bahrain Mumtalakat Holding Company in 2006, whose role is to manage all public investment, and the creation of the BIC “one stop shop” and providing all business services, licensing and registration.