Historical records have named The Kingdom of Bahrain as the “Pearl of the Gulf” and the nation has been a long-standing partner to Malaysia with cordial diplomatic ties spanning half a century.
The strong Bahrain-Malaysia relationship is founded upon economic cooperation as its fundamental pillar, characterised by a significant growth in trade.
Malaysia exports a diverse range of products to Bahrain, ranging from wood, furniture, and electronics to palm oil — in return — Bahrain exports aluminium products and oil-related items to Malaysia.
Both nations have assumed key roles in the global Islamic banking sector, fostering closely-knit collaboration and the mutual sharing of expertise in this field. Cultural exchanges have also further deepened the ties between the two nations. Malaysia has become a popular tourist destination for Bahraini travellers, who have been captivated by the country’s rich cultural heritage and warm hospitality.
Likewise, Bahraini students pursuing their education in Malaysia have developed a profound appreciation for Malaysian culture and traditions while contributing to the academic landscape of both nations. The Bahraini community residing in Malaysia serves as a cultural bridge, promoting understanding and friendship between the two societies.
BusinessToday spoke to Embassy of the Kingdom of Bahrain in Malaysia Chargé d’Affaires Rashad Farouq Al Sheikh exclusively recently who said formal relations between Bahrain and Malaysia trace back to November 25, 1974, when both nations announced the establishment of diplomatic relations at the ambassadorial level. This occasion marked the beginning of a prosperous partnership that has flourished across multiple domains. More recently, bilateral relations achieved new milestones when His Majesty King Hamad bin Isa Al Khalifa, King of Bahrain, issued a decree in 2017 to establish Bahrain’s diplomatic mission in Kuala Lumpur, further solidifying the commitment to strengthen ties between the two nations.
Synergic Economic Ties
The outlook for Bahrain-Malaysia relations is very promising, Rashad said, as the two nations prepare to celebrate the 50th anniversary next year.
This significant milestone provides an opportunity not only to reflect on past achievements, but also to look towards a more prosperous future. Joint efforts are being channelled into enhancing cooperation across various fields, encompassing politics, economy, education, culture, tourism, and healthcare.
Both nations are dedicated to strengthening trade relationships, fully implementing existing agreements, and nurturing stronger cultural connections.
Bahrain’s Economic Recovery Plan, unveiled in October 2021 in alignment with the Kingdom’s Economic Vision 2030, is devoted to steering the country from post-COVID recovery to long-term growth and sustainability. It entails the implementation of over USD30 billion of large-scale projects and initiatives across pivotal economic sectors, with a focus on high-impact non-oil sectors, including financial services, information, and communications technology (ICT), manufacturing, logistics, and tourism. The overarching goal is to solidify Bahrain’s position as a leading global economy.
In 2022, non-oil trade between both nations reached USD251.4 million. Bahrain’s total imports amounted to USD88 million, with Bahrain’s total exports reaching USD163.4 million.
Trade relations between the two countries are currently on an upward trajectory, and we hope to achieve a trade volume of over USD350 million in 2024. This target spans across a multitude of sectors, including but not limited to Islamic Finance, FinTech, Manufacturing, Transportation, Logistics, Tourism, ICT, and other key sectors.
Rashad said Bahrain is also looking into food security, infrastructure and mechanical and engineering sectors and especially the Halal food industry which would increase the engagement between Bahrain and Malaysia and the halal market.
“Trade is vision which signifies the commitment of both Bahrain and Malaysia to further enhance their economic ties and mutual collaboration in diverse industries.”
Malaysia is considered the 27th largest import market and the 20th largest export market for Bahrain. The two countries are determined to expand trade across a wide range of sectors, including energy, Islamic finance, infrastructure, and halal commodities.
Bahrain also sees Malaysia as a strategic location in the heart of Southeast Asia, with 676 million citizens, offering commercial opportunities for companies to expand their regional and global supply chains and operations and with these factors Bahrain’s flourishing growing economy presents exciting investment opportunities within a business-friendly environment designed to help businesses grow and expand regionally from Bahrain.
Distinguished by its status as the most diversified economy in the Gulf Cooperation Council (GCC), Bahrain offers a plethora of opportunities across key sectors such as financial services, ICT, manufacturing, logistics, and tourism.
Bahrain’s pro-innovation business policies and regulatory framework provide a favourable setting for businesses of all scales to grow and thrive.
The Kingdom’s Cabinet has taken a proactive approach by presenting the draft 2023–2024 national budget to Parliament and the Shura Council, allocating BHD1.123 billion (Approx. RM14 Billion) for over 50 mega projects spanning housing, education, health, digitalisation, and artificial intelligence sectors.
This budget is divided into two segments, with BHD608.6 million (Approx. RM7.58 Billion) designated for the current year and BHD514.1 million (Approx. RM6.41 Billion) for the following year.
Approximately 38% of the draft 2023-2024 budget is earmarked for infrastructure projects, while 33% will go towards housing and community facilities. Moreover, 11% of the budget is allocated to youth, sports, culture, and information, 4% for education, health, and social services, with the remaining 13% directed to other sectors.
Some of the key projects the budget will cover include the Bahrain Metro, Sports City, Salman Industrial City, Salmaniya Medical Complex (SMC), the fourth bridge between Muharraq and Manama, roads leading to the airport, the new National Assembly building, and improvements in media services.
Bahrain’s Robust Investment Value-Proposition
Rashad explained Bahrain’s inward FDI stock surged by 5.82 percent to US$35.43 billion in 2022 compared to 2021. Similar to Malaysia, Bahrain is showing strong signs of recovering from the pandemic, with a GDP growth rate of 4.9 percent in 2022, compared to 2.2 percent in 2021.
“We hope that the volume of investment between the two countries will increase in the coming years.
The Embassy of the Kingdom of Bahrain in Kuala Lumpur, Malaysia, has recently intensified its efforts to showcase lucrative investment opportunities in Bahrain to Malaysian investors as part of its ongoing commitment to strengthening bilateral trade and investment relations,” he said.
Malaysian investments have contributed significantly to Bahrain’s infrastructure development, with Malaysian companies playing significant roles in major projects such as Bahrain International Circuit, Bahrain City Centre Mall, and the expansion of Sitra Causeway and Khalifa Bin Salman Port.
These ventures have not only bolstered both countries’ economies but have also generated employment opportunities, benefiting both Bahraini and Malaysian citizens.
Looking ahead to 2024, we emphasise that the ties presents an opportunity to enhance the relationship between the two nations and strengthen cooperation in the fields of economics, culture, science, education, and tourism.
Established Avenues
In order to ensure that both nations encounter mutual benefits through further economic growth, the Bahrain Economic Development Board (Bahrain EDB) is ready to work with the government, and both current and prospective investors, to ensure that Bahrain’s investment climate is attractive, to communicate the key strengths, and to identify where opportunities exist for further economic growth investment.
Bahrain EDB, which has now established branches globally and plans to set up here in Malaysia in 2024, is an investment promotion agency with an overall responsibility for attracting investments into the Kingdom and supporting initiatives that enhance the investment climate.
It focuses on several economic sectors that capitalise on Bahrain’s competitive advantages and provide significant investment opportunities. These sectors include financial services, manufacturing, logistics, ICT, and tourism.
Team Bahrain is a curated approach that champions the private and public sectors working closely together to create an innovative and attractive investment environment for businesses to succeed. Whether working to pass a new regulation or analysing the feasibility of launching a niche idea to market – Team Bahrain works with empathy and drive connecting investors to the key decision makers that matter.
The USD4 Trillion GCC Market
Rashad said Bahrain shines as a strategic destination of choice for investors looking to tap into the over USD4 trillion GCC market. The country’s liberal regulatory environment which allows 100% foreign ownership across almost all sectors, direct access to Saudi Arabia (the largest GCC market) and adjacent markets, cost-effective operational environment, open and liberal lifestyle, and a deep pool of local skilled workforce, offer compelling and competitive advantages to investors.
Furthermore, a number of factors such as solid progress in infrastructure and real estate development, steady increases in visitor numbers, and the attraction of key players in the global digitisation sector, have added to Bahrain’s attraction as a prime destination for inward investment.
The country has developed into one of the strongest growing economies in the region and has judiciously cultivated a healthy diversification of investment into non-oil sectors. Bahrain EDB is the primary contact point for these investors, providing a comprehensive advisory service to investors and supporting them on their journey long after the initial contact, nurturing long-term partnerships to ensure businesses remain successful. Bahrain also encourages innovation through its liberal and supportive approach to startup businesses from all sectors.
Bahrain’s appeal extends beyond its strategic location. With a history spanning over 4,000 years as a vibrant trade centre, Bahrain is celebrated for its hospitality, warmth, and progressive outlook which boasts a thriving financial hub with the highest concentration of Islamic finance institutions in the region and is home to a highly skilled, bilingual workforce.
According to InterNations, Bahrain is ranked first globally for Getting Started Abroad 2023. Bahrain was also ranked first amongst the GCC in the World Happiness Report 2022, which was released by the United Nations’ Sustainable Development Solutions Network.
Bahrain has a distinctive island culture that both locals and expats find entertaining and rewarding. From its beautiful coastline offering diverse water sports, to the vibrant restaurant scene, to the warmth of the traditional cultural events, to the café culture, art and music scene, and spacious housing. Bahrain offers an excellent lifestyle proposition, especially for families.
Bahrain and Malaysia share stronger cultural and economic relations as both countries’ welcome tourists and investors reciprocally. Building upon these robust trade relations, we aim to attract even more tourists and investors, fostering even stronger economic bonds in the future.
For potential investors eyeing Bahrain, Rashad wholeheartedly recommends a visit to experience the country first-hand.
