MEED speaks with Sheikh Mohammed bin Isa al-Khalifa, chief executive officer, Economic Development Board of Bahrain (EDB)
MEED: In your view, what is the root cause of the unrest Bahrain has experienced this year? How does the country resolve these issues and is the political will there to continue the reform process Bahrain has started?
Sheikh Mohammed bin Isa al-Khalifa, chief executive officer, Economic Development Board of Bahrain (EDB):
It is important to see the progress already made in Bahrain in the context of the region. We have undergone more than 10 years of political, social and economic reform in Bahrain, but this is a process and there is more work to be done.
Clearly, the events that have swept through the region acted as a catalyst for those who believed reform was not moving fast enough. However, I believe that ultimately we will look back on this recent period of unrest as a positive catalyst for further change that helped Bahrain emerge stronger. Our aim must be for this progress to be sustainable. Bahrain will move at a speed that it can withstand and that is in the interests of everyone who lives in the Kingdom.
What is your view of Bahrain’s perception in the region, and internationally, following the political unrest?
The unrest has highlighted both Bahrain’s achievements and also the challenges we face as we move to the next stage of reform. Bahrain is seeking to find a careful balance as it treads a sustainable path of progress, not least of all in a wider region with complex and competing demands.
Recent events have also demonstrated the strength of unity within the Gulf and our shared outlook and common purpose. This will offer new economic opportunities to Bahrain and underlines our position at the heart of the Arabian Gulf.
Does the EDB have a strategy for improving that reputation and what does it include? What is the EDB doing to restore confidence and economic growth to the Bahraini economy?
The EDB is leading a series of roadshows to the US, Europe and Asia during which representatives from the kingdom’s private sector and government will be reaching out to businesses and other key stakeholders to discuss the benefits of accessing the trillion-dollar GCC market from Bahrain.
Following recent events, the EDB also reached out to the heads of more than 300 leading multinationals and Bahrain enjoys continued support – there’s no indication of significant commercial migration as a result of the protests.
As well as the Formula One returning next year, we also have key economic conferences and exhibitions such as the World Islamic Banking Conference and more social events such as the Bahrain Boat Show, Spring of Culture and the Bahrain International Air Show returning over the coming months, which demonstrates that stability has returned.
By making efforts to reach out to international stakeholders, continuing to work closely with those operating in Bahrain and attracting visitors into the country, I am confident that we will see a resumption of strong long-term economic growth.
How damaging has the unrest been to the Bahraini economy? Do you have a GDP forecast for 2011 and 2012, and how has that changed since the beginning of the year?
Inevitably there has been some impact, but Bahrain demonstrated economic resilience throughout the global economic downturn, and events of the past months should not fundamentally affect the long-term outlook, for a number of reasons.
Firstly, Bahrain’s business fundamentals, the transparency with which we do business, the high quality regulation through our single regulator, the Central Bank of Bahrain (CBB), and the low cost of doing business, remain unchanged. Secondly, the oil and gas rich nations of the GCC are responding to the situation by coming closer together and focusing on increasing their cooperation, meaning that Bahrain is, more than ever, the best place for firms to access the wealth of the trillion-dollar GCC economy.
We continue to see investors set up operations in Bahrain over recent months, with the CBB issuing 8 licences so far in 2011. Other key businesses such as [Germany’s] DHL have reiterated their commitment to Bahrain by the signing of new agreements.
The most recent Bahrain EDB quarterly report (http://www.bahrainedb.com/quarterly-review.aspx) estimated that Bahrain’s economy grew by 1.76 per cent in the first quarter of 2011 and forecasted that Bahrain’s overall GDP will grow by 1.6 per cent in 2011. Bahrain grew throughout the downturn, at no point falling into recession, and will achieve growth this year as well, which demonstrates the fundamental strength of our economy.
Will this set back the goals of the Vision 2030, both in terms of the social goals of creating a more stable and equal society, improving education and access to employment, developing the private sector, and the economic goals of improving the standard of living?
Far from it, we have made clear progress in recent years and Bahrain will recover from this period and emerge stronger, politically, socially and economically. The government is committed to reform that protects and serves the national political and economic interest of Bahrain and all Bahrainis.
The government has committed to significant investment in key infrastructure and social development projects, and work has already started on a comprehensive social housing programme of 50,000 homes ($5.3bn) – to be built within three years alongside further regeneration in less affluent areas. Also, SME support is being provided through the Tamkeen labour fund and BD10m ($26.5m) has been set aside to support around 2,000 companies.
Bahrain remains committed to ensuring that the same core business fundamentals remain in place; stable and transparent regulation, an open business environment and sustainable growth, exploiting our location between East and West and offering a base from which to access the GCC market.
The strong fundamentals will support a resumption of strong long-term economic growth, providing increased investment in social welfare reform for all Bahrainis, while key political issues are addressed through the National Dialogue.
When do you expect to see the GCC support fund coming through for Bahrain and how will they be used?
The Finance Ministry is finalising the technical arrangements of the Gulf Development Programme with the other GCC countries. The programme will aim to aid key developmental projects in priority sectors, such as housing and infrastructure, as well as other investment projects that bear fruit over consecutive years
How important are the elections for Bahrain, and given that [Shia opposition party] Al-Wefaq is not participating, can the elected candidates be considered a legitimate representative of the people?
Bahrain is a constitutional monarchy and a functioning parliament is essential in order to enact further reform. Of course, we would like to see all societies participate, but if one chooses not to we cannot allow this decision to derail the process. The elections provide people with the opportunity to vote for whomever stands. As with any other democratic process, the elected candidate is the legitimate representative of all voters in their constituency, not only those who voted for him or her.
How does the EDB now fit into the political landscape of Bahrain – given the way the political situation has deteriorated in the country since the beginning of the year, is there still a broad acceptance of the kind of goals the EDB has pursuing, and the way it is going about it?
The objectives of the EDB remain unchanged. We are focused on formulating and overseeing the economic development strategy of Bahrain and creating the right climate to attract direct investment into the kingdom, working with all key delivery ministries. This will ultimately help create greater opportunities and drive job creation for all Bahrainis, leading to higher standards of living and helping to build lasting social stability.
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