Major infrastructure investments fuel Bahrain's long-term development goals

Bahrain has moved forward with plans to improve national infrastructure as part of its economic development strategy, announcing a series of tenders relating to the upgrade and expansion of the country’s airport.

MODERNISATION: In early 2018 Bahrain Airport Company (BAC) issued concessions for works related to airport security at Bahrain International Airport (BIA), including the construction of a new perimeter fence and installation of improved CCTV and lighting facilities. At the same time, the Ministry of Works launched a tender for the first stage of road access improvements to BIA’s new terminal, with work scheduled for completion in late 2018. In addition, BAC issued concessions to run pharmacy, convenience store, and food and beverage outlets at BIA in January 2018. Chosen companies will design, outfit, finance, develop and operate the stores. These concessions form part of the $1.1bn Airport Modernisation Programme (AMP), which aims to develop a passenger terminal and overhaul existing facilities by 2020. Once completed, BIA will have the capacity to handle 14m passengers per year, up from 8m in 2017, increasing regional and global connectivity.

The AMP falls under a broader $32bn infrastructure programme under way in the kingdom, which places transport and logistics – along with tourism – at the heart of plans to diversify the economy away from hydrocarbons revenues. In addition to the BIA upgrades, Bahrain is assessing plans to construct a second causeway to link it to neighbouring Saudi Arabia. The proposed 25-km connection, which is expected to cost around $4bn-5bn and be undertaken as a public-private partnership, would ease congestion on existing transport connections and improve logistics between the two countries. Other projects in the pipeline include construction of a light rail system and a series of road upgrades designed to improve traffic flows.

STIMULATING GROWTH: Tourism, which is among the sectors to benefit from upgrades, is seen as a key growth driver; the number of international visitors increased by 12.8% in the first nine months of 2017, and the sector accounts for 6.3% of GDP. A series of four- and five-star hotel developments are set for construction, with an additional 4000 rooms to be added to existing supply by 2020. This along with the development of the Mall of Dilmunia and Marassi Galleria should expand tourism offerings, stimulating growth.

VISION 2030: These projects are in line with Bahrain’s Economic Vision 2030, the plan to grow and diversify the economy by investing in infrastructure development and training in targeted sectors. Since the plan’s release in 2008, Bahrain’s GDP has grown from $25.7bn to $33.9bn in 2017, while GDP per capita based on purchasing power parity has expanded from $40,800 to $51,800, according to the IMF. Given the recent fall in hydrocarbons revenues, attracting private investment, particularly foreign direct investment (FDI), is a key strategy. While inflows have experienced volatility in recent times, FDI rebounded to $695m by the end of October 2017, more than double 2016’s full-year total of $280m.

The increase in FDI comes amid efforts to attract foreign capital. In June 2017 the Central Bank of Bahrain created a financial technology sandbox – a secure, virtual space to test software or coding – to enable the private sector to take advantage of opportunities in the area. Dubai’s NOW Money and Tramonex, the London-based foreign exchange cash-management business, became the first two firms in the sandbox, followed by the September 2017 announcement that Amazon Web Services (AWS) would bring its Middle Eastern cloud technology data centre in the kingdom. This came on the back of ICT upgrades and efforts to digitise government operations as part of the Cloud First strategy, which, along with the new AWS base, are expected to provide employment opportunities to Bahrainis through supporting the growth of local tech start-ups and improving the country’s ability to attract skilled expertise from around the world.