07 February 2007
Over the past few weeks, Bahrain has revealed a number of significant developments that will encourage industrial growth in the kingdom.
Last month, Ahmed Mansoor Al A'Ali Company (AMA) said that it will set up a 'supply and apply' advanced pipe coating facility in Bahrain. The $1.5m facility will utilise Nukote Coating Systems International's coating technologies and expertise and will remain wholly owned by AMA. Moreover, existing industries in the kingdom have publicised expansion plans, the most notable of which concerns The Arab Banking Corporation's (ABC) mandate to underwrite a $555m financing facility for Gulf Industrial Investment Company (GIIC). The cash will help finance GIIC plans to more than double the output of its iron ore pelletising plant at Hidd Industrial Estate and carry out major infrastructure work.
In addition to new and expanded plants, there has been a general upward trend in industrial activity in the kingdom. Ulrich Reifenhauser, chairman of the exhibitor council of K 2007, the world's largest trade show for the plastics industry, recently said that the basic chemical, plastic and metal industry has absorbed about 90% of total industrial investments in Bahrain.
Industry and Commerce Minister Hassan Fakhro, announced that a record 236 initial industrial licences were issued last year, generating a potential windfall of investment and jobs. If finalised, Fakhro said that they will secure Bahrain investments of about BD610m ($1.6bn) and create 8323 jobs for Bahrainis.
Kandeh Yumkella, director-general of the UN Industrial Development Organisation (UNIDO), recently commended the kingdom for its good planning and success in its industrial expansion.
Bahrain will also host the Gulf Industry Fair 2008. The event is the first exhibition aimed at providing Gulf Cooperation Council (GCC) states with a forum dedicated to the industrial sector.
Bahrain's march forward has been due in large part to the kingdom's industrial past. Today, Bahrain's downstream aluminium industry makes up approximately 7-8% of GDP. Established in 1971, Aluminium Bahrain's (Alba) success has encouraged other industrial sectors to grow such as petrochemicals, gas processing, metal, food processing, paper production, manufacturing of wood products, and garment making. Overall, the industrial sector now makes up roughly 10.6% of GDP.
However, industry in Bahrain still has some issues that need to be addressed. The textile sector, which was once a major employer, has shrunk due in large part to increased competition from Chinese and Indian rivals. At present, there are seven or eight players compared to 22 firms five years ago. Much like elsewhere in the region, Bahrain's dependence on oil remains relatively strong. In 2005, Bahrain's total non-oil exports amounted to $1.78bn, which was down a marginal 1.5% from 2004.
An arguably more concerning issue is that of energy supply. Bahrain's dwindling reserves are prompting the curtailment of new enterprises and the expansion of existing ones. For example, Alba opened a fifth production line in 2005 but has held off on a sixth only because the company is already using all of its energy allotment.
However, the kingdom's energy needs can be significantly boosted by the proposed Gulf-wide electricity grid, according to Majeed Shafea, the general manager of Caltex in Bahrain. Shafea told OBG that he is hopeful that such a project can reduce Bahrain's dependence on gas.
Regardless of the evident concerns that face it, Bahrain is still striving to improve its industrial sector. The recent creation of the Bahrain Industrial Group, an organisation designed to help identify, develop and broker industrial projects best suited to Bahrain's human and natural resources, will go some way towards continuing the sector's growth in the kingdom.
Over the past few weeks, Bahrain has revealed a number of significant developments that will encourage industrial growth in the kingdom.
Last month, Ahmed Mansoor Al A'Ali Company (AMA) said that it will set up a 'supply and apply' advanced pipe coating facility in Bahrain. The $1.5m facility will utilise Nukote Coating Systems International's coating technologies and expertise and will remain wholly owned by AMA. Moreover, existing industries in the kingdom have publicised expansion plans, the most notable of which concerns The Arab Banking Corporation's (ABC) mandate to underwrite a $555m financing facility for Gulf Industrial Investment Company (GIIC). The cash will help finance GIIC plans to more than double the output of its iron ore pelletising plant at Hidd Industrial Estate and carry out major infrastructure work.
In addition to new and expanded plants, there has been a general upward trend in industrial activity in the kingdom. Ulrich Reifenhauser, chairman of the exhibitor council of K 2007, the world's largest trade show for the plastics industry, recently said that the basic chemical, plastic and metal industry has absorbed about 90% of total industrial investments in Bahrain.
Industry and Commerce Minister Hassan Fakhro, announced that a record 236 initial industrial licences were issued last year, generating a potential windfall of investment and jobs. If finalised, Fakhro said that they will secure Bahrain investments of about BD610m ($1.6bn) and create 8323 jobs for Bahrainis.
Kandeh Yumkella, director-general of the UN Industrial Development Organisation (UNIDO), recently commended the kingdom for its good planning and success in its industrial expansion.
Bahrain will also host the Gulf Industry Fair 2008. The event is the first exhibition aimed at providing Gulf Cooperation Council (GCC) states with a forum dedicated to the industrial sector.
Bahrain's march forward has been due in large part to the kingdom's industrial past. Today, Bahrain's downstream aluminium industry makes up approximately 7-8% of GDP. Established in 1971, Aluminium Bahrain's (Alba) success has encouraged other industrial sectors to grow such as petrochemicals, gas processing, metal, food processing, paper production, manufacturing of wood products, and garment making. Overall, the industrial sector now makes up roughly 10.6% of GDP.
However, industry in Bahrain still has some issues that need to be addressed. The textile sector, which was once a major employer, has shrunk due in large part to increased competition from Chinese and Indian rivals. At present, there are seven or eight players compared to 22 firms five years ago. Much like elsewhere in the region, Bahrain's dependence on oil remains relatively strong. In 2005, Bahrain's total non-oil exports amounted to $1.78bn, which was down a marginal 1.5% from 2004.
An arguably more concerning issue is that of energy supply. Bahrain's dwindling reserves are prompting the curtailment of new enterprises and the expansion of existing ones. For example, Alba opened a fifth production line in 2005 but has held off on a sixth only because the company is already using all of its energy allotment.
However, the kingdom's energy needs can be significantly boosted by the proposed Gulf-wide electricity grid, according to Majeed Shafea, the general manager of Caltex in Bahrain. Shafea told OBG that he is hopeful that such a project can reduce Bahrain's dependence on gas.
Regardless of the evident concerns that face it, Bahrain is still striving to improve its industrial sector. The recent creation of the Bahrain Industrial Group, an organisation designed to help identify, develop and broker industrial projects best suited to Bahrain's human and natural resources, will go some way towards continuing the sector's growth in the kingdom.
© Oxford Business Group 2007
