Bahrain - Frequent legal environment fine-tuning along with physical and digital infrastructure upgrades are key to Bahrain becoming a fully enabled “smart” country, suggests a new report.

Analysing the opportunities and challenges awaiting Bahrain in light of neighbouring economic activity and an increasingly tech-oriented global economy, Arthur D. Little (ADL) latest report entitled ‘Situating the Kingdom of Bahrain in a Future World: Opportunities for Foreign Investment’ notes that much like the wider GCC, the kingdom has entered a paradigmatic yet opportunistic shift.

The consultancy says the country’s national strategy is pivoting to become more sustainable and competitive by investing in future-defining oil-proof sectors, as the Covid-19 pandemic underscored the need for economic growth through the accelerated uptake of innovation and digital economy.

It explains that this has resulted in Bahrain amplifying plans for economic diversification through Foreign Direct Investment (FDI), backed by several competitive advantages that make FDI attractive.

The kingdom boasts the highest FDI per capita in the region, as well as an FDI inward stock of 92pc in terms of nominal gross domestic product (GDP) – the highest in the GCC. Therefore, the foundations are in place for heightened FDI attractiveness that dramatically boosts the current GDP of $30 billion.

“Despite being a smaller market in regional terms, the kingdom’s highly favourable investment environment is clear for all to see,” explained Andreas Buelow, partner at Arthur D. Little Middle East.

“The country has the infrastructure and potential to attract robust FDI across various emerging sectors in the short, medium, and long term, with projects holding high success rates in areas such as renewable energy, health management, financial services, cloud computing, and technology incubation. Challenges always accompany opportunities, and disruption of varying degrees will continue casting uncertainty as national ambitions are pursued in the years ahead. However, Bahrain is favourably positioned to not only capitalise on FDI openings, but also create the same vibrant future that the kingdom’s leadership and wider business community both envisage.”

Having examined the country’s entire FDI landscape, Arthur D. Little identifies specific challenges in anticipation and provides insights about the most prudent courses of action for overcoming obstacles and making full use of upcoming opportunities.

The country’s small domestic market and challenging fiscal position could be overcome by carving a niche in the global landscape for specialised economic activities, whilst continuing to act as a trusted regional economic partner and leverage in full the global potential of its local workforce.

“As Bahrain prepares to move forward, driving innovation, establishing new partnerships with neighbouring countries, and utilising existing resources are viable, effective avenues for overcoming the most difficult challenges at hand,” added Mr Buelow.

“Technology will certainly be a key enabler of any positive eventualities and central to all future economic activities. Consistent implementation over the long haul will be key to success.”

Also among the essential next steps identified by the report for the kingdom to become a fully enabled ‘smart’ country is developer dividend monetisation.

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