The economic downturn that engulfed the Middle Eastern countries, including those in the Arabian Gulf, has rattled the region. With oil prices tumbling by more than 70 per cent, their economies, budgets and welfare and infrastructure plans have gone haywire. The scenario of low oil prices looming for another four or five years does not raise hopes of any cheer in the short run.
Saudi Arabia, among the largest oil producers in the region, has suffered most and is now taking fiscal measures to come to terms with the changed scenario. The United Arab Emirates and Oman have adopted their own strategies for the purpose. They are not exactly foundering but they have come to realise that for the present, it is goodbye to the glorious days when the oil royalties flowed like a freshet.
Bahrain Escapes Gulf Economic Downturn
Amid this grim and doleful scenario, however, Bahrain is one nation which seems determined to defy the downturn. And that’s because, unlike its neighbours it has never relied completely on what little oil revenues it had, and diversified long ago. Considering it is a tiny kingdom, that diversification has helped it enormously.
International banking is one area where it has always led the region ever since Beirut fell to the machinations of the Hezbollah and other terror groups more than three decades ago. And within that, Islamic banking is its forte. It also set up a ship repair yard and an aluminium smelter plant rivalling the world’s other big unit in Dubai, and an oil refinery for Saudi oil. These might look modest ventures for a large country but for a small island nation they signify healthy revenue generators.
Bahrain has done more than these few fund-generating ventures. The constant fine-tuning of its fiscal, economic, banking, industry and labour-related policies and its efforts to ensure the welfare of its citizens – thus creating a feel-good factor – have helped Bahrain to stay on course in these economically turbulent times.
For instance, the good fiscal results by banking and financial institutions in the kingdom clearly reflect the government’s success in creating a suitable economic environment. The industrial free-trade zone set up with the backing of the crown prince some years ago, and the free-trade agreements signed with the US have also helped the country.
Thus, it draws industrialists from elsewhere, thanks to its liberal laws and very low tax regime. It is counted among the top ten countries in terms of the ease of conducting business with minimal paperwork and bureaucratic hassles. These are hings which count for those looking for safe and congenial havens to do business.
Bahrain Foreign Workers’ Rights
Bahrain also realizes that in today’s world of cut-throat competition to draw investors, a nation’s image counts for a lot. For example it takes good care of its foreign workers’ rights and welfare.
When last year, between July and December, it declared amnesty for illegal foreign residents and workers so they could leave without having to pay any fines, it was not an all-out bid to throw them out. It told them gently that if they were keen on staying back they should find a job and regularise their status. Bahrain is also the only country in the region where, to switch a job, a foreign worker does not have to leave the country for six months to one year. That is a condition which turns the worker, fearful of losing one job and not able to keep lien on the next for that long, into a virtual slave of the first employer.
Defying The Gulf Economic Downturn
Given all these positive aspects, Bahrain wins hands down in the region and is therefore able to defy the downturn and keep itself afloat. No wonder investors, bankers and those keen to set up industries continue to scout the place.