Report: Bahrain Most Cost-Effective Destination for Business in GCC

Published January 22nd, 2019 - 01:06 GMT
Bahrain the most cost-effective destination for business in the GCC (Shutterstock)
Bahrain the most cost-effective destination for business in the GCC (Shutterstock)

Minimal operating costs, a beneficial tax structure and a welcoming culture have made Bahrain the most cost-effective destination for business in the GCC, said a report.

The above factors converge to create an unparalleled net benefit for the financial services, ICT, and Manufacturing & Logistics sectors, added the report by Bahrain Economic Development Board (EDB), noting that recent reports by KPMG reveal why corporations worldwide are giving Bahrain a second look as the key market for smart expansion within the Gulf.

The financial services sector experienced an average growth rate of 4.2 per cent in Bahrain between 2006 and 2016. This growth – driven by an influx of FinTech firms with their sights on shaping the future of the Gulf’s financial ecosystem – comes as no surprise, given that KPMG recently found operating costs in Bahrain to be drastically lower than some of the Kingdom’s neighbouring countries. For instance:

• Commercial properties in Dubai and Abu Dhabi tend to rent for four times the rate of equivalent space in Bahrain
• Financial services firms in Bahrain realise operating cost efficiencies of 35 per cent when compared to firms in Dubai and Abu Dhabi

Other factors drive the competitive advantage for financial firms here, including access to capital through a range of funding options such as the $100-million Al Waha Fund of Funds and the comparatively lower living expenses – including rent utilities and the cost of education – than anywhere else in the Mena region.

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ICT companies find solid footing

As Amazon Web Services prepares to open its first Middle Eastern Data Centre Region in Bahrain in 2019, our digital landscape will change in ways that offer greater connectivity and faster connections for information, communication and tech-first firms. A recent KPMG report also draws attention to the 15 to 20 per cent annual operating cost advantage that ICT firms encounter in Bahrain:

•    Rental rates for commercial properties are lower in Bahrain than any other nation in the GCC – a full 50 per cent lower than the average;
•    Utility costs, such as Internet, electricity and telephone services, cost 25 per cent less than the GCC average; and
•    Expenses tied to cross-border connectivity and data flows are lowest in Bahrain, compared to the average cost in the GCC.

With low operating costs and a commitment towards enhancing cloud infrastructure, tech entrepreneurs have found a welcoming environment to devote their time and resources to what they love most – innovation – in Bahrain.

Powering manufacturing & logistics firms

Few transit hubs can offer businesses the combined versatility and efficiency that Bahrain delivers. The Bahrain Logistics Zone, situated strategically at the heart of the GCC, creates access to every market in the Gulf by road, air or sea. KPMG also highlights several cost benefits that make Bahrain a top location for manufacturing & logistics (M&L) firms looking to expand their operations, including:

• Transportation and logistics costs range 30 to 50 per cent lower in Bahrain than any other GCC market
• Expenses tied to workforce in the region are 32 per cent lower in Bahrain than the GCC average
• Total costs of operating an M&L business in Bahrain skew 49 to 75 per cent lower when compared to other GCC markets.

Innovative tax structures and a responsive approach to creating solutions for businesses have created an optimal environment for business to not only thrive within Bahrain, but also branch out to capitalise on the opportunities offered by the $1.5 trillion GCC market. When combined with low operating costs, unmatched quality of life, and a welcoming culture, discerning business owners have recognised Bahrain as the ultimate business advantage, the report concluded.

Copyright 2022 Al Hilal Publishing and Marketing Group

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