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Expansion of the transportation sector is regarded as crucial for future economic growth in Bahrain; the sector’s contribution to GDP is expected to increase from 4% to 7% in the coming years, driven in large part by the rising population. Upgrades at Bahrain International Airport will boost the facility’s passenger and cargo capacity with the addition of 13 new gates and 40 new check-in counters while plans to reduce congestion on the roads include a government initiative aiming to switch at least 15% of all personal journeys from automobiles to public transport by 2030, with the latter expected to receive significant public investment as a result. Meanwhile the Bahrain Logistics Zone, which began operations in 2008, continues to build up Bahrain’s role as a regional logistics centre as the kingdom looks to position itself as a key entry point to the GCC. This chapter contains an interview with Maher Salman Al Musallam, Acting CEO, Gulf Air.

Oil and gas remain key to Bahrain’s economy, with 87% of government revenues generated from hydrocarbons in 2012 and the oil sector growing robustly in 2013, posting 15% real GDP growth. While falling oil prices are a concern in the short term, the kingdom is looking to boost oil production in the medium term. Efforts are under way to double the output of the Bahrain field by 2020 through the use of enhanced oil recovery techniques while a new round of offshore exploration drilling is expected in 2015. Meanwhile plans were announced in 2014 for the kingdom’s first liquefied natural gas (LNG) terminal, with the LNG regasification facility expected to import 3m tonnes per annum. Elsewhere, a major upgrade to the kingdom’s oil refinery on Sitra Island will ensure Bahrain remains competitive at a time when a number of similar expansions are taking place in the region. This chapter contains interviews with Abdul Hussain bin Ali Mirza, Minister of Energy; and Pete Bartlett, CEO, Bahrain Petroleum Company.

Bahrain boasts the highest insurance penetration rate in the GCC at 2.3% of the population. This is a result of its comparatively long insurance history, the clear regulation in place and the large number of companies involved in the sector. Motor insurance remains the primary source of revenue and claims within the sector, with motor lines representing almost 26% of premiums and contributions written in the market in 2012. A regulatory regime that allows for the free movement of capital and 100% foreign ownership of companies, as well as the availability of a highly skilled workforce has attracted many international insurance providers to set up shop in Bahrain. Moving forward the takaful segment is expected to play an increasingly prominent role in the sector, with new regulations being introduced to govern the framework of the segment and with international trends indicating that takaful’s global value will reach $17bn by 2015.

Bahrain remains a world leader in Islamic finance, boasting the highest concentration of Islamic financial institutions globally, with six licensed Islamic retail banks and 18 licensed Islamic wholesale banks. Islamic wholesale banks’ investment portfolios have begun to demonstrate promising diversification in recent times, with a shift away from risky real estate fuelling interest in other sectors. Meanwhile, in 2014 the Central Bank of Bahrain, which regulates the kingdom’s Islamic financial institutions, introduced regulatory changes aimed at ensuring best practice is applied to sharia-compliant transactions, including the issuance of sharia-compliant bonds and the Islamic insurance segment. Today takaful represents one of the fastest-growing segments of Bahrain’s insurance sector, with gross contributions of takaful companies growing 7% from $142.31m in 2012 to $151.58m in 2013, according to the central bank. This chapter contains a dialogue between Adnan Ahmed Yousif, President and CEO, Al Baraka Banking Group; and Aabed Al-Zeera, CEO, International Investment Banking.

June 2014 marked the 25th anniversary of trading on the bourse, which began operating as the Bahrain Stock Exchange in 1989. The market looks to have recovered from the global financial crisis, and in 2013 posted an 18.9% year-on-year increase in market capitalisation, with the trend continuing into 2014, with a 21.7% rise to BD8.47bn ($22.45bn) at the end of September 2014. The banking sector accounts for the bulk of activity, with commercial banks comprising 69.16% of the value of all shares traded in the first nine months of 2014. In a drive to increase liquidity the Bahrain Bourse has recently extended its trading day, and in July 2014 it upgraded its NASDAQ OMX trading platform from the Horizon platform to the X-stream system. Moreover, positive steps to encourage more trading – particularly within the GCC – have been taken, while discussions are also under way to increase listings, including development of a specific framework under which SMEs might be attracted to trade on the exchange. This chapter contains an interview with Khalifa bin Ebrahim Al Khalifa, CEO, Bahrain Bourse; and a viewpoint from Najla M Al Shirawi, CEO, Securities & Investment Company.

Despite being buffeted by successive financial storms since 2008, Bahrain’s banking sector has remained resilient and in February 2014 the Central Bank of Bahrain’s (CBB) “Financial Stability Report” showed many areas of strength and renewed vigour. In 2014 the finance and banking sector accounted for nearly 17% of GDP, according to the CBB, making it the second-largest contributor after the hydrocarbons sector. Deposits reached BD15.23bn ($40.4bn) in February 2013, their highest levels since 2008, while the central bank expected credit growth to the private sector to increase in 2014 after reaching a peak of $18.56bn at the end of September 2013. Meanwhile, the CBB has been urging greater consolidation across the sector to strengthen against future financial shocks, with both conventional and Islamic banks on the lookout for merger opportunities. This chapter contains a viewpoint from Khalid Hamad, Executive Director - Banking Supervision, CBB, and Chairman, International Islamic Financial Market; and interviews with Abdul Razak Al Qassim, Chairman, Bahrain Association of Banks, and CEO, National Bank of Bahrain; and Hassan Jarrar, CEO, Standard Chartered Bahrain.