Traders work at the Bahrain Stock Exchange in Manama. The kingdom's prime assets are believed to be its strategic geographical location in the Middle East region, low labor costs, diversified industries and an open economy that offer a favorable business environment for Chinese companies. Phil Weymouth / Bloomberg

Oil-rich Middle East kingdom launches office in HK to win investors in Belt and Road drive

Oil-rich kingdom Bahrain - one of the Middle East countries along the China-led Belt and Road Initiative - has launched its economic development office in Hong Kong as part of efforts to lure SAR and Chinese mainland investors seeking access to the fast growing $1.6-trillion Gulf Cooperation Council (GCC) market.

The SAR office aims to facilitate bilateral links between Hong Kong and Bahrain and seek cooperation opportunities in key industries like tourism and leisure, financial services, information communications and technology and manufacturing.

It will help investors explore opportunities and guide them through the process of establishing companies in Bahrain.

The value of trade between Hong Kong and Bahrain surged 22.8 percent to $139.43 million in 2015, according to government data.

The tiny island nation, located on the western shores of the Persian Gulf and is heavily reliant on oil exports and tourism, is recognized as one of the world's freest economies. It has been stepping up a campaign for foreign trade and investment, stressing its role as the gateway for Chinese mainland investors in the six-nation GCC of which Bahrain is a member.

According to Bahrain's economic development agency, the country's prime assets are its strategic geographical location in the Middle East region, low labor costs, diversified industries and an open economy that offer a favorable business environment for Chinese companies.

"Bahrain is connected to Saudi Arabia by a 25-kilometer causeway, which only needs 30 minutes' drive, so many companies use Bahrain as a gateway for access to Saudi Arabia and the GCC countries," said Simon Galpin, managing director of the Bahrain Economic Development Board (BEDB).

"In addition, Bahrain has a favorable business environment. Labor and energy costs are 40 percent lower than in Dubai. We offer a unified jurisdiction with a tried and tested legal and regulatory environment, and foreigners can set up wholly-owned companies there, without having to look for a local partner. There's also no income tax, no corporate tax, no capital gains tax in Bahrain," he said.

Shenzhen-based telecommunications giant Huawei has spearheaded the Chinese mainland's business presence in Bahrain, having set up its Middle East headquarters in the kingdom 10 years ago. The group opened its first Middle East IT Competence Center in the country in 2013.

Galpin said tourism is the most important industry for the start of business links with Hong Kong and mainland hotel operators, while the financial services sector fits well for Chinese companies, especially those engaged in the digital payment business.

"Tourism is our key focus. We are keen to invite hotel operators to set up and expand their hotel operations in Bahrain," said Galpin. "Lots of visitors from Saudi Arabia drive to Bahrain for weekends and holidays, but the tourism industry only accounted for 2 percent of Bahrain's real gross domestic product in 2014. So, I believe there's huge potential."

According to the BEDB, Bahrain hosted more than 10 million visitors in 2014 - up 11.1 percent over 2013 - with about 6.6 million of them from the GCC, especially Saudi Arabia.

As a nation involved in the Belt and Road Initiative, Bahrain is seeking deeper business cooperation with mainland companies.

"Bahrain is very keen to develop economic relationships with the mainland. We have many government-funded infrastructure projects that could present opportunities for mainland engineering companies, such as upgrading oil and gas companies, expanding our airport by 40 percent and a new light-rail system. We're now actively looking for partners," said Galpin.

The Belt and Road Initiative, proposed by China in 2013, is a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The network connects Asia, Europe and Africa and passes through more than 60 countries and regions with a population of about 4.4 billion.

cherrylin@chinadailyhk.com

(HK Edition 08/30/2016 page9)