SINGAPORE – The Bahrain Economic Development Board (EDB) is opening an office in Singapore, marking the Gulf nation’s first foothold in South-east Asia and broader ambitions in the region under its Economic Vision 2030 plan.

Five priority sectors have been identified for collaborations, as the kingdom focuses on diversifying its economy from one built on oil wealth to a globally competitive one – a shift that began more than two decades ago.

The five sectors are financial services, information and communication technologies, manufacturing, logistics and tourism.

“Our priority is to attract these investments into Bahrain to further grow and diversify the economy and create more job opportunities,” said Ms Dalal Buhejji, executive director of business development for financial services at Bahrain EDB.

“We believe that having a physical presence in Singapore will give us access to the Singapore market and the Asean markets,” she told The Straits Times on Monday ahead of her visit to Singapore on Tuesday.

Bahrain EDB, led by its chief executive Khalid Humaidan, together with Ms Buhejji and senior officials from the Central Bank of Bahrain and Bahrain Fintech Bay, will be attending the Singapore Fintech Festival 2023 from Wednesday to Friday.

Ms Buhejji said that Singapore and Bahrain share many similarities, both being agile nations with flexible regulatory environments that are progressive to foster digital innovation across sectors, and in the financial services market in particular.

The Singapore office will help Bahrain attract more digitally enabled technologies, she said, with Asean’s digital economy poised to exceed US$200 billion (S$272 billion) by 2025. 

“That’s a major opportunity for us, especially as we grow our digital economy in Bahrain across all sectors,” Ms Buhejji said. 

Bahrain’s push to develop a crypto hub that protects investors has proven attractive to companies specialising in blockchain-based technology and services. It boasts more than 120 fintech companies, mostly in the payments and crypto sectors.

Singapore’s Whampoa Group, an investment firm with stakes in global tech firms, announced that it would set up the headquarters of its new digital bank in Bahrain.

It plans to launch Singapore Gulf Bank, whose services include payments and settlement for crypto companies, in December, and is awaiting the final approval to get its licence from the Central Bank of Bahrain. 

Whampoa is co-founded by Mr Lee Han Shih, a member of the business family that co-founded OCBC Bank and Lee Rubber Group, and Ms Amy Lee, a former senior partner at the Lee & Lee law firm started by her father Lee Kim Yew and his older brother Lee Kuan Yew – Singapore’s first prime minister – and his wife.

Just as Singapore will be Bahrain’s gateway to South-east Asia, Bahrain aims to be the bridge connecting Asean to the US$4.3 trillion Middle East and North Africa (Mena) region.

Like Asean, Mena and the six Gulf Cooperation Council (GCC) members of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates are going through exciting transformation and growth, she said. “Many global companies and investors have identified Bahrain as a place to set up their regional headquarters to grow and access the region.”

She cited examples including American Express and BNP Paribas, which have their regional headquarters in Bahrain, as well as Citi and PwC, which have chosen to set up their technology hubs and service centres there to serve global clients.

In 2022, the financial sector accounted for 17.5 per cent of gross domestic product, about on a par with oil and gas’ contributions which were about 17 per cent, down from 42 per cent in 2002.

From 2002 to 2022, Bahrain’s economy grew fourfold as it diversified away from oil, with nominal gross domestic product (GDP) expanding from US$10 billion to US$44 billion, Ms Buhejji said.

In the second quarter of 2023, Bahrain recorded a 2 per cent growth in real GDP compared with the same period in 2022, according to its Ministry of Finance and National Economy. 

The growth was fuelled by a rise in the non-oil sector, which contributed close to 83 per cent of Bahrain’s real GDP between April and June.

The country is also witnessing an acceleration in foreign direct investments (FDIs), thanks to its business-friendly environment, regulations, strategic location and availability of talent, as well as the constant upskilling and training of its workforce, Ms Buhejji said.

According to global research and advisory firm Oxford Business Group, Bahrain’s FDI inflows surged by about 6 per cent, or US$1.95 billion, to US$35.43 billion in 2022. A projected US$1.4 billion in direct investments were attracted by Bahrain EDB in the first nine months of 2023.

The overall cost of doing business in Bahrain is also much lower compared with its neighbours, Ms Buhejji said.

She cited a KPMG report that showed the annual cost of operating a manufacturing business in Bahrain is 20 per cent to 56 per cent lower than that of its Gulf peers. It analysed the costs of business registration and licensing, labour, rental, and transport and logistics, among other factors.

Bahrain as a member of the GCC enjoys a free trade agreement with Singapore that came into force in 2013. 

Singapore businesses that have set up operations in Bahrain include the Ascott hospitality group, retailers BreadTalk and Charles & Keith, software firm CrimsonLogic and school operator EtonHouse.