GDP (US$ Billion)

34.90 (2017)

World Ranking 96/192

GDP Per Capita (US$)

24,029 (2017)

World Ranking 37/192

Economic Structure

(in terms of GDP composition, 2018)


External Trade (% of GDP)

139.4 (2016)

Currency (Period Average)

Bahraini Dinar

0.38 per US$ (2017)

Political System

Constitutional monarchy


Oil has been the main force behind economic growth in Bahrain, accounting for over 70% of GDP and 80% of government revenue. While the hydrocarbons sector remains the dominant industry in Bahrain, continuing efforts to boost trade growth and industrial diversification bode well for the economy in the medium-to-long term. Bahrain is looking to increase efforts to expand the renewables sector over the coming decade in order to curb an increasing gas import reliance. Non-oil industrial development is still at an early stage, but the country’s strong logistics profile and supportive industrial policies may provide a base for stronger manufacturing growth and less reliance on oil revenues. Moreover, the Bahraini government's development plan for the country's future, Economic Vision 2030, is based on three guiding principles: sustainability, fairness and competitiveness. The Economic Development Board has led a programme of co-ordinated economic and institutional reform intended to transform Bahrain from a regional pioneer to a global contender. The ultimate aim of the plan is to ensure that every Bahraini household has at least twice as much disposable income, in real terms, by 2030.

Sources: World Bank, Ministry of Industry, Commerce and Tourism, Fitch Solutions


Major Economic/Political Events and Upcoming Elections

September 2015
Bahrain Petroleum Company and Saudi Aramco signed deals worth around USD300 million. The deal entailed the construction of the new cross-border Arabia-Bahrain pipeline between both countries.


January 2016
Bahraini government launched a National Broadband Network.


April 2016
Started of the modernisation programme at Bahrain International Airport, which was expected to be completed in 2019. The USD1.1 billion scheme involved the construction of a 207,000 square metre main passenger building, which was expected to handle 14 million passengers and 130,000 air traffic movements annually, as well as to have a handling capacity of 4,700 bags per peak hour.


May 2016
Bahrain's fourth Telecommunications Plan was approved by the Bahraini government and included the broader aims of developing 5G services and readiness and allowed for infrastructure-based competition growth.


April 2017
Bahrain Telecommunication Company, trading as Batelco, confirmed it was committed to the National Broadband Network Project. The project aimed to provide over 95% of homes in Bahrain with internet access speeds of not less than 100Mbps, and internet speeds of not less than 1Gbps for state and commercial users.


December 2017
The Sitra refinery expansion and modernisation contract was awarded to a consortium led by Technip, Samsung Engineering and Tecnicas Reunidas; targeted for completion in 2022.


March 2018
Batelco signed a memorandum of understanding (MoU) with Huawei to work together on the Bahrain National Broadband Network (NBN). The MoU also covered the pair’s development of ‘Safe Cities’ in the Kingdom, in order to enhance safety and living standards in urban areas.


April 2018
Bahrain reported the discovery of the kingdom's largest oilfield in more than 80 years.


April 2018
The United Kingdom opened a permanent military base in Bahrain (a naval support facility) for the first time in nearly 50 years since Bahrain declared independence.


May 2018
The Shura Council (the royally appointed upper house of the National Assembly) approved an amendment to Article 3 of Law No. 14 of 2002, known as the Law on the Exercise of Political Rights. In the interests of national security, the new amendment broadened the scope of exclusion for certain individuals from running for office in the Council of Representatives.


May 2018
The second phase of the Al Dur 2 Independent Water and Power Project was scheduled to begin operations by early June 2020. The scheme will have an initial generation capacity of 800MW, which will then expand to 1.5GW, once the project is completed in June 2022.


September 2018
Tender process began for the consultancy work for delivering the King Hamad Causeway linking Bahrain and Saudi Arabia. The project encompassed both passenger and freight rail, with the freight service running from Bahrain's Khalifa bin Salman port and connecting to the Saudi rail system.


October 2018
At the World Investment Forum in Geneva, the Bahrain Economic Development Board (EDB) won the United Nations' Investment Promotion Award for excellence in boosting investment into sectors that would help meet the Sustainable Development Goals. The award acknowledged the EDB's work with Amazon Web Services, which was set to launch its first AWS Middle East Region in Bahrain in 2019. The increased availability of cloud computing would help Bahrain and other countries in the region develop emerging sectors, enhance productivity and support the growth of start-ups.


November 2018
The EDB and FinTech Consortium announced the launch of 'Bahrain FinTech Bay', which was the largest dedicated FinTech hub in the Middle East and Africa.


November 2018
A high-level business delegation organised by the EDB conducted a nine-day visit to Mainland China. The long-term aim is to strengthen economic and trade ties between the two countries.


November 2018
Parliamentary and municipal elections held on November 24, 2018 were notable for greater participation of women and youth candidates. Turnout was reportedly 67%, which is up from the 53% reported at the last elections in 2014.


January 2019
Bahrain was preparing to open the world's largest underwater theme park in summer 2019. The park was aimed at re-establishing Bahrain as a regional diving hub, which, it is hoped, would help to revive the country's traditional pearl industry.


February 2019
Bahrain's budget deficit dropped by 35% in 2018.


February 2019
Bahrain's sovereign wealth fund successfully raised USD600 million in Islamic bonds, marking a turnaround in credit conditions.


February 2019
The Government published consultancy tenders for the Bahrain Metro project, having completed a feasibility study. The metro project included the introduction of driverless trains, cover 109km via six lines and have the capacity to transport 43,000 passengers an hour.


April 2019
Bahrain formalised the October-2018 agreement with Kuwait to support the Bahraini economy. The next day, King Salman of Saudi Arabia travelled to the state to discuss regional developments. The agreement relates to a five-year USD10 billion pledge of financial aid package from Kuwait, Saudi Arabia and the United Arab Emirates to rescue Bahrain from a potential debt crisis, caused partly by interruptions to oil output.


April 2019
Bahrain signed 12 agreements and memorandums of understanding worth USD2 billion with French companies, including Total and CFM International.


May 2019
Eagle Hills Dayar has signed a finance agreement worth USD374 million with a syndicate of banks from the United Arab Emirates and Bahrain for the construction of a shopping complex dubbed 'Marassi Galleria' and two hotels in Bahrain.


Sources: BBC Country Profile – Timeline, The Independent,, Bahrain Economic Development Board, Khaleej Times, The National, Independent, Reuters (Credit RSS), Reuters (Business News), Al Jazeera, Fitch Solutions

Major Economic Indicators
Graph: Bahrain real GDP and inflation
Graph: Bahrain real GDP and inflation
Graph: Bahrain GDP by sector (2018)
Graph: Bahrain GDP by sector (2018)
Graph: Bahrain unemployment rate
Graph: Bahrain unemployment rate
Graph: Bahrain current account balance
Graph: Bahrain current account balance

e = estimate, f = forecast
Sources: IMF, World Bank
Date last reviewed: September 2, 2019

External Trade

Merchandise Trade

Graph: Bahrain merchandise trade
Graph: Bahrain merchandise trade

e = estimate
Note: 2012-2017 estimate for imports only; 2018 estimates for both imports and exports; 2014 is not estimated for either
Source: WTO
Date last reviewed: September 2, 2019

Graph: Major export commodities to Bahrain (2018)
Graph: Major export commodities to Bahrain (2018)
Graph: Bahrain major export markets (2018)
Graph: Bahrain major export markets (2018)
Graph: Bahrain major import commodities (2018)
Graph: Bahrain major import commodities (2018)
Graph: Bahrain major import markets (2018)
Graph: Bahrain major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: September 2, 2019


Trade in Services

Graph: Bahrain trade in services
Graph: Bahrain trade in services

e = estimate
Note: 2018 estimates for both exports and imports; 2016 estimates imports only
Source: WTO
Date last reviewed: September 2, 2019

Trade Policies
  • Bahrain has been a World Trade Organization (WTO) member since January 1, 1995, and a member of the General Agreement on Tariffs and Trade (GATT) since December 13, 1993. Bahrain signed up to the WTO Rule of Origin Agreement, WTO Trade Facilitation Agreement and the WTO Protocol Amending the Marrakesh Agreement. Furthermore, Bahrain is a signatory to the Istanbul Temporary Admission Convention, Harmonised System Convention and the International Convention on the Simplification and Harmonisation of Customs Procedures.

  • Bahrain has a relaxed trade regime with minimal tariff and non-tariff trade barriers for the majority of its trading partners.

  • In light of the global slump in crude prices, Bahrain's trade balance has been shielded by the kingdom's growing export revenues from services. For example, when Bahrain's total export revenue decreased by about 17.8% between 2014 and 2015 and decreased by another 22.7% between 2015 and 2016, export revenue derived from services actually increased by 6.3% between 2014 and 2015 and by around 20% between 2015 and 2016. In 2017, revenues derived from services' exports amounted to around USD11.1 billion. In 2017 (latest available data), the main services which Bahrain derived export revenue from were tourism, transport, as well as ICT and telecommunications services. However, secondary sector industries such as refined fuel production, metal product manufacturing (mainly aluminium) and machinery play the most significant role in terms of the country's exports and imports.

  • Bahrain is a member of the Gulf Cooperation Council (GCC), along with Saudi Arabia, the United Arab Emirates, Oman, Kuwait and Qatar. The GCC is a political and economic organisation that was created in the 1980s, but since 2015 a customs union has also been launched between the six member states. Therefore, the country's GCC membership means that it is part of a single market and customs union with a common external tariff.

  • A tariff of only 5% is imposed on the majority of items imported to Bahrain from non-GCC countries and there is a single point of entry where tariffs are collected once imports enter the GCC. Only certain sensitive goods imported from GCC countries will face tariffs and there is freedom of movement between GCC countries without customs or non-customs restrictions.

  • In June 2016, the GCC nations approved plans to double the tariff on imported tobacco from 100% to 200% in mid-2016. The United States' tobacco importers are exempt due to pre-existing free trade agreements (FTAs).

  • Bahrain implemented excise tax on December 30, 2017, pursuant to the GCC's unified law on selective excise taxes.

  • There are signed bilateral investment treaties (BITs) between Bahrain and the following areas: Algeria, Belarus, Brunei Darussalam, mainland China, Czech Republic, Egypt, France, Germany, Iran, Italy, Jordan, Lebanon, Malaysia, Mexico, Morocco, the Netherlands, Pakistan, Russia, Singapore, Spain, Syria, Thailand, Turkey, the United Kingdom and the United States. BITs with the Belgium-Luxembourg Economic Union (BLEU), Bulgaria, Sudan, Turkmenistan, Uzbekistan and Yemen are signed but not yet in force.

Sources: WTO – Trade Policy Review, UNCTAD, Fitch Solutions

Trade Agreement

Trade Updates

Negotiations for an FTA between the European Union (EU) and the GCC started in 1990 but were suspended in 2008. The region represents an important export market for the EU and ongoing co-operation between the two led to a more structured informal dialogue on trade and investment being launched in May 2017.


Multinational Trade Agreements


  • The GCC Customs Union: This customs union, which entered into force on January 1, 2003, seeks to enhance ties between member countries. The customs union also seeks to harmonise member countries' economic, financial and monetary policies, as well as their commercial and industrial legislation and customs laws. The union also seeks to lay the steps towards building a common market and an economic and monetary union between the member states. Because two out of five of Bahrain's top export and top import partners are all members of the GCC, all of Bahrain's trade with these countries is tariff-free. All members benefit from having a common external customs tariff, common customs regulations and procedures and unified standards and specifications for all products. There is freedom of movement between the GCC countries for the vast majority of goods without restrictions. This reduces the overall time and cost burdens for supply chains.

  • The Pan-Arab Free Trade Area (PAFTA): PAFTA was established in order to create an Arab economic bloc that could effectively compete with other countries while ensuring that member countries increased trade with each other. PAFTA entered into force on January 1, 1998. The most important aspect of the agreement was that over the next 10 years (to 2008), each member country would seek to reduce customs fees by 10% per annum as well as gradually eliminate trade barriers. In March 2001, the member countries decided to reduce the period over which the reductions in tariffs could be made so as to speed up the process and in January 2005 the elimination of most tariffs among the PAFTA members was enforced. Two out of five of Bahrain's top export markets are members of PAFTA, as well as many of its smaller trading partners.

  • The GCC and European Free Trade Association (EFTA): This agreement, which applies to the trade in goods and services, was signed on June 22, 2009 and entered into force on July 1, 2014. The signatories to the FTA seek to liberalise their markets. The non-trade aspects seek to enhance the economic relations between the member countries. While EFTA member states (Norway, Switzerland, Iceland and Lichtenstein) are far removed from Bahrain and there is no considerable trade between the countries, it may promote further trade in the future.

  • The GCC-Singapore Free Trade Area (GSFTA): The GSFTA was signed on December 15, 2008 and the agreement entered into force on September 1, 2013. The GSFTA is a comprehensive FTA between Singapore and the GCC countries that includes the trade in goods and services. The FTA also includes provision to foster greater investment between the signatories. In the case of trade, the rules of origin and customs procedures for goods between the countries have been simplified. Furthermore, the agreement seeks to create a level playing field as far as government procurement is concerned. Singapore is one of Bahrain's import suppliers and therefore, Bahrain has benefitted from tariff eliminations on 99% of Singaporean domestic exports to the GCC.

  • Bahrain-United States FTA: This agreement entered into force on August 1, 2006. On the first day the agreement took effect, 100% of the two-way trade in industrial and consumer products began to flow without tariffs. The United States is one of Bahrain's top five exporting partners and import suppliers. The removal of tariffs on all bilateral trade between the countries in terms of industrial and consumer products (with the exception of a few agricultural items) has been highly beneficial. The FTA also promotes economic reforms and liberalisation in the Middle East. The United States-Bahrain bilateral investment treaty, which entered into force on May 30, 2001, covers investment issues between the two countries.

Under Negotiation

  • Australia-GCC FTA: Negotiations with the GCC commenced in July 2007. These negotiations were preceded by bilateral FTA negotiations with the United Arab Emirates, which were abandoned following a decision by GCC ministers to only negotiate FTAs as a group. To date, there have been four rounds of Australia-GCC FTA negotiations, with the last one held in June 2009. Australia and the GCC share a significant economic relationship, encompassing trade and investment across a broad range of goods and services. The GCC is a key market for agricultural exports such a livestock, meat, dairy products, vegetables, sugar, wheat and other grains. The agreement provides an opportunity to address a range of tariff and non-tariff barriers. An Australia-GCC FTA would provide an opportunity to reduce barriers to trade in mineral commodities and automotive parts. Provisions on investment would encourage inward investment from the GCC and enhance security for Australian investments in GCC countries themselves, including in such areas as mining or the development of educational campuses. No progress is expected on an FTA with the GCC while the intra-Gulf tensions, which commenced in June 2017, remain unresolved.

  • Mainland China-GCC FTA: In July 2004, the launch of mainland China-GCC FTA negotiations was announced. Thus far, the two parties have held nine rounds of negotiations and have reached an agreement on the majority of issues concerning trade in goods. Negotiations on trade in services have also been launched. Greater trade liberalisation will help to develop the industrial and service sectors.

  • India-GCC FTA: The agreement is expected to remove restrictive duties, push down tariffs on goods and pave the way for more intensive economic engagement between the nations. More than 50% of India's oil and gas comes from the GCC states.

  • Japan-GCC FTA: This agreement will seek to reduce tariffs and the liberalisation of services trade and investment. Japan mainly imports aluminium, natural gas, liquid natural gas and petroleum products from the GCC, while Japan mainly exports electronics, vehicles, machinery and other industrial products to the GCC.

Sources: WTO Regional Trade Agreements database, European Commission, Australian Government Department of Foreign Affairs and Trade, Ministry of Commerce People’s Republic of China, BH-US Free Trade Agreement, US Department of State, UNCTAD, United States Trade Representative, Fitch Solutions

Investment Policy

Foreign Direct Investment

Graph: Bahrain FDI stock
Graph: Bahrain FDI stock
Graph: Bahrain FDI flow
Graph: Bahrain FDI flow

Source: UNCTAD
Date last reviewed: September 2, 2019


Foreign Direct Investment Policy

  1. The government actively encourages investment in sectors that are export-oriented and do not compete with established local companies. Bahrain provides a free, open and transparent environment for businesses and has a globally competitive, value-creation story that focuses on sustainability, skills and good governance. There is no requirement for foreign businesses to gain local sponsorship in order to be able to gain entry into the domestic market.

  2. State-owned enterprises only dominate the oil and gas market, and the Bahraini government encourages private investment in all other critical sectors through significant tax breaks, various special economic zones (SEZs) and industrial parks, and a sound legal environment. There is an increasing trend towards privatisation; no industry is closed to foreign investors.

  3. To carry out any commercial activity in Bahrain, a legal vehicle should be established in accordance with the Bahrain Commercial Companies Law No. 21 of 2001. Foreign investors are able to establish a 100% foreign-owned entity in Bahrain under certain conditions. However, for some business activities (such as trading) there is a limitation on foreign ownership, so a local partner would be required. Since 2001, the kingdom has been heavily inclined towards increasing privatisation across all sectors, with the state holding company being mandated to reduce its shares in any company to less than 50%. If an international company wishes to establish a branch office in Bahrain, no local sponsor or partner is required.

  4. There are no exchange control restrictions on converting or transferring funds. Bahrain has no withholding or thin capitalisation rules in relation to the financing arrangements in Bahrain.

  5. Bahrain has signed the GCC Value added Tax (VAT) Framework Agreement in relation to implementing VAT from 2018, and in January 2019 Bahrain introduced VAT at a standard rate of 5%. Previously, VAT was not applicable to goods and services in Bahrain with the exception of hotel, short-term lease apartment rental rates and certain restaurants, which were subject to a 10% tourism levy on the gross income and a 12% sales tax on gasoline included in the price.

  6. Foreigners and nationals of other GCC states are permitted to own land and real estate in areas designated by the Bahraini government. The areas designated are all located within significant commercial or manufacturing or residential districts, specialised industrial zones or near key transport hubs.

  7. The Bahraini government prohibits foreign business ownership in press and publications, Islamic pilgrimage services, clearance offices and workforce agencies.

  8. The Bahraini government maintains complete ownership over all oil reserves, refineries and related services. Private investment is allowed and encouraged in other state-dominated industries, such as transportation, aluminium manufacturing, telecommunications and construction.

  9. Tax rates in Bahrain, as in the rest of the GCC, continue to be highly favourable because the country does not charge any corporate tax for companies in non-oil sectors. There is no personal income tax for residents and non-residents in Bahrain and there are no capital gains or estate duty taxes.

  10. In January 2019, the Bahrain EDB announced that it had attracted investments worth USD830 million in 2018.

Sources: WTO – Trade Policy Review, Fitch Solutions, Bahrain Economic Development Board


Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive Programme Main Incentives Available
The Bahrain International Investment Park (BIIP), located five minutes from both Bahrain International Airport and Khalifa Bin Salman Port, was established in 2005 by the Ministry of Industry, Commerce and Tourism as the country's flagship business park. BIIP is a key driver in developing Bahrain's economy, approximately 80% of investment in BIIP comes from international businesses. The BIIP is not a free zone but rather an integral part of the GCC. - 100% foreign ownership 0% corporate tax (with a 10 year guarantee)

- Exemption from import duties on raw materials, plant machinery and spare parts imported for manufacturing

- Duty-free access to all GCC markets and to the United States, Singapore, Norway, Switzerland, Iceland and Lichtenstein; Products manufactured in Bahrain and sold into GCC countries and other Arab markets are free of import duties

- 100% repatriation of capital, profits and dividends

- No recruitment restrictions for the first five years

- No minimum capital required

- Access to financial grants and training support

- Competitively low operating costs
The Bahrain Logistics Zone (BLZ) - The BLZ is operated by ports and maritime affairs at the Ministry of Transportation and Communications. The zone is designed to offer local, regional and international companies a base from which to operate in a bonded area in order to take advantage of Bahrain's highly advantageous position to access GCC and regional markets quickly and economically.

- The BLZ offers the most cost-effective base for doing business in the northern Gulf. The main benefits of choosing the BLZ include the following:
  • 100% foreign company ownership allowed

  • Multimodal access by land, sea and air

  • Competitive land prices and 20-year renewable leases

  • Warehouses in place developed by private developers

  • Flexible plot options with a range of plot sizes starting from 4,000 square metres

  • Purpose-built infrastructure with an ample road network and plot entries designed for the needs of lorry traffic

  • Dedicated 24-hour customs service for shipment processing

  • Dedicated account managers to assist in setting up and operating within the BLZ

  • Seamless end-to-end services

  • Basic services such as facilities management and special waste management

Sources: Kingdom of Bahrain Ministry of Industry, Commerce and Tourism, Bahrain Logistics Zone, Bahrain International Investment Park, Bahrain Economic Development Board, Fitch Solutions

Taxation – 2019
  • Value Added Tax: 5%
  • Corporate Income Tax: 0%

Sources: Kingdom of Bahrain Ministry of Finance and National Economy, National Bureau for Revenue


Important Updates to Taxation Information

Bahrain began to implement VAT as of January 1, 2019, in line with some regional GCC peers. The GCC unified VAT and excise treaties outlined that a uniform VAT standard rate of 5%, with some limited exceptions, will be applicable when each GCC member state implements VAT and that the implementation had to take place before January 1, 2019. The mandatory threshold for businesses in Bahrain has been set at BHD37,500, which will be adjusted upwards in June 2019.


Business Taxes

Type of Tax Tax Rate and Base
Corporate Tax - There is no base corporate tax applicable in Bahrain

- Only oil and gas companies pay a corporate tax of 46% on profits from sales of oil, gas and secondary products
Social security contributions The employer's social security contribution is 12% for Bahraini workers and 3% for non-Bahraini workers, while the employee contributes 7% if Bahraini and 1% if non-Bahraini (making total contributions 19% for Bahrainis and 4% for non-Bahrainis)
VAT 5%, generally. However, zero rating applies to: basic food items in the GCC list; primary, secondary and higher educational institutions; general health services, vaccinations and medicines; interest payments on loans and life insurance contracts; vehicle fuel, motor oil and cooking gas; building materials and photovoltaic cells and equipmet to produce electricity and hot water; sale and rental of real estate; airplane tickets and buses and taxis
Municipal Tax 10% municipality tax levied on the rental of commercial and residential property to expatriates
Stamp duty Stamp duty at 2% is applied to the transfer or registration of real estate; If payment is made within two months following the transaction date, the rate is reduced to 1.7%

Sources: National Bureau for Revenue, Kingdom of Bahrain Ministry of Finance and National Economy
Date last reviewed: September 2, 2019

Foreign Worker Requirements

Foreign Worker Permits

All foreign workers – except for GCC nationals – require a work permit to work in Bahrain. In general, if all the paperwork is in hand and the foreign worker has a company willing to sponsor them and pay additional fees, then this process is not exceptionally time consuming or costly. The Labour Market Regulatory Authority regulates the granting of work visas to foreign nationals wanting to work in Bahrain. A work permit may only be obtained once the applicant has a formal letter of an offer of employment from an employer in Bahrain, which must be submitted with the work permit application. Reforms enacted to this system in August 2017 mean that a 'flexible' work permit can now be applied for that does not link a foreign worker to one particular sponsor and enables a foreign worker to have multiple employers for a period of up to two years. This should improve the availability of labour in the Kingdom, but the cost of such permits is significantly high.


Localisation Requirements

The Bahraini government is attempting to increase the employment of its citizens in the private sector. This is known as the Bahrainisation policy and employers have to pay fees in order to obtain employment visas for their foreign employees. Currently, the fee for a two-year employment visa is BHD200. All private and public companies are required to pay a monthly levy with respect to each expatriate that is employed. The levy is charged at a rate of BHD5 per employee for the first five expatriate employees and BHD10 for each expatriate employee thereafter. Since January 2015, an additional fee of BHD72 for health insurance when issuing or renewing a visa for an expat has been introduced. This fee may not be applicable if the employer provides compulsory health insurance for the employee.

Businesses are expected to prioritise the employment of Bahraini nationals; furthermore, some sectors have various ratios of local to foreign worker numbers which they must comply with. The Bahraini public sector has been one of the larger employers of Bahraini nationals in the past, but with state revenue significantly decreased, the government is enforcing stronger compliance of its Bahrainisation policy in order to account for the shortfall. This is demonstrated by the warning issued by the government in May 2016, which stated that businesses that were found to be contravening the policies (the hiring of one Bahraini national for every four foreigners hired) would be fined USD800 per foreign worker who did not comply or could lose their business permits. The online 'Bahrainisation Calculator' enables employers to check if they meet the minimum set for the employment of Bahrainis in their establishment.


Visa/Travel Restrictions

All business visitors to Bahrain who are not nationals of other GCC states need to obtain a visa to visit the country. This can be done on arrival or in advance. Although visitors to the country who have stamps in their passports from Israel will experience less trouble when attempting to enter Bahrain than in other Gulf States, it is up to Bahraini officials to determine whether that visitor is permitted to enter the country.

Bahrain claims to have the most flexible visa policies in the region, with residence permits easy to obtain for anyone establishing a company in the country. A visa on arrival can be issued to citizens from 67 countries and 114 nationalities are eligible for online visas.


Religious/Cultural Barriers

The Bahraini labour authorities strictly regulate female participation in the workplace for various cultural and religious reasons. In certain cases, women are not allowed to work at night (determined on a case-by-case basis) and the labour authority is allowed to prohibit certain types of work for women.


Kafala Sponsorship System

In 2009, Bahrain announced that it would begin dismantling the sponsorship system known as the 'kafala' system that governs foreign labourers. Bahrain established the Labour Market Regulatory Authority and said that new legislation would permit migrant workers in Bahrain to change employers without their employer's consent. However, while the system has been improved, in practice it is still difficult for migrant workers to change employers. For example, an amendment that was made in 2011 – in response to recruitment agencies lobbying against the changes – means that a worker needs to wait one year before legally being able to change to a new employer. This means that it may be easier for employers to recruit foreign workers from outside Bahrain rather than recruit from the country's large pool of migrant workers.

Sources: Labour Market Regulatory Authority, Migrant Forum in Asia, Nationality, Passports & Residence Affairs, Bahrainisation Calculator, Fitch Solutions


Sovereign Credit Ratings

  Rating (Outlook) Rating Date
Moody's B2 (Stable) 17/12/2018
Standard & Poor's B+ (Stable) 01/12/2017
Fitch Ratings BB- (Stable) 28/02/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings


Competitiveness and Efficiency Indicators

  World Ranking
2017 2018 2019
Ease of Doing Business Index 63/190 66/190 62/190
Ease of Paying Taxes Index 4/189 5/190 5/190
Logistics Performance Index N/A 59/160 N/A
Corruption Perception Index 103/180 99/180 N/A
IMD World Competitiveness N/A N/A N/A

Sources: World Bank, IMD, Transparency International


Fitch Solutions Risk Indices

  World Ranking
2017 2018 2019
Economic Risk Index Rank N/A 109/202 109/202
Short-Term Economic Risk Score 41.0 42.1 43.8
Long-Term Economic Risk Score 50.7 50.8 50.6
Political Risk Index Rank N/A 122/202 128/202
Short-Term Political Risk Score 67.7 71.7 73.8
Long-Term Political Risk Score 57.5 57.5 56.5
Operational Risk Index Rank N/A 38/201 41/201
Operational Risk Score 63.2 64.6 64.4

Source: Fitch Solutions
Date last reviewed: September 2, 2019


Fitch Solutions Risk Summary


By 2019, the implementation of VAT and tighter government finances will weigh on private consumption and fixed capital formation, however the effects will soon dissipate. Growth is expected to moderate in the near term due to constrained government spending and weaker household spending growth, while volatile oil prices cloud the outlook. Nonetheless, financial support from Gulf allies, the completion of Alba’s Line 6 expansion project and continued infrastructure spending will underpin growth.  In addition, Bahrain’s heavy reliance on regional peers such as Saudi Arabia and the United Arab Emirates as key export markets is a vulnerability, as demand from these markets suffered significantly with the global slump in crude prices between 2014 and 2016.


By regional standards, Bahrain offers a competitive operating environment for investors. The kingdom's key strengths lie in its logistical profile and trade and investment environment. With Bahrain's modern and well-connected utilities and transport infrastructure, businesses and their supply chains will find few risks of any type of utilities shortages or outages or poor quality transport systems causing them headwinds. Bahrain has a relatively streamlined regulatory framework, while also allowing 100% foreign ownership in most sectors. The absence of a national minimum wage, low labour contributions and flexible labour regulations offer firms a low-cost labour environment and improve companies' ability to adjust their labour in response to market shocks. However, Bahrain has a small pool of local labour, both skilled and unskilled, thus necessitating the import of foreign workers in a broad range of industries. Overall, with good availability and the low cost of utilities and a highly receptive trade and investment environment, Bahrain is one of the least-expensive places in the world to set up certain business ventures.

Source: Fitch Solutions
Date last reviewed: September 2, 2019


Fitch Solutions Political and Economic Risk Indices 

Graph: Bahrain short term political risk index
Graph: Bahrain short term political risk index
Graph: Bahrain long term political risk index
Graph: Bahrain long term political risk index
Graph: Bahrain short term economic risk index
Graph: Bahrain short term economic risk index
Graph: Bahrain long term economic risk index
Graph: Bahrain long term economic risk index

100 = Lowest risk, 0 = Highest risk
Source: Fitch Solutions Political and Economic Risk Indices
Date last reviewed: September 2, 2019


Fitch Solutions Operational Risk Index

  Operational Risk Labour Market Risk Trade and Investment Risk Logistics Risk Crime and Security Risk
Bahrain Score 64.4 63.1 69.5 71.5 53.6
MENA Average 47.5 52.3 48.0 48.7 40.9
MENA Position (out of 18) 4 4 2 2 6
Global Average 49.6 50.3 49.8 49.0 49.2
Global Position (out of 201) 41 28 29 32 83

100 = Lowest risk, 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Bahrain vs global and regional averages
Graph: Bahrain vs global and regional averages
Country Operational Risk Index Labour Market Risk Index Trade and Investment Risk Index Logistics Risk Crime and Security Risk Index
UAE 72.4 71.2 79.1 68.7 70.5
Qatar 64.9 65.0 61.8 71.6 61.2
Oman 64.5 62.2 61.9 64.5 69.2
Bahrain 64.4 63.1 69.5 71.5 53.6
Saudi Arabia 62.4 67.2 62.1 62.7 57.7
Jordan 57.2 56.9 60.7 59.0 52.3
Morocco 53.8 43.2 63.8 54.8 53.2
Kuwait 53.5 54.2 51.2 52.5 56.2
Egypt 48.7 49.9 45.7 56.4 42.9
Tunisia 47.0 42.2 56.2 47.3 42.3
Lebanon 44.0 53.0 51.9 41.4 29.7
Iran 42.9 49.5 36.7 50.8 34.4
Algeria 39.1 46.1 31.1 42.9 36.2
West Bank and Gaza 33.8 48.8 37.4 32.0 17.0
Libya 28.9 47.2 22.1 29.3 17.1
Syria 27.8 45.5 23.7 27.0 15.0
Iraq 27.4 43.7 24.8 28.6 12.4
Yemen 22.4 32.7 24.9 15.8 16.1
Regional Averages 47.5 52.3 48.0 48.7 40.9
Emerging Markets Averages 46.9 48.6 45.4 47.4 46.1
Global Markets Averages 49.9 50.3 49.8 49.0 49.2

100 = Lowest risk, 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: September 2, 2019

Hong Kong Connection

Hong Kong’s Trade with Bahrain

Graph: Major export commodities to Bahrain (2018)
Graph: Major export commodities to Bahrain (2018)
Graph: Major import commodities from Bahrain (2018)
Graph: Major import commodities from Bahrain (2018)

Note: Graph shows the main Hong Kong exports to/imports from Bahrain (by consignment)

Graph: Merchandise exports to Bahrain
Graph: Merchandise exports to Bahrain
Graph: Merchandise imports from Bahrain
Graph: Merchandise imports from Bahrain

Note: Graph shows Hong Kong exports to/imports from Bahrain (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: September 2, 2019

  2018 Growth rate (%)
Number of Bahrain citizens visiting Hong Kong 1,320 -7.61

Sources: Hong Kong Tourism Board, United Nations Population Division – Department of Economic and Social Affairs

  2018 Growth rate (%)
Number of Middle East residents visiting Hong Kong 130,511 0.54

Source: United Nations Population Division – Department of Economic and Social Affairs
Date last reviewed: September 2, 2019


Commercial Presence in Hong Kong

  2018 Growth rate (%)
Number of Bahraini companies in Hong Kong N/A N/A
- Regional headquarters
- Regional offices
- Local offices


Treaties and Agreements between Hong Kong and Bahrain

  • There is a bilateral investment treaty between Bahrain and mainland China that entered into force on April 27, 2000.
  • Bahrain has a Tax Treaty with mainland China that has been applicable since January 1, 2003.
  • In April 2019, Hong Kong and Bahrain signed an Investment Promotion and Protection Agreement.

Sources: Inland Revenue Department, UNCTAD, Hong Kong Trade and Industry Department, State Administration of Taxation of The People's Republic of China, Fitch Solutions


Chamber of Commerce (or Related Organisations) in Hong Kong

Arab Chamber of Commerce & Industry

The Arab Chamber of Commerce & Industry (ARABCCI) was established in Hong Kong in 2006 to promote commercial ties between Hong Kong, mainland China and the Arab World.

Address: 20/F, Central Tower, 28 Queens Road, Central, Hong Kong


Tel: (852) 2159 9170

Fax: (852) 2159 9688

Source: The Arab Chamber of Commerce & Industry, Hong Kong


Honorary Consulate of the Kingdom of Bahrain in HKSAR

Address: 22/F, Chevalier Commercial Centre, 8 Wang Hoi Road, Kowloon Bay, Hong Kong


Tel: (852) 3171 1199

Fax: (852) 2368 2399

Source: Visa on Demand


Visa Requirements for Hong Kong Residents

A Bahrain tourist visa is required for HKSAR passport holders. Nine visa types are available, with a one-year, multiple-entry visa permitting stays of up to 90 days.

Source: Visa on Demand

Date last reviewed: September 2, 2019

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