A glance at the state-run website http://www.bahrain.com/ will quickly show how dynamic, beautiful, and inviting the Kingdom is. By striving to be in the first rank of global business leadership, Bahrain has achieved a long series of “firsts” in order to rapidly move into a major leadership role in world banking, finance, business opportunity, tourism, high-performance sport, education, and culture.
Bahrain – and not Saudi Arabia - was the first country on the Arab peninsula where oil was discovered and an oil well was located, with the ‘black gold’ spurting from the first well in the Middle East the 16th of October 1931. But Bahrain never relied on its oil industry, but instead invested its profits to serve as a catalyst for the development of the rest of the economy.
After becoming an independent state in 1971, the government moved quickly to set up an independent financial regulatory body, the Bahrain Monetary Agency (BMA). The BMA, from the beginning, was the lender of last resort, responsible for the national monetary policy. After achieving independence in 1971, it was renamed the Central Bank of Bahrain.
The banking sector is still the flagship of the country, which now is home to 417 banks and 172 insurance companies. (Tourists should make it a point to visit the CBB’s coin and currency museum with collections dating back to 653 AD.)
Citigroup was the first Western bank to set up an Islamic branch in Bahrain’s capital in 1996. Today, Manama hosts 24 Islamic banks and 11 Islamic (Takaful) insurance operators, by far the largest Islamic financial centre in the Gulf region. Sheikh Nizam Yaqubi of Bahrain is one of the world’s leading Islamic scholars, who consults some 40 financial institutions worldwide in the field of the Koran and capital. This market is currently growing at 15–20 per cent a year, and is expected to reach $2 billion by 2015.
Bahrain was the also the first GCC state to sign a Free Trade Agreement (FTA) with the USA in 2004. In 2005, Alees Saaman, a Christian Bahraini, became the first female and first non-Muslim deputy who chaired a parliament in the GCC. Today, Bahrain women are fully integrated into society.
The recent world financial crisis certainly had its impact on corporate results, but: “We’re fortunate in Bahrain,” says Talal Al Zain , CEO of Mumtalakat Holding, Bahrain’s $14 billion sovereign wealth fund (SWF), “that Bahrain has always been managed in a conservative manner. The Bahrain Central Bank has been very prudent in protecting the market and financial sectors though the downturn the world is going through now.” For example, none of the large real estate project cancellations, such as those in Dubai, occurred in Manama.
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Bahrain is the only state on the Arabian Peninsula that harbors a Synagogue for the 100 Bahraini Jews living in the country. Bahrain recognizes in practice that the Holy Quran recognizes both Jews and Christians as “peoples of the book,” since both are believers in a monotheistic religion (i.e. to have faith in one God). Therefore, Bahrain has thriving Jewish and Christian communities. In 2000, the Emir appointed a Christian woman and a Jewish businessman to the Consultative Council.
On the Muslim side, Bahrain also displays its openness as the only GCC country with a majority Shi’ite population—although the members of the Al-Khalifa governing family are Sunni. Other countries with a Shi’ite majority are Iran, Iraq, Lebanon and Azerbaijan. In Bahrain, both communities live side-by-side and take part together in the social and governmental life of the nation.
Thousands of tourists from all over the world, regardless of their faith, visit the famous Al-Fateh Mosque near the Royal Bahraini Palace in order to learn more about Islam and his messenger Mohammed (peace be upon him). The Al-Fateh mosque is one of the largest in the world, capable of accommodating over 7,000 worshippers.
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“We are proud of being the boutique destination of the Gulf,” says Dr. Heba Aziz , the director of tourism . The term “boutique” often connotes little more than higher prices; but in Bahrain care is taken that excellence in quality and personal service. These are the standards that Bahrain’s success is built upon.
Nevertheless, the Kingdom faces challenges. The financial crisis weighs on construction and on the banking sector, although less than on the latter than any other banking hub in the world (like Switzerland). Locally based banks escaped relatively unharmed from recent fluctuations, while Western-based banks have been feeling the heat from their home countries since mid-2007. A local setback for real estate firms and banks in the Gulf emerged later amid a credit crunch and declining liquidity in the market triggered by falling oil prices and declining world trade.
Yet, Bahrain’s conservative and prudent financial management prevented these from affecting the Bahrain economy to a greater extent than other financial hubs.
Bob Addison, Bahrain’s Country Manager at global real estate adviser DTZ, is not daydreaming when talking about the status quo: “Like any other global company, we have been hit by the global recession in terms of our turnover. So, we have to work smarter and we have to analyze our baseline costs and make sure our staff is operating productively.”
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