Bahraini minister of industry Dr Hassan Fakhro said investments in the Salman Industrial City, which is under construction have reached US $3.5 billion (BD1.3 bn) and are expected to more than double to nearly $8 billion (BD3bn) in the next few years.

The forecast came as King Hamad officially laid the foundation stone for the city.

The city forms an integral part of Bahrain’s Vision 2030, which aims to develop the economy and diversify it. The city is part of the iconic Khalifa bin Salman port, Bahrain’s biggest. It is also in proximity to the Bahrain International Airport and the King Fahd Causeway, linking the island of Bahrain to Saudi Arabia.

January 6, 2010



Analysis and Forecast: Decreasing Risk

The laying down of the foundation stone as well as the confirmation of the amount of investment is a good indication that Bahrain’s plans for economic diversification are proceeding according to the plans set in Vision 2030.

Bahrain’s income is heavily reliant on its small and rapidly dwindling oil resources as well as assistance from Saudi Arabia.

The industrial city will benefit from oil and gas resources, in addition to the Free Trade Agreement between Bahrain and the US.

Although Bahrain is amongst the region’s foremost in efforts to diversify its economy, oil is still occupying a prominent place in the economic indicators generally. It contributed by around 18% of the GDP, 54.6% of the gross state revenues and 58.5% of its foreign trade where it constitutes 70% of the exports and 44.6% of the overall imports.

In addition to dwindling oil resources, Bahrain’s population is almost 50% local, with the rest being expatriates. This is a relatively high figure for the region. The local population is also heterogeneous, with it being equally divided between Sunni Arabs, Shiite Arab and Shiite Persian. There have been grievances of inequality in terms of opportunities for the different sections of the local population.

The diversification plans are therefore vital to ensuring the long-term economic prospects of Bahrain as well as increasing opportunities for its relatively large local population, in comparison to neighbouring states on a per-capita basis. The city will also strengthen the relative position of the Gulf’s smallest country, given both its geographic and trading positions.

Below is a figure showing the approximate make-up of the Bahraini economy: