Economy
The discovery of oil in the 1930s transformed Bahrain into the Gulf's first oil economy, but early acknowledgement on the part of the Government that oil resources could not generate sustainable economic growth led to the well-engineered diversification program that has yielded today's broad economic base, where oil refining and manufacturing coexist with sophisticated financial, commercial and service sectors. Bahrain is the most diversified and least oil dependent country in the GCC states.

Source: Ministry of Finance and National Economy, National Accounts 2003

Bahrain became a member of the United Nations and the Arab League in 1971. In May 1981 it joined its five neighbours - Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates and formed the strategic alliance called the Gulf Co-operation Council (GCC). The GCC seeks to strengthen cooperation in areas such as agriculture, industry, security, investment and trade among its six member states. Bahrain has an independent legal and judicial system with a framework of commercial laws and, on this strength and its well-developed infrastructure, has become an international and GCC arbitration centre. Bahrain has been ranked the sixteenth freest economy in the world and the freest economy in the Middle East by the Washington-based Heritage Foundation for 2003. It is ranked as the most liberal economy in the Arab world and boasts one of the most modern cosmopolitan societies in the entire region. It is also the region's financial and banking centre with some 250 banks and financial institutions. The government of Bahrain encourages free trade and foreign investment by allowing 100% foreign ownership and control of company assets and enforces no personal, corporate or withholding taxes. In June 2002, Fitch upgraded Bahrain's long-term foreign currency rating from BBB to A-, following similar upgrades in 2002 by Standard & Poor's and Moody's. Bahrain's achievements and potential have also been consistently recognised by various United Nations agencies. Bahrain has been ranked the number one Arab country on the UNDP's Human Development Index as well as number one on the first Arab Human Development Index.

Bahrain has also topped all Arab countries on UNCTAD's Inward FDI Performance Index (2002) and Inward FDI Potential Index (2002) and UNIDO's Industrial Performance Index (2002-2003). The country is also a founding member of the WTO, having gained accession in January 1955. Determined to maintain an open economy that is conducive to both economic and social growth, Bahrain continues to evolve its legal and administrative infrastructure. The most significant move on the part of the Government, in this regard, has been the introduction of the new Commercial Companies Law that has come into effect on January 1, 2002.

Economic Indicators	1999	2000	2001
Nominal GDP (BD million)	2,489	2,997	2,983
Real GDP (BD million)	2,472	2,603	2,728
Real GDP Growth (%)	4.3	5.3	4.8
Inflation (%)	-1.3	-0.7	-1.8
Trade Balance (BD million)	250.1	587.1	482.0
Current Account (BD million)	-35.3	275.5	42.7

Source: Ministry of Finance and National Economy and the Bahrain Monetary Agency

Investment Incentives

• 100% foreign ownership of companies;
• 100% foreign ownership of land;
• No restrictions on repatriation of capital, profits or dividends;
• Highly favourable tax environment with no personal, corporate or withholding taxes;
• Easy access to visas;
• A cost effective, highly trained, bilingual workforce;
• "Fast track" registration;
• No custom duties on imports;
• GCC Customs Union in place;
• Strategic geographic location as a transit centre in regional market with a population of 200 million;
• Free movement of capital and foreign exchange;
• Sophisticated internationally oriented & highly developed legal framework;
• Mature legal and administrative infrastructure;
• Well developed offshore facilities;
• Advanced telecommunication (Open to competition in April 2003);
• Proximity and strong business ties with the major markets;
• "One-stop" facility responsible for assisting investors with application procedures.

Money & Currency

The national currency is Dinar, with each dinar divided into 1,000 fils. The Bahraini Dinar is pegged with the US dollar at US$ 1= BD0.377. Notes are available in denominations of 1 dinar, 5 dinars, 10 dinars, and 20 dinars. Coins come in units of 5, 10, 25, 50, and 100 fils. Currency can be easily exchanged at the airport, hotels, banks and the money changers.

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