Foreign Investment in Bahrain Rising Sharply

New foreign direct investment in Bahrain more than doubled in the first nine months of 2018 as the kingdom marketed itself as a base for companies to access the region, especially Saudi Arabia, data showed.

Investment commitments between January and September jumped 138% from a year ago to a record US$810 million from 76 firms, said the Economic Development Board, an investment promotion agency. That compared to US$733 million in all of 2017, and was over five times the amount of FDI in 2015.

The rise in FDI is good news for Bahrain’s balance of payments, which has been under pressure as the kingdom runs fiscal and current account deficits fueled by low oil prices.

The central bank’s net foreign reserves hit a one-year low of 499.4 million dinars (US$1.31 billion) in July, although they rebounded to 734.2 million dinars (US$1.93 billion) last month.

Manufacturing and logistics accounted for most foreign investment in the first nine months of this year, the EDB said. Some companies are locating operations in Bahrain to take advantage of reforms in Saudi Arabia, which aims to develop non-oil industries such as mining, light manufacturing and tourism.

Bahrain also wants to become a center for financial technology; last year it created a “regulatory sandbox” allowing companies in the field to experiment without facing normal regulatory constraints. This year it established a US$100 million fund of funds to support technology start-ups across the region, which it hopes will attract venture capital firms to Bahrain.