InterviewsNovember 19, 2009

Bahrain Industry Baytik Industrial Oasis Bahrain Leading Industry Oasis

: Published: November 19, 2009

Industry is one of the key pillars of the Bahrain diversification efforts away from oil. What is your frank assessment of the Bahraini industry and is there space for it in a service based economy?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: Since 30 years ago, Industry in Bahrain played a significant role in diversifying the economy. From oil refining to production, to aluminum and petrochemicals- these are all examples of this diversification. There are, of course, challenges too. However, the initiative contributed a lot and you can see the results in the government’s budget and the general economy. There are high prospects to develop and focus more on some industries that fit well with the economy and the future of Bahrain more than others. For example, downstream industries in aluminum and plastics are a fitting industry along with knowledge based industries like manufacturing high tech products. There are some established companies doing this now but it can be capitalized on as a cluster. In the oil and gas based industries, the production is sufficient for current consumption and there are a lot of initiative to increase the production of oil and gas to meet the requirements of future developments that have been met with encouraging results. I think that the concrete results will be announced when they are available through the government. Another challenge is the availability of land. Heavy industries require a lot of land that Bahrain shouldn't focus on. Knowledge based industries have a high value here and the contribution is higher than in heavy industries. Kuwait Finance House-Bahrain is, of course, considering all of these factors while investing in Bahrain and we do a lot of coordination to help authorities achieve the targets of economic development.

Bahrain has a diverse business portfolio. How important is the industry projects unit for KFH-Bahrain?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: The investor projects play a very important role in the Bank’s portfolio and business plan. We have been investing in manufacturing and other industries in Bahrain and as you know, two years ago we launched Baytik Industrial Oasis which is a company focusing on the development of Bahrain industrial parks and Bahrain industrial zones. The first project (a park) started with 170,000 square meters to add to the infrastructure as a comprehensive package. Phase one of the park will be ready for operation in September, 2009. The total cost for phase one is around 34 million dollars and these are only direct costs, however, we anticipate this park to attract investments of over 200 million dollars.

How do you differentiate this park as opposed to other regional parks, especially in Dubai or other Emirates?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: The location of Bahrain in the center of The Gulf is an advantage for exports. Bahrain enjoys free trade agreements with other countries (like the US) and from some other 25 plus countries. The park also has the privilege of being tax free for ten years which is rare. The location is near Khalifa Bin Salman port as well as near Bahrain International Airport and King Fahad Causeway. The developer of the Bahrain industrial park is Kuwait Finance House – Bahrain and this is a major advantage that gives access to finance and capital, in addition to the services and facilities we will offer. Because the Bank is the largest developer in the Kingdom with around 11 billion dollars in assets. Associating with the Bank can help obtain the support to penetrate other markets.

Despite all of the advantages, what are your main challenges? Especially those due to the global economic downturn?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: The economic downturn is heading the international community and this is not a normal time. Manufacturing is a long-term type of investment that is, however, more sustainable. Our challenges include the downturn in the economy and the need for developing the infrastructure in the industries that we are involved in. We invest in human resources training and in Bahrain some of the industries are operated by over 90% of Bahrainis, especially in industries like petrochemical, oil and gas, or aluminum industries. In new industries requiring special skills, this percentage is lower. We need to focus more on vocational training to support these industries. The Bank has taken this initiative in investing in and being the founder of the first private vocational training center in the region - The National Institute for Vocational Training. This is a company owned by 55 industrialists beside the Bank, who serves as the largest shareholder. We created tailor made vocational programs to meet the needs of employers and think this is very important to support government initiatives. This challenge is manageable through focus and development of HR.

Getting back to Baytik Industrial Oasis, what is the balance of power between investors, clients, and yourself? How has the crisis impacted you?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: In the beginning we decided to invest in the Bahrain industrial park through Baytik Industrial Oasis and we fully invested in the project without pre-leasing the units. Moreover, we already have plans to invest in industries and manufacturing units and we need the capacity in the infrastructure to utilize our investments. Part of the Bahrain industrial park will be used to cater to our needs. When we started developing the project the market interacted with us and we received many inquiries and feedback. Right now we have many industries that account for over 55% of the area available.

Are these companies from the GCC?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: It is a mix. Most of them are joint-ventures with local and international companies and a few of them are direct foreign investments.

You also mentioned that KFH-Bahrain has established its industrial investment arm. In what markets are you investing and where do you see the opportunities?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: KFH-Bahrain’s industrial arm has its focus on a number of sectors. The production of metal and steel being one of the main sectors of focus as well as the manufacturing/production of high tech equipment and the building materials sector is important to us as well.

What are the key industrial projects planned for 2009-2010?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: For the Bank, one of the main new projects is Royal Arabian; a development in Bahrain to develop the equestrian racing facilities in Bahrain over a total area of four kilometers square. This project will commence this year and will take around six to seven years to complete. It includes raising the standards of international horse racing and provides lots of comprehensive facilities; residential, commercial, hotel, business places, equestrian institute and other developments that are good for the horse racing. It is a very exciting project and there will be at least two international races starting in year four of this development.

What do you expect from your investors regarding this project?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: This project is new and we are looking for alliances related investors and institutions in the industry. We have a business plan that we will launch very soon to target potential investors and developers for the project.

How would you define your strategy for the next three years?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: For Baytik Industrial Oasis our strategy is to conclude our existing projects and develop new locations in different locations in Bahrain and in the region for industrial parks. We want to capitalize on our expertise and speed, and currently we are studying some projects to invest in various markets and sectors.

What is your policy towards being green and sustainability development?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: The Bank is very well positioned towards investing in clean industries and for supporting the environment management plans of the government or of any country that we are partnering with. We have also made some green plans for our own investments where we hired international advisors to help us achieve this. Bahrain industrial park is focused only on clean industries and there are specific regulations for the type of industries we allow to operate in the park; mainly those who don’t pollute the environment and this list is in agreement with the government of Bahrain. We fully support this policy as well.

What is your dream and vision for Baytik Industrial Oasis?

Baytik Industrial Oasis - Bahrain's Leading Industrial Zone: We would like Baytik Industrial Oasis to become a leader in industrial infrastructure development and also in three to five years it will be the largest specialized developer in the region of Bahrain industrial and economic zones.