Business in Bahrain-the opportunities and the pitfalls

For the past 40 years, the oil-rich country of Bahrain has been establishing itself as foreign-investment friendly as it has sought to diversify its industries away from the reliance on oil. To this end, the Arabian island nation has much to offer those looking to set up a business in or expand their existing business into the country. As with the rest of the Middle East, however, Western businesses wishing to take advantage of the business-friendly environment will have to be aware of the sometimes subtle differences in the Gulf state’s approach to commerce.

Bahrain is regarded by some as the gateway to the Gulf and despite only boasting a population of around one million, the Gulf region offers access to a potential 100 million people. The country is already linked to Saudi Arabia by a causeway and another one is planned to link it to Qatar by 2015, making it a strategic centre.

Geography aside, there are a number of other reasons for considering building a base in Bahrain – one of the main draws to the area is the liberal tax regime. There are barely any personal income taxes, corporation taxes, wealth taxes or capital gains taxes. Importantly for those considering dealing in the area, there is also no restriction on the repatriation of capital, profits or dividends. If you already bank with a global institution, you should face few problems in transferring money to the region, setting up a business credit card or securing office space.

In terms of the legal system, it is based on the British system meaning it is fair for business owners, investors and employees alike. Businesses can also be private-owned in almost all private sector activities and there are no “free zone” restrictions as exist elsewhere in the Gulf. The state does expect companies to follow international accounting practices and to pursue good corporate governance.

Although the Gulf States and the Middle East in general are keen to attract foreign investment and business, and Bahrain is one of the most liberal cultures in the area, it is worth remembering that cultural differences should be respected. On a very basic level, this means only shaking hands with your right hand and only shaking hands with a woman if she specifically offers her hand. Small talk is expected at the start of a conversation but be wary of asking after a businessman’s wife if you do not know him well.

In the Arab world, the sole of the foot is regarded as dirty so you should avoid pointing it at anyone you meet, and try not to cross your legs during meetings. Also, do not be worried by long periods of silence in a meeting – these are not seen as awkward in the Arab world but instead are regarded as showing a certain gravitas. These may seem like trivial details but get them right from the start and you will gain the correct kind of reputation and find that doing business in the area becomes easier.

If you are considering setting up a business in Bahrain, your first stop should be the Bahrain Investor’s Centre, which is part of the Ministry of Commerce. You will also need to obtain the required paperwork from the government, which includes a work visa, a residency permit and a CPR card, which is used as identification. Another useful resource is the Economic Development Board in Bahrain, which was specifically set up to aid investment in the region.

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