The planned Financial Harbour and other mega projects in the offing have pushed Bahrain to the forefront of global financial hubs and set off a hectic race for financial domination in the region, according to a report.
While such projects have allowed the tiny Gulf island nation to close the gap with Dubai, the UAE emirate is still classified as the region’s dominant financial centre and is set to grow further, the Oxford Business Group (OBG) said.
“Dubai may still be seen as the leading financial centre in the Gulf region, but Bahrain is closing the gap, despite the far greater resources its UAE rival can channel into attracting big business to its shores,” OBG said in a report.
“Projects such as the $1.5 billion (Dh5.5bn) Bahrain Financial Harbour (BFH), a development covering nearly 400,000 metres of waterfront land in Manama, marketed as a self-contained financial and business city, as well as investments to boost communications and technology infrastructure, have helped to enhance Bahrain’s appeal to local, regional and international business.”
The study said such projects have started to pay off in terms of the growing financial reputation of Bahrain, which has long been the largest offshore banking centre in the Middle East.
In the City of London Corporation’s latest Global Financial Centres Index (GFCI), released at the end of February, Bahrain was shown to be the biggest mover, not only in the Gulf but globally, the report noted. The study assessed the 50 top-rated financial centres around the world using the competitiveness criteria of people, business environment, market access, infrastructure and general competitiveness. Bahrain was ranked at 39th this year, a jump of three places since the previous GFCI report in September.
“While Dubai held on to the highest rung on the Gulf ladder, at 24th place, the emirate slipped two spots on the GFCI rankings, while Bahrain’s other regional rival, Qatar, dropped three places to 47th. Internationally, Bahrain leapfrogged Asian powerhouses Mumbai and Beijing, along with Johannesburg, in terms of competitiveness,” OBG said.
It said the improved ranking for Bahrain represents a major achievement, given that it failed to even make the top 50 in the first GFCI report, issued last March.
“However, Bahrain has little room for complacency, with the GFCI study identifying Dubai as the key and growing regional hub, which is tipped to become significantly more important over the next few years.
“One area, however, where Bahrain appears to have a decided edge is in Islamic financing, a form of business pioneered by the kingdom that has now gained international acceptance. Its credentials as both an Islamic and international financial hub were given a boost in early March when the Islamic Bank of Asia (IB Asia), Singapore’s first Islamic bank, announced it would be basing its Middle Eastern operations at the BFH.”
While Bahrain may not have the energy dollars of Qatar or the overall revenues of Dubai to spend on building business complexes at home or buying them abroad, its rapid move up the GFCI, in addition to the steady influx of firms and banks to the kingdom, suggest its influence as a business and financial centre is set only to grow in the future,” OBF added.
It cited figures by Bahrain Central Bank showing a steady growth in the country’s financial sector has turned it into one of the largest components of the gross domestic product, accounting for nearly 25 per cent in 2007. The value was at around $15.7bn.
“Although the kingdom has invested heavily in technology to boost output from its existing oil fields and opened up new offshore blocks for exploration, Bahrain is a net importer of fossil fuels,” the report said.
“Bahrain has long foreseen the dwindling of oil resources, and has committed to developing new industries, such as its financial sector.”
Bahrain fast emerging as global financial hub