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'It's like business speed dating' - Bahrain's economic development chief on a week at Davos

Jan 23, 2016, 18:17 IST

Bahrain Economic Development Board

The small Swiss town of Davos was crammed with 2,500 of the most influential and powerful people from over 100 countries for the World Economic Forum (WEF) Annual Meeting 2016 this week.

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Basically, it's an opportunity for the powerbrokers of the world to set the agenda and for big business and politicians to seal deals.

So for Bahrain, which is looking to grow its financial services, manufacturing, and technology sectors, it is the perfect place to get more direct foreign investment.

In fact, when Bahrain Economic Development Board CEO Khalid Al Rumaihi spoke to Business Insider on the sidelines at the WEF conference, he joked that it was basically like "business speed dating."

"I've lost count [of the amount of meetings he had had so far," he said when he spoke to Business Insider on Friday. "There's been at least 8 bilateral deals but I can't give more details until it's all finalised. We have more conversations with investors and companies that we are targeting. We're particularly interest in ICT and logistics."

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Bahrain's economy is pretty unique in the Middle East. It has an open economy and is ranked 18th in the 2015 Index of Economic Freedom by Heritage. Its economy is also very diversified away from oil already, unlike many other Gulf states and is heavily invested in financial services and tourism too.

However, the country is keen to become more of a hub for technology and logistics in order to be a country that is more integrated into industry supply chains. That is why Prince Salman bin Hamad Al-Khalifa, Deputy King of Bahrain and Chairman of the Economic Development Board, appointed Al Rumaihi as the new CEO in March last year.

"I've been in this position for 10 months and one of the first things the Prince and Chairman told me was to be proactive in scanning sectors and see what makes sense for us to diversify in," he said.

"We have a more engaged workforce than any other gulf country (Bahrain has an unemployment rate of 7.4%) and although it sounds cliche, we are in a strategic position being next to Saudi Arabia, so Bahrain can further tap into that. We are also cost competitive as labour costs are 40% cheaper than most of the Gulf's major cities."

Al Rumaihi highlighted how the country's wishlist for companies going over to Bahrain is growing and mainly spans the sectors that are outside the economy's comfort zone.

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For example, he said within financial services, which accounts for 14% of the Bahrain economy, he is looking to grow the sector to 20% by 2020. In information communications and technology (ICT) he is hoping to grow the sector from 7% to 14%.

"We are already diversified away from oil. In 2000, oil contributed 44% to the economy, however by the end of 2014 - which is the latest figures we have - 80% of our economy was made up of non-oil sectors," he said. "We want to continue with that and we want to change the makeup of the economy. We want to see growth in meaningful services, such technology and manufacturing."

"We are targeting banks from China for more financial services to be set up here and we are speaking to a number of logistics and manufacturing groups and non-oil intensive industries around food and craft around Bahrain so can build a bigger food industry.

"We are also looking to grow our tourism sector so instead of people just spending one day with us, we'll pick up some of the Saudi tourists for a few more days with more hotels and entertainment facilities."

Bahrain is onto something as it has actively diversified their economy for over 10 years. However, it comes at a time where its neighbour Saudi Arabia is in the middle of building a$95 billion (£67 billion) supercity, which the Saudis hope will draw from both Chinese manufacturing and Western tech innovation.

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Fahd Al-Rasheed, group CEO and managing director of King Abdullah Economic City spoke to Business Insider earlier this week in Davos and his mandate sounded very similar. So it sounds like this could pose a problem for Bahrain if it is looking and courting the same investors and companies.

I said that if Ford, for example, was looking to build a plant in Saudi Arabia, it is unlikely to look at Bahrain after setting up a factory. However, Al Rumaihi said that this isn't the case and that he's optimistic there's room for both of the countries to broaden out into the same sectors.

"I don't see it this way. If Ford, for example, set up a manufacturing plant, it would need wheels, spare parts, the resources to make a car. This is where we can develop and see where we can fit in the supply chain. The market will dictate where you fit in better but there is room for growth for the both of us."

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