Bahrain is tapping the UK, China and India for more foreign direct investment in 2019, with three deals expected to be signed in the coming months, as the smallest Arabian Gulf state looks to non-oil sectors to drive economic growth.
The government’s investment agency, Bahrain Economic Development Board, is in talks with two Chinese technology companies to set up in the kingdom, which would be their first locations in the Middle East. Both deals would represent investments of “tens of millions of [US] dollars”, said the agency’s chief executive Khalid Al Rumaihi.
The deals are expected to conclude this year. "China is a big source of FDI and we are seeing concrete deals emerging from our trips [the most recent of which was last November]," Mr Al Rumaihi told The National at Euromoney's GCC Financial Forum in Bahrain.
The EDB is also in talks with an Indian company that wants to set up operations in Bahrain. The agency, which already has promotional offices in Delhi and Mumbai – among other global offices – wants to establish an office in a third Indian city in the year ahead.
“We are focusing on India more and more, looking more closely at how we can nurture Indian businesses and consumers here in Bahrain," Mr Al Rumaihi said. "We have geographic proximity, and tourism and technology industries are particular opportunities.”
Chinese technology giant Huawei, as well as retailer Chinamex that owns Dragon Mall, State Bank of India, ICICI, Ajmera and Mayfair Global Realty, are examples of Chinese and Indian companies already operating in Bahrain.
Bahrain’s GCC neighbours, especially the UAE and Saudi Arabia, are another “wonderful source of FDI”, the chief executive said, as is the UK, which is nearing its deadline for exit from the European Union.
“I feel the UK could imminently be free of Europe, and will be able to strike its own trade deals and they will do it with the GCC,” Mr Rumaihi said. “We think it will be a major source of FDI as the UK, and British companies, spread their wings.” FinTech, precision engineering, light manufacturing, technology and other services are particular opportunities, he said, "and Bahrain is talking with prospective UK partners over potential deals".
Two laws are set to be introduced that would support an increase in FDI, including a data jurisdiction law enabling companies that store digital data in Bahrain to have their data and any related disputes governed by their own country’s legal framework. Amazon Web Services in 2017 announced a deal to open a massive data centre in Bahrain, and the project is expected to commence later this year, according to Mr Al Rumaihi. The other law seeks to create a register of movable assets, to support bank lending to small and medium-sized enterprises in Bahrain.
In the first nine months of 2018, Bahrain EDB reported record FDI inflows to Bahrain for the second year running, increasing by 138 per cent year-on-year to $810 million.
Bahrain’s real gross domestic growth reached 3.8 per cent in 2017, but is forecast to have slowed to around 2 per cent in 2018 on the back of challenging economic conditions for the region and maintenance work on a major Bahraini oilfield which halved production in the first half of the year. This caused GDP growth to lag to 1.1 per cent in the third quarter, Mr Al Rumaihi said. The latest figures are due to be released in the coming weeks.
The chief executive forecasts “marginal” gross domestic product growth of 2 to 2.5 per cent this year, driven by the manufacturing and construction industries. State-backed aluminium company Alba’s Line 6 expansion project will come online this year, making Alba the world’s largest aluminium smelter.
However, the part-introduction of VAT in Bahrain in January – making it the third GCC state to introduce the tax – is an “unknown variable” that has caused the government to be conservative in its forecasts while it evaluates the impact on inflation and consumer spending, Mr Al Rumaihi said.
Bahrain has the most debt of any Gulf state and a non-investment grade rating by S&P Global Ratings. The kingdom had a budget deficit of about $3.5bn in 2017 and a debt-to-gross domestic ratio of 85 per cent. The 2018 figures have yet to be released.
This week, Bahrain’s cabinet approved a reduction in the budget deficit to 708 million dinars (Dh6.9bn) in 2019 and a rise in state revenues.
Sanju
Produced: Vidhu Vinod Chopra, Rajkumar Hirani
Director: Rajkumar Hirani
Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani
Rating: 3.5 stars
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
The Lost Letters of William Woolf
Helen Cullen, Graydon House
Profile of Whizkey
Date founded: 04 November 2017
Founders: Abdulaziz AlBlooshi and Harsh Hirani
Based: Dubai, UAE
Number of employees: 10
Sector: AI, software
Cashflow: Dh2.5 Million
Funding stage: Series A
The specs: 2018 Dodge Durango SRT
Price, base / as tested: Dh259,000
Engine: 6.4-litre V8
Power: 475hp @ 6,000rpm
Torque: 640Nm @ 4,300rpm
Transmission: Eight-speed automatic
Fuel consumption, combined: 7.7L / 100km
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The years Ramadan fell in May
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
The Vines - In Miracle Land
Two stars
The specs: 2018 Ford Mustang GT
Price, base / as tested: Dh204,750 / Dh241,500
Engine: 5.0-litre V8
Gearbox: 10-speed automatic
Power: 460hp @ 7,000rpm
Torque: 569Nm @ 4,600rpm
Fuel economy, combined: 10.3L / 100km
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Third Test
Result: India won by 203 runs
Series: England lead five-match series 2-1
Match info
Liverpool 4
Salah (19'), Mane (45 2', 53'), Sturridge (87')
West Ham United 0
