Bahrain is working hard to keep its economy moving despite challenging times for the kingdom with the old established industries pursuing growth initiatives and the government scouting for new private sector investments to spur the economy further.

Details of plans for a new industrial city have been divulged, reflecting confidence and hope that meaningful industrial progress is possible and worth pursuing. Another initiative, the King Hamad Oasis for Science and Technology, follows similar models established in Gulf states but could prove useful to boost the innovative spirit among young Bahrainis and impact on industrial development eventually.

Both the new $16 billion industrial city and the science oasis are determined attempts to boost industrialisation and create conditions for growth. The new city hopes to build on the manufacturing base as a way to diversify the economy away from oil. The hub is planned to help improve manufacturing’s current contribution of 17.7 per cent to the GDP. The mixed-use city will be built on 95 sq km of reclaimed land with areas earmarked for industrial, commercial, residential and recreational facilities. Having spelled out basic plans, the government is taking a long-term view. The city is expected to be fully operational by 2040 and generate $13 billion annually, providing employment to 240,000 workers.

The King Hamad Oasis for Science and Technology will accelerate transition to a knowledge economy and encourage companies to establish a base of operations in the kingdom, said Adel Al Safar, chairman of the Bahrain Chamber of Commerce and Industry’s information technology committee. “This park will support non-traditional industries that we sorely need in this age of speed and high technology,” he added.

A company out to prove that the current Bahrain scenario is far from hopeless is Maalem Holdings which is reported to be eyeing a number of schemes in the kingdom. One of the schemes it is considering is a unique mixed-use project on a strategic plot in Bahrain’s Seef district.

“Bahrain remains one of the most established investment destinations in the region, given its role as a financial centre and business hub in the Gulf and its plans to strengthen the economy through integration and promotion of dynamic and diversified sectors,” said Matar Al Bloushi, the holding company’s chairman.

MAJAAL, A SUCCESS STORY
First Bahrain’s light manufacturing and warehousing hub, Majaal, has yielded good news. It had its first phase fully occupied earlier than envisioned and is entertaining requests for the second one.

On another positive note, Bahrain investment firms showed robust growth in the assets they managed. In September, the assets figure touched $16.4 billion, up 72.4 per cent, according to the Central Bank.

A Balexco production facility

Bahrain is attractive for financial companies because of its comprehensive regulatory framework and tried and established laws that govern the asset management market. Bahrain also has an educated workforce and is near to regional wealth.

Displaying a tough competitive spirit, one of Bahrain’s stalwart companies, Batelco, agreed to buy Cable & Wireless Communications Assets in Monaco and some islands in a deal worth up to $1 billion. Batelco is debt-free but has reported falling profit in several of its past quarters.

In stressful times, consumption takes a hit, but a Singapore-based coffee firm feels Bahrain people have it in them to splurge on their offerings even with well-established global brands around. The Klassno brand is expanding its retail outreach in Bahrain through partnership with local distributor Babasons. The company, a proprietary holding of Singapore Stock Exchange-listed Food Empire Holdings, considers Bahrain a strategic growth market. “We have experienced a great demand for our products from coffee lovers across the country,” said Food Empire’s Middle East country manager Abishek Gupta.

For the moment, the best bet for Bahrain’s industrial growth remains the expansion of its large iconic companies. Bapco is expanding its Sitra refinery at an investment of $6 billion. And Alba recently awarded Bechtel Canada a Letter of Intent to perform a Bankable Feasibility Study for the Line 6 expansion project that will add some 400,000 tonnes of aluminium annually to its current capacity of 840,000 tonnes.

Arab Ship Building and Repair Yard Co (Asry) recently completed vital expansions including building a quay line that has vastly increased its ability to accommodate customers’ docking schedules. The company has diversified into new business streams including consultancy, offshore services and power barge construction. In 2011, it achieved revenues of approximately $168 million and is on course for about a 5 per cent increase in 2012.

Over four years since its establishment, the offshore division has become the main contributor to the company’s revenue. It is the leading choice for small and medium-sized rig repair projects.

Garmco has begun an expansion to expand its raw metal stock and raise overall capacity nearly three times to 460,000 tonnes annually in a decade. Foulath is awaiting the start of normal operations at its United Steel Company (Sulb) complex which will have a melt shop, a rolling mill of 1 million tonnes per year and a DR plant of 1.5 million tonnes. Foulath is also converting a stainless steel rolling mill into a rebars plant to feed growing demand in the construction market.

Bahrain Aluminium Extrusion Company (Balexco) has had a major expansion and Gulf Petrochemical Industries Company (GPIC) is in the process of having one. 

A plant set up by German chemicals giant BASF to produce customer specific antioxidant blends (CSBs), its largest such facility, will likely inspire other multinationals to set up ventures in the kingdom.

The kingdom’s real GDP is expected to touch 2.8 per cent in 2012 from 1.9 per cent in 2011. If Bahrain shows the same verve demonstrated by the old stalwarts and social conditions are more congenial, the economy would take on a healthier look.