Logistics: Positioning Bahrain as an entry point for the GCC

Mirroring the example of Hong Kong’s logistical relationship with China, Bahrain’s economic relationship with the rest of the GCC is similarly successful. It is a small, wealthy, investor-friendly state that continues to draw expatriate workers on the edge of a massive market. Bahrain is also an increasingly important logistics hub for its larger neighbour. With recent investments in its harbour, public infrastructure and airport, the country is taking on a greater role in regional logistics.

“Bahrain continues to position itself as the premiere logistics hub in the Northern Gulf due to its location and superb infrastructure opportunities that will continue to improve as part of Bahrain Economic Vision 2030,” Vivian Jamal, the executive director of business development at the Bahrain Economic Development Board, a public investment promotion agency, told OBG.

Making Connections

In 2012 fDi Magazineranked Bahrain’s principal seaport and airport as among the world’s top 20 most attractive special economic zones for foreign direct investment. Efforts to build up the kingdom’s infrastructure will also benefit from a $10bn fund set up by several member states of the GCC to support housing and infrastructure development as part of the Gulf Development Programme in 2011. The commitment to fund infrastructure projects bodes well for Bahrain’s transportation sector. In addition, Bahrain is set to invest up to $22bn in infrastructure over the next four years, including for the Bahrain International Airport modernisation project, which will increase the airport’s capacity from 9m to over 14m passengers.

Economic Vision 2030 further commits the kingdom to infrastructure growth, and in line with the plan Bahrain is in the midst of expanding road infrastructure and developing a public transport system. In addition, the country will also benefit from the planned GCC railway network, which is scheduled to begin initial operations in 2018 and will allow uninterrupted rail travel from Kuwait City to the Omani port of Salalah on the Indian Ocean. The project envisions an expansion of the causeway between Bahrain and Saudi Arabia to include the railway line, as well as a new causeway between Qatar and Bahrain. That causeway would be the longest in the world and provide Bahrain with direct access to one of the GCC’s fastest-growing economies.

Potential Partners

In March 2014 the first of regular shipments from the Arabian Sugar Company in Bahrain to Iraq began. With its booming oil sector, Iraq has the potential to be an important driver of growth for Bahrain’s transport sector. Manama is already linked to Iran (with a population of 77m) via Gulf Air flights, freight shipments and an irregular ferry service. Due to its geographic position, were the geopolitical situation to change, Bahrain would be a key beneficiary of expanded global trade with Iran. Iran is beginning work on new export facilities for liquefied natural gas and to develop its portion of the world’s largest natural gas field, known in Iran as South Pars and known on the Qatari side of the border as the North field.

Logistics Zone

The government hopes that the Bahrain Logistics Zone (BLZ) will become increasingly important to logistics in the region. The BLZ is part of a planned industrial development commissioned in 2010 along with the Bahrain International Investment Park, the Bahrain Investment Wharf and the Al Hidd Industrial Area. Together these entities are the core components of the Salman Industrial City. The BLZ falls under the administration of the Port and Maritime Affairs Directorate at the Ministry of Transportation and Telecommunications. The BLZ began operations in 2008 on a 100-ha site. The area offers 24-hour Customs services and the plots have a minimum size of 2000 sq metres. Though the bonded area is designed for logistics companies, the BLZ is also open to retailers and distributors, such as packaging firms.

The BLZ is just one example of the government’s emphasis on infrastructure projects. The recent completion of the Sitra Causeway, Umm Al Hassam interchange, Khalifa Bin Salman Port and the upgrade of BIA are all proof that the kingdom is committed to maintaining its position as a regional centre for logistics.