The Market Gap Report - 2009

1
Market Gap Report: Agenda
• Market Gap Identification : Background & Methodology

• Sub-Sector Prioritization: Methodology
• Sector Scan
1. Healthcare & Pharmaceuticals
2. Education
3. Construction & Real Estate
4. Telecommunications
5. IT
6. Media
7. Travel & Hospitality
8. Trade & Wholesale
9. Transport & Logistics
10. Financial Services
11. Agriculture & Food Processing
12. Oil and Gas & Petrochemicals
13. Manufacturing
I. Background
II. Aluminum
III. Other Manufacturing
a. Textile, Apparel & Leather
b. Ship & Boat Building
c. Auto & Auto Components
d. Electrical Equipment
• Relative Sector Prioritization: Consolidated View
2

• Sector Scan
2. Education
5. IT
6. Media
13. Manufacturing
I. Background
II. Aluminum
3
Market Gap Report: Background
• The Market Gap report presented is commensurate to the completion of the Market Gap Study awarded by Tamkeen to
D&B
• The key objective of this Study was to conduct a thorough analysis across various sectors that make up the Bahraini
Economy and identify, assess, evaluate and enumerate market gaps across these sector value chains
• A Market Gap is defined as a sector / sub-sector where current level of market play (in terms of number of players and
penetration levels) is deemed to be lower than Market Potential (assessed on the basis of expected near term growth
rate)
• This Report sequentially follows the closure of Phases 1: Taxonomy Analysis & Industry Mapping; Phase 2: Sectoral
Landscaping and Phase 3: Regional Benchmarking, which formed core inputs for the report
• The Market Gap Identification report presents a thorough scan of 18 sectors entailing over 200 sub-sectors (that make up
the economic landscape of Bahrain)
 Out of these sub-sectors, 99 are identified as market gaps (as defined), while the remaining subsectors are
deemed to be overcrowded and saturated with limited capacity to sustain increased play (either through new entry
or expansion of existing capacity) in the near term
• Market Gaps identified are primarily of 2 types
 Gaps in terms of sectors / sub-sectors that remain currently underpenetrated or underserviced vis-à-vis market
potential
 Gaps in terms of sectors / sub-sectors which are virtually absent from the Bahraini landscape and with respect to
the sectoral value chain; however could potentially exist, based on assessment of market feasibility and demand
assessment
• Subsequent to identification and assessment of market gaps identified at each sector level, D&B has also conducted a
Relative Sub-Sector Prioritization to prioritize amongst the market gaps identified, sub-sectors that are deemed to be
relatively more attractive and are associated with a relatively higher degree of ‗Bahrain readiness‘
4
Market Gap Report: Background
• Sectors / sub-sectors that are deemed to be unfeasible (at basic level) due to lack of competitiveness, enabling
ecosystem, ‗natural input‘ requirements, first mover‘s advantage of imports / rivals; have not been considered as
‗market gaps‘
• Market Gaps underpinned and discussed in the course of the following report have been indentified and
assessed on the basis of a deep study of the industry incorporating:
1. Taxonomy Analysis & Industry Mapping
2. Sectoral landscaping
3. Regional Benchmarking
4. Key Industry leader engagements
• Steps 1, 2 and 3 are commensurate to Phases 1, 2 and 3 of the Market Gap Study
 Inputs from these phases formed the framework and basis of the Market Gap Identification phase
 As part of Step 4, key industry leaders were identified across the various sectors under study
 Key industry leader discussions and focus group discussions were conducted to build industry knowledge,
validate industry maps, ascertain Bahrain‘s sectoral landscape, underpin industry gaps and assess root
disablers / causal factors for such gaps to exist
A total of 157 industry leader engagements were conducted and form the core input framework for the
Market Gap Study
5
Market Gap Report: Approach for Manufacturing
The approach followed for Manufacturing in the Phase 2 report, ―Sectoral Landscaping‖ has been followed through in
the Market Scan phase as well. The rationale of the same has been presented:
• Within Manufacturing, Bahrain has a major footprint in Aluminum & Aluminum products, followed by
Petrochemicals (inclusive of Chemicals & Chemical downstream products, such as paints; fertilizers; rubber and
plastics).
• Additionally, the Kingdom has a minor footprint in Food & Beverages; Pharmaceuticals; Textile and Auto
Components (Aluminum based alloy wheels) and Electrical & Industrial Components.
Within the following report:
• Aluminum, Petrochemicals have been dealt as separate sections

• Food & Beverages Processing has been clubbed with Agriculture based on natural downstream linkage
• Chemicals, and Plastic and Rubber have been clubbed with Petrochemicals based on natural downstream linkage
• Pharmaceuticals Manufacturing has been clubbed with Healthcare based on natural downstream linkage
• Textile Manufacturing, Auto Components, Ship & Boat Building, and Machinery and Electrical Equipments have
been clubbed as Other Manufacturing
6
Market Gap Scan : Methodology Framework
Theoretical Deemed
industry oversaturated
construct in the near Identification of areas
term which „apparently‟ Identification of areas
Sector cannot support of market gaps
Drill down
Benchmarking increased market play
Regional
Benchmarking
Market segments found to

Sub-sectors where level of
be absent or have a
market play (saturation /
Underpinning of virtually negligible footprint
penetration) is deemed to
Bahrain Market in Bahrain/ These may
be lower than Market
Gaps offer opportunity for new /
Potential (Expected
existing players, based on
Growth rate over the next
deeper market feasibility
5 years)
Primary and Secondary and demand assessment
research
Underpenetrated Virtually absent
sub-sector sub-sector
An „onion approach‟ was followed to drill down to market gaps at sub-sector level
7
Market Gap Scan: Type of Gaps
Core causes for gaps Impact Type of Gaps
• Lack of technology Under penetration of

• Regulatory challenges sector / sub-sector
• Lack of skills required Lower number of players
• Lack of facilitatory Absence of sector
versus actual potential
ecosystem
• Infrastructure challenges Hindered capability /
• Import substitution growth
• Lack of strategic focus
Core reasons for gaps such as regulatory challenges, infrastructure, investment may directly lead to
under penetration in terms of capacity or restrict the number of market players which becomes the root
cause for under penetration
Sources: D&B
8
Market Gap Scan : Analysis of Market Gaps & Causes
D&B – Sector / Sub-Sector Gap Analysis
Market Gap –
• Sector Size / GDP Contribution i.e. Barriers • Strong GDP Contribution
• Number of Players • % Bahrainization
• Revenues, Output, Employment • Employment
• Bahrainization • Lack of trained workforce • Alignment with other sub-
• Customer Requirements • Poor Access to Capital sectors and sectors
• Supplier Dynamics • Requires Market • Healthy Competition
• Import / Export Substitution Development • Fair profit margins
• Markets & Competition • Lack of Technology • 1 year growth /3 year growth
• Linkages to Other Sectors • Inadequate Policy Support • Consistency with overall
• Bahrain competitiveness
• Inefficient Support Bahraini vision
Ecosystem
Sector - • Lack of awareness
Sector (Ideal
Current Status Status)
Need for Government Intervention to Remove Barriers

& Minimize Market Gaps
Sources: D&B
9
Relative Sub-Sector Priortization: Background
• Once the market gaps were identified, these sub-sector were studied with the objective of further prioritizing them
• The rationale of prioritization was based on an investment allocation approach, wherein the more attractive sub-sectors
with a more immediate / ready impact gain relative priority over sub-sectors with lower attractiveness and less
immediate impact
• It must be noted that the rationale of the prioritization matrix is not to defocus any of the identified gaps; rather, it is to
establish the framework for a phased strategy targeting investment, effort and time (in terms of graded priority buckets)
• The various sub-sectors identified as gaps were passed through the D&B Sub-Sector Prioritization Matrix
• This model broadly rates various sub-sectors on the following heads

 Core Attractiveness parameters namely Absorptive Capacity, High Skill Employment Generation
Potential, Impact of Investment and Strategic Sector Importance and
 Bahrain Readiness (with respect to the sub-sector / sector)
• Each parameter within these heads has been rated on a scale of 1 to 5 (1 being the lowest and 5 being the
highest)
D&B Research & Analysis 10

Relative Sub-Sector Priortization: Methodology
• These various elements of the Priortization Matrix are explained as below
1. Absorptive Capacity: Defined as the capacity of the sub-sector to ‗absorb‘ higher play either through capacity
expansion by existing players and / or through entry of new players into the segment. The absorptive capacity has
been captured through the combination of:
 Level of Market Play which is a metric used to identify degree of saturation in the market (sub-sector) in terms of
number of players and / or degree of penetration
 Market Potential which is a metric used to assess expected near term market growth (over a 3 – 5 year time
frame)
2. High Skill Employment Generation: Defined as the capacity of the sub-sector to generate high skill jobs for Bahraini
workers. This has been captured through a combination of:
 Proportion of High Skill Jobs: This parameter captures the proportion of high skill jobs as a percentage of total
jobs in the sector with respect to the Bahraini economy. The data has been captured from the Allen Skill Gap
Study report. The scores captured were then calibrated accordingly to scale (1 to 5) for the purpose of
measurement. The underlying assumption behind measuring ‗high skill ‗is that roles requiring the minimum of a
Bachelors degrees and above are included within classification
 Bahraini Fit: This parameter subjectively measures the current skill level and degree of attractiveness of
Bahrainis to work in the particular sub-sector and has primarily been captured as a perception of industry
leaders interviewed during the course of the study

3. Impact of Investment: Defined as the value addition per dinar of investment made in the subsector. This has been captured
through a combination of:
 Return on Investment: The typical 3 year global ROE‘s across various industries were sourced from the NYU (Stern
Business School) database. These averages were then calibrated to scale (1 to 5) for the purpose of measurement
 Compensation / Capex: This parameter determines the incremental impact of every 1 BD of investment on total
compensation. This inadvertently rewards sectors deemed as high value add employment generators, capturing potential
both in terms of high-skill jobs as well as number of jobs generated
4. Strategic Importance: Defined and measured as a degree of alignment of sub-sector with stakeholder objectives. This is
captured through a combination of:
 Degree of Alignment to Government Objectives: This parameter measures the extent to which the sub-sector is aligned to
national strategic focus, Vision 2030 and government / regulatory focus / thrust
 Degree of Alignment to Tamkeen objectives: This parameter captures the extent to which the sub-sector is aligned to
Tamkeen‘s strategic thrust areas such as those increasing the levels of productivity, innovation, generation of high-skill
jobs, fostering of entrepreneurial opportunities and propagation of downstream / peripheral SME activity
• The parameters illustrated between 1 to 4 form the ‗Core Sector Attractiveness‘
• An adjustment to the total Core Sector Attractiveness is subsequently made with the effect of ‗Systematic Industry Enablers‟,
which captures the presence / absence of any natural constraints i.e. availability / access to land, raw materials, energy and other
natural enablers - Sub-sectors that have a natural dependence on these factors will tend to get penalized on this front, while
sectors with no such dependence / constraints will tend to get rewarded (on a relative basis).
• The adjustment of the Core Sector Attractiveness with the effect of the Systematic Industry Enablers leads to the overall Sub-
sector Attractiveness Score

Illustration A: Core Sub-sector Attractiveness
13
• The second fundamental dimension / factor for sub-sector is ‗Bahrain Readiness‘. This parameter captures
Bahrain‘s state of readiness to capture market opportunities within the sub-sectors in terms of:
 Alignment of regulatory framework
 Strength of supporting infrastructure
 Availability of required local (Bahrainis) skill sets
Illustration B: Core Sub-sector Attractiveness
14
• A 2-way matrix plotted between Sub-sector Attractiveness and Bahrain Readiness (for each sector) as well
as a hybrid score computed by combining the 2 parameters was used to classify opportunities / gaps
identified into High, Mid and Low Priority buckets.
 The hybrid score reflects the ‗Prioritization Index‘
• The cut offs for Priority buckets were developed by fitting a normal distribution curve on the Prioritization
index scores (PI) obtained at a consolidated (aggregate of sub-sectors across sectors) level
• The priority buckets have subsequently been applied sector-wise to yield a classification of sub-sectors
(within the sector) as per the applied cut offs.
• The priority buckets (and corresponding cut off scores are as follows):
 High Priority (A): Sub-sectors (at sector level) with PI > = 67%
 Middle Priority (B): Sub-sectors (at sector level) with 67> PI and PI > = 52
o Grade 1 (B1): Sub-sectors (at sector level) with 67> PI and PI > = 62
 Low Priority ( C ): Sub-sectors (at sector level) with PI < 52

Rationale & Caveats
• The Market Gap Report has been prepared as a product of the Market Gap Study conducted for Tamkeen by D&B
• The Market Gap Report is a based on an economy level study incorporating an analysis of 18 sectors (incorporating over
200 sub-sectors) that make up the landscape and footprint of Bahrain
• The underlying rationale for the study has been based on a ‗market scan‘ rather than ‗market feasibility‘ approach
• Within the premise of the market scan approach, the objective has been to identify sub-sectors that present gaps in
terms of:
– Being underpenetrated with respect to optimum market potential (near term)
– Being virtually absent or having minimal presence in the Bahrain sector value chain with respect to the ‗theoretical‘ /
‗ideal‘ industry map / blueprint for the sector
• The assessment of under penetration of sub-sectors has been on the basis of a combination of local / regional /
international data available from credible industry sources as well as opinions captured from industry leaders deemed to
be stalwarts within their respective sectors (D&B conducted in-depth interviews and focus group discussions with over
157 industry leaders across enterprises in Bahrain within the sectors studied)
– D&B has taken reasonable care is terms of selection of sources for data which comprises of government sources e.g.
CIO, regulatory associations e.g. CBB, TRA, industry associations, industry reports e.g. BMI and broker reports e.g.
Kuwait Finance House
– Findings of each sector were presented before industry experts (through focus groups), for validation and refining of
findings
– However, it must be noted that D&B holds no liability in terms of 100% accuracy of data, wherever such data has
been presented in the analysis
16
Rationale & Caveats
• The identification of market gaps is also coupled with a broad level assessment of the underlying bottlenecks associated
with each sector in terms of inadequacies in regulation and / or infrastructure and / or regulatory bottlenecks
• A sub-sector / industry might be underpenetrated / absent in the Bahraini value chain due to lack of fundamental
feasibility2 - such a sub-sector does not necessarily qualify as a market gap (e.g. the Case of Petrochemicals – where
the Oil & Gas industry is constrained due to lack of fundamental feasibility to extend its footprint beyond Refining)
• Further the assessment of potential is in the context of a broad view of regional competition / play with respect to the
sub-sector / industry being studied and adequate examples of such regional context have been established throughout
the report, commensurate to assessment / analysis presented for each such sub-sector
• Across the 18 sectors and constituent (> 200 sub-sectors) analyzed in the course of the study, 99 sub-sectors were
identified as gaps
• In order to prioritize these gaps further, a robust framework combining ‗Relative Market Attractiveness‘1 and ‗Relative
Bahrain Readiness‘1 as key parameters has been adopted
– As an outcome of the assessment, each sub-sector receives a score on both these parameters
– In addition each sub-sector also receives a ‗Priority Index‘ score, which is a hybrid between ‗Relative Market
Attractiveness‘ and ‗Relative Bahrain Readiness‘
– The hybrid score gives a view on the relative positioning of each sub-sector within the sector being studied
• The components used to assess Relative Market Attractiveness include:
– Absorptive Capacity of the sector
– Impact on Investment
– Ability of the sector to generate high value add jobs
– Alignment to EDB Vision & Government focus
1 Explained in a later section

2 The absence or underpenetration of a sector might be attributed to lack of fundamental competitiveness, natural or any other constraints 17
Rationale & Caveats
• The components used to assess Relative Bahrain Readiness are a combination of deemed readiness of Bahrain in terms
of skill pool, infrastructure and regulation to fill these gaps
• It must be noted that this prioritization matrix has been prepared keeping in perspective an ‗investment allocation
approach‘ keeping in background and context Tamkeen‘s core objectives
– Fundamentally, Tamkeen is looking to focus on sectors that have high attractive potential, high value add
employment generation capacity and have more immediate realizable potential / returns from directed investment and
efforts, in the form of programs and initiatives
• Overall this study is anticipated to help in making logical, strategic and tactical decisions based on current market activity
– The primary goal is to specifically establish feed for strategies to encourage economic growth and diversification as
well as for Investment support activity streams of Tamkeen
• For other stakeholders, the report gives insightful directions in terms of highlighting sectors that possess the inherent
potential for growth and return on investment; however any strategic decision should be based on a more in-depth
feasibility and demand / export potential assessment
18
Market Gap Scan Report: Agenda

• Sector Scan
2. Education
5. IT
6. Media
13. Manufacturing
I. Background
II. Aluminum
19
Healthcare & Pharmaceuticals
20
The Healthcare Industry Map comprises Healthcare services as
its primary sector….
Technology Medical Medical

providers Health fund
(computer system Equipment and Instruments & Pharmaceutical
raising
for records, supplies Devices manufacturers
billings), etc. organizations
providers providers
Medical
Management
Practices &
Services
Ancillary Health
Direct Health Care Service Providers
(within hospital
Service Providers facilities /
independent)
Primary Secondary Tertiary Ambulance

Health Health Health Pharmacies
Home Services
care care care Nursing Rehabili-
providers providers Diagnostic homes & Health tation
providers
labs Assisted Care therapy
living Providers Research
Referrals Centers
Referrals
Referrals
Health Insurance
Medical & Personal care Therapeutic & plans
skilled nursing (bathing / psychosocial
services transportation) services
Prescription
Benefits
companies
General & Outpatient & Specialty
Doctor’s Dental
Surgical Emergency Hospitals /
office care Centers clinics Referrals
Hospitals clinics
Managed healthcare
plans
Weight reduction
facilities
Exercise facilities
End User – Patient
Sources: Hoovers, D&B Research & Analysis

21
…With Primary, Secondary and Tertiary Healthcare as key
segments within Healthcare Services along with diagnostic
labs, home healthcare providers and rehabilitation services
The theoretical construct of the Healthcare Industry broadly comprises providers of Healthcare Services
which form the core structure of the Healthcare industry map. Other operators in the construct are linked
to these players either through value chain relationships or at peripheral support level
• Typically, Healthcare services include Primary, Secondary & Tertiary Healthcare services, Laboratories & Imaging Center
services, Home Health Care services, Dental care and Nursing Home and Assisted Living services and facilities
• The Primary, Secondary & Tertiary care sectors consist of institutions such as General / Surgical hospitals, Emergency
centers, Specialty clinics, etc. which may be independent or attached to a hospital or a Medical Management provider.
• These sectors are supported by Ancillary Healthcare providers comprising ambulance services, pharmacies and research
centers which may be part of a hospital / medical management co., or provide their services as independent third parties
 Major Services in this sector include hospital medical care (40% of global industry revenue), and outpatient care (20%
of global industry revenue) provided by physicians
 Diagnostic centers, home healthcare providers, rehabilitation services do not fit within the categories of primary,
secondary or tertiary care, but form a core part of healthcare services
 Research Hospitals are also of importance as they specialise in research and discovery of new drugs and cures and are
directly correlated with the growth of the healthcare sector
 Outpatient centers (which do not fall within the hospital industry) and hospitals may either be generalist (providing the
entire range of services) or specialist (focusing on a specific service / ailment) e.g. An imaging center will provide a
particular service (X rays) while a cardiac center will provide only treatments related to cardiovascular diseases.
• Major companies include Kaiser Permanente, HCA and Ascension Health. Globally, the healthcare sector is a very
fragmented industry, with the top 50 healthcare companies accounting for just 15% of revenue. Hospitals are the least
fragmented in this industry, with the top 50 hospitals accounting for 30% of revenue

22
Growth in population, an increasing chronic disease burden
and an influx of medical tourists are increasing demand for
healthcare in Bahrain, particularly in hospital care…..
• The Bahrain healthcare sector comprises private and government Market Size Breakdown of Healthcare
Services, in BD million
generalist hospitals, dental hospitals, specialty clinics and primary
160.00
healthcare centers 144.95
140.00
• Primary healthcare developed rapidly in Bahrain over the last 30 years 120.00
with the establishment of Government healthcare centers which provide 100.00

family medicine, immunization programs, diagnostic radiology, etc. 80.00 73.93
60.00
• Secondary care / tertiary care is mainly represented by the Salmaniya 40.00
Medical Complex (SMC), Bahrain Defence Force Hospital, the psychiatric
20.00 8.60
hospital, geriatric hospital and maternity hospitals
0.00
Hospital activities Medical & dental Medical laboratories
• Employment in the healthcare sector grew at a CAGR of 4.5% between
800800 practice activities
2003 and 2007; the sector employed around 9600 employees in 2007 800
Healthcare
HealthcareExpenditure
Expenditure
700700
700 HealthcareininBahrain
Bahrain
Expenditure
Healthcare Expenditure in Bahrain, in BD
• Total Revenue of the Healthcare sector in 2008 was BD 227.5 600
million
600
600 million
500500
BD million
• BD million
GDP contribution of the sector is estimated to be around 1.98 % of total 500
BD million
Bahrain GDP and has projected a CAGR of 11.5% between400 400 and
2002 400
2007 300300
300
200200
• Although the healthcare sector in Bahrain is dominated by the public 200
100100
sector (primary healthcare centers , BDF and SMC), the private sector is 100
rapidly growing with a 123.6% increase in inpatients and 63.3% 0increase
0
0
in outpatients compared with a government sector increase of 3.2% in
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009
(f) (f)2010
2010
(f) (f)2011
201(
2003 2004 2005 2006 2007 2008 2
inpatients and 15.4 % in outpatients (2007 – ‘08)
Health
Health
Expenditure
Expenditure
- Bahrain
- Bahrain Public
Public
sector
sector
health
health
expenditure
expenditu
Health Expenditure - Bahrain Public sec
Sources: CIO, Industry Reports, D&B Research & Analysis

23
There are now 407 licensed businesses in the Healthcare
sector with Private clinics (part time and full time) being the
most common mode of healthcare service providers…
Institution Type No. Specialization %

General Practice 46% • 407 Healthcare businesses have been
Part time clinics 93
Gyn & Obs 10% licensed so far by the Ministry of Health
Private clinics 85 • The largest number of licenses have been
Surgery 9%
Optics 83 Psychiatry 7% granted to medical / dental part time clinics
Dental clinics 49 ENT 5% (set up by doctors at SMC)
Derma 5% • There is no regulation governing the set
Medical Center 40
Other 12% up or operations of alternative medicine
Hospital (General Practice) 12 centers in Bahrain. However, 7 alternative
24 hour clinics 12 75% are general practitioners
medicine centers have been licensed by
Laboratories 7 / dentists ‗special license‘
• There is also no regulation governing the
Alternative medicine 7
establishment & running of polyclinics in
Physiotheraphy centers 5 Bahrain. Institutions that operate in the
Dental Laboratories 4 ―polyclinic‖ format are given the tag of multi
Others 9 specialty clinics
• The Bahrain healthcare sector is characterized by a low number of specialized doctors in select fields ( for example in the
fields of neurology, oncology) having full time or part time clinics
• Almost all hospitals in Bahrain are general hospitals offering primary and some levels of secondary care in various areas of
general medicine and specializations
• Majority of secondary / tertiary care available in Bahrain is provided by Salmaniya Public hospital, the backbone of the
healthcare system in Bahrain as well as the Bahrain Defence Force Hospital

24
… however Bahrain‘s private sector will need to expand in
order to meet the rising demand for health care …
In 2007, Bahrain‘s total population stood at 1.05 million. From 2006 – 07, non-Bahraini population jumped 82.5% to 517,368;
nearly half of the total population.
1930 beds • Salmaniya Medical Complex, the main provider of

secondary & tertiary healthcare in Bahrain accounts for
46% of total beds available in Bahrain‘s hospitals
• In the private sector ‗Bahrain International Hospital‘
accounts for the most number of beds (23%), followed
by International Medical city (15%) , Bahrain specialist
(12%) and Al Amal hospital (11%)
• The King Hamad Hospital which is expected to
commence operations in the near term, is expected to
have about 312 beds
• Bahrain offers 18 beds / 10,000 population as opposed to • Bahrain‘s private healthcare sector will have to expand
the Global (including developing countries) average of 25 to meet rising demand, through the establishment of
beds / 10,000 population healthcare projects such as ‗Dilmunia Health Island‘
• Japan offers 140 beds / 10,000 population while Russia • Additionally, there is need to increase standards of
and Germany offer 97 and 83 beds / 10,000 population, healthcare infrastructure by facilitating sustainable
respectively private sector investment
Sources: Industry Reports, D&B Research & Analysis

25
Bahrain enjoys an overall healthy position in the region in
terms of health expenditure and infrastructure…
Allocated healthcare expenditure as a Health expenditure as % of
% expenditure
Allocated healthcare of GDP as a % of GDP Government
Health Expenditure as a % expenditure
of Government Expenditure
5 12
4 10
Percentage
Percentage
8
3
6
2
4
1 2
0 0
Bahrain Kuwait Oman Qatar Saudi UAE Bahrain Kuwait Oman Qatar Saudi UAE
Country Country
Government expenditure on health
Government expenditure on health as a % of total
as % of totalhealth
health expenditure
expenditure • Estimated total health-care spending in the region will
reach BD 22.6 billion in 2025, up from BD 4 billion
100
currently (McKinsey & Co)
80 • Private sector growth seems necessary in Bahrain, in
Percentage
60 order to provide the capital accessibility, skill-sets and

40 financial discipline to support flexible, properly targeted
healthcare expansion
20
• GCC countries ranked low on healthcare spending as a %
0 of GDP as compared to the OECD average of 9% in
Bahrain Kuwait Oman Qatar Saudi UAE 2005
Country
Sources: Industry Reports, D&B Research & Analysis, Ministry of Health, World Bank
26
…while market leader Saudi Arabia is meeting the increased
demand for quality healthcare through privatization reforms,
growth of preventive medicine and specialized care…
Total Healthcare spend in Saudi, BD million - 2007 Hospitals / Beds – Public vs Private sector in Saudi
21% of beds in Saudi belong to
the private sector as opposed
to 33% in Bahrain
Total Healthcare
spend as % of
BD 5.1 GDP in Saudi is
billion 3.6% as opposed
to 3.9% in Bahrain
• Saudi Arabia accounted for 53% of GCC healthcare expenditure in 2008, with total spend reaching BD 5 billion
• Many ambitious medical cluster projects are under way in Saudi Arabia with healthcare projects valued at over BD 6.6 billion
• Demand for hospital beds is expected to increase to 70,000 in Saudi by 2016
 In order to manage this increase, the government has been implementing policies to increase private sector
participation, resulting in significant private sector growth, accounting for over 50% of the newly established hospitals
and incremental bed capacity
• Other factors that have led to private sector growth are specialized treatments offered, superior quality of services and
facilities, coupled with inconvenience faced by patients due to crowded public sector health establishments
• Saudi is revamping its primary health care system by establishing ―mini clinics‖ for preventive care in order to reduce crowding
in public hospitals
• In addition, Saudi is also instituting significant improvement to enable access to specialist medicine care and training

27
Primary healthcare remains the major healthcare requirement
in Bahrain …
Outpatient visits by institution - 2007

• 60% of outpatient visits in 2007 were to primary health care centers
• 3.5 million people visited Bahrain‘s health centres in 2007 however
such units are considered scanty (only 0.2 / 1000 people)
• Through a network of >23 health care centers and clinics scattered
throughout the Kingdom, primary healthcare is provided to all citizens
• High demand for such services leads to limited appointments and
long waiting hours for patients
• Primary healthcare centers provide family medicine, immunization
programs, health education & maternal and child healthcare
• Larger centers also provide dental services, laboratory investigations
and diagnostic radiology
• Most private hospitals in Bahrain are generalist hospitals providing
Visits to Primary healthcare centers by requirement primary and levels of secondary care
• Family Medicine (a form of primary care that provides continuing
comprehensive healthcare for the family emphasizing health
promotion) is expected to be a key driver of healthcare in Bahrain
With a growing and ageing population, the requirement for a focused

preventive medicine agenda becomes apparent. There is a need to
promote private sector initiatives for preventive medicine clinics and
private – public partnerships in order to combat the burden on
government primary health centres
Sources: Industry Reports, D&B Research & Analysis, Ministry of Health

28
…although there is an emerging need for the provision of
secondary & tertiary healthcare services …
Admissions at SMH by type of treatment - 2007

• As part of the Ministry of Health‘s (MoH) plan to
promote the country as a centre for the provision of
tertiary health services, the following new trends
have been identified:
 Cardiovascular diseases cause more than one-
third of all deaths in Bahrain;
 Cancer, congenital diseases, respiratory diseases
and gastrointestinal diseases are on the rise;
 Diabetes is affecting a sizeable percentage of
Bahrain‘s population, including children
Leading cause of deaths in Bahrain- 2007  The elderly population is expected to triple within
two decades
• In light of the above, the Ministry of Health has
decided to focus on the following 10 priority areas:
cancer, circulatory & cardiovascular diseases, dental
health, diabetes, hereditary diseases, injury
prevention, respiratory illness, maternal & child
health, mental & emotional health, and physical &
learning disability

29
…which are currently provided mainly by the public
healthcare system through SMC and the Bahrain Defence
Force hospital…
Ministry of Health provides Secondary Health Care Services through several hospitals. Specialities in these centres
include medicine, surgery, orthopaedics, plastic surgery/burns, pediatrics, obstetrics/gynaecology, ear, nose and throat
surgery, ophthamology, oral surgery and intensive care.
Healthcare providers
The Salmaniya Medical Complex is the main secondary and tertiary care facility in Bahrain. It has 870
Salmaniya Medical
beds (excluding Special Care Baby Unit) and extensive outpatient services. SMC accounts for over
Complex
80% of public healthcare expenditure in Bahrain.
Bahrain Defense Force Hospital provides services to a large variety of the population, including
Bahrain Defence members of the Bahrain Defense Force and their families. A number of highly specialized services are
Force Hospital offered, including tertiary care for advanced cardiac care services. The hospital has 349 beds, with
almost 24,000 admissions, 123,000 outpatient attendances at consultant clinics and over 80,000
attendances at the accident and emergency department.
For many years, the private sector constituted mainly of general and specialized clinics. Recently
Private sector however, more secondary care facilities / hospitals have started operations and the number continues
to rise.
Although Bahrain ‗s facilities in advanced secondary and tertiary care in certain specializations such as oncology, and cardiology
are absent / limited except for certain treatments offered at Salmaniya / BDF, the private sector is reluctant to invest in such
facilities /or skill sets due to Bahrain‘s small population size and implied lower demand diluting Return on Investment

30
There is growing demand from Bahraini residents and GCC
expatriates for an all encompassing package of physiotherapy
and rehabilitation services…
• Directly related to:

Demand in  an ageing population
 increased attention to the needs of disabled people and accident victims
Bahrain
 lifestyle related diseases
 Alignment with medical tourism promoting initiatives
• There are currently 7 licensed physiotherapy centers in Bahrain

• On an average, weekly, 65%-70% of physiotherapy patients are Bahrainis, while 30% - 35% of
Present situation patients come from other GCC countries such as Saudi, Qatar and Kuwait
• There is presence of physiotherapy services & physiotherapy training over the last 30 years at
private hospitals, government hospitals and also at some primary health care centers, which
constitute the backbone of Bahrain‘s largely public run healthcare system
• Requirement for holistic physiotherapy clinics in Bahrain offering the whole range of services in
manual therapy, therapeutic exercises and the application of electro physical modalities, either
through independent hospitals or within a hospital complex
• Demand for physiotherapists is growing rapidly in the field of sports
Opportunities • Growing incidence of lifestyle-related diseases like hypertension, obesity, etc. and Bahrain‘s
population demographics is further opening up more vistas for physiotherapists.
• Requirement of ‗community physiotherapists‘ who are needed in hospitals, nursing homes,
orthopaedic departments, rehabilitation centers, schools for the mentally retarded and physically
disabled children, defence medical establishments, etc. is rising rapidly
Development of Physiotherapy centres through public –private partnerships that will cater to Bahraini nationals and medical
tourists from the GCC represent a growth opportunity for Bahrain based on the region‘s propensity for lifestyle related diseases
and the growing elderly population which is expected to triple within the next two decades

31
Complementary and Alternative medicine also presents a growth
opportunity in Bahrain on the back of the large expat Asian
population and in keeping with global health reform trends..
• Demand for alternative medicine in Bahrain is related to:

Demand in  Provision of alternative medicine formats to the residents of Bahrain in keeping with the
investment in health care infrastructure and reforms
Bahrain
 Cultural mindset of Bahrain‘s largely Asian dominated population (the majority of which are
South Asians) and their belief in alternative and traditional remedies
• There are currently 7 licensed alternative medicine centers in Bahrain

• There is an absence of a regulation governing the establishment and operation of such centers; with
Present situation the existing alternative medicine centers having been licensed through ―special licenses‖ – this
regulatory gap further restricts the establishment of more such centers in Bahrain
• However, the Bahrain Wellness Center, a world class resort aiming to be the Gulf's largest centre for
internationally accepted forms of alternative medicine therapies, has recently been set up in Bahrain
• A growing belief in complementary and alternative medicine

 One in three adults in the United States used at least one complementary or alternative medical
therapy
 Other industrial countries, including those in Western Europe, Australia, and Israel, have also
Opportunities
been observing increased interest and demand for complementary and alternative medicine
with more than 60% of physicians recommending CAM to their patients
• Increased proliferation of CAM is expected to provide impetus to the growth of this segment
There is a need to upgrade licensing and registration laws (Ministry of Health) to tap into Complementary and
alternative medicine (CAM) opportunity by allowing for the establishment and operation of alternative medicine centers

32
In keeping with demand trends, Bahrain is collaborating with
International Healthcare providers to offer quality healthcare to
its residents and medical tourists…
1 2 3
Bilateral cooperation in healthcare policies &
Modernization of healthcare Alternative medicine
implementation
• Bahrain has expressed interest in • Bahrain has completed an MoU with Singapore • Bahrain is looking at
working jointly with the Indian designed to encourage an exchange of healthcare legislation to effectively
state of Kerala in the area of
professionals and the setting-up of bilateral workshops licence alternative
Hospital Information Systems *
to promote the exchange of medical expertise medicines, and according to
• Planned collaboration with
Thailand to modernize the • MOH has expressed interest to promote and support reports, has invited Thailand
Kingdom‘s healthcare services is collaborative efforts with other GCC Countries in order to establish a traditional and
being considered. The to improve the health status in the Region** herbal medicines factory in
partnership will focus on • Further the Ministry has also expressed interests in the country, which would act
oncology, intensive ppromoting and supporting collaborative efforts with as a source of supply for the
care,emergency medicine and
regional and international agencies and organizations, entire Gulf region*
training medical professionals;
including the WHO and the World Bank**
with the private sector strongly
involved in the process*
Bahrain is working with various countries across different aspects of healthcare with the aim of providing quality
healthcare to its growing population and medical tourists
Sources: Industry Reports, BMI*, Ministry of health**, D&B Research & Analysis
33
Medical tourism provides a strong opportunity for Bahrain
healthcare if the Kingdom promotes medical entrepreneurship
and provides quality healthcare at a lower cost….
Medical tourism provides state-of-the-art private medical care in collaboration with the tourism industry to
Definition patients from other countries at highly competitive prices
Globally, medical tourism is estimated to be a BD 23 billion industry (2006). Available analysis projects that
Global
people from Afro-Asian countries spend as much as BD 7.5 billion every year on healthcare services from
industry
outside their countries.
Thailand, Malaysia and Singapore together currently attract as much as ten times more medical tourists than
Global
India. Hongkong and South Africa are emerging as big medical tourism destinations along with Israel, Jordan,
destinations
Cuba and Costa Rica. Other countries like Greece and Croatia plan to be attractive healthcare destinations
With prices at a fraction (sometimes 1/10th) of those in the US or EU, the concept has broad consumer appeal,
Value
with advanced technology and facilities with high-quality procedures on par with hospitals in developed nations.
proposition
FACILITATORS
• Promoted by government policy, which facilitates effective working of medical tourism and retail industries
• Medical expertise that is on par with international standards & internationally accredited hospitals
• Development of hospitals with required infrastructure and management style meeting international standards
• Niche positioning within the Kingdom‘s tourism strategy framework, supplemented with aggressive marketing campaign
EXAMPLE - UAE
The UAE is attempting to promote the “quality” of its healthcare services with 14 hospitals in the UAE having been accredited by
the JCI in the US, one of the world's leading accreditation organisations. It has also teamed up with Harvard Medical School to
operate Dubai Healthcare City, as a state-of-the-art 'centre of excellence' for clinical and wellness services, medical education
and research aimed at competing with low-cost health care providing countries in Asia
The UAE‘s Ministry of Health is at the forefront of developing the necessary infrastructure to attract medical tourists

34
…and would have to be developed across the healthcare
sector in conjunction with the Retail and Tourism industries
with a focused marketing approach…
The Government of Bahrain has indicated the importance of medical tourism and promoting Bahrain as a medical tourism hub
Health tourism would have to be developed around a program that incorporates a variety of relevant government
agencies, hospitals, private medical centers, and businesses in the retail, wellness, spa, health, and tourism industries.
Target segments Bahrain‟s advantages Economic growth

• Western expatriates looking to • Liberal environment • Increased employment
receive quality healthcare at a • Quality of healthcare & medical technology
• Competitive cost as compared to other GCC • Transfer of high level skill sets
lower cost
• GCC expatriates looking to countries and the West • Private sector growth
receive quality healthcare (not • Bilingual population (English & Arabic)
• Availability of low cost /high quality resources • Development of quality
available in their countries) in
• Leverage on current infrastructure & availability of healthcare infrastructure
a more liberal environment –
diverse treatments – several private hospitals are
Dubai spends > BD 200 mn
already offering treatments in plastic /cosmetic
/ year on sending its surgery and physiotherapy targeting GCC expats
residents for treatments • Leverage on strong influx of GCC tourists (>70% of
abroad all tourists entering Bahrain)
Focus areas
Focus on developing Increased focus on Focus on health & Focus, positioning and Promote Bahrain on the
advanced secondary & developing the private wellness packages marketing of specialized global healthcare map by
tertiary services by sector (particularly as (including tours, hotel treatment packages e.g. facilitating doctors /
importing skill sets & public healthcare for stay and shopping) dental , cosmetic nurses attendance at
medical technology GCC nationals is free) surgery; especially foreign workshops
within the GCC

35
A prominent market gap in the healthcare sector is the
absence of medical research ..
Medical research (or experimental medicine), is the basic research, applied research or translational research conducted to aid and
support the body of knowledge in the field of medicine
• Research is urgently needed to help address the burden

of disease that affects Bahrain and the developing world
Government Medical Industry
funded Research sponsored • This research need may be restricted by lack of skilled
staff, opportunities in education & research, funding, etc.
• Saudi Arabia has overcome these obstacles by creating a
Research centre at the King Faisal hospital , which has
Research that contributes to The evaluation of new
the development of new treatments for both safety and become an important participant in the field of biological
treatments(pre clinical trials) efficacy (clinical trials) research, and it is now taking steps towards establishing
a viable biotechnology base
Transational research - iterative feedback loops between the • The research hospital focuses on areas such as
basic and clinical research domains to accelerate knowledge comparative medicine, genetics, biological & medical
translation
research , radiopharmaceuticals; it is also a centre for
Requirement in Bahrain clinical studies and training
• Despite talks that a medical research institute was to be
Establishment of Creation of a Augmentation of set up in Bahrain, focusing on health research and
research centres cadre of medical research with
in teaching research workers involvement of development, such an institute has yet to be operational
institutions & with an planning • Countries that reflect best practice in terms of healthcare
medical appropriate agencies and services have centralized their development around a
universities career structure academia
strong medical research capability
Sources: D&B Research & Analysis
36
The Health Insurance sector in Bahrain is currently in the
adolescent stage of its lifecycle …
Characteristics of Bahrain Medical Insurance Industry

• The Medical insurance industry in Bahrain is characterized
Growing opportunities
New entrants in the form by High Risk (frequency of claims, lack of strict restrictions
from Group employee
of insurers, reinsurers and on services offered leading to high out payments, external
benefits, self funded
Third Party Administrators
schemes surveyors are unable to investigate all claims due to cultural
problems) and High Return (premium value)
Adolescent
stage • Apart from treatment costs, drug costs are also covered.
Insurance currently covers patented and generic drugs (as
long as these are under prescription) although insurance
Competitor advantage Variety of packages companies are planning on excluding several expensive
though Price differentiation offered
patented drugs.
• Currently about 50,000 subscribers for medical insurance in Bahrain

• Medical premiums grew from BD 5 million in 2005 to BD 22 million in 2008
• The increase in health insurance uptake among expatriates has been a major driver of the insurance sector, which has recorded
growth at an average of 20% yoy since 2002.
• Between 2006 and 2007, public health expenditure on expatriate workers was already cut from BD 50 million to just BD 20 million,
according to figures announced by the Ministry of Health - The decline has been largely driven by increases in treatment fees for
expatriates, though the increase was quite minimal
• Lack of regulations governing processing of medical insurance claims; there is an urgent need for guidelines / arbitration to
resolve issues between hospitals and insurance firms, arising from lack of clarity on scope of medical coverage, products
covered, accountability (in terms of refuted claims), etc.
• Lack of adoption of best practice formats in terms of electronic claim forms
• Lack of capacity and skills of health insurance operators to interpret, process and handle claims

37
…And is poised for likely impetus from planned regulatory
reforms which will mandate compulsory health insurance for all
expatriates…
• The government has proposed a five-stage plan to make private health insurance compulsory for all expatriate workers by
2013, with expatriates now accounting for around half of the country‘s population
National Health Insurance scheme breakdown

Phase I Private health insurance mandatory for companies with more than 500 employees
Phase II Private health insurance mandatory for expatriates in companies with more than 50 employees
Phase III Private health insurance mandatory for expatriates in companies with more than 10 employees
Phase IV Health insurance expanded to include all expatriates, except domestic workers
Phase V Health insurance for all expatriates, including domestic workers
The insurance scheme has not been finalized yet, primarily for the following reasons:
• Insurance sector may be unable to meet expected demand if regulation allowing mandatory health insurance is passed
• Social perspective - Government concern that certain companies may not provide insurance to their employees
(particularly, labour class) which may limit their ability to receive medical treatment. This could, however be addressed by
a regulation requiring compulsory insurance provided to employees at time of registration / renewal of license
• The private sector does not have the infrastructure required to handle inflow of patients ( in terms of volume and
treatments) as private hospitals have a limited portfolio of services and limited hospital beds
Sources: Industry Reports, BNI, D&B Research & Analysis

38
…Although there is concern that existing medical insurance
players may not be able to meet expected demand if this
regulation is passed…
Estimated demand growth Current Supply scenario
• Presently, Bahrain has a small health insurance market

with only 12 insurance companies
Expected growth: 809% • Insurance companies were also till now less inclined to
get into the ‗health insurance‘ sector due to the high
associated risk coupled with a limited volume
• Premium rates are seemingly attractive, averaging BD
160 per year
Vigilance is required from the regulator when handling

However, the impact of the estimated
the sudden increase in customers which may result in
growth of 809% is expected to be softened
mushrooming of new players and price wars
due to the phased out activity plan
• In order to cope with the expected expansion therefore, new players may come in, or existing players can upgrade their
capacity by making major investments in IT infrastructure as well as staffing
• Competition should bring premiums down, however, a careful balance will have to be struck; overly high costs could negatively
affect employers and hamper economic development and job creation
• However, if premiums are set too low, players believe it would threaten the existence of insurance companies and jeopardise
the success of the entire scheme
• Another requirement is that of an arbitrator to investigate areas of dispute between hospitals and insurance companies and the
development of a regulatory structure governing health providers, particularly malpractice laws
Sources: Industry Reports, D&B Research & Analysis, BNI

39
…Which might create grounds for the development and
proliferation of Managed Healthcare Plans in Bahrain, a
segment and concept that is currently absent in the Kingdom…
• The previous crisis in the Western world is expected to provide an indication of likely shifts in this industry in the coming years
• In order to manage lower margins due to competition; increased claims and expenses thereby lowering investment returns,
most Western countries rapidly adopted Managed healthcare plans as a format to offer medical benefit plans to citizens
• These Managed Healthcare Plans comprise lower payouts (through high volume of patients attached to a specific
group of doctors leading to lowered fees), thereby proving an effective format with positive impact on public
profitability and margins
In light of the current economic crisis, the expected regulation mandating private insurance for expatriates and the
consequent need to control healthcare costs, Bahrain could consider developing its „managed healthcare‟ segment
in order to receive a higher quality of healthcare along with many added benefits at a lower cost
Shifting to managed
Maximise sales Minimize claims /
healthcare plans from
(through higher expenses (through …Maximise overall profits
traditional insurance
volume of patients) lowered pay outs)
plans is expected to…
• Development of managed healthcare system in Bahrain will control the financing and delivery of health services to members
who are enrolled in a specific type of healthcare plan (HMO, PSO, etc.) and will ensure that:
 providers deliver high-quality care in an environment that manages or controls costs
 the care delivered is medically necessary and appropriate for the patient‘s condition
 care is rendered by the most appropriate provider
 care is rendered in the most appropriate, least-restrictive setting

40
Manufacturing / Assembling of Medical equipment (except for
basic medical devices) is absent in Bahrain…
• There is little local manufacturing of medical devices and all but the most basic devices must be imported through a
local agent in Bahrain
• Bahrain‘s small size has in the past, limited the health system‘s requirements for niche hi-tech devices, however, fast
population growth, an increasing chronic disease burden and an influx of medical tourists are increasing demand for
healthcare and making the purchase of specialist devices more cost effective
• The public sector remains the dominant purchaser of medical devices and accounted for an estimated 63% of health
expenditure in 2007. In 2007, the Ministry of Health spent BD 5m on medical devices, with some BD 3.5m spent on
equipment for the Salmaniya Medical Complex (SMC), the cornerstone of Bahrain‘s secondary and tertiary care
system
• Most medical equipment is acquired through tenders run by the Ministry of Health
• Though the public sector is expected to drive the market in the immediate to near term; the growth in private sector
investment will outpace that within the public sector
• Medical devices manufactured in developed countries particularly the US, the UK and Germany, should continue to
dominate the market because of their state of the art quality and the economies of scale leveraged by multinationals
• However, Gulf-based manufacturers of basic devices should have increased opportunities to win sales in Bahrain as a
result of the GCC common market
 This trend should be further strengthened by the GCC‘s Group Purchase Programme (SGH), which has been
steadily expanding in scope.
There appear to be limited opportunities for local manufacturing / assembling due to lack of competitiveness (high set up &
operational costs / quality of skill sets, lack of local demand , etc.) of local manufacturers to compete in a highly sophisticated
global industry

41
The Pharmaceutical Industry Map comprises manufacturing
and distribution of drugs as the primary components of its value
chain….
Manufacturing of scientific
instruments and analysis
equipment
Manufacture of drug
delivery systems
(capsules, injections,
needles)
Research &
Development
Manufacturing of Venture
Drugs / 3rd party Capitalists /
contract
manufacturing Governments
Funding
Development of Technology
Synthesis Extraction Biotechnology (specific lab method) / licensing of
technology
Chemical
Manufacturing Research tools providers
Classification of type of Drugs
Nutritional & Medical

Patented diagnostic Vaccines
Generic Drugs Dietary
Drugs substances
Supplements
OTC Prescription
Regulatory Approvals
(Clinical testing, pre Patent Protection
market approvals)
Distribution &
Warehousing
Other players in the industry
Logistics Services
(3rd party / part of
Wholesale construct such as third party
Distributors
manufacturer group)
logistics players are linked to
Medical
manufacturing and distribution
Pharmaceutical Managed Care
Groceries Doctors Centers &
Retailers
Hospitals
Companies
players at peripheral support level
End consumers

42
…With Pharmaceutical drugs being broadly categorized into
patented and generic drugs
Globally…
Consistently ranked as one of the most profitable industries
Average of 10.3% return on assets as against median return of 4.7% on other industries
Average of 15.7% return on revenues as against median return of 5.9% of all firms
• Typically, the Pharmaceutical Manufacturing Industry tends to be highly concentrated (15 multinationals dominating
this sector) , while the distribution network tends to be highly fragmented
• The Pharmaceutical industry develops, produces and markets drugs licensed for use as medications. Other products
developed by such manufacturers include medical devices, diagnostic substances and nutritional products
• A distinctive characteristic of ―big pharma‖ is the heavy investment in R&D. Target areas for R&D are the segments with
the highest potential: cardiovascular, infectious, psychiatric and oncology diseases
• The following type of drugs may be produced:
 Generic: same as a brand name drug, it is allowed to be produced and marketed after the brand name drug's
patent has expired. The generic drug may still have a patent on the formulation but not on the active ingredient
 Patented: a drug protected by a patent which provides exclusive rights to the patent holder to use the invention
for the duration of the patent
• The modes of distribution may be via prescription (usually prescribed by a physician) or Over the Counter (OTC)
• The top 100 drugs (patented) accounted for 36% (BD 87.5 billion) of the global market in the last year
• The United states accounts for almost half of the global pharmaceutical market; this industry is the most profitable of all
businesses in the US with a 17% return on revenue
• The Middle East accounts for 2% of global pharmaceutical sales with a total regional value (ME) of BD 4 billion
Sources: Hoovers, Industry reports, D&B Research & Analysis

43
Total drug expenditure in Bahrain has been rising as Bahrain
continues to invest in its health infrastructure…
Drug Expenditure
60.0
DrugTotal
Expenditure Drug
Drug Expenditure 2005-2008, Expenditure
in BD million
50.0 • The Ministry of Health has been increasing spending in recent
40.0
500 60.0 times; drug expenditure
60.0was BD 43.35 million (consumer prices) in
BD
50.0
30.0 50.0 per capita over the period, shows a slight
400 2008; Drug Expenditure
20.0
40.0 40.0
BD million
300
10.0
decline due to the sharp increase in population in 2007-2008
BD
BD
30.0 30.0
200
0.0
20.0 • Factors that are helping
20.0 to stimulate market growth include:
100
007 2008 2009(f) 2010(f) 2011(f) 2012(f) 2013(f)10.0 10.0
0 0.0  Solid economic growth
0.0 & plans for healthcare modernization
Year
7 2008 2009(f) 2010(f)
2005 2011(f)
2006 2012(f)
2007 2013(f)
2008 2009(f) 2010(f) 2011(f) 2012(f) 2013(f)
 A rapidly expanding population
expenditureYear Per capita drug expenditure Year
 The scheme to have all expatriate workers covered by private
enditure Per capita
Totaldrug
drugexpenditure
expenditure Per capita drug expenditure
health insurance by 2013
Bahrain Pharma market by sub sector - 2008  Emergence of more 'civilisation'-type and chronic diseases.
• However, the currently limited population size and the
11%
Government‘s attempt to contain public healthcare costs will put a
4%
brake on the faster rise of pharmaceutical spending
• Government purchasing is now based predominantly on patented
drugs, but the share of generics is reported to be slowly increasing
• The share of OTC drugs is limited as Bahrainis are slow to adopt
a self medicating approach
84%
• Most drug demand is met by imports, which is expected to
Patented products Generic drugs OTC drugs continue to account for the bulk of pharmaceutical sector revenues

44
The Bahraini Pharmaceutical industry consists of limited
manufacturing with heavy reliance on imports
Total value of Pharma As Bahrain‘s sole manufacturing company Bidapharm (mainly

manufacturing sector - BD 3.51 mn engaged in repackaging and blistering) has ceased
2008 operations, the current pharmaceutical manufacturing sector
Contribution of pharma (as valued by the CIO, Bahrain) may include homeopathic
manufacturing sector to BD 1.55 mn products, potions / creams or pharmaceutical products such
GDP - 2008 as syringes, pistons, etc.
• Foreign drug companies dominate the market in value terms
• However, multinationals and other foreign firms are present in Bahrain only through imports, rather than through
local manufacturing facilities
• Key suppliers to the Bahrain market, include GlaxoSmithKline (GSK), Roche, Bristol-Myers Squibb, Sandoz,
Merck & Co, Pfizer and AstraZeneca, as well as the UAE‘s Julphar.
Sources: CIO, Industry Reports, D&B Research

45
…although Bahrain‘s distribution network is fairly well
developed
The country imports most of its pharmaceuticals from France, the UK, Germany,
Import Switzerland, US, Jordan, Saudi, egypt, Oman, India and sometimes the UAE
Distributors have their own warehousing / facilities and are reluctant to use 3rd party
Warehousing warehousing due to uncertainty of warehousing standards, inventory control, etc
Distributors have their own distribution networks which deliver to end customers such
Logistics / distribution as pharmacies, hospitals, etc.
End customers
Distributors may have their own retail networks or supply to independent retailers
Pharmacies / Retailers
The MoH buys drugs from local distributors or the Secretariat General of Health
Ministry of Health (SGH) in Saudi depending on its requirements and availability of drugs
Hospitals purchase a combination of patented / generic drugs based on their

Hospitals customer segments. For example, 70% of drugs purchased by ‗Bahrain Specialist‘
are patented while only 20% of those purchased by ‗Shifa hospital‗ are patented
There is no regulation / mandate from the Ministry of Health with regard to temperature controlled facilities for
warehousing of drugs

46
Saudi is the regional leader with more than 7 pharmaceutical
manufacturers and a strong export market…
Value of GCC pharma market, in BD million

Country No. of Manufacturing facilities 700
600
Saudi Arabia >7
Market (BD million)

500
UAE >3 400
Oman >2 300
200
Kuwait >2
100
Bahrain 0
0
Qatar 0 Saudi UAE Kuwait Qatar Oman Bahrain
Arabia
• At BD 640 million, the Saudi Arabian pharmaceutical market represents 65% of the BD 1 billion GCC market
• Therapeutic pharmaceuticals make up 80% of the market led by systemic hormones (17%), Alimentary tract & metabolism
(15%), respiratory system (10%), sex hormones (9%), nervous system (8%) , cardio system (7%) and musco skeletal
system (7%)
• Secretariat General of Health (SGH), which orders imports bulk pharmaceuticals for the GCC is based out of Saudi Arabia
• The Saudi Government encourages its private sector to establish local pharmaceutical manufacturing by providing incentives
such as free land, interest free loans, and subsidized utilities
• Any potential plans for Bahrain to develop its pharmaceutical manufacturing sector through the traditional route of encouraging
local industry, would be met by significant barriers to entry in the form of first mover‘s advantage and sheer volume potential of
the Saudi industry
Sources: Bioplan Associates, D&B Research & Analysis

47
..while the Pharmaceutical manufacturing industry in Bahrain
remains relatively weak and nascent …
Focus : Low Sector Presence : Low

Vision – 2030 - Emphasis on moving to higher Lack of local or international players in the
value added manufacturing activities and pharma manufacturing sector
migrating, over time, to manufacturing activities
that require highly skilled labour Limited number of players in the medical
Based on Bahrain‘s low competitiveness, EDB devices (pistons, syringes) sector
has toned down its focus on this sector
The Bahraini pharmaceutical market is limited by factors such as:

• Limited profit levels for foreign firms, representing a barrier to investment
• Heavy investment requirements and reservations over ROI for local establishments
• Bahrain‘s small size acting as a deterrent for ―absorption‖ of such drugs
• Emergence of neighbouring Saudi Arabia as a manufacturing / exports hub for the GCC and strong
competitiveness of Saudi pharmaceutical manufacturing firms
• Limited ability to produce high margin patented drugs due to low skill sets & technical know how
• Limited export potential to neighbouring GCC countries due to existing manufacturing presence
Potential for growth is limited without strategic focus, strong government investment / support and
private investment

48
Pharmaceutical Manufacturing sector is a market gap and
presents an opportunity, only if there is strategic focus and
intent to delve into this sector, which is …
The strongest potential for Bahrain to develop its pharma manufacturing industry is through strategic alliances or
local partnerships with Global Pharma players of complementary strengths
1 Partnerships of local New product Penetration of Bahraini New geographic
firms with global pharma development market markets
giants
2
Attract global companies to o Development of high o Ensure buying
invest in Bahrain by: o Export to new geographic
margin products ‗quotas‘ from MOH
o offering promotional by importing technical markets by leveraging on
facilities like free land, o Initial Promotion of
skills and know how partner‘s export strategy
expatriate visas, buying products via local
o Development of ‗niche‘ and Bahraini Government
quotas from MoH, etc. distributors through
generic products (such as strategic relations
o promoting Bahrain‘s ―push ― method
strategic location for dental material)
-
exports
Creation of a local manufacturing unit in alliance with a global company will address the issues currently limiting the
proliferation of a Bahraini manufacturing sector such as:
• Heavy investment requirements & drug discovery costs
• Ability to import skill sets from the partner company and impart training to Bahrainis
• Limited reliance on local consumption by building on exports through partner company‟s strategy and Bahraini
strategic relations (for example, US FTA)
49
… contingent upon investment of requisite efforts to develop a
strong industry in Bahrain including strong Government
support, import of technical skills & export strategies …
Focus area for Bahrain
Production of finished
Manufacture of active Final packaging of
dosage forms from
Pharmaceutical pharmaceutical finished dosage forms
active pharmaceutical
Production process ingredients and
ingredients and
or repackaging of bulk
intermediates finished products
excipients
Special Reliable supplies

technologies of high quality raw
Dependable material Human Resources
Requirements Huge initial provision of water with specialist
capital outlay & high quality knowledge
utilities
Attract foreign Import technologies Bulk raw material Import skill sets
investment through Government import from low with a view to
Solutions through free land, partnerships with Support cost countries transferring such
etc. global firms such as India skills to Bahrainis

50
… As well as provisions for a well planned cost control
structure…
Cost distribution: Big Pharma
Manufacturing costs
comprise 36% of total costs
to the big pharma, out of
which material costs
comprise 50%
41%
Bahrain could consider an acquisition route to backward

integrate (by acquiring facilities manufacturing pharmaceutical
ingredients) in order to manage pharma material / ingredient
Backward integration costs. Alternatively, it could import in bulk from low cost
through acquisition ingredient manufacturers
Manufacture of active Production of finished Final packaging of finished

Pharmaceutical dosage forms from active dosage forms or
pharmaceutical
Production pharmaceutical ingredients repackaging of bulk finished
ingredients and
process and excipients products
intermediates

51
Investment will in turn, drive further growth by creating a need
for value added players in other economic sectors
Economic
Follow Saudi example of attracting Insulin production and related
Development of Development
private sector investment through warehousing and distribution
free land, interest free loans, and operations have recently research cells
subsidized utilities commenced in the Bahrain Value added
Investment Wharf Independent manufacturing
Warehousing activity
Domestic Pharma players
companies
Generic Products Growth of support
3rd party
services
Partnerships
logistics players
Move to
Increase in
High value Creation of skilled
International players manufacturing of
Products workforce
having medical devices
complementary
strengths Pharmaceutical
market research Increased R & D
Patent expired activity
brand drugs
E.g. Novo Nordisk is investing
BD 150 million in an insulin Creation of value
manufacturing factory in added market sectors
Tianjin China
Venturing into Pharmaceutical Manufacturing is dependent on Bahrain‟s strategic intent, based on its need to invest in
a sustainable manufacturing sector and its desire to achieve self reliance and security

52
UAE‘s Julphar exemplifies the need for sustained investment
and staying power…
• With a capital of BD 16.5 million and 855 workers, Gulf Pharmaceutical Company (Julphar), which has a
production capacity of 1 billion units annually, manufactures 275 varieties of medicine, only 7% of which are
consumed locally. The rest is exported to 40 countries. The company‘s new factory, Julphar 2, which produces
antibiotics, was opened in March 1999. Julphar, founded in 1985, now has five factories, three of which are in
Ras al-Khaimah, one in Ecuador and one in Germany
• Starting with a single plant and delivering a few pharmaceutical products in the local market, Julphar has rapidly
moulded itself into a large group with a world-wide network, presently extending to seven state-of-the-art world-
class manufacturing plants, five of which are located in UAE and one each in Ecuador & Germany
Despite humble beginnings, Julphar posted a net profit of over BD 12 million in 2009…
1985 - 1989 From 1985 – 89 Julphar posted total sales revenue of BD 21.5 million
2000 - 2004 Successfully increased its global turnover to more than BD 1.9 billion in 2000-04, securing an unparalleled
growth rate of 110.5%
2005 Julphar had a y-o-y growth in sales of close to 12% and a five year CAGR in net profits of 34% until the
last quarter of 2005.
2009 Sales increased 21.9% YoY during 2009 to BD 76.2 million. The company reported a gross profit of BD
45.48 million, up 27.4% over 2008 and a net profit of BD 12.25 million. The company has a robust order
book and expects double digit growth in sales and an operating profit during 2010
Sources: TAIB, Julphar annual report

53
…based on focused vision to increase self reliance and
security, and a strategy of business diversification,
strategic contracts and improved distribution networks
Key success factors
Vision Development of a pharmaceutical company that would make UAE self sufficient in all of its therapeutic
needs, providing quality medicine at affordable prices.
Manufacturing of the H1N1 vaccine in 2010 after signing a deal that made it the sole regional producer and supplier of a
Chinese firm's flu vaccine.
Strategic • The General Secretariat of the GCC granted Julphar a BD 13.2 million contract to supply the GCC
contracts countries with 86 different medical formulae for this year. The contract is a part of the annual Unified
Medicines Purchase Agreement (UMPA) of the GCC countries.
• In a scenario of most markets complying with the WTO rules and regulations, Julphar plans to embark
on new business opportunities, under licensing manufacturing and contract manufacturing, focusing on
major value based therapeutics and products
Expansion / • The company is undertaking expansion projects in two important directions – geographic diversification
Diversification and related diversification
• Formation of ‗Planet Pharmacies‘ which aims to become the largest healthcare products retailer in the
MENA region mainly through inorganic growth strategies.
• Investment in securities
• Investment in an API Indian Manufacturing Company, SMS Pharma (for cheaper procurement of raw
material)
Distribution Julphar also has several wholly-owned subsidiaries that work as separate entities and control a large
networks network of distribution and warehousing, a transport fleet and pharmacy management in the UAE and
Oman, supporting in distribution of the company‘s products in the region
Sources: TAIB, Julphar annual report

54
The demand for Pharma Retailers appears to be well met …
• The population‘s small size makes distribution quite • There are sufficient distributors in the Bahraini market
unchallenging with a varied portfolio of drugs
• The major players include Wael Pharmacy, Gulf • However, there is often insufficient access to critical
Pharmacy, Yousuf Mahmood Husain, Al Jishi Bahrain drugs such as Tammiflu, due to the country‘s non
pharmacy and Behzad which hold 75% - 80% of the existent manufacturing sector and consequent
dependence on imports
market share in Bahrain
• Bahrain has about 123 pharmacies in total (91
• Distributors are usually sole distributors for a company‘s independent pharmacies with the rest being attached to
products to ascertain accountability for drug quality government and private sector hospitals) –below the
• Through these distributors, Bahrain has access to a WHO average of 1 pharmacy for 2300 people in
combination of patented and generic drugs which are industrialized countries
distributed to pharmacies, retailers and hospitals • Expansion of existing pharmacies / development of new
• There are 91 active retail pharmacies in Bahrain most of retail pharmacies is hindered by:
which are located in the urban areas  regulations which do not allow registration / expansion
of retail branches unless the owner is a qualified
• Key retailers such as Jaffar Pharmacies, Nasser
Bahraini pharmacist
Pharmacies, Hamadtown, Gulf Pharmacies and Behzad
 Fixing of Drug prices by the MoH, in a scenario of
Pharmacies have 60% of market share
strengthening Euro (against Dinar), thereby leading to
an erosion of margins (14 pharma retailers have shut
A new regulation is currently being considered whereby the shop in the last year due to pressures on profitability)
setting up of pharmacy retail outlets would be relaxed (with
• However, opportunity in Pharma retail appears limited on
no mandatory requirement of a Bahraini Pharmacist owner).
the back of Bahrain‘s limited geographical size, thus
Such a regulation has the potential to dilute the market in
restricting the need for more pharma retail outlets across
terms of unrestricted expansion of foreign (e.g. Saudi)
the Kingdom
operators, thereby impacting market play of local operators.

55
Addressal of issues impacting skills formation amongst Bahraini
employees by Tamkeen is critical to serve the potential growth in
the Health sector …
Shortage of nursing s staff • Shortage of nursing staff (150 nurses a year being trained currently) due to shortage of faculty in
– does not meet current teaching institutions. There are therefore, nursing centers (although such institutions are not
requirements provided for under current law) which provide nurses for patient home use and hospitals on a
temporary basis
• High-level health specialities such as general surgery are satisfactorily resourced in Bahrain.
Shortage of specialised
However, sub-specialities (such as orthopaedic surgery), and primary health care specialists in
medical professionals
chronic disease (such as diabetes and asthma) were significant current occupational gaps.
• Medical colleges in Bahrain (AGU, RCSI, CSI) mainly use the SMC for clinical trials with very few
Shortage of teaching trials at BDF. The Ministry of Health could work with the private sector by using private hospitals as
hospitals teaching hospitals, however, exposure is restricted due to limitations with regard to tertiary care
and specialised secondary care provided
Employer skill requirements for healthcare sector • Health organisations do not have difficulty attracting employees,
they are more likely to experience a shortage in supply of good
candidates
• It may be noted that the greatest current workforce shortages in
the health sector were professionals in medical sciences, nurses
and dentists
• There are also skills gaps in health management resources, and
specialist and technical health skills.
*Source: Allen survey, D&B Research 56

Healthcare & Pharmaceuticals: A Snapshot of Prominent
Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Healthcare &
Pharmaceuticals sector
• The key pointers to the interpretation to the plot presented is as follows:
• The plot presented subsequently is a 2-axis plot between Market Potential (x-axis) and Current level of Market Play (y-axis)
and is used to reflect the ‗absorptive capacity‘ of the Healthcare & Pharmaceuticals sector
o The Market Potential is a broad assessment of Expected growth rate in the near term in terms of largely domestic
potential and / or regional / export potential (as applicable for the sub-sector within the plot)
 The assessment of market potential is a ‗near term‘ assessment (i.e. time frame of 5 years) and is based
on a combination of top level secondary research and consolidated industry opinion captured through
industry interviews conducted for the sector
 A detailed demand analysis for each sub-sector has not been done and is outside the scope of this report
o The Level of Market Play is an assessment of the level of penetration within the segment based on presence of
domestic / regional / international operators (as the case may be for the sub-sector)
 The outcome of the analysis is to identify and delineate zones of apparent near term saturation and near term under
penetration in the sector – the sub-sectors falling in the zone of underpentration and / or depicted as being ‗absent‘ in the
Bahraini Healthcare & Pharmaceuticals sector value chain are termed as ‗market gaps‘
 These gaps represent sub-sectors within the sector that present potential opportunities based on and subject to a detailed
demand, feasibility and cost – benefit analysis (outside the scope of this report)
 Some of the sub-sectors / market gaps represented in the plot are considered to be bottlenecked either because of lack of
infrastructure ecosystem and / or regulatory support; however the position of such bottlenecked sub-sectors in the plot, is
under the assumption of removal of the bottleneck /disabler and therefore reflects its respective inherent potential
57
Healthcare & Pharmaceuticals: A Snapshot of Prominent
Bottlenecks, Gaps
Market Gaps (absence of segment)

Current Level of market Play (assessed in terms of
High Primary out patient Market gaps in terms of sectors that have no / minimal
number of players and degree of penetration)
care presence in Bahrain, however could potentially

Pharma
No apparent gap
present opportunities for existing players / new
Distribution
entrants based on market feasibility and assessment
Pharma
Retail
Inpatient care 3  Managed healthcare plan providers
Medical tourism  Pharmaceutical Mfg.
Medium
1
2
 Medical research
Physiotherapy
Alternative
medicine 1,a
Preventive
Medicine 1,a
Infrastructure /Regulatory Bottlenecks (Disablers)
Market gaps
in terms of
 Subsidized public healthcare for expats
under Health
Advanced secondary / Insurance*, a  a Regulatory facilitation to enhance growth
Low penetration
tertiary treatment4 opportunities in alternative medicine, preventive
medicine and health insurance
Low Medium High
 Incentivize private sector to develop required
Market Potential (assessed in terms of expected growth rate infrastructure to facilitate health tourism growth
1. The growth of preventive medicine, alternative medicine & physiotherapy is on the back increasing demand for such services, particularly by GCC tourists
2. Expected high growth in health tourism based on increased government expenditure on health and focused healthcare developments. Although the sector
is nascent in Bahrain, there is strong potential in terms of the private sector already catering to GCC medical tourists, particularly in the areas of plastic &
cosmetic surgery, urology, physiotherapy etc. However, Bahrain has to contend with regional (UAE and Saudi) and international competition from low cost
medical tourist destinations
3. Inpatient care infrastructure is underpenetrated as compared to international bed / population ratios
4. Bahrain„s facilities in advanced secondary and tertiary care in certain specializations such as oncology, and cardiology are absent / limited except for
certain treatments offered at Salmaniya / BDF
* Demand for health insurance is expected to grow at exponential rates, dependent on whether health insurance is made mandatory for all expatriates
Market gap sectors that are currently underpenetrated, however market potential is high based on buoyancy of expected growth rates and market adoption
Market gap sectors that are currently underpenetrated, however market potential is deemed to be high if bottlenecks are removed
58
Sectors not deemed to be market gaps Sources: D&B Research & Analysis
Relative Sub-Sector Prioritization: Healthcare & Pharmaceuticals
• The following section (table and 2-axis plot) summarizes and presents the Relative position of each sub-sector identified within
the Healthcare & Pharmaceuticals sector as a ‗market gap‘
• The key pointers to the interpretation of the Relative Sub-sector positioning is presented as follows:
• The table and 2-axis plot presented in the next section tabulates / plots the relative scores / position of each sub-sector /
market gap in terms of Sub-sector Attractiveness and Bahrain Readiness
• These scores are the outcome of the ‗D&B Sub-Sector Prioritization model‘, which has been developed in line with
Tamkeen‘s objectives to relatively assess the prioritization of each sub-sector (within each sector) using an ‗investment
allocation approach‘
• The Relative Sub-sector Attractiveness is a combination of Absorptive Capacity of the Sub-sector, Impact of Investment,
Ability of the Sub-sector to generate high value add jobs and Alignment to Government / Vision 2030 (a detailed
explanation of each of these factors has been given in the Methodology section of the report)
• The Relative Sub-Sector Bahraini Readiness is a relative view of the ‗readiness‘ of each sub-sector (market gap) within the
sector in terms of availability of infrastructure, regulatory framework and trained Bahraini skill pool (a detailed explanation of
each of these factors has been given in the Methodology section of the report)
• The table in the next section also presents the ‗Hybrid Score‘ which is a factored combination of the ‗Relative Sub-Sector
Attractiveness‘ and ‗Relative Sub-sector Bahraini Readiness‘ and is used to assign an overall priority to the sub-sector
(Priority Index)
o The Priority Index has higher skew towards the Subsector Attractiveness (as compared to Bahraini Readiness)
59
** The Priority Index has been calculated as a Hybrid Score of the Relative – Sub-Sector Attractiveness and Relative Bahrain Readiness
scores
Each subsector has been evaluated for its attractiveness (based on factors such as market saturation, market growth, high skill employment
potential, impact of investment, strategic importance, availability of enabling factors such as dependence of raw material, energy, land and
other natural enablers) and Bahrain‟s readiness (based on factors such as alignment of regulatory framework, availability of infrastructure,
skill formation and development)

1. The Pharma sector has been presented in conjunction with the healthcare sector due to strong downstream linkages
2. Notes:
• The position of the various sub-sectors on both axes reflects the relative position of the sub-sector within the overall sector
• All sub-sectors indentified as areas of opportunity (within the Market Gap Scan report) have been plotted
• Sub-sectors highlighted in red represent bottlenecked industries; market potential (incorporated within Relative Sector Attractiveness for these sub-
sectors have been taken into consideration in consideration of addressal / removal of bottleneck which could be a regulatory, infrastructure or skill
formation issue
• Sub-sectors highlighted in Green represent markets / industries virtually absent in the Bahraini sector industry map / value chain

• The following section represents a 1-axis plot which maps the position of each sub-sector (market gap) in the report in terms of
the Overall Priority Index score (hybrid between relative sub-sector attractiveness and relative Bahraini readiness) that it achieves
• The key pointers to the interpretation of the plot is presented as follows:
• The plot represents a range of scores (ranging from 20% to 100%), divided into 3 broad Priority buckets / clusters i.e. A, B
and C
• The cut off scores for these buckets have been devised by fitting the Priority Index scores attained for all the sub-sectors
(market gaps) across the entire spectrum of sectors studied as part of the Market Gap study within a normal distribution
curve(total of 18 sectors that make up the economic landscape of the Kingdom)
• Priority Bucket B is further divided into finer buckets: B1, B2 and B3 (within the normal distribution curve, the frequency of
observations tends to be the highest around the average i.e. center of the curve; therefore finer cut offs are used to give a
better view of the positioning of the sub-sectors represented in terms of Overall Prioritization Index)
• The cut offs for Priority buckets were developed by fitting a normal distribution curve on the Prioritization index scores (PI)
obtained at a consolidated (aggregate of sub-sectors across sectors) level (**a detailed explanation of the cut off scores is
given in the Methodology section of the report)
• The priority buckets have subsequently been applied sector-wise to yield a classification of sub-sectors (within the sector)
as per the applied cut offs
• The objective of the relative sub-sector prioritization is to have a relative view / ranking of subsectors in terms of
‗attractiveness coupled with readiness‘ rather than to defocus attention on sub-sectors falling into lower buckets
• In fact Tamkeen might actually consider active intervention towards a sub-sector falling into a lower Priority bucket (say C)
in order to enhance the level of readiness associated with it (with implied overall impact on Priority Index score)
62
Relative Sub-Sector Prioritization: Healthcare &
Pharmaceuticals
Inpatient care
Medical Medical
Alternative Medicine
Insurance Tourism
Secondary /
Tertiary Services
Medical Pharma Physio Managed

Research Manufacturing therapy Healthcare
plans
Preventive
Medicine
20% 52% 57% 62% 67% 100%
Priority Index
Priority C Priority B Priority A
Priority B3 Priority B2 Priority B1
Notes:
• Sub-sectors highlighted (written) in red are deemed as bottlenecked sectors

• Sub-sectors highlighted (written) in green are deemed as virtually absent from the Bahraini sector value chain / industry map
• The axis is not fitted to scale

Key Sector Growth Drivers: Healthcare Services
International collaboration with

global healthcare providers
Expected regulation mandating
Increasing number of GCC
private insurance for expatriates is
medical tourists,
…………… expected to lead to growth in
insurance sector and healthcare
reforms
Increasing demand for primary An elderly population which is

healthcare and family medicine Healthcare Growth Drivers expected to triple within 2
decades
Natural population growth (6% Increase in chronic diseases

y-o-y)
The factors depicted are the key drivers enabling growth of segments pegged as high growth
markets
Sources: D&B Research & Analysis 64

Key Sector Growth Drivers: Pharmaceuticals
Emergence of more
'civilisation'-type and
chronic diseases
……………
Government vision – focus on Heavy Government spending on

developing value adding healthcare & related
manufacturing sectors infrastructure
Pharmaceutical Growth
Drivers
The scheme to have all

expatriate workers
Natural population growth (6%
covered by private health
y-o-y)
insurance by 2013
markets

65
Education
66
The Education Industry Map comprises Core education and
Professional Development / Education services as its primary
sectors ….
Engineering, etc.
Central Regulatory Regulatory Authority Management Accreditation by
Authority for specific courses Legal / Medical 3rd party
Core education system Professional Education / Development
Child care Promoters Continuing

Related Services Education
services Self learning
Day care
After school care Kindergarten Corporate Training
Sports coaching Govt. Directorate

Elementary
Counselling Services Education
Secondary Remedial Professional Career/Technical

Summer camp
Education Education development (vocational)
Coaching classes/ Soft skills & Industry

Higher tutorials grooming specific
education
Negotiation & IT training
Leadership
Generalistic Specialist
Universities Institutions Team building Technical skill
development
Delivery Modes
Onsite Distance
Education Education
Learning Input Learning Input
E – learning
Synchronous Learning Asynchronous Features

learning Management learning Multimedia
Audio/Video conferencing Self paced courses Interactivity

Learning Mngt systems
Application sharing Learning Content

Book marking
Discussion groups
Management systems
Shared Whiteboard Simulation
Instant messaging/chat Knowledge Management
Tracking
Related Services
Managed Education
Professional Educational Comparative
Service Management
Services Development research Education
Providers
Books & stationery Technology Teachers
Infrastructure, land Food & Beverages Administration
Manufacturing &
Transport,
Business Services Healthcare Construction related
logistics
technologies
ICT and Agriculture,

Financial Services Petrochemicals Trading
Telecommunications fishery, forestry

67
…With Primary, Secondary & Tertiary Education as the key
sub-segments within core education Services…
The theoretical construct of the Education Services Industry broadly comprises core education services &
professional development / education services . These form the core structure of education industry map.
Other operators in the construct are linked to these players either through value chain relationships or at
peripheral support level.
• The education industry consists of schools, colleges, universities and various private institutions. The education sector can be
broadly classified into the following categories or sub segments:
 K-12: This includes the education offered from nursery to the twelfth grade by various public, private and religious schools
 Higher education: This includes various government-run and private colleges and universities. This also includes Medical
Schools, Law Schools and Business Schools.
 Vocational education: This includes industry/job oriented education, based on the apprenticeship method of learning
 Professional Education / Development : This includes corporate training, conducted in house or by professional training
companies and may comprise training on technical skills, soft skills & grooming, leadership & negotiation
• The education industry also includes ancillary education services, such as after-school tutoring, educational content suppliers,
regulators, quality assurance bodies, etc.
• The K-12 education industry is quite fragmented with about 95,000 public schools in the US having an annual budget of BD
131 million and 27,000 private schools with annual revenues of BD 9.5 million. Growth in the private sector is mainly driven by
the inadequacies in the public sector educational system
• In the Colleges / Universities segment in the US, 60% of industry revenues are generated by public schools, although 75% of
students are enrolled in public schools. The Professional development / training is highly fragmented with the 50 largest
companies representing only 15% -40% of total revenue.
• The industry generates large scale revenues and employment; the revenue from higher education alone in the US is worth
over BD 151 billion. However, the state of the education industry in most developing countries, such as Afghanistan,
Bangladesh, Pakistan and nearly all of Africa, is bleak, with the literacy rate in these countries still below 60%.

68
Secondary education is the main contributor to education
sector revenues in Bahrain, with most Bahraini workers having
a secondary or post secondary school degree…..
Market Size Breakdown of Education sector, in BD million
• Absolute contribution of the education sector to Bahrain GDP grew by a
CAGR of 10.2% from 2004 to 2008 to reach BD 314 million in 2008
• However, relative contribution declined, with the education sector
contributing 3.81% in 2008 to total GDP as against 4.6% in 2004
• While the percentage contribution of the public education sector to
GDP shows a slight decline (1.59% in 2004 to 1.33% in 2008); the
contribution of the private education sector depicts a slight increase
(1.18% in 2004 to 1.35% in 2008)
• General employment trends in Bahrain‘s education sector show an
increase in employment between 2002 and 2007 in the Ministry of
Education (19.4 per cent) — with a total labour force of 16282, mainly Workers classification by education level
Bahraini nationals
100%
100%
• In Bahrain, Education is divided into Pre school education, Basic 80%
80%
Education, Secondary education and Higher education (university /
60%
vocational) 60%
40% 40%
• Secondary Education was the main contributor to industry revenues at
20% 20%
BD 326 million, followed by Universities & Colleges
0% 0%
• Most Bahraini workers have secondary or post secondary level
educational degrees, while roles requiring higher education degrees
such as PhD are mainly filled by expatriates
• Ministry of Education statistics depict that the majority of students who
study abroad (Foreign / Arab / Gulf countries) study in the fields of
medicine and health, engineering, education or law
Bahraini Non Bahraini
Bahraini Non Bahraini
Sources: CIO 2008, GOSI, Industry Reports, D&B Research & Analysis
*GDP at current prices
69
The GCC region significantly lags behind in terms of tertiary
education and innovation, with Bahrain falling below the GCC
average in terms of education expenditure…
Country
Country rank
ranks for Indicators
selected fromfrom
indicators Global Competitive
Global competitiveIndex
index2006-07 (higherEducation
2006-07 (Higher education)
related)
Bahrain GCC average Best comparable GCC country Bahrain has been consistently
Overall Rank 49 41 UAE (32) falling below the GCC average score
Higher Education & Training 64 57 Qatar (46)
across various parameters
Quality of educational system 79 54 Qatar (20)
Quality of Math & science education 86 74 Kuwait (61)
Availability of scientists & engineers 96 80 Kuwait (63)
Local availability of research / training services 96 69 Kuwait (53)
GCC Federal expenditure on education

31%
28% 28%
20% *Due to lack of data, the illustration

13% depicts the most recent available data
10%
(comparable years from 2004 – 2007)
Kuwait Oman Qatar Saudi Arabia UAE Bahrain
2006 2005 2005 2004 2005 2007
Enrolment rates in tertiary educational institutions remain low on average, and the quality of education is in need of upgrading. The
way in which education policies are handled by GCC governments will be a significant determinant of the region‘s ability to develop
as innovation-based economies that do not wholly rely on natural oil based resources
Source: Industry reports, D&B analysis

70
In the GCC, Saudi Arabia is the largest market for
educational services, emphasizing on modernization of
the system through initiatives such as E-Learning…
Saudi Government spend on Education (BD million) Total No. of students - Saudi („000)
10,588 636 678 723
CAGR: 16.1% 9,770 525 572 604
8,815
7,068
5,646 4,386 4,452 4,541 4,639 4,701 4,786
5,017
2003 2004 2005 2006 2007 2008
General Education Pupils University Students

2003 2004 2005 2006 2007 2008
Bahrain has the lowest education expenditure in the GCC as a % of Bahrain also has the highest rate of participation (GER* = 36 per cent in
total federal expenditure 2005) in tertiary education in the GCC
• Higher education in Saudi Arabia has undergone a tremendous growth over the last five decades. The higher education system,
which is based on diversification, has expanded to include 119 major universities (109 colleges & 9 institutes), 18 primary
teacher's colleges for men,102 primary teacher's colleges for women, 40 colleges and institutes for health, 24 technical colleges,
9 private universities and colleges
• The Government has further laid down plans to open 12 new universities in the country along with the signing of co-operation
agreements with leading universities in the US, Europe and Asia.
• In a major transformation of traditional education, most universities in Saudi Arabia are expected to switch to a system of e-
learning. The Saudi Ministry of Higher Education has established the National Centre of E-learning & Distance Learning (ELC),
to organize the change and prepare e-learning material. 9 universities have already agreed to implement the system.
Absence of educational institutions teaching through E-Learning methods in Bahrain is observed as an apparent gap, although
the Government has been exploring such initiatives through its ―Education Project‖
*GER is an UNDP statistical measure expressing the number of students enrolled in primary, secondary and tertiary levels of
education, regardless of age, as a percentage of the population of official school age for the three levels 71
Primary & Secondary Education in Bahrain is mainly delivered
through the Public sector… …
% share of students Dominated by public sector, with

2002-03 2003-04 2004-05 2005-06 gradual decline being observed
No. of schools 242 251 258 259
Public 81% 79% 79% 78%
Private 19% 21% 21% 22% Expected need for a larger number of pre primary education
providers in the near term in keeping with population trends
No. of universities 9 9 14 16
Public Pre-primary
22% education
22% in Bahrain
14% is predominantly
13% private and has grown quite rapidly since 1999, the gross
Pre Primary
Private enrolment
78% ratio *78%
in 2005 reaching
86% 49%88% with a total of 134 private kindergartens / nurseries. Given that the
Education population demographics shows that Bahrain has a large number of pre-school children, it is expected that
the demand for early childhood programs and educators that has built up will continue over the near term
Basic education is divided into two stages, primary and preparatory education and stretches out for nine
Primary years. Primary school enrolments grew strongly between 1999 and 2006 i.e. 17.6% growth. As of 2005-06,
Education there were 259 schools in Bahrain (K-12), of which 203 were public (including 2 religious institutions) and 56
were private. Private enrolment was 25% at primary level in 2006
This stage prepares the student for university education / higher institutes / labour market and stretches out
Secondary for three years. Secondary school enrolments grew strongly between 1999 and 2006 with a 25.4% growth
Education in enrolments. Private enrolment was 17 % at secondary level in 2006. Most students graduated in the
commerce stream in 2006 followed by graduations in the science stream
Virtually all Bahrainis complete twelve years of schooling, with one of the highest rates of participation worldwide, especially for
girls. However, there are concerns regarding the the quality of the training provided and the lack of standards for selection of
entrants to the teaching profession
Source: Ministry of Education, UNDP
*GER is an UNDP statistical measure by expressing the number of students enrolled in primary, secondary and tertiary levels of 72
education, regardless of age, as a percentage of the population of official school age for the three levels
Current issues in the quality of education are further
augmented with problems in basic skills outcomes from
schooling…
Expected increase in workforce

Areas for development:
• Planning for differentiation in courses offered
• Use of student assessment strategies
• Development of higher order thinking skills
• Basic skills in Arabic and English
• Links across the curriculum through education cycle
• Understanding students behaviour
• Self-evaluation
Current Expected
Workforce Workforce
• Strategic planning
• In order to meet the skill demands of the Bahraini Economy, it is necessary that the schooling systems develop a strategic
plan focusing on raising students achievement levels , go through an accurate self-evaluation of the school‘s strengths and
areas of improvement with clear, measurable targets for improvement
• Bahrain can look at encouraging a concept of self learning through the promotion of ―International Baccaleureate‖ type
schools which divert from traditional teaching methods and encourage self learning and all round development with emphasis
on international mindedness and a positive attitude to learning
o Worldwide, more than 50% of IB schools are state funded schools
o Such schools offer exams at standardized levels worldwide, thus ensuring an international level of competency
Source: QAA, Industry reports, D&B analysis

73
A career guidance and transitions service would assist
students in understanding industry options available to
them and planning for a career..
Career & Transitions

Services
Career Counselling Transitions Service
Prepare students who want to enter the higher / Prepare students entering the workforce through:
tertiary education field by: • Information on the changing nature of work and
• Providing information on the variety of career the labour market as well as work ethic expected
options available by employers, public and private
• Personality assessment • Access to, and sharing of career development
• Matching skill sets with career options, based on resources and experiences of graduates during
industry demand and public policy goals the transition period
Dissemination of information through career fairs, classrooms, online programs etc.
Bahrain can consider promoting such services through a government mandate; or as a required condition for licensing or
funding schools and tertiary institutions; or such services can be funded directly by the governments in whole or in part.
Source: D&B analysis

74
While participation in vocational programs have increased
significantly, enrolments in tertiary education have shown a
slight decline….
Graduates by specialization
University Graduates - 2005-06
by specialisation, 2005-06
• There were 18,841 higher education enrolments in
700
600
Bahrain in 2005 (68% were female enrolments)
No. of students
500 • There were 15200 secondary students enrolled in

400
300 public technical and vocational programs in Bahrain
200
100 in 2006
0
• Tertiary enrolments fell slightly from19,079 in 2003
to 18,403 in 2006
• In the same year, there were 3185 graduates, with
40% of them graduating in the fields of social
science, business, and law
In 2006, Specialization
there were 16 universities, 2 of which are public and 14 are private. Bahrain‘s Higher Education
Tertiary education Council accredits degrees from these universities. The public universities are University of Bahrain
(universities & (offering varied courses) and Arabian Gulf University (which consists of a medical college and post-
colleges) graduate college). Leading specialist colleges and institutes include the Bahrain Institute for Banking and
Finance, Bahrain Institute of Technology, and College of Health Sciences.
The Bahrain Training Institute (BTI) is the largest individual provider of vocational training programs. BTI
offers regular full-time programs (Diplomas & Certificate programs) as well as short corporate training
Technical / programs.48 % of graduates who qualified in 2007 were not working 3 months after graduating, which is a
Vocational courses serious concern given much higher recruitment rates in the previous years. Bahrain has recently
established a polytechnic based on the New Zealand model of applied degrees to meet skills gaps in
areas not covered by the private sector and to supplement BTI efforts

75
The shift from university courses towards technical /
professional courses needs to be encouraged in order to align
with industry demands …
Global trends – secondary school graduates

In Bahrain, however, the pyramid is inverted
/ lopsided with about 70% of students (who
go on to study after secondary education)
20% -30% going to university and only 30% of
University students going in for vocational / technical /
professional courses
40% Technical /
Professional University degrees
Limited number of
are regarded as
institutions offering
superior to
30%-40% technical /
High School Technical /
professional
vocational degrees
courses in Bahrain
by students
• In Bahrain, colleges offering degrees in vocational / technical courses include the Bahrain Polytechic, the College of Health
Sciences (training in medical sciences, nursing) and colleges such as the RCSI
• Other specialised institutions such as the Bahrain Institute of Banking and Finance and the Bahrain Training Institute (technical
/ vocational courses) offer diplomas / certificates in specialised subjects
• Almost all of Bahrain‘s universities are generic universities
There is a need to improve relevance of tertiary education through spurs in Education & Training Reform based on vertical
differentiation (reaction to demand for a greater diversity of graduates )

76
…with focus on developing a national ‗Registered
Apprenticeship‘ program, particularly focusing on technical
areas…
Registered Apprenticeship programs would meet the ‗skill‘ needs of the Bahraini workforce and mobilize the workforce with
structured, on-the-job learning in traditional industries such as construction and manufacturing, as well as new emerging
industries such as health care, information technology, energy, etc.
Develop apprenticeship programs

for university / vocational /
professional courses requiring
Development of apprenticeship programs within a technical training
governmental supported framework
Structure funding process for
Job Seekers Employers
Connect apprenticeship programs
looking to learn looking for
new skills qualified workers
Enlist employer participation by
offering incentives
Workforce with industry-driven

training and employers with a Development of strong training /
competitive edge apprenticeship standards
Prioritize programs through

There is currently an over-supply of humanities-social collaborative discussions with
science graduates who often are lacking employability industry leaders & training
skills, and a shortage of science, mathematics, technology institutes
and nursing graduates

77
…under a unified Tertiary Education body…
The Ministry of Labour (2008a), through its High Council for Vocational Training, is responsible for Bahrain‘s training sector,
while the Ministry of Education is responsible for licensing other educational institutions
Unified Tertiary Education Authority

Strategic steering of the
Bahrain could consider bringing universities and training institutes under a educational system
common framework and unified Tertiary Education Authority
Governance &
Management
Academically
oriented
Broaden access and increase Comprehensive curriculum:
universities /
flexibility through the creation expanded choice of
Present
colleges
of new institutional models academic and practical
while introducing new curricula subjects
and pedagogical services
Narrowly focused Parallel development of
vocational schools Human Capital
Research Management &

Mechanisms should be established to achieve the right balance between Innovation
different components of the tertiary education system, which includes
universities, institutes of technology and colleges that provide post- Investment in the tertiary
secondary level instruction. Further, there is a need to meet the demands of sector
specialisation, competition and complementarities within the system.

78
…with a well planned funding mechanism, to ensure alignment
with Bahrain‘s needs, and a future focus to encourage institutions
to seek funding from the private sector through grants, etc.…
Current funding mechanism are not considered effective by stakeholders as programs are funded by different Ministries based
on course type with relatively static funding (no revision based on factors such as student population, strategic national focus)
Funding
Mechanism
Steer the tertiary education Ensure that approach is Funding approach to be

Identify programmes and
system in a way that transparent, flexible, consistent with the goals of the
policies that should receive
facilitates its contribution to predictable, fair and demand economic system (expansion,
priority for new public funds
society and the economy driven quality, institutional capacity )
Providing high levels of public Make institutional funding

New programmes should be
subsidies to priority fields of formula driven, using both input
assessed for relevance – e.g. Improve cost-effectiveness by
high relevance (e.g. when and output indicators and
whether they respond to labour steps to reduce inefficiencies
graduate numbers fall short of including strategically targeted
market needs, before approval
demand) components
Eliminate duplicate programs, Consider allocating institutional
Ensuring relevance to society
link funding with graduation funding by performance
requires the development of a
rates, re deployment of funding agreements/contracts negotiated
robust system of quality
across low enrolment with individual institutions
assurance
programs
• Need for a unified funding body (across university / technical / vocational / professional courses),with a flexible funding approach
based on industry demand, priority courses, student population, strategic focus.The funding committee may comprise members
from the Ministry of Education, Ministry of Labour, MOIC, etc. to ensure alignment with the needs of the Bahraini economy
• There is also a need to encourage institutions to seek funding for expansion or infrastructure through the private sector
(institutions or individuals ) through grants, endowments, etc .

79
The QAAET was established to ensure quality in the fields of
education and training…
The role of the QAAET is to ensure quality by reviewing and analyzing the performance of educational establishments, national
exams, redressing weaknesses and building on strengths at schools and higher educational institutions to reach the Kingdom‘s
national goals.
Quality Assurance Authority for Education & Training
Higher Education National Examination

School Review Unit Vocational Review unit
Review unit unit
• University Reviews • Undertaking independent
• Responsible for reviewing, • Monitor the quality of
Provide external validation of national examinations for
monitoring and reporting on vocational education and
the quality of the provision of training, identifying areas for claims made by an institution grades 3, 6 and 9, in the
in its self-evaluation report core subjects of Maths,
education in schools. improvement, focusing on
• Program reviews Science, Arabic & English.
• Identification of strengths the learner‘s experience
and areas of improvement, • Evaluation of the quality of Whether the programme • Design, develop and deliver
meets minimum standards & the new examinations and
establish success measures the vocational education and
recommendations to improve ensure transparency, and
and spread best practice training offered by providers
the programme accuracy of results
• The SRU will carry out licensed by the Ministry of
Reviews of all 204 public Labour, technical education • Capability building • The NEU is working together
Designed to improve quality with its international partner,
schools in Bahrain and will in schools (jointly with the
assurance knowledge in the the University of Cambridge
pilot Reviews in private Schools Review Unit) and
3 core functions of teaching International Examinations
schools and kindergartens Post-secondary providers
and learning, research and (CIE), to establish the new
licensed by the Ministry of
community engagement examinations in Bahrain
Education
The QAAET does not have the authority to take decisions based on these reviews. The reports are submitted to the Ministry of
Education to determine whether its licensing regulations are being met and whether an institution should be accredited or
continue to be licensed. Funding decisions may also be based on these reports.

…along with a program to establish a National Qualifications
framework, which should be completed by 2012…
Bahrain's ambitious education reform process will receive a boost through an initiative led by the Education Reform Board, to
create a National Qualification framework for Bahrain which will help to create a universal language by which all stakeholders in
the vocational and academic education markets can assess their training standards
.
A National Qualification framework is expected
National Qualifications Framework to:
• Measure the multitude of qualifications that
exist
Formalize the • Create policies that support accreditation of
Create a policy descriptions of the prior learning
Linking the document various qualification
framework to levels • Create a broad structure that will help track and
other measure the quality of training and education
international Create a quality control on offer
meta mechanism for • Help bridge the gap between vocational and
frameworks accreditation of programs academic qualifications
• Allow more learning pathways and translation
for certifications and mobility
Recommendation of a body that will take over The project will be jointly managed by Tamkeen
actual implementation
and the Scottish Qualifications Authority
It is critical that the National Qualifications framework serves to assist institutions in assessing their current output standards as
well as create a seamless transition between the secondary and tertiary systems, thus eliminating the need for re - training of
students at tertiary school level

81
However, there is an absence of National Occupational
skill standards, which serves as a basis for developing
training frameworks…
National Occupational Standards (NOS) are statements of the skills, knowledge and understanding needed in employment
and clearly define the outcomes of competent performance
1 Development of National Occupational skill standards
Individual Development in the workplace Business / Organizational development Educational system development
Identifying professionals that are Design and delivery of professional

Recruitment
capable, competent & well trained training programmes
Identifying training / professional Planning for staff development and Development of a qualifications
development needs retention framework
Design and delivery of staff training Ensuring a higher category of

Criteria for promotion
programmes graduating / trained students
Contributing to organisational goals Decision making related to

Development review
and service provision applications for Registration
2
Develop cross national approaches and benchmark national standards to international requirements
There is a strong need to develop Occupational standards and related training standards and assessment in Bahrain, as they are
an essential link between workplace employment requirements and human capital development and can make a major
contribution to the design of high quality education and training programs by ensuring that they are directly linked to the needs of
the workplace and overall Bahraini economy

82
… and a need to tighten accreditation criteria,
. for private as
well as public institutions, under a common governance
structure..
Bahrain needs to establish a common governance structure for all higher education China now has more than 800 private
bodies and evaluate /monitor the quality of courses offered & refuse accreditation or higher education institutions, although the
re-accreditation of courses and institutions failing to meet requirements and/or Ministry of Education officially recognizes
standards required for professional or trade certification only a handful of them
Higher education institutions must be accountable, whether public or private. Accountability does not imply
Need for overall uncontrolled interference, but it does impose a requirement to periodically explain actions and have successes and
accountability failures examined in a transparent fashion, within the context of agreed rights & responsibilities. Those responsible
for governance should regularly test and verify standards of quality.
Need to meet standards with relation to…

Bahrain‘s Government should consider making it mandatory for education and training providers to ensure
Curriculum adequate industry involvement in course design, teaching, practiciums and assessment as a condition for funding
support and accreditation of vocationally oriented courses
Need to provide a certain quality of educational infrastructure with relation to classrooms, laboratories, equipped
Infrastructure
teaching hospitals, libraries, computers & Internet access
Research Theoretical and applied knowledge in a multitude of fields is a criteria which is expected to be met in universities
While the Higher Council for Education is responsible for accrediting private institutions, there is an absence of an accrediting body for public
institutions / programmes as such institutions are established by Government Decree. Accreditation of courses offered by both government
and private institutions by a common entity would serve as a unified framework within which overall planning, governance, and application of
the NQF and NOS would work, by bringing similar qualifications offered at par with each other

83
Improvement in education quality should act in conjunction
with encouragement of funded applied research…
Bahrain‟s education sector portrays a gap in terms of basic and applied research
Refers to scientific study and research that seeks to

Tasks for Policy Makers solve practical problems. Applied research is used to Goals
find solutions to everyday problems, cure illness, and
develop innovative technologies.
Setting priorities for Prioritizing to sustain
research direction high quality
Applied Research
Allocating funds in line Funding that covers all
with priorities major aspects
• The role of research universities derives from a unique
capacity to combine the generation of new knowledge
with the transmission of existing knowledge. Pressures Promoting autonomy
Making long-term plans to expand higher education, may, in many cases divert and responsibility
such universities from pursuing research.
• In order to facilitate research development at
Providing efficient universities, there is requirement for infrastructure Facilitating international
administration maintenance, libraries, equipment, or supplies—key role of research
ingredients in maintaining a research establishment.
Most funding for scientific research comes from two major sources: corporations (through research and development
departments) and government (primarily through universities ).

84
Bahrain has a number of Corporate training institutes,
however; the quality of training provided could be improved,
particularly in the areas of monitoring learners‘ progress...
Almost 50% of training institutions were ranked as ‗Below satisfactory‘ in terms of their performance, by the QAAET, with very few players
scoring ‗above satisfactory‘ ratings. Bahrain‘s corporate training segment provides a variety of courses mainly through local players, and a
few international players such as Ernst & Young, Aptech, GBM, etc. Course are mainly provided in the areas of IT, Management, Finance, &
soft skills
Key Strengths Overall Key Weaknesses Overall
• Arrangements to monitor and record learners‘

achievement
• Knowledge and experience of trainers • Assessment of learners‘ knowledge and skills prior to
• Retention of students starting their courses
• The personal support extended to learners • Observation of trainers‘ performance and self
monitoring
• Range of programmes
• Strategic planning
• Use of incentives for high achievers (E&Y) • Course & Session Planning
• Level of learners satisfaction • The learning environment and resources
• Range of courses offered (particularly international • Measures to monitor and improve the quality of
training
players)
• Training methods
• Methods for surveying market needs
The growth in corporate training is expected to be on the back of need for skill enhancement, supplementation of tertiary education aimed at
skill formation directed towards bridging skill gaps identified across various sectors, as well as increase in government initiatives promoting
skill development and training

85
Future focus areas were identified across various sectors such as
Healthcare & Education…
Adequacy Efforts required

Current levels of training
Sector of Future focus areas for education to develop
provided
training* focus areas**
• No. of medical colleges such as

• Need to encourage more graduates in
Arabian Gulf University, RCSI,
specialized areas of medicine
College of Health sciences, all of
• Tie ups with the private sector to
which are linked to SMC as a
Healthcare develop ―teaching hospitals‖
teaching hospital
• Nursing graduates & allied healthcare
• Low focus on developing advanced
providers (technicians)
secondary / tertiary skill sets for
• Healthcare Management
medical students
• Most education providers have high • Need to encourage more graduates in

qualifications such as diplomas, education through expansion and by
bachelors and Masters degrees, introduction of new courses
however, there is low skill • Increase focus on ―career
Education development in specialized subjects development & counselling ― training
for teaching higher secondary / tertiary • Increase focus on specialized
students. education fields (technical,
• There is only 1 public Teacher‘s engineering, maths)
• Increase focus on teaching methods
training institute (University of Bahrain)
*Adequacy of training is captured by quality and levels of training provided

Highest Minimal **Efforts required captures the investment and time required to further develop these sectors
*Source: Allen survey, D&B Research, QAA

Details on sector related training and focus areas for education are further elaborated on in each sector specific profile 86
…Construction & Trade…
Efforts required
Current levels of training Adequacy
Sector Future focus areas for education to develop
provided of training*
focus areas
• No training offered for

unqualified workers which • Courses in Inspection & Safety
deters Bahraini nationals – most • Drafting, Project Management & Value
positions are filled by non Engineering
Construction
Bahrainis • Real Estate services focused
• Apart from some engineering (valuations, facilities management, strata
courses, most training in this management, etc.)
sector is provided in house
• There are short courses in retail • With the growth of the Organized Retail
offered by BTI and BAISAN. sector, there is potential for university
degree programs in retail management
• However, there are no degree
• Need for Automotive Training Institute that
courses offered by any institute in
Trade can offer technical and soft skills
Bahrain
training for low to middle management
• On the job training is usually
profiles – automotive repair technicians,
provided as well as short courses security technicians, service
in communication & selling skills representatives


…Transport & Logistics…
Efforts required
focus areas
• In house training with IATA • Expansion of training provided by GAA to
certifications, etc. (gulf air) provide training to pilots, engineers and other
Air • Gulf aviation academy (GAA) students for various jobs in the aviation
transport provides orientation for Bahraini industry
cadets training for an Airline • Certification / Accreditation across aircraft
Transport Pilot‘s License types
• Need for a Maritime Study Institute in Bahrain

to provide training for skilled and unskilled
Water • There is no institute offering roles in the maritime industry
transport specialized courses for the • Institutes providing training / scholarship
maritime industry initiatives to send students to specialized
institutes abroad(marine engineering & craft
fitting, naval architecture etc.)
• Bahrain Polytechnic has started • Freight forwarding & logistics courses for
Logistics a course for the logistics freshers
industry • Refresher courses for experienced executives


…Financial Services & Petrochemicals…
Efforts required
focus areas
• Courses for underwriters, engineers, and
• Undergraduate courses in
investment managers
Banking & Finance at the
• Training in compliance, Internal Audit &
University of Bahrain
Risk Management, Internal control,
• BIBF provides training in
quantitative analysis, Basel II norms
Financial Banking & Finance
• Focus on developing and English
Services • Waqf fund provides training in
language skills
Islamic Banking
• Need for professional qualifications
• HRD provides training for
rather than academic qualifications
exams in specialised areas
• Need for specialised tertiary skill
such as CFA, CMA, FRM
development for senior staff
• Engineering courses provided by

the University of Bahrain & • Training of chemical / petrochemical
technical training provided by engineering technicians
BTI, • Need to incorporate internships (practical
Petrochemicals
• Mainly in house corporate training training) in academic training in order to
(BAPCO, NOGA, etc.) create synergies between educational
• Courses provided are largely institutions and industry players
theoretical in nature


…Manufacturing…
Adequacy Efforts required

Future focus areas for
Sector Current levels of training provided of to develop
education
training* focus areas
• Undergraduate / graduate courses • Increased focus on high level
offered by the university of Bahrain in technical skills (e.g. engineering)
science, engineering & business service • Focus on courses in metallurgy,
• Arab open university & Gulf University material handling, and industrial
provide courses in engineering and chemicals (for aluminum sector)
manufacturing management • Improvement in quality of
• Vocational training provided by BTI education received particularly
• Industry experts believe that courses vocational training especially in
offered do not match the depth and light of the Government‘s
Manufacturing
practical experience required initiatives to create a value adding
• Training institutes by manufacturing manufacturing industry
companies (for example, ALBA • Greater emphasis on industry
facilitates training for about 70% of its driven skills identification to be
workforce in managerial, technical and linked to the educational system
general development) • Need for inclusion of
• UoB and BTI do not provide aluminum apprenticeship model which can
focused training despite the strategic be used to improve training and
importance of the sector create job ready candidates

…ICT, Telecom…
Efforts required
focus areas
• University of Bahrain provides a
• Development of strong fundamental IT
range of telecom courses,
skills and knowledge
largely theoretical • ICT Management & coordination
• There are more than 40 • Training in Certified software application
institutes in Bahrain providing IT such as Microsoft certified systems
Education and training, engineers and Cisco certified personnel
including Gulf University and • IT strategy & planning
BIT • Training in specialised areas such as
Holistic ICT
model • Batelco is identified as a installing and maintaining network
(encompassing regional trainer in ICT / telecom security infrastructure
• Domain training with focus on
IT and • While number of players
Telecom) requirements of government projects (e-
providing IT education and
government initiatives)
training in Bahrainis adequate
• Courses focusing on effective interaction
however, there is definitely between telecom and ICT
scope for stringent • Voice, data and entertainment services
accreditation, regulation of • A holistic approach involving collaboration
standards in terms of delivery of between classroom coaches and industry
training programs and outcome mentors is required for focused skill
formation within the ICT sector
of curriculum


…Media…
Efforts required
focus areas
• Need to create awareness at a

fundamental level amongst Bahraini youth
around careers offered in Media across
segments; thus creating a need to build
such awareness at University levels
• University of Bahrain provides • Lack of enabling ecosystem in terms of
courses in media. However, The training and awareness around Media as
Media Studies curriculum a career
Media offered by the University of • Focus on skilled Media professionals in
Bahrain in high value add jobs such as
Bahrain is thought inadequate
post production, which offers a variety of
by industry players
roles such as Editing, Camera, Sound
engineering / production, Animation,
Transcription, Content Development,
Copywriters
• Specialized media training - modules in
editing, content development, copyrighting


…and Tourism…
Efforts required
focus areas
• Specific Council of Training in • Training at the fundamental level to

Hospitality (SCTH) focused on training accentuate attractiveness of the sector
efforts in the sector ; has its own
(overcoming negative mindsets & cultural
budgets from training levies
tabboos towards this sector)
• Baisan Institute of Hospitality
• Enhance professionalism of current training
Management (BIHM) offers programs
in hospitality, retail, tourism and travel; institutions and increase focus on
works with Tamkeen to train Bahrainis specialised tourism areas (e.g. growth
for entry & mid level positions areas like medical tourism) and specialized
• BTI also offers diplomas / bachelor‘s areas of hospitality ,meeting the
Tourism
degree in travel & tourism which are requirements of premium establishments in
accredited by Cambridge University Bahrain (PG courses in guest relations,
and IATA kitchen, operations, HR, purchasing, etc.)
• High levels of in house training, • Tourism & travel related courses need to
particularly induction & administration
focus more on soft skills such as
training
communication & people skills
• Lack of professional hospitality
• Increased investment in Iata training based
training institutes in Bahrain current
institutes operate largely for on the increasing sophistication of GDS
commercial interest systems


employees by Tamkeen is critical to serve natural and potential
growth in the Education sector …
• The education sector lacks in its ability to provide careers counselling, training and
Skill gap in providing career support geared towards career development, which is directly linked to trends such as
development training high youth unemployment, with a significant proportion of graduates not working upon
concluding study
Inadequate levels of Bahraini staff • A major problem is the lack of Bahraini staff. Professors are usually not made
in private sector, leading to permanent unless they are Bahraini. Non Bahraini staff usually leave after 2 -3 years of
migration of skill sets a fixed period, leading to a migration of skill sets and experience
• Specialized courses which should be introduced (including energy audit, modelling and
Lack of education professionals simulation etc. can only be taught by highly qualified faculty. However, such qualified
providing training in specialized faculty may not join due to lack of monetary motivation.There needs to be a regulation
subjects allowing for higher packages for specialised teachers based on demand for the
course, degrees and qualifications
• Very few Bahrainis resign from this sector; however, there is minimal career progression,
as there is very low emphasis on self development and research.
Stagnation of education providers • It is recommended that a regulatory mandate linking research and career progression be
enforced with timelines for each promotion, thereby encouraging research &
development
• The quality of teaching & related standards is low, due to the lack of an effective quality
Low Quality of teaching & related assurance system, lack of accountability, absence of a national qualifications framework
standards (to set guidelines) and an ineffective hiring process (lack of standards for hiring
teachers)

Amongst key issues, focused training in Technical and
Communication & Leadership Skills is the key to augmenting
levels of employment in the sector …
Current employment trends Higher Education Graduated by field of study, 2004 (%)
Employer skill requirements for education sector • Although the total no of employees in the education sector
has increased, the total % of employees has decreased from
5.2% in 2002 to 3.9% in 2007
• Employers in the telecom sector cited a need for strong
communication, leadership & Management skills
• Employees in the education sector and graduates stated that
remuneration was the most important factor in influencing
their decision to take a job
• % of graduates specializing in education was relatively low
• Factors restraining employers from recruiting staff include a
shortage of good candidates, lack of financial resources, and
inability to attract good candidates to their organization
*Source: Allen survey

95
Education: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Education sector
and is used to reflect the ‗absorptive capacity‘ of the Education sector
penetration in the sector– the sub-sectors falling in the zone of underpentration and / or depicted as being ‗absent‘ in the
Bahraini Education sector value chain are termed as ‗market gaps‘
96
Education: A Snapshot of Prominent Bottlenecks, Gaps

No apparent gap
Market gaps in terms of sectors have no /
Generic
minimal presence in Bahrain, however
Universities
High Secondary
could potentially present opportunities for
Primary
Education Education
existing players / new entrants based on
market feasibility and assessment
Pre Primary
Education1  E-learning
Corporate  Applied research
Medium Training2
Vocational / Infrastructure / Regulatory Bottlenecks

technical
Education 3 (Disablers)
Market gaps in
terms of under  Absence of National Qualifications
Low penetration Career counselling / framework & Occupational standards
transitions services4  Absence of mandatory industry
apprenticeship
 Common governance structure
Low Medium High  Lack of well planned funding mechanism
Market Potential (assessed in terms of expected growth rate)  Weak accreditation criteria
1. The growth of pre primary education is on the back of Bahrain‟s population demographics and consequent demand
2. There is growing demand corporate training to meet the inadequacies of the education sector currently, and to hone specialised skills
3. Vocational / Technical education is expected to grow based on workplace demands for practical & technical skills. There is a need to change the
mindset of the public with regard to vocational education & increase quality and number of vocational education providers
4. Need for career counselling / transitions services based on increasing number of students looking for career options
Sectors not deemed to be market gaps

97
Relative Sub-Sector Prioritization: Education
the Education sector as a ‗market gap‘
(Priority Index)
98
scores

1. Notes:
formation issue

and C
101
Career
counselling /
Transition
Programs
Applied E - learning Pre Primary Corporate

Education Training Vocational
Research Training
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Education
Government focus on
Initiation of QAAET to focus on
Bahrainization and consequent
quality of education and training
requirement to develop skills of
Bahrainis
……………
Initiatives such as Development of

Increased private sector involvement at all
National Qualifications Framework
levels of education and growth in number
through which education providers can
of corporate training institutions Education Growth Drivers assess their training standards
External factors such as the Kuwaiti

freeze on hiring Bahraini pvt.
Urgent market demand for skilled and
University graduates have increased
workplace ready workers
focus on quality training &
accreditation
markets

103
Construction & Real Estate
104
The Construction & Real Estate Industry Map comprises
Development and Real estate services as its primary
sectors….
Manufacturing
Crude oil refining Mining
timber, wood
Iron &
Aluminum Zinc Copper
Steel
Sand /
Bitumen Gypsum Clay Limestone Plywood &
rock Wood Plywood Metalworks
Products products (fabrication /
Cement casting)
Asphalt Aggregate Glass Petrochemical
derivatives Textile
Manufacturing
Plastic Rubber
Plaster Ready Mix Paint
Mortar manufacturing Manufacturing
concrete Manufacturing
& products & products
Building
material Structural Floor
Pre Plumbing Paint, lawn
Input distributors building Coverings
Construction Manufactured Home & electrical & garden
material / materials/ & home
Equipment building / Improvement supplies equipment
service Building supplies furnishing
Providers frame Centers
providers material
providers
installers
Land Permit Marketing &

Land Acquisition Construction
Process Development Acquisition Sales
Property
Project
Developers
Manager
Operations- Master Prime Operative Real Estate

developer Developers Contractor Builders Operators
categories
Labor Specialist Architects

Engineers
providers contractors Offices
Leasing Property Waste

Services Pest Control Management Management
Related Services
Services Facilities Real Estate
Management Marketing Finances Brokers
Services Management
Develop- Heavy & Civil Schools & Residential &

Office & Retail
ment types Engineering Hospitals Industrial Single family
Projects (Commercial)
(Institutional) homes
Property End users End users

Real Estate investors (buyers) (lessees)
Investment
Trusts
Sources: Hoovers, D&B Research & Analysis 105

…With Residential, Commercial, Industrial and Infrastructure
development as as key segments along with Real Estate
service activities…
The theoretical construct of the Construction & Real Estate Industry broadly comprises land development
and real estate services which form the core structure of the industry map. Other operators in the construct
are linked to these players either through value chain relationships or at peripheral support level
• Typically, the Construction sector would be categorized by the end use of developments (such as the residential,
commercial, industrial and infrastructure sectors) and Real Estate would include services related to real estate such as
brokerage and related services such as property management, facilities management, etc.
 Residential construction includes the construction of buildings / apartments, villas and residential complexes for
residential use
 Commercial construction includes office & retail buildings, and complexes. Mixed use developments are developments
which include a mixture of residential, commercial and retail space
 Industrial construction includes industrial manufacturing developments
 Infrastructure construction includes highways and bridges, pipelines, water and power plants, sewers and other civil
engineering projects
• Sector operations include bidding for projects, managing project plans, labour, equipment, and construction materials.
• Major industry services include constructing buildings for industrial, commercial, institutional use and heavy and civil
engineering projects. Residential, Commercial & Institutional construction accounts for over 50% of industry revenue,
heavy and civil engineering accounts for 40% and industrial building construction accounts for about 5%
• This industry is highly fragmented with many small companies working as sub contractors on larger projects (for example,
the US construction industry includes about 90,000 firms with combined annual revenue around BD 175 million)
• Overall construction is dependent on government budgets and level of corporate profits, and is highest in states which
have a healthy economy, a larger population and are positioned as business centers

106
Construction & Real Estate have been active sectors in
Bahrain, despite the general economic slowdown …
GDP of Construction sector,

GDP (Current in BD million
Prices)
• While high inflation, shortage of land and rising material costs posed
challenges in 2008, there are currently more than BD 3 billion worth 500
450 429.25
CAGR:18%
of real estate projects under development in the country, many of 400
which are continuing on schedule in 2009 350
300
250
• Bahrain is largely dependent on raw material exports from the UAE, 200
134.33
Saudi Arabia and India to meet the growing needs of its construction 150
100
industry. 50
0
• A construction surge put intense pressure on local and regional 2002 2008
supplies of cement and steel, with construction costs rising by 50%

in the 1st quarter of 2008, following a 30% rise in 2007; however,
prices have cooled since then GDP
GDP of Real (Current
Estate sector, Prices)
in BD million
500
CAGR:7% 429.17
• Ambitious self-contained developments built on reclaimed land, such 450
400
as Durrat Al Bahrain and Diyar Al Muharraq, are increasingly defining 350 301.27
features of Bahrain‘s construction sector 300
250
200
• Construction GDP (current prices) was BD 429.25 million in 2008,
150
recording a CAGR of 18% from 2002 upto 2008, while the Real 100
Estate Sector grew at a slower CAGR of 7% (from 2004 upto 2008) 50
0
to contribute BD 429 million (current prices) in 2008 2004 2008

107
…with construction of buildings being the largest contributor to
revenues in the construction services sector…
Market Size
Market Size Breakdown of Construction Services, in BD million
2,000.00 1,856.07
1,800.00
1,600.00
1,400.00
1,200.00
1,000.00
800.00
523.54
600.00
400.00
200.00 63.61
0.00
Construction of Civil engineering Specialized
buildings construction activities
• The total revenue from the Construction sector in 2008 (value of production) was BD 2442 million, with the highest
contribution to this revenue coming from the construction of buildings (76% of revenues)
• The construction industry in Bahrain has grown substantially with private players taking a key role in the process - such
players are involved in building construction, civil engineering and marine construction
• The industry has received continued support from the Government of Bahrain and other international financial investors
such as the Gulf Investment Corporation (GIC), GHC, Kuwait Finance House (KFH), etc

108
Bahrain enjoys an overall healthy position in the region in
terms of contribution of the Construction & Real Estate
sectors to the GDP…
% Contribution to GDP (current • Contribution of Construction (5.1%) and Real Estate (6%)
% contribution to GDPprices)
by country (current prices) to GDP (2007) in Bahrain, closely followed that of the
10% UAE economy, to which both sectors contributed
approximately 8% in 2007
8%
• High oil prices, abundant liquidity, political stability,
6% increased domestic spending and the focus of regional
economies to diversify from reliance of the hydrocarbon
4%
sector have all been economic variables carrying the
2% construction and real estate market to unprecedented
0% levels over the last few years in the GCC
Kuwait Oman Qatar Saudi Bahrain UAE • The recent global credit meltdown and cautiously
optimistic market sentiments towards property
Real Estate Construction investments in the regional real estate market is reflected
through the signs of price correction in the sector
With an area of only 741 sq km, Bahrain is the fourth most • Although the declining oil prices coupled with global
densely populated nation in the world. The government is financial crisis is expected to slow down economic growth
considering changes in legislation to allow construction on and capital investments, which will directly affect
previously restricted ―green belt‖ sites in order to ease some of
the pressure on land construction & real estate sector growth; certain regional
economies still offer attractive opportunities based on
enduring demand fundamentals

*Note: Contribution of Real Estate sector in Saudi includes Real Estate, finance, insurance and other business services and is only indicative 109
…with the UAE leading the GCC market in terms of master
planning and industry structure…
The UAE has multiple global and domestic players involved in modern & prestigious construction projects. Although the sector
was dominated by residential & commercial projects, infrastructure development has been catching up in recent years
Housing
Construction project distribution - UAE index
authority
Strong
Catering to
infrastructure
all market
& transport
segments
networks
Development
Regulatory
of cluster
facilitation
model
• Dubai has a Real Estate Regulation Authority (with ongoing talks already in place around the development of a Federal Real Estate
Regulation Authority) which serves as a repository of transactions, mitigates speculation and related rising land prices through the
creation of an index (RERA)
• Regulations such as revised cap on rent increase, law controlling cancellation of property purchase, introduction of standard property
contracts, creation of freehold property in designated zones, liberal rules for freehold property owners / investors faclitate investment
• Dubai has been addressing the needs of varied population segments through the creation of commercial & residential properties for
lower, mid & high level categories of residents / tourists
• Dubai has been focusing on the development of strong public transport networks as well as increased industrial investment
• The development of clusters in ICT, media, finance, education, etc. play a central role in nurturing sector development

110
Banks‘ share of lending to the Construction sector has been
on the rise, across the region
Commercial banks lending to the sector increased significantly in 3Q - 08 to 25.9% of total business lending,
signifying increased sector activity in Bahrain. With the CBB raising the limit of the value of banks‘ real estate
Bahrain financing to 30% of loan portfolio value in end 2008, there seems to be scope for increased lending to the sector.
In 3Q-2008, average mortgage interest rates stood at 8.43%, slightly down from 9.13% a year earlier
Credit to the real estate sector accounted for 24.8% of total credit extended by banks during 2007, making it
the second largest area of credit after personal facilities. Further, the sector has consistently expanded, with
Kuwait banks increasing facilities to the sector at a CAGR of 31% over 2002-07. Similarly, the construction sector saw
expanding credit growth over the period 2002-07, reporting a CAGR of 24.7%.
In tandem with the increasing contribution of the Real Estate sector to GDP, the credit distribution to the Real
Oman Estate Sector had also been on an upturn. The credit extended to this sector has increased at a 4-year (2003-07)
CAGR of 15.5%.
During 2003-07, total credit facilities of the banking sector grew at a CAGR of 38.4% to reach BD 20 billion, while
total credit to Real Estate sector grew at a higher CAGR of 79.9% during the same period. As a percentage of
Qatar total banking sector credit, the share of Real Estate credit has increased consistently over the last few years, from
4.3% in 2003 to 12.3% in 2007 and 13.3% in 2008 (6 month period).
In the UAE, total credit extended to the real estate sector was growing at a double digit growth rate with real
estate mortgage loans at BD 8.98 billion in 2008, growing by 49% from 2007. However, the recent credit crunch
UAE forced UAE lending institutions to toughen their lending criteria. HSBC lowered its loan to value ratio to 70% from
85%. Lloyds TSB stopped loans for purchase of apartments and dropped its loan to value ratio on villas to 50%.
Negative real interest rates and strong domestic demand by home-seekers / investors could keep the real estate
Saudi activity quite active in the Kingdom. Bank credit to the building and construction sector posted a 5-year CAGR
(2002- 07) of 15.7%, recording a value of BD 4.34 billion in 2007. With 3Q-2008 credit to building & construction
Arabia sector amounting to BD 5.36 billion, the sector is expected to continue its double digit growth in coming years.

111
In the residential segment, with growing demand, the
government is working to increase the housing supply in
Bahrain…
Current Residential Market Scenario
Supply of Luxury / high

Shortage of land Increased land prices Need for social housing
end housing
• The government is • Recently, the market has • A property law amendment • As a result of rising prices
considering legislative witnessed speculative (2006) allows small for land, affordable housing
changes to allow activity driven mainly by developers to enter the is in short supply, and
construction on previously Kuwaiti, and Saudi market and build on plots many families are currently
restricted ―green belt‖ sites investors for investment purposes. on the waiting list for state-
to ease pressure on land. • Demand for residential • While the market for high- subsidised housing or
• The state is also mulling properties has been end property has flourished loans
amendments to legislation, increasing due to the over the past decade • Bahrain‘s rapidly growing
which will allow individuals growth in population and Bahrain‘s crowded luxury population has put long-
to build more residential influx of foreigners property segment is term, increasing pressure
units on their plots of land • Land prices appreciated 3 vulnerable to the effects of on the country‘s housing
• A large number of Bahraini to 4 times in the last few the global economic supply, and the
families
. own enough land years, particularly in the slowdown, as demand for government still plans to
to construct more than one areas of Saar, Budaiya and second homes starts to build additional housing
unit, but are often Busaiteen dwindle units by 2010 in order to
prevented from doing so by • The residential property • Luxury housing buyers are combat the shortage
zoning restrictions. market is mainly dominated mainly GCC nationals
by rental activity. (Kuwaitis, Saudis,Qataris)
With a crowded luxury property segment and an increasing need for lower – mid range housing, the government is
shifting its focus from luxury developments to affordable housing

112
…through projects initiating development of 14,000
affordable residential units by 2014…
The Government has committed to a multi million Dinar plan to build thousands of housing units to address
the „affordable‟ housing needs of Bahrainis
• The Government has just approved a multi-million Dinar plan to build thousands of housing units in an ambitious scheme for
2009-2014 . However, the initially decided format for building these housing units (Smart Technology Blueprint) has been
cancelled and the government is still considering various formats / options for building such affordable housing
• The government will finance the project by seeking a loan of BD 250 million
• The plan will incorporate construction of 14,000 new housing units
 A total of 10,000 units will be built in the next year using smart technology procedures in two phases
 Thereafter, 1500 housing units will be built in partnership with private developers, making the first phase of the
Northern Town
• Detailed plans of the project are yet to be chalked out by the Ministry of Housing
• Other annual monetary inflows will be used to fund the scheme until the loan is repaid
• An additional BD18 million has been earmarked to benefit pensioners and the housing renovation scheme, following a
parliament request
 BD13 million will be earmarked for pensioners
 BD 5 million will go to the housing renovation scheme
In the United States and Canada, a commonly accepted guideline for housing affordability is a housing cost
that does not exceed 30% of a household's gross income
Sources: Industry Reports, D&B Research & Analysis 113

…and financing measures and tools to address the need
for affordable housing for Bahrainis through initiatives
such as Eskan Bank…
Eskan Bank provides housing finance for eligible Bahrainis. Eligibility is based on a Government list and through the
Role
bank‘s own evaluation process. The bank currently has a list of 3000 applicants waiting for finance.
The upper limit for loan is BD 40,000, with subsidized interest rates of 3%. As many applicants face difficulty in getting
Loan
additional finance from commercial banks (as the title deed is pledged with Eskan Bank), the bank is topping up its
Terms
housing loans at commercial rates. Maximum loan term extends to 25 years.
The Bank recently issued a residential mortgage backed security initiative, the first of its kind in the Gulf, securing BD
Initiatives 30 million guaranteed by the social loans housing loans portfolio. An MoU was signed with UNIDO to establish a
centre for smart building in Bahrain, to develop new, cost-effective and environmentally friendly housing projects.
Housing loans paid up by the bank upto April 2009

Housing loans disbursed by Eskan Bank in the first four months of 2009
were up 13.5% compared to the same period in 2008. Loans paid out at the
end of April this year amounted to BD 14.9 million, compared to
BD 13.5 million paid out in the same period last year. The rise in total loans
paid was attributed to two reasons:
• the lower prices of real estate due to the international economic crisis, and
• the provision of new Islamic and traditional financing options launched by
the bank last year.
The Government of Bahrain, through Eskan Bank (100% Government owned) provides customers with mortgage loans to finance
housing needs (Renovation, Construction and Purchasing). The Committee of Public Facilities and Environment has also approved
a draft law that will allow the government to provide interest-free housing loans for families earning less than BD 600 a month
.
The potential of public private partnership opportunities have
not been fully explored in this segment…
Major residential projects include: Although major projects in the

• Lulu Island Mixed Development (underway) valued at BD 471 million residential market remain luxury
• North Bahrain New towns Project (ongoing) valued at BD 980 million
projects, homes for middle- and lower-
• Construction works for infrastructure development at Amwaj Islands
(underway) valued at BD 565 million income buyers currently represent an
• Durrat Al Bahrain (planning stage) valued at BD 1130 million excellent opportunity for the private
• Marina West (planned completion in 2010) valued at BD 265 million sector
A larger private sector role needs to enabled through a sound

Disincentivies for private sector participation include: framework including:
• Non provision of Government grants and subsidies • Increasing transparency of the property market and private sector role
• Increasing land costs – Land costs have remained high due • Access to land
• Innovative financing tools – Introduction of Real Estate Investment
to the speculative informal nature of the Bahrain property
companies and other forms of investment
market
• Creation of comprehensive municipal policy relating to the local
• High construction costs - Difficulty in maintaining affordability government role in facilitating private sector participation in affordable
for lower income individuals with high capital project costs housing
• Lack of clarity - Regarding defining affordable housing and • Development of a ‗one-stop‘, centralized organization that serves as a
the potential role of the private sector within that designation housing and land trust as well as the key coordinating organization for
information sharing between the public, non-profit and private sector
There is a need to outline an enabling framework for public private partnerships towards the provision of an
affordable housing market and overcome barriers to private sector involvement

115
…through incentives like housing allowances, density
bonusing and inclusionary zoning …
Private sector participation in the projects may range from initiating the project, including design to providing funding and expertise.
Potential Advantages Disadvantages

Incentives
Density A density bonusing policy allows developers to add more • Ability to provide Potential community
bonusing floor area or additional density in exchange for certain substantial resistance
provisions that benefit the community, such as a certain affordable units,
percentage of affordable housing units • Works in prime
areas with limited
space
Alternative Alternative development standards refer to flexible planning • Reduces No guarantee that
development & Engineering regulations that allow for alternatives in construction costs cost savings will be
standards design and construction (such as reduced setbacks, and • Allows for a more passed on to the
narrower lot sizes) efficient use of customer
land
Land The government can play a role in reducing land costs for • Easier access to Strong competition for
Contributions affordable housing. One recommended method is to give land government owned
affordable projects priority in the competition process for • Potentially lower land
the sale of government land, allowing such developers project costs
opportunity to bid on the land prior to market rate
developers.

116
…as is practiced in countries such as Canada, the US, the UK
and Australia…
Potential Advantages Disadvantages

Incentives
Inclusionary Inclusionary zoning requires that a development project • As a mandatory policy, Can be viewed as
zoning include a special component desired by the municipality, it can potentially market interference
such as a certain percentage of affordable housing in every increase the supply of
development, as a condition of approval affordable housing
significantly
Subsidies Some form of direct subsidies are required to achieve the • Reduced land costs Strong competition
necessary supply of affordable housing as they help fill the would reduce project for government
funding gap between the cost of development and potential costs owned land
revenue generation. Direct subsidies could be either as • Filling of the funding
capital grants, but they could also be in the form of gap
subsidized mortgages or loans • Easier access to land
Rehabilitation Rehabilitating the existing housing stock and other public • Lowered capital costs May not increase the
of existing buildings, for affordable rental housing is an effective short- for good locations stock of affordable
stock term solution to increase the stock of affordable housing as • Decreased approval housing as such
it may require significantly less money and time than new time units are affordable
construction. Additionally,renovations lower future operating due to their potential
costs, which can increase affordability state of disrepair
Involvement of the private sector would provide impetus to the development of additional affordable housing units as the private
sector has the expertise and resources to build housing units at a scale not easily achievable and replicable by the public sector.
Additionally, private developers are in a better position to leverage properties to extract capital which provides private builders with
the capacity to secure funding for future projects financial institutions.

117
In the Commercial / Retail segment, based on the large
number of buildings coming up…
Bahrain is considered to be one of the easiest places to do business and was ranked eighteenth worldwide and second in the GCC
as per the World Bank - IFC‘s Ease of Doing Business Index – 2009, showcasing the high demand for commercial / retail space
Demand driving factors so far…

• Market regulations were relaxed in 2007 to allow for the sale of commercial space to all nationalities on a freehold basis
• Multinational companies, particularly banks and insurance companies have been looking for high quality office space to
accommodate their headquarters in Bahrain‘s new business districts; they account for some 35% of office demand
• Bahrain‘s advantages as a lower cost GCC location than Dubai and its proximity to Saudi Arabia
• Although most of the Bahraini population falls into the low income group, the activity in the Bahraini retail market has been quite
buoyant, supported by the expatriate population, and influx of Saudi and GCC tourists
Commercial developments include… Average office sales prices (Q4‟08)
• Launch of additional office towers including West End Tower

in Seef, Signal One Tower in Amwaj Island and Times
Square Tower in Diplomatic Area during 4Q-08
• Supply of office space which has come up in Bahrain
through developments such as the Bahrain Financial Harbor
(130,000 m2), The World Trade center (35,000 m2), etc.
• DTZ estimates that there will be a total of more than
1,000,000 m² of office space across the Kingdom by 2012, a
100% increase on the 500,000 m² currently available
• By the third quarter of 2008 total GLA in climate-controlled Lack of planning around major commercial facilities in Seef
malls stood at 430,000 sq metres. and Diplomatic area have led to absence of peripheral
infrastructure support facilities such as parking

118
..it is deemed that demand for commercial space will be
saturated by 2013 …
Current demand for commercial space

• The current shortage of quality office space will continue to drive demand in 2009, especially in the new business district of Seef,
which is seen to be accommodating a growing number of multinational companies in recent years.
• However with more projects in the supply pipeline expected to be released onto the market in 2010, the demand for high quality
office space is likely to ease in Bahrain.
Expected market saturation by 2013
• Bahrain realty prices which enjoyed high growth until recently are seeing some moderation now as the global economic
slowdown and fall in oil prices have led to substantial wealth erosion
• Going forward, the demand for commercial property will be impacted by a combination of factors which include the extent of
slowdown in the domestic as well as regional economies and the current pace of supply which will impact demand
• There could be as much as 550,000 sq metres of office space in the pipeline, according to initial estimates from DTZ, which
could push the market into a state of oversupply unless developers are careful in terms of staggering the release of space to
meet market needs
• AYA Tower in Hoora, West End Tower in Seef, Signal One Tower in Amwaj Island and Times Square Tower in the Diplomatic Area
were all launched in Q208 but sales were either suspended or cancelled in Q109.
• With the tightening of liquidity, obtaining credit has become difficult and investors are hesitant to enter the property market.
Although this will negatively impact the supply of capital to the market, remaining investors will be committed to quality
developments catering to specific end-user demand .
Decline in demand in conjunction with current pace of supply is expected to lead to market saturation in the near term,
with an accelerated trend by investors to be selective and cautious

119
The government is enabling build up of Bahrain‘s industrial
sector …
Limited industry exists in Bahrain, with most industry activities in the traditional sectors of aluminum, oil & gas and related
downstream industries
Industrial sector developments Inititiatives promoting the industrial sector
Lately, the Bahraini industrial sector has picked up with a • The government has been opening up avenues for private and
number of projects such as: foreign investments which are expected to drive the sector
• The Alba line six expansion • Non-Bahraini investors in industrial projects may fully own
• Upgrading Bahrain‘s oil refinery buildings and land with the aim of setting up economic
• Expansion of Bahrain Petroleum Company (Bapco) projects.
• The privatization of Al-Hidd power and Water Station • They may also lease government land through the Ministry of
• Development of industrial parks such as Bahrain Investment Finance. Land is available on a long-term basis for a
Wharf, Logistics Zone, Bahrain Industrial investment park maximum lease of 50 years
Development of industrial parks such as Bahrain Industrial Investment Park (focused on attracting export oriented
manufacturing companies and internationally traded services), Bahrain Logistics Zone (focused on attracting logistics /
warehousing facilities and business) and Bahrain investment Wharf (acting as a mixed use development and focused
on attracting light manufacturing industries, logistics companies) are expected to boost Bahrain‘s industrial sector by
attracting Foreign Direct Investment and encouraging the growth of Bahraini manufacturing facilities through a focused
export orientation

120
…and continued heavy spending on infrastructure…
Transport networks Energy and Utilities Infrastructure
With its highly developed communication and transport There are three independent power projects in the Kingdom,
facilities, Bahrain is home to numerous multinationals doing two IWPPs (including Al Dur 1) and one power generation
plant. The authorities are encouraging IPPs to operate and
business in the Persian Gulf
they have also privatised some state power assets
Total of 3,498km of roads on the island, of which 79% are Bahrain's Electricity and Water Authority signed a MoU with
paved. The 25 km causeway linking Bahrain and Saudi Singapore's National Water Agency (2008). The two agencies
provides easy access for manufacturers / exporters to will collaborate on the operation and maintenance of water
mainland markets supply, and the design and construction of waste water
treatment systems
The government is pursuing plans to upgrade airport facilities
by building a new terminal and adding passenger bridge Supply of 220kv transmission cables for upgradation projects
gangways. BIA handles an average of 580 flights a week across the country (Saudi Cable). Bahrain is also upgrading
its power sector with the construction of substations and
transmission lines in a BD 120 million initiative
Construction work at the BD 52 mn Khalifa bin Salman Port
was on course for completion by 2009, which will more than
triple Bahrain's annual capacity to 1.1mnTEUs in phase 1 Bahrain's new Water Resources Council will bring the
responsibility for the management of water resources in
Bahrain under its auspices with the aim of improving the
The Qatar-Bahrain causeway, which had been scheduled to efficiency of the sector, whilst preparing it for the millions of
get underway in March 2008, remained at the design stage in dollars worth of investments that will fund future projects in
Q408. water supplyand sanitation.

121
…with mixed use Land reclamation projects being a
major feature of the construction sector in Bahrain
Land reclamation projects are a major feature of the construction sector with the kingdom‘s size increasing by some 26 sq km,
or 11.4%, since reclamation statistics were first recorded in 1981
Major developments include…

Diyar al Muharraq – Mixed use Durrat Marina– Mixed use Bahrain Bay– Mixed use Amwaj Islands– Mixed use
.
Financial Harbour– Mixed use Marsa al Seef– Residential / Retail Dilmunia– Health & wellness Durrat al Bahrain– Mixed use
The combined cost of the above projects alone is over BD 8 billion

122
Rising material costs posed challenges throughout 2008,
particularly cement costs, one of the main inputs to the
construction sector..
Current scenario
• Increasing construction materials and aggregate costs put a strain on contractors throughout the first nine months of 2008, but
have since cooled substantially with the prices of construction materials now falling, taking huge financial pressure off
contractors and real estate developers.
• A construction surge put intense pressure on local and regional supplies of cement and steel, with construction costs rising by
50% in the first quarter of 2008 alone, following a 30% rise in 2007
• Cement supply represented the biggest challenge for Bahrain‘s construction market after neighbouring Saudi Arabia halved its
production in 2007 when one of its key cement plants went off-line.
• Bahrain‘s construction sector has suffered recently as a result of inadequate port facilities,however, the new Sheikh Khalifa bin
Salman Port at Hidd is expected to make the import and handling of cement more cost-effective in the coming years
• Global steel prices began to cool from September 2008 onwards and continued on a downward trend until well into the second
quarter of 2009 with many large contracting firms feeling the impact of volatile steel prices due to bulk purchases
• Bahrain‘s government is now looking to new markets such as Spain, Turkey and Pakistan in order to prevent a repeat of the
material shortage scenario in 2008
New Developments to mitigate future shortages
• Bahrain National Company signed a renewable contract with a Spanish company in September to import 300,000 tonnes of
cement over a six-month period
• Bahrain signed a MoU with the Turkish government to set up a trading house in Bahrain that will supply construction materials
• Gulf Finance House announced plans to open a BD 2 bn steel plant in Bahrain in order to meet rising demand, while a new
BD5.6m cement plant is to be developed by Star Cement at Hidd

123
… however, Bahrain‘s construction sector has proved itself to
be quite resilient and there appears to be no requirement for
additional local cement manufacturing facilities….
Falcon Cement is the only cement manufacturer in Bahrain
Current Supply Current Demand

• Import from Saudi Arabia – 3600 tons a day (mainly • Total demand for cement is 4000 metric tons a day
through UCC) (104,000 tons a month)
• Falcon Cement – 1000 metric tons a day
• Star Cement – 1300 tons a day (clinker grinding)
• Other suppliers – trucks from Saudi which ―dump‖ cement
in Bahrain and Qatar
The market is currently in a state of over supply with supply over 6000 tons/day against current demand of 4000 tons/day
Development of Cement Manufacturing facilities at this juncture is not recommended by industry players as:
• The market is currently in a state of oversupply

• Production costs of imported cement (from Saudi Arabia) about BD 22-23 / ton, while production cost of local cement in Bahrain is about BD
33 / ton, restricting margins of the local industry
• Currently all raw materials are imported including limestone (from UAE), gypsum (from Oman), Iron (from Saudi)
• Bahrain cement manufacturing industry cannot sustain itself on local development without Government support. Addtionally it cannot
compete with Saudi on exports due to size and competitiveness of the Saudi market (Bahrain has only about 12 – 13 readymix companies
as opposed to 100‘s in Saudi), as well its ease of access to natural resources and energy
• Low government support in terms of electricity & water supply, imposing of quotas, allowing cement ―dumps‖ from Saudi
It is estimated that in the medium term, the sector doesn‘t qualify as a market gap based on lack of feasibility due to current
oversupply, limited ability to export (due to competition from Saudi based on volumes and price) & low competitive advantage

124
In keeping with the fast pace of construction in the country,
Real Estate brokerage services, although largely unregulated,
have been on the rise …
• The number of traded land permits grew at a slower pace than the
No and value of traded land permits (BD million)
value of traded land permits, which grew by a CAGR of 111% to
reach BD 1.37 billion in 2007
• Bahrainis are the real drivers of property demand and account for
over 90% of all real estate transactions
• Buyers from neighbouring Saudi Arabia accounted for 76% of all
real estate transactions involving non Bahrainis in 2008. Total value
of transactions from non GCC buyers rose to BD 3.3 million in 2008,
a 26% increment on the previous year‘s figure. However, Real
Estate transactions by non GCC nationals (residential property)
were minimal
• The upward trend in real estate transactions is a direct result of the
number of incentives and financing options offered by banks and
• In most jurisdictions such as in the United States,
financial institutions for nationals to take out mortgages and other
types of loans to finance their house purchases. a person must have a license before they receive
remuneration for services rendered as a real
• The high volume of transactions by nationals rather than overseas
estate broker, with unlicensed activity being illegal
investors suggests that the market is driven to a greater extent by
• However, in Bahrain, there is lack of regulatory
end-users than by speculative buyers, as is the case in some other
property markets in the region, most notably Dubai enforcement with regard to mandatory licensed
real estate activity leading to unregulated activity
• Cost of registering land has also increased from 1% to 3% over the in the sector and absence of a framework
last few months (end 2009), thereby decreasing the incentivization mandating the recording and structure of
to register land and formalize real estate transactions transactions

125
In Real Estate related services, demand for Facilities
Management in high end properties is well met, but there is
need for increased sophistication of mid market level players
It is estimated that Facilities management market in the Gulf region will be worth BD 336 bn over the next 25 years
Facilities Management
High end / luxury segment Mid Market segment Low income segment
• Existence of strong players servicing this

segment, such as CBRE, Knight Frank, • There is a market for mid level facilities • Social housing is a high growth area in
DTZ, Star Properties & Cluttons management players, however, local Bahrain because of strong demand
players do not have the required level of (over 40,000 people on the Ministry of
• Jones Lang LeSalle and Cushman & are sophistication to provide quality levels of Housing Waiting list) and Government
planning on entering this market services plans (2014 plan)
• Bahrain is a finite market and new entrants • Local developers are trying to address • However, this segment does not
would compete for the same market as this need by starting their own facilities generally require facilities management
existing players. Additionally, there has management arms as a non core part of as tenants of such housing facilities are
been a fall in demand for luxury properties. their services for their own consumption reluctant to pay for such services
• Low attraction for international players as • Local players do not have • Buillding care / maintenance is usually
compared to other GCC countries (such as requisite training / certifications reflected conducted on an informal case to case
Dubai) as there is a absence of strategic in the quality of services provided basis
Master Planning
Demand from high end developments is well Need for transfer of knowledge / skills from Limited requirement for sophisticated
met by international players existing players / improved education facilities management services
There is a need for regulation prohibiting developers from utilizing in house facilities management players as per best practices
thereby ensuring segregation of interests , promoting 3rd party independent players and ensuring quality of service

126
…along with a requirement for Strata Management Services,
which will provide a framework for ownership and guidelines
to manage developments..
Strata management is an area of specialist property management involving the shared responsibility of owners in grouped
dwellings (units & apartment complexes) agreeing on matters concerning common property. Strata company laws institute an
effective way of governing these issues, with a strata company taking the responsibility of governance
Vital to ensure harmony and a sense of community for owners, residents, commercial operators & the greater community
Requirement for Strata Management Services
Protection of consumer rights Settling of disputes between tenants / Provide audited accounts for fees
(developer / owner / residents) owner & tenants, etc. charged – encouraging transparency
Currently, developers , property owners Currently, apart from resorting to the court, Currently, there is no transparency in the
and tenants do not have an understanding there is no provision for dispute resolution, Bahraini market regarding payments
of their individual rights & responsibilities liability or related payments in Bahrain taken by facilities management players
Create an enablingf environemnt for the establishment of a strata title system which will provide a framework for
ownership, along with guidelines to manage developments with multiple users and owners.
Development of a code of procedure Need for Training of Bahrainis and Develop facilitatory regulation around
listing down the rights & liabilities of transfer of skill sets to promote local strata management / facilities
developers, land owners, tenants, and employment and local business management services e.g. Regulations
apartment owners; by adapting generation in keeping with the on validity of real estate trusts (escrow),
existing best practices to suit the requirements of a growing real estate utilization of tenant / owner funds (of
local environment sector & complex type developments capital versus funds from interest), etc.
Currently, BCS (Nass Group) is the only provider of Strata Management Services in Bahrain. There is a need to develop this
sector, with a view to incorporate industry best practices, while simultaneously creating employment / business opportunities

127
There is a need to structure Bahrain‘s speculative real estate
market through inputs such as market research, a property
market index and standardized valuation practices..
Due to the speculative nature of the Bahrain property market, land prices remain high. Based on high land costs, developers tend
to build high end / luxury complexes to maximise their returns, which in turn have been facing lower investment demand coupled
with actual high demand / need or social housing
Increased transparency
Development of a Real Standardized valuation
through research & index Managing land supply
Estate Regulatory Agency practices
development
• Development of a regulatory • Limit ―comparable value‖
agency (independent or • Monitoring of Sale Prices, valuations which leads to Promote private development
integrated with the survey asking prices, and listings in ―land locking‖ – non of low cost housing /
and land registration body) areas, seasonal trends and development due to minimal commercial developments
to ensure a transparent and charting them for reference profits based on through measures such as
effective regulatory and patterns ―comparable‖ land prices increasing supply of land,
environment • Development of a pricing / • Creation of a mandatory density bonusing (vertical
• Responsible for the up to value based on a framework requirement for properties development on limited land
date registration of real of sound market research in above a certain value (for size), inclusionary zoning
estate procedures (sale, order to bring consistency to example 250 million) to go (mandatory low to medium
purchase, and mortgage ) Bahrain‘s Real Estate through residual or economic cost developments as a % of
• Addressal of grievances of market valuation by companies / all bought land), encouraging
buyers and builders persons meeting required banks to lend for certain
• Monitoring ‗affordable standards (for example, types of development
housing ‗ agenda Chartered surveyors)
While the real estate industry should mainly be regulated by market forces, current intervention is neccesitated to avoid irrational
market development , stabilize prices, adjust investment and supply & demand equilibrium of the market

128
growth in the Construction & Real Estate sector …
• This sector is mainly dependent on expatriates for its labour, both for low skilled labour (Bahrainis do not wish to join at lower
positions) and highly skilled labour (shortage of requisite skill sets among Bahrainis)
• There is limited workplace training & induction programs to enhance employee skill sets.
Lack of workplace training / Bahrain‘s construction sector also does not offer apprentice programs to meet future skill
absence of apprenticeship model demands of the sector, which would reduce the pressure on schools and universities to
train workers by partly shifting the training of workers to industry
• The educational system does not satisfy the requirements of the sector in terms of
Lack of workplace ready qualifications, causing the sector to rely on expatriates for skilled and non skilled labour.
candidates There is an attempt to re attract such workers to their home countries by offering them
better wages and working conditions which may lead to a shortage of skilled workers
• There is a need for training & certifications in business / employment generating areas
Lack of training provided in Real
such as valuations, facilities management ( with courses such as Real Estate market,
Estate services such as valuation,
investment strategies,urban planning & institutional analysis) in order to increase the
facilities management, etc.
sophistication of local players and enable them to compete with international players
• Although there are several courses offered by the BTI (building&construction technology),
Lack of specialised / technical and the college of Engineering (civil Engineering), there is a requirement for development
skills of business skills and technical skills to fill niche,well paying positions (estimating,
surveying, contract management), particularly as Bahrainis do not join at lower posititions
• Due to high attrition rates amongst Bahrainis in the industry, these workers do not gain
High attrition rates hindering the
solid skills in project management and technical areas; employers therefore look to
development of complex skill sets
expatriates to fill the top positions

Amongst key issues,Technical and Communication Skills were
identified as key skills requirements in the construction sector…
Current employment trends
• Minor increase in employment in this sector (as a % of

total employment) from 2002 – 2007
• This sector does not have a very high educational
threshold for entry level jobs. Overall, a large number of
employees in this sector are educated at a primary,
secondary or bachelor’s level, with a very limited
number of postgraduates, Master’s degrees or
Specialised diplomas
Employer skill requirements for Construction sector • Employers in the construction sector cited a need for
strong technical & communication skills*
• Employers in the Real Estate (and Business Services)
sector were happy with their current staff levels. In this
sector, employers identified literacy skills and
communication skills as most important, while the most
commonly identified “required” skills were
communication skills
*Source: Allen survey 130

Construction & Real Estate: A Snapshot of Prominent
Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Construction & Real Estate
sector
and is used to reflect the ‗absorptive capacity‘ of the Construction & Real Estate sector
Bahraini Construction & Real Estate sector value chain are termed as ‗market gaps‘
131
Construction & Real Estate: A Snapshot of Prominent
Bottlenecks, Gaps
High end Facilities Market Gaps

Mgmt
Market gaps in terms of sectors have no / minimal
High Residential High end Cement presence in Bahrain, however could potentially present
developments opportunities for existing players / new entrants based

Brokerage on market feasibility and assessment
services 2,a
Infrastructure7
Commercial
developments5
Industrial  Strata Management Services
development7
No apparent gap
Medium Real estate Valuation3,a
Infrastructure /Regulatory Bottlenecks (Disablers)
Social
Mid level facilities Housing 1  a
Lack of enforcement of regulatory standards in real
mgmt 4 estate brokerage & related services
 Limited Master planning, particularly in commercial
Market gaps in terms of areas
Low under penetration  Limited public-private partnerships
 Lack Real Estate Regulatory Agency with a set of
regulatory guidelines and policies including a RERA /
Low Medium High
Index based on a framework of sound market research
Market Potential (assessed in terms of expected growth rate)
1. The growth of social housing is on the back of high demand and increasing government expenditure in this area
2. Although real estate brokerage in its current format (unlicensed brokers) is saturated, there is a requirement for regulated real estate brokerage activity
which will serve to provide data
3. There is a need to need to structure Bahrain‟s speculative market and corresponding demand for valuation services which meet international standards
4. Facilities Management Services (non luxury segment) is a growing opportunity , dependent on increase in local player sophistication
5. Although commercial construction is a saturated segment, there are still pockets of demand for office space in certain prime areas such as Seef
6. Includes land development / reclamation
7. Government focus on creating world class infrastructure., coupled with MOUs with other countries such as Singapore for infrastructure development
132
Relative Sub-Sector Prioritization: Construction & Real Estate
the Construction & Real Estate sector as a ‗market gap‘
(Priority Index)
133
scores

1. Infrastructure includes construction of utilities, land reclamation activities, etc.
2. Notes:
formation issue

and C
136
Valuation Mid level facilities

Services management
Industrial Infrastructure & Social Housing Strata

Construction Utilities Management
20% 52% 57% 62% 67% 100%
Priority Index
Notes:

• ow are deemed as virtually absent from the Bahraini sector value chain / industry map

Key Sector Growth Drivers: Construction & Real Estate
Increasing demand for low –

medium cost housing
Bahrain selected as regional
headquarters by several global
Increasing Government focus on
…………… companies due to the ease of doing
infrastructure & industry
business in Bahrain (ranked 2nd in the
GCC – IFC, 2009)
High influx of expatriate

Implementation of freehold Construction / Real Estate population due to Bahrain being
property laws in 2003 for Growth Drivers
foreign nationals an open economy and offering
liberal lifestyle
Influx of GCC tourists (impetus

Natural population growth (6% from the Bahrain- Saudi
y-o-y) Causeway and the
upcoming Bahrain-Qatar
causeway )
markets

138
Telecommunications
139
The Telecom Industry Map comprises Equipment Mfg. and
Telco Services as primary sectors ….
Electrical equipment
Semi-conductor manufacturers manufacturers: Optical Switching
& Transmission components Wireless Communication
Components
Manufacturers of
Distributors, optical cables Distributors,
wholesalers and wires wholesalers
Communications Software Developers VASPs, content,

(e.g. Wireless, Messaging & application developers,
Conferencing, Networking softwares) publishers
Satellite System Providers
(wholesale satellite communication
Wholesalers, services)
Distributors e.g. Avnet Telecom Services
providers
Wholesalers /
Telecom Infrastructure Distributors of
Development Providers telecom equipment
Wireless
Telecom equipment manufacturers Service
Wire
(wire line, wireless, internet, cable / providers / Cable Internet
line network
broadcasting)
operators
E.g. Wireless Networking,
Switching, Transmission
equipment Manufacturers
E.g. Wireless Broadband

Network manufacturers
E.g. Wire Switching,

Optical Switching &
Transmission equipment
Consumer electronics stores,
retailers, wholesalers (mobile
phones, fixed line instruments)
TV, Cable, Pay and Broadcast

Networks Telecom sales – through various
Wireless Telecommunication
advertising & marketing channels
Resellers
(TV, print, internet, POS, mailer
TV Program production and

distribution
End consumers – Residential,
business, government
Business Services (like advertising, warehousing of telecom equipment), IT, Financial Services (Banking, Insurance) and
Education
Sources: Hoovers, D&B Research (University, Professional Education) as well as Transport & Logistics will have inter-linkages across the industry value
& Analysis
chains and have not been explicitly shown 140
…With Mobile, Fixed Line, and Internet as the key sub-
segments within Telecom Services
The theoretical construct of the Telecommunications Industry comprises broadly Manufacturing of

Telecommunication Equipment and Providers of Telecommunication Services. These form the core
structure of the Telecom industry map. Other operators in the construct are linked to these players
either through value chain relationships or at peripheral support level
• Typically, Telecommunication Equipment Manufacturers produce a variety of products used across communication
networks including fixed telephony, wireless and internet
 Typical products include transmitters and receivers (including satellites), signal boosters, connecting devices, power
supplies, switches and phones, with diversity of products ranging from USD10 telephones to USD 5 million room-
sized Class 5 switches that are the backbone of the wire-line telephone system
 Due to the diverse range of possible products, most companies concentrate on efforts in a particular segment e.g.
Motorola specializes in wireless equipment, Cisco in internet infrastructure, Alcatel-Lucent in wire-line infrastructure.
• Around 50% of global industry revenue comes from equipment for wireless communications (including radio and TV);
while the remaining half from equipment for line – based communication
• Telephone handsets (wireless and wired) account for about a third of industry sales
• Source inputs for telecom manufacturers such as optical switching and transmission components and PCBs are
sourced from Semi-conductor and Electronic Component manufacturers, primarily based in China and Taiwan
• Globally, the industry is highly concentrated with 75% of global revenues coming from the 50 largest companies,
including major giants such as Cisco, 3 Com, Alacatel-Lucent, Nokia, Ericsson and Siemens
• Telecom Services comprises of players operating across the Fixed Telephony, Cable, Wireless and Internet segments;.
the industry is highly concentrated with the top 50 global companies generating 90% of total global industry revenues

141
With a spate of deregulation measures instituted by the TRA,
Bahrain‘s largely oligopolistic telecom sector has witnessed an
exponential growth ….
Market Size Breakdown of

• Bahrain telecom market is an oligopoly, comprising Batelco the incumbent Telecommunication Services, in BD million
player, a cluster of second tier firms and a longer tail of smaller, single or (Value of Production as calculated by CIO)
multiple product firms
• Spate of deregulation measures by the TRA since 2003, has resulted in the
opening up of Bahrain‘s mobile, fixed and broadband markets
• Sector grew by 6.3% between 2007 and 2008 (with new entrants to the
market accounting for nearly half of market growth)
• Positive impact on employment generated with a 4% growth in the number
of people working in the telecoms sector between 2007 and 2008
• There are a total of 18 active telecom service operators in Bahrain - of
these only Batelco offers the full suite of telecommunications services; with
many providers offering only one or two services
• GDP contribution of the sector (integrated ICT) is estimated to be around
3.1% of total Bahrain GDP and has projected a CAGR of 13% between The deregulation of the
2002 and 2008 telecom sector in Bahrain
spurred exponential growth
• There is virtually no local manufacturing of Telecommunication equipment
resulting in a number of
in Bahrain -The operating landscape for supply of Telecom equipment telecom service operators in
comprises a number of Tier 1, 2 and 3 distributors of Telecom and the market offering a
upstream network equipment variety of services
** Figures pertaining to employment and GDP pertain t to the integrated ICT sector
Sources: CIO, TRA, Industry Reports, D&B Research & Analysis 142
…With Telecom Revenues witnessing a staggering growth of
almost 99% since liberalization …
Estimated Distribution of Telecom

Revenues (2008)
• 6.3% growth in revenues between 2007 and 2008

• 7% Compound annual growth rate between 2004 and 2008
• Revenues have doubled since market liberalization in 2003
• Mobile services revenues represent the majority of the telecommunications services revenues
**Fixed lines revenues: include subscription revenues, monthly rental and domestic calls revenues.
**Mobile revenues: include subscription revenues, monthly rental, domestic calls revenues and mobile broadband revenues.
*internet revenues: include subscription revenues, monthly rental revenues and above usage revenues.
Sources: TRA, D&B Research & Analysis 143

Growth in employment is estimated to be around 37% since
liberalization; additionally the sector achieves a relatively high
level of Bahrainization …
Employment Distribution, 2008 (%)
• 4% growth in number of employees between 2007 and 2008

• 37% growth since liberalization
• The sector achieves a high degree of Bahrainization (88%) compared to other sectors (2008)
**Operators exclude the staff of the services companies working in the telecommunications sector
Sources: TRA, D&B Research & Analysis 144

There are a variety of services offered within the Telecom
landscape with international calling offered as the most
common service…
• The Telecom Landscape comprises 18 active operators (now 19 with Saudi Telecom being licensed in January 2009)
offering national fixed, international calling, mobile, broadband, leased line and other data services
• The most common service offered is international calls
**Other data services includes services such as National frame relay service, International managed leased line services
and International MPLS/IPVPN service
Sources: TRA, Industry Reports, D&B Research & Analysis

145
Bahrain ranks 3rd in the region after UAE and Qatar across
both the mobile and fixed line services segments and …
Mobile Services Penetration (2008) Fixed Line Services Penetration (2008)
• In December 2008** mobile penetration in Bahrain was • At the end of 2008** the fixed line penetration in Bahrain
131%**. was 20%**
• Bahrain has one of the highest mobile penetration rates • Compared to the GCC and other Arab countries, Bahrain
in the GCC and Arab countries and compares well with has a high fixed line penetration
the European countries considered • Compared to European countries, penetration in Bahrain
• Bahrain ranks 3rd in the region after UAE and Qatar and in Arab countries is lower
**As per Q2‟2009 data, the mobile penetration has declined • Bahrain ranks 3rd in the region after UAE and Qatar
to 118% **As per Q2‟2009 data, the fixed line services penetration
has remained constant at 20%

146
…outperforms the region in terms of broadband penetration …
Internet Penetration (2008) Broadband Penetration (2008)
• Bahrain‟s internet penetration was 10%** in 2008** • Bahrain‟s rank in broadband penetration (2008)**,
• In spite of the growth in the number of internet which stands at 10%**, is better than Bahrain‟s rank in
subscribers, Bahrain‟s internet penetration is low internet penetration, as 96% of internet subscribers are
compared to European countries broadband subscribers
• Bahrain tops the region in terms of broadband
**As per Q2‟2009 data, internet penetration has increased to **As per Q2‟2009 data, broadband penetration has
12% increased to 12%

147
The Mobile Services segment projected a CAGR of around
16% in terms of subscribers since 2005, particularly stimulated
by multiple sim ownership by subscribers…
Mobile Subscribers & Penetration
The total mobile subscriber

base witnessed a decline in
2009, primarily on the back of
dwindling prepaid subscriber
base (attributed to the outflow
of expat workers from the
Kingdom as an impact of the
financial crisis)
• Bahrain witnessed a 29% increase in mobile subscribers between 2007 and 2008, continuing a trend that has helped the
overall telecom sector to record an expansion of 99% since it was first liberalized
• The sector has projected a CAGR of 16% between 2005 and Q2‘09 in terms of growth in mobile subscriber base – this
growth has particularly been stimulated by multiple sim - ownership tendency by subscribers
• The launch of commercial services by STC (Viva) is expected to result in increased competition and stimulate further growth
(STC‘s subscriber base is estimated to have reached 100,000 only in the first month since launch)
• However, growth is likely to peg down over the next five years, with a 200% penetration threshold forecasted to be crossed in
2011

148
With now 3 licensed MNOs operating within the Bahraini Mobile
services segment, there is no apparent and visible gap in the
market and is expected to slow down in the medium term …
• Batelco‘s monopoly in the mobile market was broken in 2003, with Zain‘s entry and launch of commercial services via 2G and 3G
networks
 Zain also became the first telecom operator in the Gulf to provide nationwide wireless broadband after spending BD 5.6
million on a WiMax license from the TRA in January 2007
• In response to competition from Zain, Batelco implemented 3.5G mobile broadband service, attracting 38,000 customers in its first
year
 The new service offers a broadband connection, video calling and conferencing from a mobile device
• Mobile penetration crossed the 100% threshold in 2007; with penetration levels of 131% in 2008, and total subscriber base of
1.441 million (As per latest available data pertaining to Q2‘09. mobile penetration stands at 118%)
• Growth of subscriber base was driven largely by proliferation of prepaid cards and an increasing number of multiple SIM owners
• Saudi Telecom won Bahrain‘s 3rd telecom license in January 2009 (BD 88 million bid)
• With the entry of STC there is no apparent and visible gap in the MNO segment; further reflected in aggressive expansion plans of
existing operators outside Bahrain
 In June 2006 Batelco acquired 96% of Jordan-based Umniah Mobile for BD 150 mn.
 in 2007 Batelco purchased 20% of Yemeni mobile operator Sabafon for BD 6mn
 In January 2008 Batelco led a consortium to ink a deal for 49 % share of Indian operator S Tel Limited for BD 86 mn
 Zain has also expanded its presence in numerous Gulf and African countries to provide services such as its One Network
• Currently, the TRA has limited frequency available to award to a new MNO entrant, although the regulator remains open to licensing
another operator depending upon strength of business case

149
Increased uptake in 3G could partially mitigate potential
slowdown in mobile subscriber base; however this opportunity
is restricted to existing operators …
• The demand stimulus in data service usage

3G connections should provide impetus to 3G mobile
connections
Potential CAGR:
41% • Based on current 3G penetration levels, while
this segment poses a significant gap, however
opportunity is restricted to existing operators
i.e. Batelco, Zain and STC (rather than a new
entrant) to deploy optimum technologies to
leverage on the 3G frequencies awarded to
them by the regulator
• 3G proposition is based on value, cost

effectiveness, speed and convenience and has
limited opportunity for new investment / entry
• With both operators now implementing HSDPA technology, introducing new multimedia handsets and launching a wider
range of wireless broadband and other mobile value-added services (VAS); should have a positive impact on data service
usage, although initial uptake for 3G has been slow
• The 3G subscriber base is estimated at around 13000 subscribers (0.9% of mobile market) and has potential to increase to
around 80,000 at the end of 2010 and 225,000 at the end of 2013 (9.8% of the total mobile market)

150
Additionally, mirroring global trends there could be pockets of
opportunity for a potential MVNO entrant offering niche
consumer focused services…
• There are pockets of opportunity in the market for an MVNO1 (Mobile Virtual Network Operator) to come in and operate
using any of the mobile technologies being deployed by the Bahraini MNO operators (Batelco, Zain, STC) i.e. GSM,
UMTS, HSPDA
 Globally MVNOs target both the consumer and enterprise markets; however majority of MVNOs are consumer-
focused and most have a focus on price as their unique selling point
 Examples of a non-consumer MVNO include wireless maingate and white, machine to machine (M2M) data based
MVNOs
 As of February 2009, there are over 400 active MVNOs operated by over 360 companies, while close to 100 more
companies planning to operate within the sector
 Countries including Germany, the Netherlands, France, Denmark, UK, Finland, Australia and United states have the
most number of MVNOs, wherein the segment is seen to be stabilizing with established success stories
 Other countries, such as Russia, Portugal, Spain, Italy, Croatia, Baltics, India, Chile, Ireland and Austria are just
beginning to launch MVNO business models
 For a population of approximately 3.6 million, Oman has 4 MVNOs in addition to MNOs, Omantel and Nawras
Any potential MVNO entrant into the Bahraini market would have to look at addressing a minority / ethnic group with a
consumer focused offering
1 A mobile virtual network operator (MVNO) is a company that provides mobile phone service but does not have its own licensed frequency allocation of radio
spectrum, nor does it necessarily have all of the infrastructure required to provide mobile telephone service. VNOs are roughly equivalent to the
"switchless resellers" of the traditional landline telephone market

151
Potential slow down in the near term coupled with demand from a
growing base of sophisticated mobile users and increased
‗convergence‘ accentuates the need for differentiation …
Limited size of Bahrain Growing demand for infotainment,

market (Population: 1.2 transactional convenience and entertainment
STC enters
million) from sophisticated mobile users
the market in
Q1‘09
Batelco
Increased need for Emergence of Value
mobile operators added Services is a
Zain
to differentiate strong potential area
offerings for differentiation
Saudi Telecom
Current market gap in the form

Threat of potential overcrowding Increased convergence of limited number of content
and price war within the between ‗data‘ and ‗mobile‘ developers and publishers
Resulting in a downturn for ARPU producing content for mobile
VAS
• The entry of Saudi Telecom into the market is likely to further propagate competitive intensity, accentuating the need for
Bahrain mobile operators to compete in the arena of mobile VAS (Globally VAS accounts for 8 to 9% of mobile revenues)
• Other drivers include growing sophistication of Bahrain‘s mobile users and increased levels of convergence between mobile
and data
• There is a potential room in Bahrain's telecom value chain for specialized regional and international content and application
developers / publishers producing content for mobile VAS

152
…with Mobile VAS and applications providing a strong growth
opportunity, based on the proposition of differentiation by
mobile telcos…
Opportunity lies in Non-Standard

services especially around
Applications and Transactional e.g. news service, dictionary function,
based services Infotainment stock information, weather, city
navigation or travel information
e.g. Games on Demand, Video on

Non-standard Applications Demand, IPTV
Areas of Opportunity
Mobile Value
Added Services e.g. banking, email, phonebook,
(VAS) Transactional remote control services and fast food
Standard based delivery.
e.g. voicemail, SMS, call

management features such as
missed call alerts, call barring, SMS
forwarding etc.
According to industry experts, there is potential room for 10 to 15 specialized VASPs to partner with Bahrain‟s
mobile Telcos, to develop and provide in-demand content / applications

153
As in the region, Bahrain‘s Mobile VAS market remains largely
underpenetrated, with potential to develop and attract local,
international and regional VASPs and content developers ….
With a rapidly expanding mobile market across the region; most regional operators are looking at
VAS to remain competitive. With the VAS industry in its infancy, especially in terms of multimedia
rich applications viz. Games on Demand (GOD),Video on Demand (VOD) and Transactional VAS
applications, this market offers a strong potential gap to be capitalized
• A number of VASPs have already made a foray into the region although the industry is still in its nascent
stage e.g.
a. In May 2008, Paramount Digital entered an agreement with Cellempower to distribute content via the
leading VASP, Hawana-Club
b. In August 2009, Beecell, a Jordanian VAS company penned a deal with Disney to distribute mobile
content across MENA
c. In the UAE, there is limited play in the industry with basic WAP application developers like NET-COM
 Warner Brothers has setup a joint venture with Aldar investment and Abu Dhabi Media Company
to develop content for mobiles as well as internet
 Aiwagulf of Kuwait has developed content for Etisalat
 In addition, companies like Silvertouch (provides security and tracking applications for mobiles) are
also expanding in the UAE with their development bases outside the UAE.
• With a limited play in Bahrain Mobile VAS (with the exception of Zain Wallet, the Middle East‘s first
transactional mobile banking service); there is strong potential for developing and attracting VASPs, content
and application developers to develop and produce in-demand content for Bahrain as well as the region

154
In Bahrain, the mobile VAS segment has been extending its
footprint within the mobile telecom segment in a phased
manner...
July 2004 September 2004 March 2005
MTC-Vodafone Bahrain (Zain) Batelco launches Freedata SIM MTC-Vodafone Bahrain (Zain)
launches mobile TV, along with the card, giving postpaid customers launches Push e-mail service
opportunity to download and view access to GPRS, SMS, MMS and
music videos, movie trailers ;other circuit switched data
audio & video content on handsets
May 2005 June 2005 February 2005
MTC-Vodafone Bahrain (Zain) BBC World offers mobile TV Batelco launches SMS+ services
launches an SMS-based service, broadcasts in Bahrain in
which allows readers of Al Ayam conjunction with MTC-Vodafone
newspaper to book their classified Bahrain (Zain)
ads conveniently through SMS
May 2006 August 2006 October 2006
MTC Vodafone Bahrain launches a Batelco launches mobile TV service Batelco, Emitac Mobile Solutions
Hexia-powered subscription service which runs over Microsoft-based (EMS) and Research In Motion
for Disney ringtones. Also launches PDA device Batelco launches (RIM) jointly announce that the
HSDPA across its network GPRS-based ‗Batelco Connect‘ BlackBerry solution is available in
service Bahrain
Sources: D&B Research & Analysis, Industry reports

155
…with offerings include information services, Mobile TV, Ringtones
and SMS. However, demand is quickly shifting towards sophisticated
services such as transactional services…
April 2007 April 2007 November 2007
MTC-Vodafone Bahrain launches new MTC-Vodafone Bahrain offers Zain Bahrain launches its 'Mobile Stock
data services and competitions for interactive mobile location-based Guide' service, which allows customers
Formula 1 season; racing enthusiasts services to provide them up-todate stock
can also attempt to win daily tickets to exchange prices
the Formula 1 event through a daily
SMS quiz
December 2007 April 2008 October 2008
Batelco launches 3.5G service portfolio, Batelco launches 3.5G service portfolio, Zain Bahrain in collaboration with
which includes mobile broadband, which includes mobile broadband, Research in Motion launches the new
video calling and a new mobile portal video calling and a new mobile portal BlackBerry Bold Smartphone in Bahrain
with content targeting specific customer with content targeting specific customer
segments segments
November 2008 November 2008 December 2008
Batelco announces the launch of six Batelco launches new O-net Mobile Zain Bahrain launches a new promotion
new SMS news services in co- Broadband device, enabling customers with Zain Saudi Arabia allowing Hajj
operation with Zajil Press Zain Bahrain to browse the internet, send and pilgrims to share their experience
launches its much awaited Zain Wallet receive SMS, chat using existing through the video calling service
instant messaging service and access
business applications
Sources: D&B Research & Analysis, industry reorts

156
…and multimedia rich entertainment applications…
December 2008 May 2009 May 2009
Batelco announces it is launching a Zain adds internet access, e-mail, MMS, Batelco announces the upgrade of its
new type of roaming service for in-flight BlackBerry services and mobile portal HSDPA-based mobile broadband
communication for voice and data applications to its ‗One Network‘ local services to a maximum theoretical
(GPRS and SMS) with OnAir rate voice and SMS international speed of 14.4Mbps (download)
Switzerland roaming scheme
The mobile VAS segment has been extending its footprint within the mobile telecom segment in a phased manner.
Primary offerings include information services, Mobile TV, Ringtones and SMS. With the saturation in mobile market
augmenting the need for telcos to differentiate their offerings on the VAS platform, adoption of HSPDA technology by
both Batelco and Zain as well as uptake of multimedia rich 3G phones, demand growth is likely to be seen in the
areas of transaction VAS and entertainment VAS such as GOD and VOD
Sources: D&B Research & Analysis, Industry reports

157
Overall, albeit potential slowdown in the medium term, current growth in
the mobile market is likely to be on the back of enhanced competition
from STC, growth in Mobile VAS and ability of existing operators to
offer converged services and capitalize on 3G potential…
Ability to offer fixed and

mobile services by both
Batelco and Zain will likely
lead to converged service
offerings
Batelco, Zain have been Deployment of HSDPA and
actively deploying multimedia the launch of new multimedia
content services, providing mobile handsets should have
opportunities for content a positive impact on data
providers service usage
Opportunity for content Mobile

developers and mobile
VAS Growth
Drivers
Opportunities to migrate
Launch of services by Saudi prepaid users to contract
Telecommunications tariffs
Company will enhance the
level of market competition
Opportunity for
Enhanced competitive
stimulus with a potential entry growth in 3G
of an MVNO operator services
Sources: Industry Reports, D&B Research & Analysis,

158
The Fixed Telephony Services segment is witnessing growth on the
back of strong uptake for IP based Fixed Wireless Telephony
Services, particularly by the corporate sector in Bahrain….
• By the end of Q2 2009, there were about 230,000 fixed lines

compared to 220,000 in 2008
• Fixed telephony lines consist of 204,000 PSTN and 26,000
wireless lines
• The number of fixed lines grew by 4% between 2008 and Q2 2009
due to the growth of fixed wireless
• Growth is largely on the back of new developments throughout the
Kingdom (e.g. Bahrain Financial Harbor, Amwaj and Durrat Al
Bahrain)
• Although the number of telephony lines is increasing, fixed lines
penetration is increasing only slightly - this is due to the rapid
increase in the population and fragmentation of households
• Strong stimulus to fixed line telephony is expected to continue from IP based telephony (VOIP) based on Fixed Wireless platform
• PSTN fixed-line has entered a period of decline with the market being fast replaced by Fixed Wireless Telephony
• Although almost 95% of the fixed telephony market is still owned by Batelco; some operators such as Kalaam Telecom, have
announced plans to deploy fixed wireless services which will allow them to compete directly against the incumbent
• Nuetel and 2 Connect now offer IP based solutions through state of the art NGN networks
• Although Batelco has been increasingly facing growing competition from operators offering IP telephony and carrier pre-section
services, the number of alternative fixed line service offerings still remains limited
• Batelco has responded to the increased competition in the VoIP service space with the launch of its own VoIP service (ANIS) and the
phased migration of its legacy network to NGN (Batelco completed its nationwide NGN project, the bulk of which was funded by
domestic 2008 CAPEX of US$108.5mn
• The Fixed Telephony segment is expected to continue offering growth opportunities especially for existing licensed alternative telecom
providers with capabilities to offer IP based telephony services as well as limited potential for new entrants with innovative fixed line
service offerings

159
This trend is further stimulated by new developments throughout the
island and rapid transition of Fixed PSTN to Fixed Wireless
telephony…
Strong surge in fixed

wireless telephony – (IP
based and WIMAX) the
segment has witnessed a
supernormal growth since
2007
Residential lines as a % total fixed lines
Growth in fixed lines (4% CAGR since 2005)

due to uptake of fixed wireless IP based
telephony services
60%
63% 63% 57% 59%
The number of residential customers, who
tend to use PSTN-based services, appears to
have entered a period of more rapid
contraction.
78% of households in Bahrain are estimated

to have a fixed line
Sources: Industry Reports, D&B Research & Analysis, TRA

160
In summary, there are a number of growth drivers in place
supporting the growth of the Fixed Telephony Services
segment, primarily the growth in IP based telephony…
Operators such as Kalaam

Telecom are strengthening
ability to compete against the
incumbent with fixed wireless
service offerings
Triple play and quadruple play

services are proving to be Reduction of broadband access
popular, with potential to extend fees has potential to stimulate
the market share of alternative increased usage and demand
operators for new IP services
Fixed
Telephony
Services
e.g. Nuetel‘s quad-play offering Growth
includes video, internet and
Drivers
MPLS-based IP VPN services
Business demand for IP based Successful launch and growth of

telephony services is strong, WIMAX technology
particularly internet and data
services

161
The internet segment has grown five fold since 2000, with
penetration up to 12% as at Q2‘2009…
• The number of internet users in Bahrain has grown fivefold since 2000, taking penetration to almost 12% as at Q2‘2009, with
a total of 139,097 subscribers
• The number of dial-up internet subscribers fell by around 43% in 2008 (over 2007), while the broadband subscriber grew by
around 50% over the same period
• Batelco remains the largest ISP, with 11 other players offering fixed internet services
• By the end of 2008, Bahrain was estimated to have the highest broadband penetration rate (10%) in the region (96% of
internet users are deemed to broadband subscribers)
 Current Penetration (as at Q2‘2009) has surged even higher to 12%
 The greater part of the Middle East is generally found to have average broadband penetration rates of less than 7%
• Recent broadband service growth has been driven by the take-up of ADSL especially in the lower end residential market,
following the introduction of various promotions, tariff reductions and greater network roll-outs as well as adoption of WIMAX
and Mobile Broadband by the corporate segment and upper – end residential segment
• In 2007 and 2008, the Bahraini broadband market saw the deployment of WiMAX-based services offered by Zain and Mena
Telecom
• The increased competition in Bahrain‘s internet market has persuaded Batelco to commit BD 21.7 million to the deployment
of an automated national broadband network
• Batelco is equally determined to bundle its services into an integrated package and, ultimately, plans to reinvent itself as a
triple-play operator of fixed-line voice, wireless voice and internet services
• In addition to the launch of its NGN network, Batelco has sought to stave off the increased competition by introducing a
range of new lower-priced and higher-speed broadband services; these have been aimed, in particular, at increasing the
take-up of ADSL, especially in the lower end residential market
Bahrain is making strides in the internet segment propelled by healthy take up of ADSL, growth in WIMAX as well as Mobile
Broadband

162
…and is expected to continue showing healthy growth trends
over the near term…
• At the end of Q2 2009 there were about 139,000

internet subscribers, of which 97% were
broadband subscribers and 3% were dial-up
subscribers
• The number of internet subscribers increased by
21% between 2008 and Q2 2009
• About 62% of households have fixed broadband
• Increased competition in the ISP market has contributed to lower prices and a greater range of service options for
consumers; these include a number of triple- and quadruple-play offers
• The recent deployment of WiMAX-based broadband networks is also helping to drive growth in the market, creating a
viable alternative to fixed ADSL services, the bulk of which are provided by the incumbent Batelco
• An increasingly competitive and vibrant market is helping to drive growth in the number of internet subscriptions; this is
also contributing to higher internet user levels
• The market is expected to continue projecting healthy growth trends in the immediate term with growth expected to be in
the vicinity of at least 20 to 25% over the next 2 years

163
Due to continued rapid transition from dial up to broadband,
over the past decade, almost the entire population of internet
users in Bahrain are broadband subscribers …
• The period starting 2002, shows phase out of dial up subscribers and transition to broadband
• Between 2005 to 2008, the share of broadband (as a proportion of internet subscriptions) increased from 43% to
96%, implying a cannibalization of a whopping 56% of dial up share
• In 2007, broadband projected a yoy growth of 90%, while the Dial up segment shrunk by a whopping 234% over the
same period
• In 2008, broadband projected a yoy growth of 50%, with dial up shrinking by a further 30% during the same period
• As at Q9‘2002, the share of broadband as a proportion of total internet subscribers stands at 97%

164
…As a result, the broadband market mirrors the internet
growth pattern…
• With 97% of internet users in Bahrain estimated

to be broadband subscribers as at Q2‘ 2009;
growth in broadband is expected to mirror the
same trend as internet
**The number of broadband subscribers includes
mobile broadband
Currently estimated to have a penetration rate of 12%, Bahrain leads the region within the
Broadband segment and is expected to reflect a healthy growth trend particularly on the back of
WIMAX and Mobile Broadband

165
Recent broadband growth in Bahrain has been largely
stimulated by WIMAX and Mobile Broadband..
• At the end of Q2 2009 there were 75,014 ADSL, 42,660

wireless broadband, 17,539 mobile broadband and 3,884 dial-
up subscribers
• As is evident from recent trends, growth in broadband has
been stimulated on the back of WIMAX and Mobile Broadband
• In October 2007, mobile operator Zain announced the launch
of its Zain@home brand for residential customers, which offers
bundled WiMAX broadband internet access (with up to 2Mbps
download speeds), fixed-line voice and GSM mobile services
without the need for a PSTN subscription to incumbent Batelco
• Other companies which have recently entered the market for
WiMAX internet access include Mena Telecom (launched its
WiMAX network in Nov. 2008)
• In May 2009, Mena announced that it had achieved ‗great
success‘ since launching a nationwide commercial WiMAX
service; subscriber take-up was said to be ‗exceeding
expectations‘, allowing the operator to expand its retail store
presence across the country - The company‘s rate of new
customer additions is ‗steadily growing‘ and its subscribers are
expressing ‗high satisfaction ‗
• With overall broadband growth looking ‗moderately high‘ the
regulator expects near term growth to be propelled by Mobile
and Wireless with ADSL partially ‗flattening out‘

166
Additionally, need for higher access speeds has been on the
rise…
Proportion of Broadband Subscribers by access speed (%)
There are about 40% of

broadband subscribers
who have speed 1Mbps
and more in Q2 2009
Growing sophistication of
broadband subscribers
and higher needs for data
downloads, demand for
higher access speeds is
expected in the near term

167
In summary, the growth of broadband in the near term is on the back
of new developments throughout the Kingdom and will be from a
combination of WIMAX, Mobile and Fixed Broadband…
Growth in developments across

the Kingdom – Durrat Al Bahrain,
Amwaj Islands, Financial Harbor
with increased needs for high
speed connectivity
Uptake of ADSL by low end

residential segment on the Deployment of NGN network
back of Batelco‟s cost rollout
effective high speed offerings Broadband
Growth
Drivers
The TRA has been making significant
efforts to stimulate healthy competition
in the market and create a level playing
Uptake of WIMAX and Mobile ground, primarily in terms of access to
Broadband international data gateway and
connectivity infrastructure; however
gap in terms of domestic fixed line
Increased competition through infrastructure still persists
differentiated offerings by ISPs

168
In terms of connectivity infrastructure, a current spate of investment
has ensured strengthening of international connectivity, although gap
in terms of peer to peer domestic fixed line infrastructure still persists..
In terms of connectivity infrastructure – while the gap in terms of international connectivity looks well bridged;
Bahrain's domestic connectivity infrastructure still calls for investment through government intervention
• With a spate of investment recently, the Kingdom is set to gain from fast and cost effective provisioning of capacity and connectivity
with major international business hubs and city centers
 Additional cable system through the TGN-Gulf project, Bahrain Internet Exchange (Tata Communication‘s partner in Bahrain
for the TGN-Gulf project) will enable much needed capacity growth to maintain the unprecedented expansion in data, Internet
and media traffic usage as well as improving physical diversity and overall connectivity out of the Kingdom of Bahrain
 Further, STC (Viva‘s) entry into Bahrain is marked with further investment in international cabling capacity
• On the other hand, the Kingdom remains weak in peer to peer infrastructure – the entire fixed domestic connectivity infrastructure
belongs to the incumbent, with wholesale access provided to other operators
• The TRA has been making significant efforts in enabling access of telecom operators to domestic infrastructure over the years,
through subsidized wholesale access
• In order to allow competition to develop and provide greater consumer choice, the incumbent is obliged to provide wholesale
services over its access network to other licensed operators enabling them to offer competing broadband services to end user
• Further, the charges for these wholesale services offered by Batelco must be approved by the TRA and by law, must be fair,
reasonable and non-discriminatory
o According to an April 2009 ruling by the TRA, Batelco was required to reduce the charges to other licensed operators for
wholesale broadband services below 2 Mbps and to launch higher speed wholesale services
169
With the entire domestic fixed line infrastructure owned by the
incumbent; the TRA has been taking several measures in order to
enable a level playing field for other telecom ISPs…
In November 2009, TRA slaps In March 2008, the regulator

BD 5 million fine on Batelco for issued Batelco a fine of BD100,000
failing to meet its obligation in because of the incumbent‟s delay
allowing Mena Telecom access in providing agreed upon
to the international data access wholesale leased line services to
2Connect.
In 2008, Batelco committed to

invest around BD million 38 to the
development of infrastructure
projects for both the mobile and
fixed networks
• The TRA has been taking various stringent measures against the incumbent in its endeavor to create
a level playing field for other operators
• In particular access to the international capacity of the FALCON sub-marine cable system and
FLAG has been identified as a key issue for further development of the competition within the
telecommunication sector and the Kingdom‟s economy
Sources: TRA, News articles, D&B Research & Analysis

170
Amongst such pro-consumer initiatives, the Local Loop Unbundling
initiative, is also likely to have a positive impact towards streamlining
competition,…
The Telecom Regulatory Authority has planned

a number of ‗pro-consumer measures‘ designed In recent months, the TRA has adopted a tough stance
to boost competition in Bahrain‘s Telecom towards the incumbent as part of its efforts to create a more
market competitive sector.
Key Measures include Local loop unbundling (LLU or LLUB) is the regulatory
 Overhaul of the retail regulation regime (Q4‘08) process of allowing multiple telecommunications
operators to integrate their equipment with the
 Introduction of local loop unbundling (Q4 ‗09) incumbent‟s network through a 'local loop‟
 Carrier pre-selection on a call by call basis
(Q2‘09)
 Introduction of a third mobile network operator
The intended and potential impact of the LLU is for
(Q1‘09) ISPs to have a „level playing field‟ within the fixed
 Removal of the mobility restriction for National broadband market., currently dominated by the
incumbent
Fixed Wireless Services licensees (Nov 2010)
 Introduction of number portability for fixed and With telcos being able to differentiate offerings on
service and quality, this has far reaching benefits for
mobile services (Q3 ‘09) the end-consumer.

171
….however, in addition to such initiatives, investment in a solid
backbone of end to end terrestrial fiber optic infrastructure is further
warranted…
Enablers
TRA Initiatives • Enablement of potential market
Enabling operator access to opportunities and underpenetrated
international gateway (Falcon, Flag) market segments :
and connectivity infrastructure
Wholesale  Fixed Broadband (expected
Carrier Pre Other penetration of 12% in 2009)
LLU regulation
Selection Initiatives  Growth in VOIP
regime
 Enablement of multimedia rich
content and growth of mobile VAS
Backbone of fiber optic infrastructure (Current gap) segment
• In the current scenario, except for Zain and Mena Telecom which have a presence in WIMAX, other licensed ISPs act as ‗resellers‘ of the
incumbent‘s fixed broadband services, with no ability to differentiate offerings, implied from complete dependency on the incumbent's
infrastructure
• For the success of the LLU, there is a need to make current internet wholesale products offered by Batelco more ‗fit for purpose‘
particularly in relation to speeds and technical parameters
• Fundamentally, although the LLU will allow current ISPs to integrate their infrastructure with the incumbent‘s network; however the
linkage can only be established on the basis of a solid backbone of fiber optic network (backhaul / terrestrial infrastructure)
• The alternate option is for the operators to invest in Microwave Technology, which defeats the whole purpose of LLU, as instead of
creating a level playing field for the other operators; these players are forced to recover back costs of investment by pricing their offerings
higher – implying that they eventually lose market share to the incumbent because of their inability to price competitively
• Although investment in backhaul is a capital intensive proposition, however this investment ultimately has far reaching benefits as a
robust end to end backbone of fiber optic network encompassing the geographic expanse of the island, would allow licensed ISPs to
provide competitive offerings and quality service to end consumers across Bahrain
 This ultimately implies exponential growth in the telecom market across both the voice and data segments (based on fixed broadband)

172
Investment in terrestrial fiber optic infrastructure could be a possible
consideration for the Kingdom and TRA and is further exemplified by
regional case studies such as UAE and Egypt…
Investment in terrestrial backhaul fiber infrastructure could be potentially one of the considerations of the Kingdom and
the TRA to enhance the level of domestic infrastructure, ensure fairness of competition, enable ISPs to offer cost
effective packages to consumers (especially low income households), increase the level of broadband penetration and
enhance the level of growth in the Kingdom‟s Fixed infrastructure supported voice and data segments. Investment in
fiber is further exemplied by regional case studies such as UAE and Egypt
• In the UAE, the completion of the nation-wide fiber optic network roll out has been completed in June, 2009
• The optical fiber network has enabled Etisalat to use convergence of technology to provide integrated solutions to its customers
• The company provides bundled solutions to its fixed line customers, by providing television, internet and telephone service,
through the same cable (triple play)
• This has also enabled higher access to faster 3G broadband services through their mobile devices
• Etisalat is further deploying Fiber to the Home (FTTH) technology to increase the efficiency of its services and has already
completed 60 percent deployment in the UAE
• It aims to make Abu Dhabi the first capital city in the world with complete FTTH connectivity
• Country-wide deployment of FTTH is expected to be complete by 2011
• du, the new entrant in the UAE telecom sector, has to use third party backbone infrastructure to deliver its services
 Previously, the company depended on Etisalat‘s infrastructure but recently, it has signed agreements with other privately
owned optical fiber network (popularly known as ―dark fiber networks‖) owners like Abu Dhabi Water and Electricity
Authority (ADWEA) and Dubai Electricity and Water Authority (DEWA) to use their network to deliver services
• Supported by forward-looking government programs, Egypt is well connected by several international submarine fiber optic
cables in combination with a national fiber backbone infrastructure, and the international bandwidth market has been liberalized
 The entire sector is highly competitive with more than 200 Internet and data service providers, which has led to low prices
for ADSL services and broadband packages with up to 24Mb/s delivered to residential households

173
While there is virtually no manufacturing of telecom equipments and
accessories in Bahrain, distribution of Telecom equipment is a well
represented market with Tier 1, Tier2 and Tier 3 distributors …
• There is virtually no local manufacturing of Telecommunication equipment in Bahrain.

• The operating landscape for Telecom equipment and infrastructure support comprises of number of Tier1
(global companies), Tier 2 (regional enterprises / partners) and Tier 3 distributors (Telecom resellers – SMEs)
• Ericsson is a provider of telecommunications equipment and related services to mobile and fixed network
operating in Bahrain
• Almoayed Telecom is one of the leading communication solutions providers in the Kingdom of Bahrain. The
company is an exclusive distributor for Nortel, Agilent Technologies, DMC-Stratex, WaveWireless, PAV Data and
many more range of products
• ICorp, has forged a partnership agreement for distribution of LG Nortel PABX in Bahrain to become the major
distributor for LG- Nortel, which is a leading voice products manufacturer for Small and Medium sized Customers
• Bin Hendi Informatics is a leading player in Telecom Hardware and an exclusive distributor of Samsung Mobiles
and PABX. In addition, the firm offers value-added services, including IT / Communication Infrastructure design,
Special Projects System Integration and Maintenance Contracts
• Kanoo IT has forged partnerships with Cisco, Nortel, Aruba Networks and 3M Telecommunications for distribution
of networking equipments.
• At Tier 3 level, there is a strong play of SMEs in licensed distribution of telecom equipment, parts, accessories
as well as mobile, fixed telephony and data communication instruments.

174
Within the telecom infrastructure market, global giants namely
Alcatel Lucent, Huawei, Ericsson, Cisco and Motorola have a
strong presence…
Global operators in the telecom infrastructure installation & support arena have been active in Bahrain with a number of
contract deals across the wireless and wire line segments in the recent past
Mobile
Date Details
March 2009 XIUS-bcgi, which provides revenue-generating solutions to mobile operators and MVNOs worldwide, along with the
Bahrain-based International Agencies Company Ltd, announce that Zain Bahrain has deployed XIUS-bcgi's
InstaRoam product to provide roaming service for start-up mobile operators and to enhance its roaming services.
Huawei Technologies enters into a strategic partnership with Batelco. Under the terms of the agreement, Batelco will
May 2007 provide Huawei with relevant information concerning future requirements and strategies. In exchange, Huawei will
provide Batelco with updates on its product development and future roadmap of services.
Nov. 2006 Batelco selects Ericsson to upgrade its mobile network with HSDPA technology. Under the agreement, Ericsson will
deliver and deploy a nationwide 3G/HSDPA network supporting Batelco in its Broadband Bahrain initiative through
the offering of wireless broadband services, including multimedia. The contract also includes network and
technology consulting services to help Batelco optimize the network performance.
Feb 2006 Batelco contracts Ericsson to upgrade its GSM mobile network by deploying a softswitch and expanding network
coverage and capacity. According to the deal, Ericsson is contracted to install a content delivery solution for
multimedia streaming and a charging system to enable new value-added services.
March 2005 MTC-Vodafone Bahrain (Zain) selects Smartner Information Systems to deploy the Smartner Duality Always-on Mail
solution. The Push email service allows MTC-Vodafone‘s customers to send and receive their emails from their
handsets.

175
…And are likely to benefit in terms of earmarked expenditures
by regional telcos on upgradation of mobile network
infrastructure…
Fixed Line
Date Details
May 2009 iCorp, a Technology Distribution Company in the Middle East, announces partnership agreement for Distribution of LG
Nortel PABX in Bahrain and Middle East. By signing with LG Nortel, iCorp becomes the biggest distributor in Bahrain
and Middle East for LG-Nortel products, a leading voice products manufacturer for small and medium sized customers.
Batelco and Huawei sign a deal that will see Batelco provide a complete office infrastructure set-up solution for
March 2009 Huawei's new Bahrain-based office, located in Manama. Huawei's new office has been set up to provide a range of
services for Huawei's clients based in the Kingdom and the region. As per the agreement, Batelco provided a total
solution for Huawei, from infrastructure to connectivity including Inet dedicated and structured cabling, to provide voice,
data and internet services.
Sep. 2008 Cisco announces that it will build an internet data centre in Bahrain as part of a broader agreement to provide
equipment and network services in the island nation in the Persian Gulf. The facility will serve as ‗regional hub‘ for
Cisco‘s operations in the Gulf area multimedia.
Sep. 2007 Sitronics, a Russian provider of telecommunications, IT and microelectronic solutions, with a growing presence in
other emerging markets, announce that a part of its Intracom Telecom subsidiary, Intracom Middle East, is deploying a
WiMAX network for Zain Bahrain. The broadband solution will support access to wireless high-speed internet and
voice services. The project deploys technologies provided by Cisco Systems for the ISP network and Redline
Communications for WiMAX access.
July 2007 Mena Telecom signs a contract with Motorola to plan, deploy and manage a nationwide 802.16e-based mobile
WiMAX and IP Multimedia Subsystem (IMS) network in the Kingdom of Bahrain. The end-to-end network, operating in
the 3.5GHz frequency band, will comprise WiMAX infrastructure, IMS core, Customer Premises Equipment (CPE),
voice and data applications, and operational and business support systems. Under the terms of the contract, Motorola
will also take responsibility for the customer relationship management (CRM) systems, as well as the technical
operations of the project and management of the entire WiMAX/IMS network.

176
The Mobile Network Infrastructure is emerging as a high growth
segment in the region and will spur downstream growth opportunities
for businesses within the Network & Infrastructure Maintenance &
Support domain ….
• Primary driver for growth of ICT (within the MENA region) is revenue from sales of telecoms mobile network
infrastructure expected to grow well through to 2010
• A combined compound annual growth rate of 12% for 2005 to 2010 is predicted, bringing the annual total to BD 3.2
billion
• The Mobile Network infrastructure is one of the key areas driving growth within Networking Infrastructure &
Solutions domain
• The projected revenues for the mobile infrastructure market in the region is a reflection for growth potential
(expected growth rate) in Bahrain
• Within technology standards WCDMA is projected to reflect the highest growth rate (projected CAGR of 22.6%
between 2005 and 2010)
• PDC technologies do not apply to the region

growth in the Telecom sector …
Lack of workplace ready
educational background / qualifications
candidates – impact on smaller
• This causes a problem for smaller organisations when trying to attract qualified
players / new entrants
candidates to the organization ( in terms of renumeration), limiting new entrants
• As educational institutions are not in sync with industry requirements, fresh recruits do
Low alignment between not possess requisite skill sets
telecom industry & educational • Telecom companies attempt to overcome this by providing in house training or training
institutions through corporate training institutes.
• Majority of people working in the telecom sector have a bachelor‘s degree or diploma
Lack of specialisation / focus • The lack of specialization or focus on any niche area in telecommunication (specialized
content & application developers) hinders the ―knowledge‖ development of this sector
Lack of educational institutions • There is increasing convergence of content / data development (tradionally falling within
which provide integrated ICT & the ICT sector) and the telecom sector
telecom courses • Lack of training institutions providing such courses limit market development
• Due to high attrition rates amongst Bahrainis in the industry, these workers do not gain
High attrition rates hindering solid grounded technical skills in client solutioning and technical sales,, thus leading to
the development of complex career stagnation and operators looking to trained / experienced expats to fill the top
skill sets positions
• Employees are also reluctant to invest in staff training due to high turnover of employees

Amongst key issues, retention as well as focused training in
Technical and Communication Skills is the key to augmenting
levels of Bahraini employment in the sector …
Current employment trends Rationale behind low hiring trend
• Minor decline in Bahraini employment in telecom sector (as

Employer skill requirements for telecom sector
a % of total employment in Bahrain) from 2002 – 2007
• With regard to decline in hiring staff, 66.7% of responses *
indicated a shortage of good candidates in Bahrain
• Bahrainis are mainly in Sales, Engineering, Technician roles,
while the managerial staff largely comprise expatriates
• Employers in the telecom sector cited a need for strong
communication & technical skills*
• Need for telecom business analysts, sales staff & IT literate
staff is growing substantially
*Source: CIO, Allen survey, D&B Research & Analysis 179

Telecom: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Telecom sector
and is used to reflect the ‗absorptive capacity‘ of the Telecom sector
Bahraini Telecom sector value chain are termed as ‗market gaps‘
180
The Bahrain Telecom Sector: A Snapshot of Prominent
Bottlenecks, Gaps

No apparent gap
Market gaps in terms of segment being
virtually absent in Bahrain, however

Mobile Network
High Operators 1
IP based (alternate)
Fixed line services 4
 Specialized Content / Application

Medium
Developers, VASPs (for in-demand
3G services 2
Mobile VAS - information,
entertainment, GOD, VOD)
Fixed
Fixed line PSTN 7 Broadband 5
Infrastructure Infrastructure / Regulatory Bottlenecks
support & Mobile, Mobile VASPs6 (Disablers)
Low maintenance Wireless
(Sis)3 Broadband 5
Dial up Broadband 7
a. Gap in terms of terrestrial end-to end
Market gaps in backhaul infrastructure (fiber optic
Low Medium High terms of under network) supporting voice and data
Market Potential (assessed in terms of expected growth rate) penetration
1. While there is no apparent gap in the mobile services segment (MNOs) in the near term, there could be potential opportunities for MVNOs
2. Although there is a gap in terms of 3G penetration; however capitalization of growth in this segment is limited to Batelco, Zain, STC
3. The segment includes network maintenance & support services as well as System Integrators and is associated with strong SME opportunity potential
4. IP based telephony (alternative telecom providers) is expected to offer steady growth rates in the near term, with opportunities for both existing licensed telcos as well
as potential entry of new telcos offering fixed telephony services; however the segment is considered partially bottlenecked due to operator‟s complete dependency on
the incumbent‟s fixed line domestic infrastructure
5. With a current penetration of 12%, Broadband is earmarked as a high growth segment in Bahrain; Fixed Broadband is considered partially bottlenecked due to ISPs
(except Zain, Mena Telecom which offer WIMAX as well as ADSL) complete dependency on the incumbent for access to fixed line domestic connectivity infrastructure.
Mobile and Wireless Broadband are expected to continue relatively higher growth than Fixed Broadband (as has been witnessed in recent trends)
6. High growth segment, on the back of increasing sophistication of mobile users for GOD, VOD and transactional services; also associated with strong SME potential
7. Declinng market segments
181
Relative Sub-Sector Prioritization: Telecom
the Telecom sector as a ‗market gap‘
(Priority Index)
182
1. Notes:
• Sub-sectors highlighted (written) in red represent bottlenecked industries; market potential (incorporated within Relative Sector Attractiveness for these
sub-sectors have been taken into consideration in consideration of addressal / removal of bottleneck which could be a regulatory, infrastructure or skill
formation issue
• Sub-sectors highlighted (written) in green represent markets / industries virtually absent in the Bahraini sector industry map / value chain

scores

and C
185
Mobile,
3 G services Wireless
Broadband
Fixed Fixed Network & Mobile VASPs

Telephony Broadband Infrastructure
Services Support
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Telecom
Increasing convergence
between mobile and data
content
Growing base of mobile users with
Strong market uptake potential for 3G,
sophisticated needs / demands for
…………… internet and broadband, given current
entertainment, information (infotainment)
levels of penetration
and transactional VAS
Increasing trend in multiple sim Cannibalization of traditional

card ownership (delineation Telecom Growth Drivers fixed line by VOIP, based on
between personal and work strong adoption by corporate
phones) sector
Regulatory measures by the

Natural population growth (6% TRA – LLU, Carrier Pre-
y-o-y) selection etc.
markets

187
Information Technology
188
Hardware, Software and Services are the backbone of the IT
Industry Map

189
While globally, Hardware, Facilities Outsourcing and Packaged
products are highly consolidated; Custom programming and IT
Services remain predominantly fragmented…
The theoretical construct of the IT sector comprises 3 broad segments – Hardware, Software and
Services
• The global computer hardware industry is highly concentrated with the top 50 companies generating about 90 percent
of revenue, with major companies including Dell, Hewlett-Packard, IBM, and Sun Microsystems
• Globally, PCs, including desktop, laptops, and workstations, account for 40% of industry revenue; Input/output devices
(printers, monitors, keyboards, and mice), 25 % ;mainframes & servers, 20 %; and disk drives, 15%
• The US computer networking equipment industry includes about 1,000 companies with combined annual revenue of
BD 18 billion, with major companies including Brocade Communications, Cisco, Extreme Networks, and Juniper
Networks
• Within IT services, companies mainly provide consulting, systems integration (SI), data processing, and technology
outsourcing services to business customers. - roughly half of industry revenue comes from consulting and SI
• The facilities outsourcing segment of the industry is highly concentrated: the 50 largest companies hold more than 80%
of the market, while the rest of the IT Services industry is fairly fragmented
• The US industry includes about 95,000 companies that generate about BD 64 billion in annual revenue - large
companies include Accenture, Computer Sciences Corporation and the technology consulting arms of IBM and HP
• IT software segment largely comprises of operating software, application software and network software players; the
sub-segments within these segments stem from various industrial / functional applications
• The global Computer software development comprises established players like Microsoft, Oracle and Electronic Arts.
• The packaged products segment is concentrated: the 50 largest companies hold nearly 70% of the market, while the
custom programming segment is highly fragmented - Large companies often are involved in both publishing and
programming services, while smaller programming firms typically sell their products to publishers.

190
Although subsidiary to its regional counterparts, UAE and Saudi;
the Bahraini IT sector is witnessing a boost on account of
increased government spending …
• Only one tenth the size of the Saudi IT market, Bahrain‘s IT market remains
subsidiary to both Saudi and UAE Market Size Breakdown of IT, in BD million
• The total value of the IT sector is estimated to be BD 127 million (2009E) (* this
includes sales of hardware, IT software and Services).
• The sector is forecasted to grow at a CAGR of 6.3% between 2009 and 2013, to
reach a size of BD 162 million, with per capita IT spending expected to increase
from BD 36 in 2008 to BD 48 in 2013
 Within the total sector value (sales), Hardware sales accounts for the majority
(70%) followed by Services (26%) and Software (4%)
 A similar trend is expected throughout the forecast period with averages of
68%, 5% and 27% contributions from Hardware, Software and Services
respectively, to the aggregate value of the IT Market
• The Bahrain government is the largest driver of IT spending, further fueled by a
spate of e-government innovations, led by the CIO
 Some of these initiatives include the E-government project, Ministry of Works
project to implement a 5 year SISP, PMIS and EAMS
 Other projects being undertaken include Enterprise Architecture Project, the
National Identity card Project, Enterprise Service Bus Project and the Single
Sign out Project The growth of the IT
• GDP contribution of the sector (integrated ICT comprising IT and Telecom sector in Bahrain is
services) is estimated to be around 3.1% of total Bahrain GDP and has projected largely being driven by a
a CAGR of 13% between 2002 and 2008; while employment contribution spate of government
estimated around 0.5% of total labor market, has projected a growth of 24% initiatives
between the same period
• Other driver sectors of the industry include demand growth from retail, telecom
and financial services
**Hardware reflects the value of computer sales, & peripherals

191
In terms of Network Readiness, Bahrain‘s relatively superior
performance on mobile penetration is mitigated by relatively poor
performance on IP regime and quality of IT education …
• The Network Readiness Index (NRI) presents the

resultant ranking on a number of sub-components
incorporating usage, environmental laws relating to ICT
and ICT Readiness
• On the NRI, Bahrain performs 3rd after the UAE and
Qatar
 Within the region (relatively), Bahrain performs well
in terms of Mobile Subscriptions and the E-
participation Index
• In comparison to the UAE, Bahrain loses out on certain
critical parameters like ―firm-level technical absorption‖,
which measures the degree to which private enterprises
engage in technology transfer and licensing
arrangements with other countries
 This is partially explained by the fact that a solid IP
regime considered vital to the importation of ICT and
the growth of multinational cooperation in ICT, is
virtually missing in Bahrain
• The country performs moderately on the Readiness
Components
 Sub-optimal (relative) performance in terms of
Quality IT education mitigates its superior
performance on human development initiatives
• Notably, the Qatar ICT industry is predicted to grow by
145% between 2007 and 2010, primarily due to the
provisioning of infrastructure and active government
policy
Sources: Industry Report, D&B Research & Analysis 192

While Bahrain recognizes the importance of ICT and is successfully
promoting ICT adoption, the country ranks third after UAE & Qatar
in terms of overall Government Readiness…
The Government Readiness

Index is a composite score
reflecting importance of ICT
for government future vision,
E-Government Readiness
Index, Government success in
ICT promotion and ICT use
and government efficiency
• UAE secures first position based on the country‘s strategic plan laying specific guidelines for strengthening of e-government
programs coupled with the fact that the country‘s non-oil sector‘s IT spend now accounts for 40% of regional IT spend
• Although Kuwait still has a high dependency on oil, the government is diverting a significant portion of the oil income to invest
in IT initiatives in an attempt to diversify ‗away‘ from oil
• In Saudi Arabia too, substantial budgets have been allocated for e-government infrastructure development; this is coupled
with the fact that a youthful Saudi population is likely to support higher PC penetration in the country
• In Qatar the government has recently outlined new ICT investment plans and the foundation of a new technology park
• In Bahrain (albeit its small size), IT metrics remain buoyant with Banking, Telecoms and Real Estate sectors accounting for a
significant and growing portion of IT spend

In terms of consolidated IT spend, Saudi Arabia emerges as the
leader in the region attributed to the sheer size of the market…
IT Hardware Spending IT Software Spending

Benchmark Parameter IT Services Spending (2008)
(2008) (2008)
BD mn BD mn BD mn
UAE 653.8 188.0 303.4
SAUDI ARABIA 650.8 242.0 365.2
OMAN 61.8 20.0 27.0
QATAR 64.0 6.3 67.3
BAHRAIN 82.3 5.3 65.7
• In terms of IT Spend across Hardware, Software and Services, Saudi emerges as the leader in the region with total IT
spend reaching BD 1.3 million in 2008, attributed to the sheer size of the market**
• Despite an economic slowdown, Saudi Arabia appears better placed than some other markets in the region to withstand the
current global economic headwinds
• Historically, Hardware has been the largest segment of the Saudi IT Industry, contributing more than 50% of IT spending
over the past few years
• Oil and gas is the leading sector in terms of IT spend followed by Government and Telecoms
**In terms of spend as a % of GDP, Saudi‘s IT spend is estimated to be around 0.9%, which is comparable to Bahrain

The development of the ICT sector across the region in the past
decade has been around a clustered approach, with Bahrain
only recently responding to this trend ..
The development of the ICT industry across the region has been around a clustered approach
• Qatar Science & Technology Park, has been established as a base for technology-based companies from around the world and an
incubator for start-ups
 The park, which provides premises, services as well as support programs, helps organizations develop and commercialize
their technologies
• Oman has developed the Knowledge Oasis Oman (KOM), which brings together a diversity of enterprises from niche industries as
varied as m-commerce and e-security
 KOM is home to over 60 companies including HP, Oracle, Microsoft, NCR, Motorola and Huawei as well as dynamic start-ups
• In Saudi, The Public Pension Agency (PPA) invested SR 2,000 million ($530 million) in a new IT park in Riyadh, with a view to starting
the first phase early last year
 The IT park is aimed at attracting multinational technology firms to the kingdom including Microsoft, Intel, Oracle, Samsung
and LG
• In the UAE, the Dubai Internet City serves as a strategic base for companies targeting regional emerging markets
 Set up as an economic freezone, the DIC has attracted Microsoft, IBM, Oracle Corporation, Sun Microsystems, Cisco, HP,
Nokia and Siemens, Nera Telecom, as well as UAE based companies such as i-mate, Acette, to move their regional base to
the DIC
• Bahrain is now undertaking a series of large-scale projects to try to establish itself as a regional hub for science and technology
innovation and fill this prevalent gap.
o In April 2009, it announced a project called @bahrain, which will consist of a technology research institute, a technology park
and a 'techtainment' centre offering interactive entertainment – this contains more than one million square metres of
business, entertainment and education facilities, and will promote investment in key technologies such as transport
o Bahrain has also announced the launch of a 'higher education city', a regional hub for ICT research and training, and the first
Internet-based 'e-University' for Asia and the Middle East.
Sources: Reports, D&B Research & Analysis

195
The IT Hardware Segment in Bahrain, accounting for the
largest component of IT spend is likely to witness an average
growth of 5% in the near term….
• Overall, hardware accounts for around 70% of IT spending, with annual PC

sales estimated around 70,000 units Impetus provided by E-government
• The Hardware segment (excluding servers) is estimated to have reached a initiatives such as the Enterprise
size of BD 89 million in 2009, up from BD million 82 in 2008, at an estimated
Architecture Project coupled with
growth of around 7% y-o-y
increased IT spend by telecom, banking
• The market is expected to reach a value of BD 109 million by 2013, projecting
a CAGR of 5% between 2009 and 2013 and retail are likely to keep growth on a
• Primary drivers for spend include telecoms and banking vertical spending, e- steady path
government initiatives, and rapid consumer channel expansion
• Bahrain‘s growing population has helped to drive growth in the consumer
segment and attracted new retailers into the market
• Economic reform and trade liberalization will fuel spending by both public
sector organizations and enterprises to bring their IT levels up to international
standards
• Notebooks will drive the market over the next few years, on the back of
increased demand for mobility, lower prices and greater vendor and channel Valued at BD 89.3 billion.,
sales flexibility the IT Hardware sector in
 As elsewhere is the Gulf, notebooks are likely to account for 60% of Bahrain accounts for 70%
total PC unit sales of total IT spend
• In terms of local manufacturing, Bahrain does not have any significant
presence – there are pockets of SMEs engaging in customized PC assembly;
however with the global downward trend in hardware prices, this is a dwindling
segment
** Any reference to hardware market size refers to the sales / distribution of hardware equipment. There is no hardware manufacturing in
Bahrain; the country does not have the competitiveness to get into Contract manufacturing on the same lines as semi-conductor and
hardware hubs such as Taiwan and China . Additionally, Bahrain has no derived presence in R&D (New Technology)

While traditionally, Bahrain‘s IT market has been served by
regional distributors, with retailers importing from Dubai; most
OEM vendors are now resorting to local partnerships …
• The Bahrain PC market remains dominated by international players

including Acer, HP and Dell, with the strongest challenge coming Traditionally most vendors have
from other multinationals such as Toshiba served the market in partnership with
regional distributors, while local
• Dell has taken a commanding position in the business-oriented
retailers have imported from Dubai,
market and claims about a 30% share including 35% of desktops
however due to the retail channel
and above 25% of laptops
expansion many vendors are now
• Acer is also a strong performer in Bahrain, with a series of recent working more closely with local
contract wins to supply government ministries and recent strong distributors and boosting service
growth across the region infrastructure in the kingdom
• This trend has put an imperative on vendors to recruit more locally based distributors, who are valued for their superior
local knowledge
• Power retailers and hypermarkets are estimated to have as much as 50% of the retail market now, up from 20-30% a few
years ago
 Hypermarket Geant is among those reported to have taken the step of only sourcing IT products locally rather than
going through Dubai.
• Several vendors already work with local distributors
 Fujitsu Siemens has a partnership with Bin Hendi Informatics
 Kanoo IT distributes Microsoft, IBM and HP products
 Dell has appointed Asbis which distributes a wide range of Dell‘s commercial components including the new Vostro
series targeted at SMEs

The Hardware segment including PCs, peripherals, accessories
and networking equipment as well repair & maintenance services at
peripheral support level, is well represented by local players …
There are multiple local IT hardware firms in Bahrain engaged in distribution and retail of hardware, PCs, PC
peripherals, Security Systems and Networking Equipment
• The landscape of distribution of computers, accessories & peripherals as well as allied services such as computer repair &
maintenance comprises at least
 60 to 65* key local firms distributing Computer systems in Bahrain
 29 to 32* key local firms involved in Computer accessories & supplies
 17 to 20*key local firms involved in Computer repairs & maintenance
** There is significant overlap in terms of players operating across the above segments
• Larger (integrated) players including AlMoayyed, Bin Hindi Informatics, Kanoo IT, Fakhroo IT, Zayani and Mazin also provide
basic System Integration, Installation, Solutions and Support Services
• Other key distributors / System Integrators include Computer World WLL, Business Land WLL, iMachines WLL, Hilal
Computers, Mantech Computers, Advanti Advanced Technologies International, Bahrain Advanced Technology Company,
Equinox Computers and Venus Computers WLL etc.
With most OEM brands well represented / distributed by local IT firms, there is no apparent gap in the Hardware
segment of Bahrain‟s IT landscape
*Does not reflect the actual number of registered businesses in Bahrain

Sources: Industry Report, D&B Research & Analysis
198
Software is likely to witness an average growth of 10% y-o-y within the
near term, on the back of spend on Enterprise Applications & Business
Suite Softwares by Banking, Telecom and Government sectors …
• The domestic software market is expected to grow steadily as Bahraini companies look to meet growing regional competition
• The market is estimated to have attained a value of BD 5.6 million in 2009, recording a growth of around 6% over 2008 -
Enterprise applications account for around 30% of that spending, with the market for ERP applications currently far from
saturated
• The market is forecasted to project a CAGR of around 10% between 2009 and 2013 to reach an estimated size of BD 8.3
million (2013)
• Further with increasing adoption of multimedia as a tool to reach out to consumers, coupled with the prevalent low website
penetration rate in the country (No. of websites / No. of Businesses); Portals are also pegged as a high growth opportunity is
the Software Value chain
• As FDI increases in the region, and as more local companies expand regional operations, this provides another source of
demand for solutions
• Government organizations also provide a ‗push factor‘ as they move from paper-based to paperless systems
 Ministry of Works has planned asset management and document management application rollouts
 The CIO has announced plans to base its entire infrastructure on Linux and plans to source supplies from BBM
(Bahrain Business Machines)
 The EGA has a number of initiatives planned out - Enterprise Architecture Project , National Identity card Project,
Enterprise Service Bus Project, Single Sign out Project
• The Bahrain Defense forces are amongst the major customers for document management type software
• As Bahrain regains its status as the region‘s financial hub from Dubai, financials services spend is likely increase as banks
implement risk management solutions and invest to support new services and regulatory compliance
The Bahraini Software Market provides strong growth opportunities for Enterprise Applications (ERP, SAP modules,
CRM)

Software products and solutions from IT giants namely Microsoft,
Oracle, UNIX and SAP have widespread presence across all
segments of the software solution value chain in Bahrain …
• The software segment has seen some recent competitive maneuvering as • The Bahraini enterprise
vendors take advantage of growing opportunities software development
 The market is dominated by Microsoft, which in 2002 moved its MEA office segment is dominated by
to Bahrain; since then the company has enjoyed increasing local success Microsoft; with strong play
with its Microsoft Dynamics enterprise solutions from Oracle and SAP
• UNIX applications have a
• Oracle benefits from a strong pre-installed base in the region, with more than strong presence in high end
750 enterprises using Oracle E-business suite in the Middle East enterprise critical applications
 Recent local wins for Oracle included a deal reputedly worth BD 200.5 • Presence of these players is
million with the Bahrain Maritime and Mercantile Institute (BMMI), a logistics seen across the IT software
and supply chain outfit value chain:
 Operating System:
• At the end of 2007, SAP AG announced that it would acquire all of partner SAP Microsoft Exchange,
Arabia‘s software licenses and customer maintenance products UNIX, LINUX
 SAP has many large enterprises in the region, but the new direct presence  Enterprise applications:
should bring SAP closer to its customers and partners. Microsoft, Oracle, SAP
 Portal: Microsoft
• In Banking & Financial services vertical, specialist business intelligence
SharePoint, Oracle, UNIX
providers like Hyperion (acquired by Oracle) have found opportunities
(runs on IBM tools)
• Similarly, Arima Insurance Software develops software solutions for the  CRM: Microsoft Great
insurance industry; covering general and non-life insurance, medical insurance, Plane, Oracle, SAP
life insurance and reinsurance

Additionally, there are a number of local and international software
firms in Bahrain that offer a variety of software, solutions and
system integration services …
There are over 40* key local firms** offering IT software & solutions in Bahrain encapsulating basic application
development services, reselling, distribution, publishing and system integration services. The portfolio of Major
software applications & solutions offered by these players include
 Structural analysis & graphic software  Wireless Networking

 AutoCAD  Network Security
 Accounting software, wireless software,  Human Resource Management & Payroll
 Enterprise content management software  IP Telephony
 Business infrastructure software  Infrastructure
 Banking software (credit automation  ERP, CRM
corporate banking, treasury, payment  Time / Labor Management
transactions, risk management,  Fleet management
governance, compliance)  Production / Contracting Management
 Real estate software  Restaurant Management
 Shipping management software  Digital identification
 Education & Training software  POS
 Graphics, Multimedia & Publishing  Process Control
 Security & Virus protection
 Enterprise Management
 Hospital Management
The Bahraini market is well represented by a number of software firms who distribute, resell and publish software
solutions encompassing a wide portfolio of applications
** There is a significant degree of overlap in terms of integrated firms that offer triple play offerings – hardware, software, system integration and services 201
Sources: Industry Report, D&B Research & Analysis
The Business Intelligence Portal segment looks completely untapped in
Bahrain and could potential provide opportunities for growth especially
within the vibrant Financial Services and sunrise Insurance markets…
Bahrain does not have any local players operating in the online business intelligence portal domain
• According to Gartner, the Business Intelligence market globally grew by a whopping 22% in 2009 (over 2008)
• The worldwide appetite for BI platforms, analytic applications and performance management software in 2008 increased 21.7% on
the previous year, from $7.2 billion (BD 2.7 billion) to $8.8 billion (BD 3.3 billion)
• Research firms including Basex and Forrester Research foresee portals as the next critical step in enterprise IT strategy
• Research shows that Data Mining, Query / Reporting, Analytics, Data Warehouse, Data Management, Executive Dashboards and
CRM are the key functionalities driving propensity for global investment in BI solutions by corporates
• Amongst key benefits – improvement in revenue & profitability, improvement in competitive advantage, improving customer
acquisition and cost reduction are seen as the top 4 (Gantry Group LLC)
• Financial Services, High Tech, Insurance, Healthcare and Manufacturing are globally viewed as the top 5 sectors driving spend in
BI tools
• Despite a well developed financial services sector, Bahrain currently does not have any local capabilities in online knowledge portal
and business intelligence services
• UAE‘s Zawya is a regional success story – Zawya is an online business intelligence provider with database, query handling
capabilities that tracks and provides company, business and industry information, encompassing Middle East and North Africa
business and financial news, research reports, IPOs, stocks, company directory, projects, funds, private equity, and Sukuks
• The BI portal market spells opportunities for pushing existing enterprise solutions such as Microsoft SharePoint as well as
customized tools development and implementation by new age IT SMEs especially within the corporate portal segment
• Customized BI tools for the vibrant Bahraini Banking & Financial sector as well as the sunrise Insurance sector offer potential

Overall, IT Services represents an average a y-o-y growth of
9% yoy and encompasses a number of segments that present
untapped potential to achieve this growth …
• Bahrain‘s IT services is estimated to be around BD 33 million (2009E), having projected a y-o-y growth of 10% over 2008
 Of that total, 40% is expected to be support and maintenance, with System Integration being the second largest category,
and managed services/outsourcing at about 20%
• The market is forecasted to grow at a CAGR of 9% between 2009 to 2013 to reach a size of BD 46 million in 2013
• Most vendors in the region see an opportunity to expand the services portion of their revenues, as enterprises demand
more from vendors and look to get more out of their IT investments
• With around two-thirds of SMEs in the region lacking an IT manager, vendors are realigning focus towards competing through
more direct investment in support and service infrastructures
• Similar factors are driving an increase in demand for managed services.
 Many businesses are reluctant to invest in internal IT capabilities, or are deterred from doing so by a lack of available skills
• This is driving investment in data centers by companies like Cisco, which has set up a regional centre in the country
• Previously, few global IT services vendors had a direct presence in Bahrain, but instead they served the market from regional
offices and through partners
 However, this is changing as Bahrain becomes a more significant market - EDS has its regional HQ in Bahrain, where it
has a major client in Gulf Air
• HP has also strengthened its service capabilities in Bahrain through the purchase of NCS, a local Bahraini company
• In 2008 HP launched a new consulting services unit in the region called Solutions Consulting Services (SCS) which focuses on
helping communications adapt to convergence issues
• The IT services market is dominated by a few big players; however, local companies still have more than 50% of the market, with
the major players including Zayani Computer Systems and BBM
Within the Bahraini IT landscape, the Services segment presents the maximum potential for growth and untapped
opportunity

Currently, a nascent segment, Software testing & Validation, could
present an opportunity for Bahrain to develop as a regional hub,
provided it is able to build competitiveness …
Currently, a nascent and undeveloped market segment in Bahrain, software testing and validation, could
present a significant opportunity
• Bahrain is now undertaking a series of large-scale • Bahrain‟s initiatives of

@Bahrain; ICT research and
projects to try to establish itself as a regional hub training
for science and technology innovation
• Potential for Bahrain to develop
o In April 2009, it announced a project called itself in the R&D domain
@bahrain, which will consist of a
technology research institute, a technology
• Growth and development of
park and a 'techtainment' centre offering downstream opportunities in
interactive entertainment – this contains Software Testing & Validation
more than one million square metres of
business, entertainment and education • Development of Bahrain as a
facilities, and will promote investment in key regional hub for ICT software
technologies such as transport R&D
o Bahrain has also announced the launch of
a 'higher education city', a regional hub for Bahrain could adopt a focused approach to
ICT research and training, and the first develop a niche e.g. there is no presence in the
Internet-based 'e-University' for Asia and region for testing and validation of graphics,
the Middle East. multimedia and animation software**
The recent initiatives such as ICT research & training as well @Bahrain have far reaching potential in
developing Bahrain as a regional hub for software testing and validation
** Muharaqqi Studios (3G animation and graphics designer) is already involved in Beta testing for software developers on contractual basis
204
…Especially in a scenario where shortage of service in India due
to increased global demand could translate into a trend favoring
more testing centers across China, Malaysia and MENA ..
• The strongest outlook in the global market for computer software testing services appears to be the IT sector
• The market for testing services is expected to become a BD 21 billion industry by 2013, according to software
consulting firm Ovum (Market testing services take place in order to discover any errors or bugs that may exist on
computer software after production)
• Both the outsourced and in-house testing services markets will grow over the next four years but not at the heady
rates seen over the last four years
• Despite this slowing, testing services will grow at a CAGR of 9.5 % from 2008 to 2013, faster than most other
(information technology) services
• India is becoming a greater rival to the US and European software tester markets due to the fact that the quality of
its services is increasing while the cost of services continue to be more affordable
• However, with shortage of service in India due to high global demand, there could be a trend favoring more testing
centers coming up in China, Malaysia and the MENA region (particularly North Africa which could emerge as a low
cost hub)
• Bahrain‟s ability to capture this trickle down potential depends purely on the Kingdom‟s focus, strategic
intent and ability to build competitiveness in this arena

205
In the IT Education & Training arena, there are a plethora of
training and certification providers …
Select sub-segments encapsulating IT Services and prevalent potential / gaps therein have been examined
as follows
• There are a number of IT training institutes that have mushroomed across Bahrain
IT Education /
Training • There are more than 40* institutes (education / training) in Bahrain providing IT Education and
training, including Gulf University and Bahrain Institute of Technology
• Microsoft alone has 28 listed partners offering Microsoft certified education solutions
Warrants focus on
improvement in quality and • The umbrella of training courses provided by various local / international educational institutes
regulation includes (but not limited to) training / certification in:
 Access and Oracle databases, web design, CorelDraw, Flash, Internet, e-commerce,
mail, networking, operating systems, programming, RDBMS, security, project
management, Photoshop
 ASP manager, B2B strategist, Java developer, mobile commerce specialist, security
specialist, web content manager, e-CRM manager, e-commerce engineer
 Microsoft, Internet Professional, CompTIA, Cisco, Oracle and Linux
 AutoCAD and 3Ds MAX
While there is no real gap in terms of number of players providing IT education and training in Bahrain;
there is definitely scope for development of stringent accreditation criteria, regulation of standards with
regard to delivery of training programs and outcome of curriculum.

206
…with Microsoft playing a key role in the Kingdom
Microsoft has been continually increasing its commitment in the Kingdom towards education, training and
certification
• The Ministry of Labor and Social Affairs joined hands with Microsoft on the Career Connection program , a part of Microsoft's
Unlimited Potential global initiative, and which focuses on helping unemployed Bahraini university graduates to find new job
opportunities by developing their IT skills
 Two hundred unemployed youngsters are being trained through this initiative resulting in increased job opportunities for
them in the Kingdom.
• Microsoft signed a Memorandum of Understanding (MoU) with the Ministry of Education, under Microsoft's Partners in Learning
(PiL) initiative
 Under the MOU, Microsoft is committed to provide improved Information Communication Technology (ICT) education to
Bahraini schools through a number of different programs to develop IT education in K-12 schools, and provide cost
effective software as well as learning resources for educational communities throughout the Kingdom
• Microsoft also has an MoU with the University of Bahrain (UOB) to work closely on key projects that support the 'Connected
Learning Community' and touch Bahraini students, teachers and the general community
 As part of the MOU, Microsoft and the University are working on building a community portal that links students,
teachers and parents to a rich pool of educational and learning resources. Microsoft is also conducting training sessions
for teachers in Bahrain, helping drive the. use of technology in the classroom education process
• In addition, Ministry of Education and Microsoft also have an Memorandum of Understanding (MOU) supporting a collaboration
between Microsoft and the Ministry of Education with particular focus on the training of 1,000 teachers in the use of the latest
technologies

However, what is required is a holistic approach in IT Training
involving collaboration between classroom coaches and industry
mentors is required for focused skill formation …
Define training needs of

Classroom training students
with requisite level Defined Student
of contact hours batch mapped to
and theoretical Coaches
coaching Develop roadmap
Collaboration
mapping between
Coaches and Skills development
Project Mentor
Experiential learning
Practical hand on Defined student /
training through intern batch Bridging of knowledge
live projects : mapped to gaps through training
EGA, Microsoft, Project Mentors
GBM Handholding, coaching,
guidance, mentorship
A holistic approach involving collaboration between classroom

coaches and industry mentors is required for focused skill formation Progress monitoring
within the sector

Niche IT Consulting encompassing Network consulting, IT
Security, CRM and Application Consulting are areas where
there is an apparent market gap …
• IDC expects worldwide IT consulting to increase at a compound annual growth rate (CAGR) of 5.2%
for the 2006-2010 forecast period, with slightly rising growth rates each year
• The need to rationalize IT expenditure, align IT with business objectives, meet regulatory
IT Consulting requirements, choose the right solution and the rise of eCommerce and new technologies such as
SOA and virtualization are driving the IT consulting service market
• Overall, the fastest growing geographies for IT consulting in the next five years will be Latin America
and CEMA (Central Europe, Middle East and Africa).
• Key trends shaping the market place include:
Opportunity in niche  Stabilization in pricing
consulting  Emergence of cost control as a major IT spend driver
 Continued bundling of IT consulting with outsourcing
 Rapidly increasing number and range of players
 Productization of offering
 Pervasive talent crunch
 Stabilization in project size/scope
• Key players in the IT Consulting domain in Bahrain include E&Y, KPMG, BDO Jawad & AlMoayyed
• There is no room for generalized IT consulting players in the market, however, there is potential room
for at least 1 – 2 integrated niche consulting firms offering specialized services especially in the
realms of Network Consulting , IT Security Consulting, CRM and Application Consulting
• This is further substantiated by the fact that that the global firms with a presence in Bahrain‘s IT arena
do not have specialized consulting partners operating in the solutions support and services space
 Oracle only has 1-2 partners
 SAP does not have any local partners for its HR, Finance modules
 Microsoft has limited local partners for its suite of applications – Great Plane, Dynamics,
SharePoint
Bahraini local home grown firms could also play a consulting support role to international players in preliminary assessment,
diagnostics, health checks and Subject matter Expertise and support to global IT enterprises with a presence in Bahrain

High end System Integration encompassing installation and
post implementation support across high-end application suites
such as ERP and CRM represents a significant market gap …
• Represents area of one of the strongest market gaps in Bahrain, with potential room for
firms with end-to-end capabilities in customized application management, installation and
post implementation service (sans Consulting as this is the domain of the larger enterprises
namely Microsoft, SAP)
• While the market has at least 11 to 13* key players with basic IT support and Software
System Integration capabilities; it lacks players specialized in complex application suites such
as ERP, Portal (e.g. Microsoft SharePoint) , CRM (e.g. Microsoft Great Plane)
 Key players in the IT support domain include Bin Hindi Informatics, Kanoo IT, Bahrain
System Integrators Business Machines; Computer World, Algosaibi, Computer Troubleshooters; Data
(high end / complex Management Services, Etisalcom; Hilal Computers; Mars IT; Tektronics IT, NCS and
application suites) Venus Computers etc.
• Even the large IT solution providers namely Microsoft, Oracle and SAP do not have strong
local partners and work primarily on outsourced contracts with IT service firms / SIs based in
Represents one of the India and across the region
strongest market gaps in
Bahrain‘s IT landscape  SAP has no local service partner in Bahrain
 Oracle has only 1 partner
 UNIX (portal runs on IBM): GBM (Bahrain) gets team from Dubai or contracts System
Integration projects to partners in India e.g. Tory Harris
The number of players in Bahrain with capabilities to offer system integration and support services
across high end application suites such as Oracle ERP suite, Microsoft SharePoint and CRM is limited
*Does not reflect the actual number of registered businesses

210
While there is no apparent gap in off the shelf and business
suite applications; niche application development especially in
the arena of Government Services has emergent potential …
• With a plethora of off the shelf applications available for both enterprise as well as SMEs, the scope
for general business application development is limited
• Additionally, given the limited size of the Bahrain market and presence of around 13 to 15 *key players
in the software development domain, potential for new entrants is limited to niche domains including:
 Government services; especially on the back of a series of initiatives being undertaken by the
EGA (Enterprise Service Bus Project; Single Sign out Project; National ID card project) and
Ministry of Works (Asset Management, Document Management application roll outs). These
Application initiatives would require specific domain application skills in the areas of Service Oriented
Development Architecture, Security / Authentication and Integration technology
o E-government had floated a RFP for a purely application development project for
certain customized application development services and could not source any local
company with the requisite capabilities to execute it; the project consequently was
Opportunities for domain
awarded to a Jordan-based software developer
expertise in government
services and non-  Non- transactional businesses, such as animation, multimedia and graphics
transactional businesses o The region lacks customized development firms in the non- transactional domain;
Bahrain could look at developing itself as a potential hub for animation and multimedia
products
 The market reflects evidence for entry of niche application developers in high growth
segments such as Insurance e.g. Arima – the market for niche application development
across industries such as Transport & Logistics and Manufacturing is relatively untapped
There are around 13 to 15* key local application development firms in Bahrain including Almoayed Group W.L.L.;
Algosaibi Information Systems Company; Bahrain TradaNet WLL Business Land; CompuEx Computer Associates;
Middle East Arabian Company for Speciality Projects; Digital Business Solutions WLL; Gemini Software Solutions; 01
Systems WLL; HiTech WLL and TCGME
*Does not reflect the actual number of registered businesses

211
In the domain of IT Outsourcing services, while potential for
Strategic Outsourcing remains limited; the market offers room for
integrated Out-tasking and Managed Operations Capabilities …
Businesses in the Middle East are increasingly depending on outsourcing to remain competitive, in the wake of the current
economic crisis. Many companies have identified outsourcing as a remedy to control increasing costs, a tool for flexible
management of resources, achievement of customer satisfaction and reduction of cycle times. IT outsourcing spend in the GCC
is projected to grow by 21 per cent, to reach a total of BD 189 million in 2009
Area of opportunity for firm Outsourcing Limited scope / potential in

with integrated capabilities Bahrain
Strategic
Out-tasking Managed Operations
Outsourcing
Outsourcing vendor provides the enterprise The Outsourcing vendor takes over the The outsourced vendor takes over the
with key resources such as Database day to day operations of the unit – puts full charge of data, assets, building,
Administrators / System Administrators with in the required resources, systems and systems and processes of the enterprise
in-built contract to replace resources in case processes; however does not control
of dissatisfaction with quality of service the assets of the enterprise / unit
rendered
Resource management, utilization and
optimization is the domain responsibility of
the enterprise
Increased spend is likely to be reflected in managed services, information systems, software applications, and network and
desktop management services.
According to industry leaders, the Bahraini market offers room for at least 1-2 firms with integrated outsourcing capabilities in
Out-tasking and Managed Operations (currently a segment deemed to be virtually absent from the Bahrain IT services value
chain)

Within the IT Enabled Transactional Outsourcing Segment, while
the Contact Center Segment will continue to charter a steady
growth rate throughout the region;…
The IT Enabled Services Industry, primarily constituting the contact market, is forecasted to post a steady 7.4% y-o-
y growth in the GCC and presents another growth opportunity for Bahrain
• The GCC contact center industry is expected to register a 7.4% growth rate from 2008 to 2013, with about 280 new
installations by end 2013 or about 56 new contact center installations per year
• With contact center seats and agents projected to grow at a compounded average rate of 5.6% and 6.1%
respectively, the industry will see additional 4,800 contact center seats and 5,900 agents between 2008 and 2013
• Aggregate operational spending by contact centers will also increase by approximately 8.1% annually to reach
around BD 282 million by end of 2013, up from BD194 million in 2008.
• The moderate growth forecast of the contact center industry within the next five years comes after a period of
outstanding growth from 2003 to 2008, the nascent years of the industry in the GCC, in terms of contact center
installations; wherein the installed base achieved a compounded average growth rate of 14.2% annually
• The government, services, healthcare the telecom sectors will act as the engine for growth as these industries have
remained relatively unaffected by the global downturn and will be more inclined to adopt innovative technology
solutions
• Moreover, there is a likely shift in the adoption trend for contact center solutions towards small to medium sized
companies as against larger enterprises
• The UAE, in particular, is expected to carry the banner for the region because of its advanced ready-built contact
center facilities such as the Dubai Outsourcing Zone

…with strong government impetus, presence of bi-lingual skills and a
growing talent pool of Financial Service professionals, the industry has
potential…
• Bahrain already has an existing footprint in IT Enabled Services (through basic Contact Center operations, with players such as Info
call and Mena Business Services
• In keeping with Vision 2030 to diversify the national economy as well as augment the services sector in Bahrain; the government
has already identified the IT enabled services as a major growth area
 Recently, the Supreme Committee of Information and Communication Technology (SCICT) approved the plan for he
National Call Center project, one of the milestones of the eGovernment strategy
o The call center will enable the general public to access all the government eServices through a single easy-to-remember
number
o The National Call Center number will not only offer high quality government services and create jobs for Bahraini nationals, but
will also establish Bahrain as a leader in in the region
o In addition, the SCICT approved a proposal to establish 15 common service centers throughout the Kingdom which will offer
government eServices
 The E-Government Authority also signed a deal with Silah Gulf (a world class contact center).
o The BD 6 million project is aimed to create 1000 job opportunities in the next 3 years, with 90% of the workforce being Bahraini
o Silah Gulf will have access to all Ministries and E-Government services and will service customers across the Kingdom.
• Increased government spending and focus • Multilingual population Potential of Bahrain‟s Contact Center
through e-government initiative (Arabic and English) industry to grow from voice, helpdesk
• Increasing pressure on businesses to • Existing footprint and and support operations to value added
expand without augmenting non-core + industry experience = „knowledge outsourced services‟ such
operational overheads • Strong Talent pool in as transaction queries, processing,
• Relative resilience of Telecom, Healthcare Banking and Financial research & analytics within the
and Financial sectors in Bahrain services Banking & Financial Services domain

…to transform from basic contact center services to more
knowledge oriented outsourced services and emerge as a low
cost regional outsourcing hub…
• The Bahraini IT market has all the ingredients

in place to leverage the Kingdom‘s position as
Relatively Low a regional hub for IT Enabled Services
cost operating
base within the
region • Further, this involves transitioning from basic
contact center operations to more knowledge
Strong footprint in
Bilingual skills – Financial based transaction queries, processing and
Arabic & English Services with outsourced research services within the
strong talent pool Banking & Financial Services Domain
• The vibrancy of the Financial sector in

Bahrain encourages the development of
Bahrain IT outsourcing e.g. Recently Euronet World
Outsourcing Wide and Arab Financial Services (AFS),
Strong Industry formed a JV called Euro-net Middle East
Focus sub-sector
broadband (EME), to offer outsourcing capabilities to
under Vision
growth expected financial institutions across MENA
2030
(over 24%)  EME based in Bahrain provides debit
card management, ATM and POS
outsourcing services, chip card
Pipeline of issuing, and gateway services to credit
government Card and national switches
Strong fit for projects –
local employment National Call • The growth of similar outsourcing projects in
Center project,
Silah Gulf the Kingdom has the potential to transform the
Bahrain into a regional hub

In the Hosted Infrastructure Services segment, current levels of
requirements of Bahraini enterprises is being met by existing
players including Batelco, Gateway Gulf and Cisco …
• Current needs of the market for network / communication based disaster recovery and business
continuity services are being served existing players
• One of the key drivers for hosted infrastructure is from the financial services sector
Hosted  Banks have been mandated under CBB regulation to maintain provisions for Data Recovery
Infrastructure  The BMA (Bahrain Monetary Agency) requires that all financial institutions keep records in off-
site storage and the recommendation that they utilize disaster recovery facilities
Services (DRS, BCP)
• In response to the strong demand area for banks and manufacturing , Cisco recently established a
new data centre in Bahrain to support the delivery of various services and technologies.
Current level of market • There is no Tier 4 certified Data Center in the region
needs being served by  The most stringent level of Disaster Recovery is a Tier 4 data center, which is designed to
existing players and recent host mission critical computer systems, with fully redundant subsystems and
market entry of Cisco - compartmentalized security zones controlled by biometric access controls methods. Another
Market growth largely consideration is the placement of the data center in a subterranean context, for data security
driven by banks & financial as well as environmental considerations such as cooling requirements
services
 The establishment of a Tier 4 Data Center is commensurate with a capital intensive
investment
 The limited size of Bahrain‘s enterprise sector and implied limited needs for Bahraini
enterprises for sophisticated Business Continuity Planning services makes such investment
unattractive and unfeasible in the near term
• According to industry leaders, although growth is likely to be driven in the immediate term by the
banking & financial services sector; however uptake by other markets in Bahrain is likely to be low
Batelco (Infort), Gateway Gulf, Neutel and now Cisco are the key players operating in the Hosted Infrastructure
Services Segment offering Disaster Recovery and Business Continuity Planning

The Networking Solutions & Support Services segment could
invite more play from existing businesses and new entrants into
the market, with network security and ….
• Overall there are at least 13 to 15* local key players operating in the Networking equipment space
space encompassing Networking solutions, Network Maintenance & Support Services and
distribution of Networking products
 The Networking solutions segment comprises key players including Computer World, Advanti
Networking Advanced Technologies, Mars Information Technology, Tektronics Information Technologies
Infrastructure & and Algosaibi (Saudi company with subsidiary in Bahrain). Computer Trouble Shooters (CTS)
Support Services is one of the key players in Network and Server Maintenance. Key distributors include HiTech,
Al Moayyed, Jafmedia and Mantech Computers etc.
• Primary driver for growth (within the MENA region) is revenue from sales of telecoms mobile network
infrastructure expected to grow well through to 2010
Potential to invite more play  A combined compound annual growth rate of 12% for 2005 to 2010 is predicted, bringing the
from existing players and annual total to BD 3.2 billion
new entrants
• With the increasing global requirements for businesses to become more integrated across units,
locations and geographies, is pegged as another growth driver
 The communication and technology infrastructure spending of new hotels alone in the GCC is
forecasted to exceed BD 109 million by 2010
• Network Security is earmarked as a niche segment accounting for a considerable portion of growth
within the Network Infrastructure & Support Services domain
Although the Bahraini IT landscape has presence across the Networking value chain across products, solutions and support
services, this area could invite more play from existing players and new entrants; on the back of increasing requirements for
businesses to become more „intra‟ and „inter‟ integrated; with substantial focus on Network Security

217
… Mobile Network Infrastructure emerging as high growth
segments …
• Primary driver for growth (within the MENA region) is revenue from sales of telecoms mobile network infrastructure
expected to grow well through to 2010
• A combined compound annual growth rate of 12% for 2005 to 2010 is predicted, bringing the annual total to BD 3.2
billion
• The Mobile Network infrastructure is one of the key areas driving growth within Networking Infrastructure &
Solutions domain
• The projected revenues for the mobile infrastructure market in the region is a reflection for growth potential
(expected growth rate) in Bahrain
• Within technology standards WCDMA is projected to reflect the highest growth rate (projected CAGR of 22.6%
between 2005 and 2010)
• PDC technologies do not apply to the region

Software as a Service, although a nascent concept in the region and
Bahrain; is witnessing increased adoption globally and presents an
opportunity for local Bahraini software vendors to capitalize on,
although initial adoption is likely to be relatively slow …
• The concept of SAAS (Software as a Service ) and Cloud Computing is nascent across the GCC
SAAS & Cloud  Software as a service is a model of software deployment whereby a provider licenses
Computing an application to customers for use as a service on demand
 SaaS software vendors may host the application on their own web servers or download
the application to the consumer device, disabling it after use or after the on-demand
contract expires
 The on-demand function may be handled internally to share licenses within a firm or by
In the wake of the current a third-party application service provider (ASP) sharing licenses between firms
financial crisis, local software
firms in Bahrain serving the  The model eliminates the need to install and run the application on the customer's own
SME segment can look at computer, thereby alleviating the customer's burden of additional costs for software
adopting the SAAS / Cloud maintenance, ongoing operation and support
Computing Model to reduce the
• There are strong global trends favoring adoption of SAAS
cost burden of maintenance,
additional installation and  The Global ‗Software-as-a-Service‘ market is expected to hit BD 3.93 billion by 2009
ongoing support to their clients.
 By the end of 2009, 76% of U.S. organizations will use at least one SaaS-delivered
However, initial adoption is application for business use.
likely to be slow (mirroring  The percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS
global trends) especially by
applications will increase from 23% in 2008 to nearly 45% in 2010.
larger enterprises (banks,
manufacturing) as well as  Asia Pacific‘s SAAS market is expected to hit BD 828 million, with China‘s market estimated
government enterprises due to at BD 63 million in 2012
nascence of concept and lack of
knowledge around data  Within the region, select firms such as Raqmiyat‟s (a leading System integrator in the
protection issues UAE) have already started making a foray into the „SaaS‟ market, based on
expectations that need for cutting back on expenses by regional SMBs will usher in
increased adoption for SAAS solutions

A paradigm focus shift towards high end IT services is further
exemplified by the Saudi IT market, pegged to grow at
whopping rate of 13% over the next 5 years …
A paradigm focus shift towards high end IT services is further exemplified by Saudi, where the market is
shifting from basic product implementations to managed services, value-add services, facilities
management, hosting & disaster recovery and outsourcing
• Regional and international IT

• According to a recent Study, spending on IT services in 2008 (Saudi), exceeded BD 331 services vendors are still
million and is expected to grow at a rate of 13% over the next 5 years; driven primarily by finding opportunities in ERP
government, banking, telecom (together these 3 sectors account for almost 50% of total IT implementation
service revenues
• While still showing signs of development, the composition of the Saudi IT services market is E.g. Raya Integration won an
set to change ERP implementation project
 Hardware and software support services accounted for the largest share of spending in from the Communications
2006 at just under 30%, while systems integration was close behind at around 29% and IT Commission of Saudi
 Custom application development and application management outsourcing, however, Arabia.
were the two fastest growing areas, with the latter more than doubling yoy in 2006
• While software support and systems integration remain the cornerstones of most IT • Multinational IT services
services providers, vendors are also likely to branch out quickly to build share vendors are targeting key
• The developing nature of the Saudi IT services market is apparent in the battle for market sectors
share, with vendors moving up and down the rankings as competition intensifies
 There are currently more than 50 IT services providers competing in Saudi Arabia E.g. HP Services has
and no one vendor dominates the market announced a new strategic
 In 2008, the top-ten vendors garnered 66% of the total spend, with five of the top- partnership with local SAP
ten being new entries consultancy company Al-
 Despite the segmented nature of the Saudi IT services market, Middle East Bilad Arabia, which will
companies are dominant, with each of the top five (SBM, Atos Origin Middle East, target the oil and gas sector
Arabic Computer System, Ejada, and Jeraisy Computer & Communication Services)
based in the region

growth in the ICT sector …
Lack of workplace ready educational background / qualifications
candidates • The University of Bahrain provides a range of IT courses, which are understood to be
largely theoretical and involving little industry interaction
• It is necessary to address management and coordination shortages in Bahrain,

Need for candidates trained in particularly in light of the projected expansion of the sector‘s workforce
management & coordination / • The global ICT sector‘s reliance on ICT managers and IT strategy and planning
strategy & planning professionals is a trend which is expected to replicate in Bahrain over the next decade
• IT skill shortages were most acute in the areas of installing & maintaining network
security infrastructure, application specific skills such as MSCE and Cisco, IT project
Lack of specialisation / focus management, and system administration
• Given the reliance of the Bahraini ICT sector on foreign workers, this may exacerbate
the shortage of specialized skilled personnel in Bahrain
Lack of educational institutions • There is increasing convergence of content / data development (tradionally falling within
which provide integrated ICT & the ICT sector) and the telecom sector
telecom courses • Lack of training institutions providing such courses limit market development
• Although a number of Bahrain IT service companies provide training to staff, a potential

High attrition rates acting as barrier to industry-based training is that trained staff are typically attracted into the higher
barriers to industry training paying banking and finance sectors, acting as a disincentive for firms to invest heavily in
training and professional development

Technical Skills is the key to augmenting levels of Bahraini
employment in the sector …
Employer skill requirements for ICT sector

• The IT sector employs a very low percentage of the total
workforce in Bahrain due to its limited size
• The IT sector relies strongly on expatriate staff due to lack of
specialization of skills and lack of industry ready graduates
• Employers in the ICT sector cited a need for strong technical
skills*
• Shortages were experienced in network security and
application specific skills
*Source: CIO, Allen survey 222

Information Technology: A Snapshot of Prominent Bottlenecks,
Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Information Technology sector
and is used to reflect the ‗absorptive capacity‘ of the Information Technology sector
Bahraini Information Technology sector value chain are termed as ‗market gaps‘
223
The Bahrain IT Sector: A Snapshot of Prominent Bottlenecks,
Gaps

General packaged application
Basic IT Training Market gaps in terms of segment being

providers (e.g. MIS, inventory,
providers virtually absent in Bahrain, however

High Accounting packages)
could potentially present opportunities
Hardware
Basic System distributors for existing players / new entrants based
Integrators on market feasibility and assessment
Network Solution &

No apparent  Software Testing & Validation (Beta
Support Services 2
Medium gap testing)
Hosted Infrastructure
IT Outsourcing & IT  Software as a Service (SAAS) / Cloud
services4
Enabled Transactional Computing
Services 3
 Business Intelligence Portal
Application development Complex System
services (high end / niche) 1 Integration 1 (ERP, **Although there are no regulatory /
Low
CRM, Portal) infrastructure bottlenecks apparent in the IT
sector, skill development through holistic
IT consulting (niche) 5 training is required to develop local Bahraini
Market Gaps in firms to fill these gaps
Low Medium High terms of under
Market Potential (assessed in terms of expected growth rate) penetration
1. There are virtually no local players in Bahrain with requisite, domain expertise and capabilities in Complex System Integration (ERP, CRM, Portal) as well as in high-end
application development (particularly for government services); with such services being rendered by foreign companies on contractual basis (demand fro local support is
deemed to be high)
2. Although the Bahraini IT landscape has presence across the Networking value chain across products, solutions and support services, this area could invite more play from
existing players and new entrants, especially in the realm of Network Security
3. Currently, IT Enabled Outsourced Services industry has presence in Bahrain only in the form of basic contact center operations, with potential for development of more value
add transaction processing, research & analytics as well as knowledge outsourcing especially in context of Banking and Financial services support operation
4. Market growth is largely being driven by Banks and Financial Services. In response to the strong demand area for banks and some other sectors and Cisco recently established
a new data centre in Bahrain to support the delivery of various services and technologies
5. The need to rationalize IT expenditure, align IT with business objectives, meet regulatory requirements, choose the right solution and the rise of eCommerce and new
technologies such as SOA and virtualization are driving the IT consulting service market; further substantiated by demand for support services from IT global firms such as
Microsoft, Oracle and SAP which already have a presence in Bahrain
Market gap sectors that are currently underpenetrated, however market potential is deemed to be high if bottlenecks are removed 224
Relative Sub-Sector Prioritization: Information Technology
the Information Technology sector as a ‗market gap‘
(Priority Index)
225
scores

1 1
1
1
1
11 1
1 1 1
1. Bahrain has a very negligible presence in Beta testing of animation / graphic development packages (Software Testing) and IT Outsourcing
2. Notes:
formation issue

and C
228
Hosted
|Infrastructure
System
Services
Application Integration
Development Services
(niche) (complex)
Software SAAS
Testing Business IT Network IT Outsourced & IT
Intelligence Consulting Solutions & Enabled Transactional
Portal Support Services
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Information Technology
Increasing trend in IT spend by Convergence between Telecom

Telecom and Banking sectors and IT
……………
Increased adoption of business suite Government e-initiatives led by the CIO

applications (ERP, SAP) to by small and with projects like National Id Card,
medium sized businesses to improve Enterprise Bus Project and Enterprise
productivity IT Growth Drivers Architecture Project
Increased demand for sophisticated

Privatization and reform programs set by IT services – High end system
the government across a number of integration, Hosted infrastructure,
sectors likely to fuel spend on IT Managed Operations &
products / solutions Customized application
development
markets

230
Media
231
The Media Industry Construct primarily comprises Film & Video,
TV Broadcasting, Radio Broadcasting, Internet and Publishing as
Key Segments …
Sources: Hoovers, D&B Research & Analysis 232

…With Film & TV being multi-billion dollar industries and accounting
for a large chunk of employment generation in downstream production
and post production activities …
The Media Industry Construct primarily comprises Film & Video, TV Broadcasting, Radio Broadcasting, Internet and
Publishing as key segments forming the core structure of the industry
• Globally, the motion picture (Film & Video) industry is highly concentrated with the 50 largest companies accounting for about
80% of total industry revenues
 The motion picture industry produces mainly first-run movies and secondary releases, distributed first through theatres and
later on various media through a variety of commercial outlets
 Secondary releases, mainly on DVD through wholesale and retail channels, contribute 50% of industry revenue, while first-
runs account for about 20%
• Manufacturers and distributors of motion picture equipment, CDs, CD ROMS and DVDs have an upstream (manufacturing) and
downstream (distribution) linkage in the Film & Video Value chain respectively
• The Television value chain further comprises Television Production & Distribution, Television Cable, Pay & Broadcast Networks,
Television Station Groups and Information Collection & Delivery players
 This industry is highly consolidated and varies in level of development and proliferation across countries
• Radio Broadcasting & Programming comprises companies that own and operate radio broadcast stations and radio programming
services – While most countries across the world have at least one state-owned network, the size of the market varies from
country to country, depending on proliferation of private networks and regulations around liberalization of media content
• The Publishing segment comprises companies that publish books, newspapers, periodicals, baseball cards, directories, comics,
greeting cards, and specialty publications
 With few renowned global publication houses such as McGraw Hill, McMillan; largely the industry tends to be fragmented
globally
• The Internet segment comprises Internet Content providers, Internet Search & Navigation Search companies, Web hosting and
other web related services such as website development and search engine optimization

233
The Bahrain Media Industry remains highly nascent and
underdeveloped, with Publishing & Printing activity occupying the
majority share in terms of sector contribution …
• The value of production of the media sector is estimated to be around BD 45.7

million, with Publishing & Printing activities contributing 62%, followed by Film & TV
production activity at 32%, and Programming & Broadcasting contributing the Market Size, Media (Total value of Production, in
remaining 5%. BD million)
• The Television / Radio Broadcasting segment remains largely state-owned.
 Bahrain Radio and Television Corporation (BRTC), established in January
1993, which comes under the purview of Ministry of Information, regulates
visual and audio broadcasting
 The BRTC operates on five terrestrial TV Channels, broadcasting in Arabic
and English
 However, the sector has dominance of pan GCC based redistributors and
satellite based TV
 Out of the addressable market; Pay TV penetration stands at around 10% of
households; the rest being made up by Free to Air and Stolen (Illegal) Pay TV
• With the convergence between movie, television and music content with the internet
as well as mobile; broadband penetration, mobile penetration and growth of these Source: CIO
segments become important drivers for media proliferation
• The radio segment consists of 3 primary radio networks namely – Voice FM, Radio
FM and Bahrain FM
Publishing & Printing
• Additionally, there is also prevalence of a number of free to air channels including activities contribute 62%
BSKSA Channel One, Radio Bahrain, Studio Two, MBC and BKSA - these offer a followed by Film & TV
variety of entertainment, religious and news programming production activity at 32%
and Programming &
• Within the publishing segment, there are around 15 mainline newspapers , 7* key
Broadcasting contributing
magazine publishing houses and 35* key commercial printers the remaining 5%.
• Specialized magazines like health magazines, lifestyle magazines, economics and
entertainment are gaining popularity in Bahrain as in the region
Combined advertising revenues in Bahrain were expected to decline
marginally in 2009, with Newspapers continuing to be the primary
contributor in terms of advertising revenues …
Advertising Revenue Split (By Media, 2007 to 2009, in BD Advertising Contribution Breakdown by Media,
million) 2008
Advertising Contribution Breakdown by Media,

2009
• Total advertising spend in Bahrain (across combined media) averages BD
18.5 million between 2007 and 2009E, with spend expected to witness a
marginal decline in 2009 to BD 18 million from 18.9 million, on the back of
global financial distress and resultant impact on advertising budgets
Advertising spend had risen by 2%, from BD 17.2 million in the first
half of 2007 to BD 18.34 million in the first half of 2008.
• The split between print and non print media (on an average) is 84%: 16%
 In terms of breakdown, Newspaper is the leading segment (62%),
followed by Magazine (21%), Television (13%) and Radio &
Outdoor activities (15)%

235
The Government is the highest contributor to Bahrain‘s consolidated
media spend across various formats …
Sector-wise Media Spend Breakdown (2009)
With a 14% share the

Government is the
highest contributor
towards Bahrain
Media sector

236
UAE is the regional leader in terms of combined advertising spend
across various formats including Television, Newspaper, Magazine,
Radio and Outdoor …
Advertising Revenue Split (By Media, 2008 in BD million)
Source: Pan Arab Research Center
• Advertising Revenue is an excellent indicator in terms of size and level of sophistication of media formats
• The UAE has the largest advertising spend in the Middle East (combined media) valued at BD 135 million – this
extrapolates to all media formats with the exception of Television, where Egypt followed by Kuwait score higher than
the UAE
• With a combined advertising spend of BD 18.5 million (3-year average), Bahrain‘s media sector is roughly 0.05 times
of that of the UAE

With only 1 local TV network in Bahrain, a large part of the Television
Broadcasting Market is captured by Free to Air Channels being
beamed across the Middle East …
Market Share Split (TV broadcasting

• Almost 100% of households in Bahrain have television sets
vs. Narrow Casting)
 Less than 5% of these have terrestrial broadcasting; while 95% receive
satellite (narrowcasting)1
• Bahrain TV is the sole broadcaster / local network in Bahrain and is owned by
Bahrain Radio and Television Corporation (BRTC), which comes under the
purview of Ministry of Culture & Information
• Out of the addressable market; Pay TV penetration stands at around 10% of
households; the rest being made up by Free to Air channels
 Within this (10%); the landscape comprises ART, Pehla, Jazeera and
Orbit Showtime (Orbit and Showtime recently merged their Pay TV
operations)
 There are over 553 channels beaming to the Middle East; with almost 6
FTA channels being received by Bahrain alone
• Moreover, these television networks have experienced an adverse impact on their
profitability in recent years due to fall in advertising revenues (advertising Narrow Casting Market Share Split
revenues are estimated to have gone down by around 40% over the past 5 years – (Pay TV vs. FTA)
with the exception of Pay TV)
• Regional market growth (and implied potential of TV broadcasting in Bahrain) is
reflected in the growth of TV advertising spend in the Middle East
 TV advertising spend in the Middle East and African (MEA) region is
projected to increase 25% from 2008 to 2013, despite expectations that
the current economic downturn will extend well into 2010
 The projection places the MEA region ahead of all others worldwide, with
revenues expected to grow from just over BD 3.7 billion in 2008 to almost
BD 4.9 billion in 2013
1. Technically all terrestrial channels e.g. Bahrain TV are broadcasters; while Cable companies, Free To Air and Pay TV Television networks are all
narrowcasters i.e. narrow beam casting via satellite

Moreover, without an enabling ecosystem for proliferation of local
private TV networks in Bahrain, downstream proliferation of the TV
production segment is further hindered …
• Only 1 local (state owned broadcaster), Bahrain TV • The presence of only 1 local TV network in Bahrain
• No private Television networks in Bahrain Bottlenecks / Hinders growth of the downstream TV
• Re-broadcaster Orbit (Pay TV) only does in-house own-brand production segment
promotion productions with Local in-house team
• Re-broadcaster Showtime broadcasts from Dubai
• CNBC has a quasi broadcasting network in Bahrain • There are only 5 to 7* active independent local
(transmits via satellite to Dubai and parachutes staff from production houses / post production houses in Bahrain
abroad) that produce content including documentary films,
corporate videos, religious contents, series and
Television commercials (although count of registered
production houses estimated to be around 60 to 80)
• These include Creative Video Imaging (Corporate Film
• Lack of regulation by Ministry of Information supporting legal set Production); Rawa Films Company (Television
up of private TV networks Production);Al Wa‘ad Media Production, Hawar Center
(Production Services);Seaqull Multimedia (Film
Production);Creative Video Imaging, Gulf Broadcast &
Professional Systems, Reji (Video Production) etc.
• In comparison, with over 30 Television networks in the
• Lack of regulatory mandate for Bahrain TV to outsource content UAE, there are over 100 active independent production
development / production to independent production houses and post production houses specializing across various
• Content development and production is limited to only a few formats in the UAE, particularly clustered within the
production houses Dubai Media City
E.g. Hawar produces religious content for Bahrain TV; Spot  Around 25% of the region‘s large DTH satellite
Studio produces episodic soap operas TV industry is headquartered in the UAE.
*Does not reflect the actual number of registered production houses in Bahrain, estimated to be much higher
239
…In spite of high market growth and job creation potential in
downstream post production activities …
• According to industry participants within the Media • Disablers for the development of a formal TV production
sector, potential of television produc tion is reflected industry include:
by the following:  Regulatory restriction on establishment of private
 There is strong prevalent market growth potential networks
especially on the back of convergence between  Lack of government protection on IPR enforcement and
the internet and TV (e.g. IPTV) protection on infringement – this curbs creativity in
 There is high potential to generate value add jobs content development
in front line as well as post production e.g. editing,  Low prevalent industry standards in advertising rates due
lighting, sound engineering, transcription, to lack of regulation** to check such undercutting (e.g.
copywriting, animation etc. (As elicited from NBC which is the top rated Pan Arab network in the
industry participants, the starting salary for a fresh Middle East has the lowest advertising rates; thus
graduate in the media sector having basic skills diluting business model for the entire industry)
and know-how in post production is BD 800)  Lack of enabling ecosystem in terms of training and
 In spite of restrictions, there is growth and awareness around Media as a career, coupled with the
proliferation of an unsophisticated industry with fact that the Media Studies curriculum offered by the
the inherent requisites for growth of a formal University of Bahrain is thought of as sub-standard
industry, already in place – almost every single amongst industry participants
village in Bahrain produces and streams content  Bahrain is ranked 120th on the RSF (media indicator
on the internet largely covering religious and developed and coined by the International Journalist
cultural / community events Society)
 There is strong potential for local production
houses to develop content for the Saudi market • The TV production segment is pegged to have high level
 A number of production houses like Gulf of sustainability, mass market appeal, potential for content
Broadcasting are finding business opportunities development for both the local and Saudi markets as well
across the globe including Malaysia, Qatar and as high degree of job creation potential in post production
Italy within the corporate film production segment activity – there is potential room for at least 5 to 7
independent production houses
** As per industry participants, the International Advertising Association (IAA )is deemed to be inactive in Bahrain
Additionally, there are strong growth opportunities within the Middle
East TV programming landscape, particularly in high quality Arabic
series that Bahraini Production houses can look to capitalize upon…
• The regional television industry in the Middle East has seen tremendous growth in the last several years
• Increases in the number of television viewers, along with favorable economic conditions, have fueled growth expectations
and led to the entry of a plethora of free-to-air TV broadcasters‘ channels
• The growth in the number of channels, however, has outstripped TV advertising revenue growth, spurring intense competition
among broadcasters
• Broadcasters are responding to competitive pressure by differentiating their programming from that of their rivals
• One of the most profitable areas of differentiation for broadcasters lies in high-quality Arabic TV series, which enjoy the
highest viewership and share of advertising revenues
• Opportunity lies especially in Arabic TV series that appeal to viewers in large advertising markets in Saudi Arabia
and the Gulf region
• The ongoing trends in the Middle East are for broadcasters to complement their traditional supply of Egyptian TV
series with productions from newer players
• The increasing demand for high-quality Arabic TV series has potential to trigger rising prices, making the
production of such series more lucrative for production houses - Limited supply and strong demand for high-quality
Arabic TV series, particularly during the holy month of Ramadan when viewership is high, is resulting in large
increases in prices, especially for first-run exclusive series (TV broadcasters, first-run, exclusive, high-quality
productions can be sold for prices that reach US$85K/episode hour (typically during Ramadan)
• Another emerging trend is the increasing operational and financial involvement of TV broadcasters in production, partly to
guarantee the quality of output and partly to drive innovation through less familiar types of content, such as TV films, sitcoms,
and soap operas, and through new media
High quality Arabic TV series provides a strong opportunity for the Bahraini post production industry, especially in terms
of content development for the Saudi audience. However, the level of Bahrain readiness to capitalize on this relatively
untapped opportunity becomes restricted due to a combination of a) high level of investment required by production
houses; b) presence of sophisticated production houses in Dubai and Lebanon in the playing field and c) lack of
supporting ecosystem in Bahrain including infrastructure, regulation and skills pool
Sources: D&B Research & Analysis, PARC 241

However, capturing this potential is contingent upon Bahraini post
production houses being able to steer through challenges and
compete on required key success factors…
Breakdown of 2005-06 Pan Arab TV Spend

(% of Total) Key Success Factors Challenges
Content creation, which requires The scarcity of good scripts

strong ties with innovative
scriptwriters and directors
Content development, which demands

adequate financing, well-established TV producers facing stiffer
mechanisms for selecting projects, competition for talent from a
relationships with good actors, fairly reinvigorated film industry.
elaborate production facilities, and
specialized crews
Content distribution, which requires

Production of Arabic TV series could be a potential privileged relationships with large TV The emergence of large Pan-
area of opportunity for Bahraini production houses channels featuring negotiated Arab broadcasters that cater to
distribution contracts for exclusives the Gulf market, especially from
and first runs, proactive marketing & Syria
However, growth potential is in the wake of Bahraini
distribution year round
production houses becoming competitive enough to
meet challenges facing the Middle East Media Industry
and being able to deliver on Key Success Factors
Sources: D&B Research & Analysis, PARC 242

While absence of cultural pre-requisites disable proliferation of a
Commercial Film Production Industry in Bahrain, dynamics of Radio
Broadcasting & Production support growth of more network stations …
Commercial Film Production

• Minimal footprint with 1 company, namely Bahrain Films Company
Reduced inherent
• Commercial film production in Bahrain remains nascent
potential due to low
• Scope of growth is limited as pre-requisites of cultural sustainability are not present market appeal and lack
• Strong mass market appeal for Egyptian commercial cinema (across the region) of cultural
• Lack of enabling ecosystem – studios, film acting academies, front line industry (actors, sustainability pre-
directors, producers) requisites, required to
support growth of
Commercial Film
Radio Broadcasting & Production Production segment
• There are 3 main broadcasting networks / stations in Bahrain: Voice FM (Indian and English);
Radio Bahrain (Arabic) and Bahrain FM (English); in addition to the multiple free to air
channels beamed across the region Local mass market
• In comparison there are around 10 radio networks in the UAE (in addition to multiple free to appeal, cost effective
air channels) producing and broadcasting content in English, Indian and Arabic advertising and
• Mass market appeal of radio is increasing as a cost effective and mobile format for international trends
advertising relative to television favoring proliferation of
• Top local spenders include U4, Bahrain Islamic Bank, Bahrain International Circuit, City Radio Network &
Center and Batelco Broadcasting segment ,
• International trends reflect strong growth in FM educationals, translators and boosters with with potential for more
registered growth rates over the past 10 years of 14%, 50% and 105% respectively radio networks
• Across the middle east, State-owned radio stations reached 176 by July 2009, up from 157 especially within the FM
stations by February 2008, a growth rate of 12.10%, while private radio stations increased educationals, translators
from 150 stations by February 2008 to 162 by July 2009, equating to an 8% rise and boosters offerings

Mirroring global trends, outdoor media is expected to continue
cannibalizing the share of other media formats such as television and
print …
Global Trends indicate potential of Outdoor media (including billboards, outdoor signage )has been capturing
share of advertising from television, radio, and newspaper. Bahrain (similar to the region) is expected to mirror
the same trend primarily on the back of outdoor media offering a relatively cost effective format coupled with the
growth in outdoor digital technology
• Traditional media platforms like television and newspapers, are operating under tremendous pressure in the current economic
recession
• However, outdoor advertising segment is expected to register a strong growth in the coming years
• After online advertising segment, the outdoor advertising segment has been the most dynamic in recent years
• Outdoor advertising has been capturing share of advertising from television, radio, and newspaper
• The global trend is expected to be mirrored within the region
 UAE has witnessed an increasing share of outdoor media in terms of overall advertising spend (across media formats)
from 3% in 2007 to 6% in 2009
 In Saudi, outdoor media has maintained an 8% share of overall advertising spend
• In Bahrain, the combined advertising spend within the Radio & Outdoor segment** is estimated to have increased marginally
from BD 0.8 million in 2007 to around BD 1 million in 2009 (** breakdown of radio and outdoor is not available)
• The adoption of digital technology is driving growth of outdoor segment
 Digital outdoor technology combines the traditional strengths of outdoor with unique targeting opportunities
• Another key reason behind rapid growth of outdoor advertising is the low cost of this medium compared with the more
expensive advertising mediums
• Although outdoor media is identified as a medium growth area, however, the landscape of players offering outdoor media
services is fairly represented and fragmented
 Some of the key players in Bahrain offering outdoor advertising / signage include Alabayan Group, Bahrain Media
Services, 5 Outdoor, Arabian Neon, Asta Neon, Beta Displays, Din Arts, Ferrari Outdoor Media, Gulf Media
International, Albayan Media Group, Hawar Center, Kassab Media, Media Zone Advertising, Miracle Prints
Sources: Industry reports, D&B Research & Analysis 244

The Printing & Publishing Industry is expected to project a CAGR of 7%
between 2007 and 2012, with package printing accounting for the bulk
of the overall industry share …
• Printing & Publishing accounts for a

total value of production of around BD
Commercial 28.5 million (CIO)
printing (printed
advertising) • The main end-users of the printing
Publishing market in Bahrain include publishing
(newspapers, (newspapers, magazines, book
Package
magazines,
Printing publishing), commercial printing (printed
book
publishing) advertising) and package printing
• The package print sector accounts for

Bahrain the largest share followed by the print
Printing & advertising, commercial printing and
Publishing newspapers
• The overall print market in Bahrain is

expected to grow at moderate CAGR of
7% between 2007 and 2012

Modest growth forecast, cut backs in advertising spends and dwindling
media share coupled with the fact that there are already 15 mainline
newspapers in circulation in Bahrain, reflects overcrowding within the
newspaper publications segment …
• In terms of Media share, newspaper circulation has the highest

media share (64% in 08‘ and expected to decline to 58% in ‗09)
• A strong newspaper reading culture together with the country‘s high
literacy level is expected to support newspaper circulation growth
• However, in spite of this the sector is expected to project a modest
CAGR of 2.6% (between 2007 to 2012)
• With around 15 mainline* newspapers in circulation, the newspaper
publication segment appears to be overcrowded and nearing
saturation
• In comparison, there are 26 mainline newspaper publications in the
UAE (15 English and 11 in Arabic)
• Cut backs in advertising revenue over the past 5 years and falling
share of newspapers in terms of media spend, are additional
dynamics that do not support growth in terms of more players
Mainline Newspaper Publications in Bahrain:
• Akbar AlKhaleej • Alwaqt

• Al Bilad • Bahrain news agency
• Al Watan • Bahrain Post
• Alayam • Bahrain Tribune
• Almeethaq • Gulf Daily news
• Altijaria • Gulf Weekly
• Alwasat News • Urdu Daily News
• Voice of Bahrain Source: MEPA, 2009
*Does not constitute other language dailies / publications other than Arabic and English
246
Further, reduction in advertising budgets also limits the proliferation of
publication houses in Bahrain, despite an apparent market gap in terms
of niche local publications in the areas of leisure, sports and fashion …
• Within the publishing segment (non-newspaper), Bahrain has around 20* key magazines & periodicals in circulation with around
12 to 15* key general publishers, 7* key magazine publishers and 35* key commercial printers
• Key Publishers include Albayan, Al Hilal; Arabian Magazines; Red House Marketing; Fanar Publishing; Scientia Bonnensis
Publishing Company, Gulf International and CCMI, Al Mahmood Translation & Publishing, Al Waraqoon WLL, Dar Akhbar Al
Khaleej Printing Press, Dar Al Kalima Publishing and Gulf Petrolink
• Arabian Magazines, Red House Marketing, Gulf International, Al Hilal, CCMI, Gulf Magazine Gulf Business Intelligence and Al
Mawakif are players within the magazine publishing segment
• In comparison the UAE has around 80 magazines and periodicals in circulation, with more than 20 magazine publication houses
• The needs of Bahraini audience especially within the leisure, entertainment, sports and fashion publication segments are met by
UAE publications entering Bahrain
• Growth within the commercial printing segment is restricted due to the limited size of the Bahraini market coupled with the
limitation of outreach to Saudi, due to the competitiveness of the Saudi printing industry
 The Saudi commercial printing industry is estimated to be at least 15 times larger than the Bahraini industry
 Additionally customs levied coupled with delivery downtime to bottlenecks at the Causeway, further impede
competitiveness of the local publishing industry
• There is potential for increase in play within the magazine publishing segment (import substitution) as the needs of Bahraini
readership especially within the leisure, entertainment, sports and fashion publication segments are met by UAE circulations
entering Bahrain
• However, this potential is largely hindered due to reduction / cut backs in corporate advertising budgets as well as nascence of
the journalism industry in Bahrain relative to the UAE
 Advertising spend within the magazine media format is expected to decline from BD 3.8 million to BD 3.4 million
registering a decline of 2% y-o-y from 08‘ to 09‘
Although there is an apparent gap in terms of local niche publishing houses in Bahrain, particularly within the leisure,
entertainment, sport and fashion segments; proliferation of such players is limited due to cut backs in advertising spend by
the private corporate sector
*Does not necessarily reflect the actual number of registered businesses in Bahrain
247
In the Internet segment, there are multiple growth drivers in place
reflecting further penetration potential of high end web-related services
including dynamic website development & hosting, web marketing &
e-commerce..
• The number of internet users in Bahrain is estimated to be approximately Internet Market Size & Growth (subscriber growth)
208,000 users (2008), equivalent to 19.6% of the Bahraini population.
• An average annual growth rate of 7% is envisaged for the next five years
• The website penetration rate (number of active websites to businesses) in
Bahrain is currently estimated to be around 10%
• Businesses are looking at cost effective ways of increasing reach out to
consumers
• There is growing sophistication and realization amongst Bahraini
businesses to have high standards of visibility by substantiating quality of
offerings display through static and dynamic websites
 There is growing adoption of web marketing as a tool for brand
promotion and strategy
• The growth of high end luxury properties being marketed to international
investors need to have high quality branding, through high resolution and
dynamic 3 D imaging
• There are around 20 to 25* key players in this segment offering services • While there are multiple players in Bahrain
in website design, development & hosting as well as e-commerce offering basic web page design; market
potential clearly exists for high end services
including:
 Dynamic websites with interactive
multimedia and 3D design
 Web marketing & e-commerce
 Search engine optimization & web
consultancy
 Business application development
* Does not reflect the actual number of registered businesses in Bahrain

248
Currently in its nascence, Digital Media needs a focused strategy for
development in Bahrain, as the Kingdom possesses the required
fundamentals for growth and proliferation of a vibrant industry …
An apparent gap within the Bahrain media landscape is the nascence of digital media, which is an industry gaining
significant impetus in the region (particularly UAE) and estimated to grow at a whopping 53% annually within the
region
• Digital media is dismantling the profitability of the old business models of analogue media, leveling the global playing
field and creating a historic opportunity for Middle-Eastern media companies
• Revenue from digital media in the next couple of years is expected to overtake analogue revenue in everything from
music sales to journalism
• Within the region, digital media market has seen an annual growth of 53% over the past three years and has remained
largely unaffected by the downturn
• In the current scenario, global corporate budgets directed to digital media are at the cost of mass marketing channels
• The region has made strides in this arena, with growth in numbers of digital publishers, agencies and supporting
services
• Advertisers throughout the region are looking to expand their digital activities beyond web display to increase in
search, social media, video games and even mobile phones
 Though emerging channels' share of total advertising investments is still low (less than 10 %), estimated growth
rate is set to grow on the back of phenomenally high rates of adoption
 ‗Search‘ represents the fastest-growing segment with Google benefitting much from the region, while social
media represents the biggest opportunity (It is notable that Bahrain is considered quite advanced when it comes
to social media; communities formed around the interaction of their members actually dominate traffic)
With increasing broadband penetration rates, supporting government initiatives and a supporting industry
footprint, there is definitely an enabling ecosystem for development of a vibrant digital media industry across
various formats including search, social media, video games and mobile

…This is further translatable into a potential for Bahrain to develop itself
as a regional hub especially in the arena of localized content
development for both internet and mobile formats …
• Bahrain possesses certain fundamental elements, which enables it to create a Knowledge-Based Society (KBS). These
elements are the building blocks for Bahrain to develop a professional content development1 industry
• The regional footprint is still in its infancy and according to industry experts has the potential to flourish into a multi-billion
dollar opportunity
• Potential for strong broadband penetration (currently estimated at around 10%) / uptake (especially amongst locals) and
high penetration rate in the mobile segment (currently estimated to be around 137%), potential for proliferation of content
development for both internet and mobile formats remains buoyant
• One of the reasons for slow Internet and broadband subscriber growth in Arab Middle East countries has been a lack of
sufficient content in Arabic for users to need a high-speed broadband connection in their daily lives
• Bahrain has a unique advantage in the region in that it possesses strong regional heritage, through which it could maintain
and build a bridge between the Arab/Islamic world and the world of technology, utilizing and building on its society‟s
multilingual skills and ethnicity
• The Kingdom could build on its ability to leverage technology (computing, communications, and content) to create a
networking-based capability that will enable the development of new capability and business platforms
• With strategic government focus in the proliferation of the ICT industry in Bahrain and initiatives of the E-Government Authority; e-
content development and management is a segment where Bahrain could look at developing competitiveness to launch itself as a
regional hub
• In November 2009, The eGovernment Authority of Bahrain and United Nations Development Program (UNDP) signed a Project
Document to support the creation of the Arab Center for eContent Development
• The Center, which will be headquartered in Bahrain, will help grow Arab eContent and expand its quality presence with an
international standard, reaching out to a knowledge-based Society.
• The Center mainly aims to develop Arab eContent by increasing its presence on the web relative to other languages, improving Arab
online search engine capabilities, and building skills in the area of eGovernment
• The focal point of this initiative will be to train and develop Bahrainis and attract local and foreign investments to pursue similar
partnerships which will, in turn, create even more lucrative job opportunities
• The growth of a content management industry is contingent to development of skills in script language and database programming
and encompasses a number of value added roles such as content design, writing, management, publishing and adaptation
.
1Contentdevelopers are specialized web site developers who have content generation skills such as graphic design, multimedia development, professional writing,
and documentation. Content developers integrate content into new or existing web sites without using information technology skills such as script language
programming and database programming. 250
Another apparent gap in the Bahraini Media landscape is the absence
of a specialized media research agency providing analytics, tracking
and measurement services across media formats…
Bahrain does not have any local players operating in the online business intelligence portal domain and / or media research
tracking, analytics and measurement
• Nascence of Bahrain‘s media industry is further reflected in the fact that there are no research agencies in Bahrain focused on
tracking and measuring media
• Such research is critical for media planners to understand optimum media buying and planning
• In the current scenario, Bahraini media planners do not have a strong backbone of data, but rely on gut feel and past trend
performance
• There is no institutionalized research agency to track, measure and evaluate viewership / readership / TRPs across media
channels as in developed media markets like India and UAE
E.g. In India TAM Media Research ( a JV with AC Nielson) tracks TV program TRPs through advanced measurement techniques such as
People Meters ('people meters', utilizes set-top boxes to record what programmes audiences are watching, providing advertisers and
broadcasters with real-time viewership data they can use to plan programming and advertisement. . Similarly, NRS tracks readership of
newspaper publications in the country. Additionally at the peripheral / support infrastructure level there is presence of Data Bureaus that track,
measure, and validate media and behavioral statistics
E.g. In the UAE, Mediastow is an expert media analysis and evaluation consultancy involved in communication evaluation, measurements and
analysis and accredited buy the AMEC
• The UAE has taken further strides in the arena of media analytics measurement
o The push to bring electronic television audience measurement to the UAE has advanced a step, with the Ministerial
Council for Services giving the green light to a plan by the National Media Council NMC) to introduce the technology to
the local market
o The project will be paid for by stakeholders, and the NMC has already the commitment for between 70% and 80% of the
cost of the project
• There could be potential room for at least 1 media research player in Bahrain, on the back of demand from media planners /
buyers , advertising agencies and corporates buying media in Bahrain for media analytics, insights and intelligence

The sector lacks a talent pool of trained media professionals
especially in the post production and digital media segments, primarily
due to lack of awareness and specialized media training…
• There is a dire mismatch in terms of availability and supply of trained media professional in
Bahrain relative to demand potential
• Various segments of the media industry offer strong absorptive potential for high value add / skilled
Lack of skilled Media
jobs
professionals in Bahrain
e.g. In post production, there are a variety of roles such as Editing, Camera, Sound engineering /
in high value add jobs
production, Lighting, Animation, Make up, Transcription, Content Development, Copywriters
• Additionally, these skills are high value add roles with commensurate high level of wages e.g. The
entry salary for a fresh copyrighter (out of University) is BD 800
• There are no specialized vocational based modular training programs that address the skill needs
of the sector e.g. modules in editing, content development, copyrighting as well as technical
Lack of specialized training in lighting, sound engineering and other post production activities
media training • According to industry representatives, curriculum of the Media Studies program offered by
University of Bahrain is relatively weak and warrants substantial bolstering in line with industry
needs especially with respect to modules in digital media formats
Lack of awareness • There is a visible lack of awareness amongst Bahraini youth around careers offered in Media
around careers in Media across segments; thus creating a need for campaigns to build such awareness at University level

Media: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Media sector
and is used to reflect the ‗absorptive capacity‘ of the Media sector
Bahraini Media sector value chain are termed as ‗market gaps‘
253
Example: The Bahrain Media Sector, A Snapshot of Prominent
Bottlenecks, Gaps

No apparent Market gaps in terms of segment being virtually

gap absent in Bahrain, however could potentially

High
present opportunities for existing players / new
entrants based on market feasibility and
Newspaper assessment
Publications Outdoor Media 4
Magazine
publications  Media research agency
Medium (niche) b
Web services
(High end) ,c
Radio Broadcasting Infrastructure / Regulatory Bottlenecks
& Production 3 (Disablers)
Digital Media
specialists 2,c a. Lack of regulation and support by Ministry
Low Post Production
Film Production of Information enabling set up of private TV
companies 1,a networks
Television Content developers 2,c
b. Lack of industry level regulation to set
Broadcasting 1,a
industry norms around advertising rack
Low Medium High Market Gaps in rates, coupled with nascence of journalism
Market Potential (assessed in terms of expected growth rate) terms of under industry and lack of regulation around IPR
penetration and copyright on content
1. Proliferation is on the basis of growing demand in corporate production (Post Production Companies) as well appetite of Bahraini / Saudi audience for
local production / content (TV Broadcasting and Post Production companies)
2. The Internet segment remains underpenetrated, with further downstream opportunity in Web Services (Dynamic web development, web marketing,
consultancy and e-commerce services), content development (especially localized / Arabized) and Digital Media
3. Growing adoption of radio as a mobile and cost effective advertising medium, coupled with growth in FM educationals, translators and boosters
4. Growth deemed on the back of relatively cost effective media format as well as growth of digital outdoor technology
Market gap sectors that are currently underpenetrated, however market potential is deemed to be high if bottlenecks are removed 254
Relative Sub-Sector Prioritization: Media
the Media sector as a ‗market gap‘
(Priority Index)
255
scores

1,2
1,2 1 1
1 1
1. Strong ICT convergence

2. Web-enabled services includes dynamic website development, web marketing and e-commerce services
3. Notes:
formation issue

and C
258
Media Research
agency
TV production & Web enabled
post production Services
houses
Digital Media Content

TV broadcasting Magazine Radio Production Development
& Broadcasting Services
publishing Services
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Media
Growing levels of sophistication of

Bahraini audience with appetite for
variety of content, information and
entertainment
……………
Low website penetration ratio
and increasing realization by
Increasing adoption of internet as a cost
businesses of the potential
effective medium for advertising in a
of media and graphics in
scenario of reduced advertising budgets
marketing of products /
services
Media Growth Drivers
Prevalence of radio as a means of cost

Strong potential in broadband growth &
effective format with mobile reach out
potential
potential (compared to Television)
markets

260
Travel & Hospitality
261
The Travel & Tourism Industry Map comprises Travel
Services providers …

262
…Accommodation Services providers including Hotels, Inns,
Resorts, Destination Spas, Bed & Breakfasts, Hotel
apartments, Homestays and Business Suites…

263
…and Restaurants & Cafes as key segments; with a number
of sub-segments such as Hotel Maintenance and Transport &
Logistics support services as peripheral level activities…

264
The Tourism Ecosystem converges the play across all these
segments along with attractions and entertainment …

265
The Global tourism industry accounts for nearly 10% of the
world‘s GDP; however it was impacted by the recession in
2009…..
Worldwide International Tourist Arrivals (in million)

• Tourism has become one of the important components of a
number of economies worldwide:
120
International
o As per WTTC (World Travel and Tourism Council), the Tourist
contribution of travel and tourism to the world GDP 100 Arrivals (mn),
Monthly
is expected to be 9.4% Evolution,
80
o The contribution to employment was approx. 7.6% in World
60
2009
40
• International tourist arrivals reached 922 million in 2008, up
18 million over 2007, representing a growth of 2%.
20 2008
International tourism receipts rose by 1.7% in real terms to
BD 356 billion (USD 944 billion) during the same period 2009
0
Jan Feb Mar Apr May Jun Jul
• However, with the advent of the recession in 2008,
tourism has also been severely impacted. The decline in
demand intensified in 2009 under the impact of economic Tourist arrivals in 2009 (monthly) decreased compared to
downturn and influenza A (H1N1) outbreak monthly tourist arrivals in 2008
• Consequently, tourist arrivals were estimated to have

declined by 7% in the period between January and July
2009 compared to the same period in 2008

266
In Bahrain Travel & Tourism is earmarked as a priority sector
under the Vision 2030, with the Tourism Master plan focusing
on doubling tourism income over the next 7 years …
The Tourism Master plan focuses on family and business tourism, and aims to double tourism income over the next seven
years and generate 10% of GDP from the sector by 2014. Some of the planned initiatives listed below
Major Infrastructure Major Developments Events & Marketing
• Expansion of Bahrain‘s International • Bahrain will have 15 new five-star hotels and 14 four-star • Special events, such as the
Airport‘s to increase its capacity to hotels within three years, creating nearly 5000 additional rooms Formula 1 Bahrain Grand Prix,
15 million passengers by 2010 to attract visitors from Europe
• Development of Al Areen with Phase one already complete,
• Construction of the 45km Qatar– including the Banyan Tree Desert Spa and Resort, the largest • Netting of international
Bahrain Friendship Bridge spa in the Middle East, and the state-of-the-art 'Lost Paradise conference contracts as
of Dilmun' Water Park. The development will include five-star Offshore Middle East, Arabian
• BD 303 million development of a hotels, residential villages, entertainment and recreational Property and Made in China
boardwalk, restaurants, and other facilities, shopping centers and the Al Areen Wildlife Park
family-oriented recreational & • An increasing focus on package
entertainment facilities at Al Jazair • Development of Durrat al-Bahrain (Pearl of Bahrain) – a holidays that target the golf-
Beach, Bahrain‘s main public beach network of artificial islands with the total investment of BD 0.38 niche market and the emerging
billion high-end cruise segment driven
by Arabs seeking luxury
• Development of the Al Farabi Care Centre in Busaiteen, a BD holidays
12.8 million (USD 34 million), health resort
• BD 0.46 billion residential, commercial and retail development

at Amwaj Islands
• Plan to develop a new expo city next to the Bahrain

International Circuit (BIC)

267
There has been an increase in number of tourists in Bahrain,
resulting in increase in GDP from the travel and hospitality
sector…..
• GDP contribution of the Tourism & Hospitality sector is estimated to be around 2% of Bahrain‟s GDP and it has witnessed a CAGR of 16.1%
between 2002 and 2008.
• The key reason for the growth in GDP from the sector has been the increasing tourist activity in Bahrain. Tourist arrivals (overnight visitors) went up to
4.9 million in 2007, up from 2.9 million in 2003, growing at a CAGR of 14%.
• The sector is well positioned to play a key role as the momentum for economic diversification builds.
Number of Tourist Arrivals, in „000s**

GDP from Travel & Hospitality (in BD million)
200.00
160.00
163.25
CAGR: 16.1% (2% of GDP)
120.00
80.00
40.00 66.53
(2.1% of GDP)
0.00
2002 2008
CAGR, 2003 to 2007: Overnight Visitors: 13.7%; Same-
day Visitors: 11.3%; Total: 12.8%
**The total visitors to the Kingdom in 2009 was 6.98 million, down by 12% since 2007
Sources: Industry Reports, World Tourism Organization, D&B Research & Analysis
268
With a 5% contribution to Bahraini employment, the sector has
witnessed a growth of 8.25% between 2002 and 2007 …
CAGR: 8.25%
Employment contribution
of the sector is estimated
to be around 5% of total
Bahrain labor market and
has witnessed a growth of
8.25% between 2002 and
2007)
Tourism has already created over 25,000 jobs in Bahrain to date, and could contribute BD 1.8 billion (USD 4.7 billion) to the
economy over the next decade, equal to 30% of GDP, according to a report published by the World Tourism Association.
Sources: CIO, D&B Research & Analysis

269
Tourist receipts and expenditure are also growing; however the
rate of growth has slowed down over the last two years…..
Tourism
Tourism Receipts
Receipts (in BD
- inbound million)
1 (in BD million) Tourism
Tourism Expenditure(in BD
Expenditures-outbound million)
2 (in BD million)
200 189
500 181
436 172
417
395 157
400 141 147
347
326
300 273
100
200
100
0
0
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
CAGR - 2003 to 2008: 6.0%; 2006 to 2008: 4.8% CAGR - 2003 to 2008: 9.8%; 2006 to 2008: 4.8%
• While there has been a moderate growth from 2004 to 2008 in tourism receipts (inflow) and tourism expenditure (outflow); this
growth has slackened over the past 2 years
• The CAGR for tourist receipts reduced from 9.8% during 2003-08 to 4.8% during 2006-08
• The decline in CAGR for tourist expenditure was comparatively less (from 6% during 2003-08 to 4.8% during 2006-08)
1. International tourism receipts are expenditures by international inbound visitors, including payments to national carriers for international transport. These receipts
should include any other prepayment made for goods or services received in the destination country. They also may include receipts from same-day visitors, except in
cases where these are so important as to justify a separate classification. Their share in exports is calculated as a ratio to exports of goods and services
2. International tourism expenditures are expenditures by outbound visitors, including payments to national carriers of the destination of visit for international transport.
These receipts also other prepayment made for goods or services received in the destination country. They may also include receipts from same-day visitors, except in
cases where these are so important as to justify a separate classification. Their share in exports is calculated as a ratio to exports of goods and services.
270
The key driver for growth in tourist arrivals in Bahrain is the
high influx of tourists from the Middle East, especially Saudi
Arabia…..
• Spur in tourist arrivals due to high influx of tourists from the Middle East: The Middle East has been the highest
contributor to the total number of tourists from 2003 to 2009 as compared to the other regions.
• Growth largely due to the increase in the number of visitors arriving from Saudi Arabia via the King Fahd
causeway: In 2009, 78.5% of visitors arrived into Bahrain by road (primarily the King Fahd causeway), 20.6% arrived by
air, and the remaining 0.8% arrived by sea.
• Almost 40% of visitors from Saudi Arabia tend to be day-trippers (Oxford Business Group 2008), whereas the visitors from
Europe, USA and Asia tend to come for longer duration for business purposes.
Sources: Industry Reports, World Tourism Organization, D&B Research & Analysis, Ministry of Culture & Information, Tourism dept
271
Tourists from the Middle East constitute over 70% of tourist
arrivals into Bahrain …
• Tourists from the Middle East,

comprise over 70% of total tourist
influx into Bahrain
• Amongst these, GCC Arabs account

for the highest proportion (61.4% in
2009)
• A total of 7.3 million tourists were

recorded to have visited in Bahrain
2009
 Leisure accounts for 75% of this
flow (5.5 million), while Business &
Journalism accounts for the
remaining 25% (1.78 million)
 A large component of these leisure
tourists is made up of same day
tripper from Saudi (estimated to be
around 40% of the total)
 While the Leisure tourist category
projects a CAGR of 7% between
2003 and 2009, Business travelers
projects a CAGR of 18% over the
same period
Sources: Industry Reports, D&B Research & Analysis, Ministry of Culture & Information, Tourism dept
272
Although Bahrain witnessed has a moderate growth in tourist numbers,
the average length of stay remains one of the lowest in the region thus
reflecting lower capture of tourist spend …
Regional Benchmarking – International Tourist Arrivals
The average length

of stay in Bahrain
has averaged 1.98
nights between
2003 and 2007
*The number of tourists refers to only overnight visitors; excludes same-day visitors
The data for the 2007 is the latest available data across various countries under comparison
• Saudi Arabia was the primary recipient of tourism activity in 2007 (accounting for 24% of the international tourists in the
region). Saudi Arabia‘s key boost for increase in tourism is the high influx of Muslims that go to Mecca for the pilgrimage of
‗oumrah‘ and ‗hajj‘. Egypt followed with 10.6 million tourists in 2007.
• Although, Bahrain had the second-highest CAGR of 12% from 2004 to 2007 in tourist arrivals, (slightly less than Syria
and excluding UAE), it had less than half the number of tourists coming into Saudi Arabia and Egypt in 2007.
• Bahrain recorded an average length of stay of 1.9 nights (2007). This is primarily due to the fact that a large number of
tourists come from Saudi Arabia to spend the weekend in Bahrain and the average spread occupancy remains low. This also
reflects low tourist spend relative to the region.
273
Bahrain has a relatively higher proportion of regional tourists as compared to
other regional tourist hubs such as Egypt and Lebanon, which receive a
healthy influx of visitors from outside the Middle East...
International Tourist Arrivals by Region (in Percentage)* International Tourist Arrivals by Purpose of Visit (in „000s)*
International Tourist Arrivals by Purpose of Visit (in '000s)
100% 12,000
10,366
10,000
75% 8,280
8,000
50%
6,000 5,274
25% 4,000 3,013

2,659 2,510
2,000 1,514
1,045 591 481
0% 159 85 27 21 244
Bahrain Egypt Jordan Kuwait Lebanon Oman Saudi Syria Yemen 0
Arabia Bahrain Egypt Kuwait Saudi Arabia Syria
Leisure, recreation and holidays Business and professional Other
Africa Americas Europe East Asia and the Pacific South Asia Middle East
* Data used pertains to 2007, which is the latest ‗common ‗data available across countries
• Almost 70% of the tourists coming into Bahrain were from • Amongst the countries in comparison; within the MICE
segment, Bahrain lags behind Saudi Arabia; however it is
the Middle East. In contrast to this, Egypt, Oman and Lebanon
ahead of Egypt, Kuwait and Syria.
witness a high percentage of tourists from outside the Middle
East (85%, 78%, 62% of tourists, respectively). • In terms of the leisure segment, Bahrain lags behind
Egypt, which has twice the number of tourists as compared to
Bahrain.
• Only 30% of tourists coming into Bahrain are from outside the
Middle East due to lack of tourist attractions and relatively low • Saudi has the majority of tourists arriving religious pilgrimage
promotion of Bahrain as a tourist destination. i.e. for oumrah‟ or „hajj‟.
274
The growth in both tourist receipts and outbound tourist
expenditure has been lower for Bahrain as compared to most of
the other countries in the region…..
International Tourist Revenue Receipts (in BD million)* Outbound Tourism Expenditure (Per Capita in BD) & Growth Rate*
Outbound Tourism Expenditure (Per Capita for 2007 in BD
and CAGR 2004-07)
1000 923 947 35.0%
International Tourist Receipts (in BD million)
900 29.9% 30.0%
800
2004 2005 2006 2007 CAGR (04-07) 700 19.4% 25.0%
600 18.5% 16.5% 20.0%
Bahrain 326 347 395 417 8.5%
500
Egypt 2,309 2,583 2,862 3,507 14.9% 330 357 15.0%
400
Jordan 501 543 777 872 20.2% 300 15.5% 10.8%
10.0%
Lebanon 2,040 2,086 1,872 1,882 -2.6% 200 4.2% 128
65 96 5.0%
Qatar 188 287 329 0 NA 100 8.1% 13 14 4
4.1% 1.9%
Saudi Arabia 2,445 1,941 1,868 1,969 -7.0% 0 0.0%
Bahrain Egypt Jordan Kuwait Lebanon Oman Saudi Syria UAE Yemen
Syria 679 733 763 1,206 21.1% Arabia
UAE 601 1,213 1,874 2,284 56.1%
Outbound Tourist Expenditure Per Capita (BD) CAGR (2004-07)
Yemen 52 68 68 160 45.1%
* Data used pertains to 2007, which is the latest ‗common ‗ data available across countries used for comparison
• Countries, such as the UAE and Yemen, have experienced • UAE and Kuwait had the highest per capita outbound tourism
huge growth in their international tourist receipts (CAGR of expenditure in 2007 (three times of the per capita outbound
56% and 45%, respectively, from 2004 to 2007). tourism expenditure in Bahrain).
• Bahrain‟s tourist receipts and respective growth rates • The growth rate of outbound tourism expenditure from
have been much lower than most of the other countries in 2004-07 has been much lower for Bahrain as compared to
the region. most of the countries. The growth has been the highest in
UAE, followed by Jordan and Egypt.
275
In terms of overall industry competititiveness, Bahrain is ranked 41st
across 133 countries and 5th in the region; with transport infrastructure
& price competitiveness being the primary upside factors…
• According to the Travel & Tourism Competitiveness (TTC) report; with a TTC Index score of 4.29, Bahrain is ranked 41st
out of 133 countries (middle east average of TTC Index is 4.08)
• The top 3 upside drivers for this ranking are Price Competitiveness, superiority of Ground Transport and Air Transport
Infrastructure
• The top 3 downside drivers for this ranking are lack of Natural Resources, inadequacies in regulatory framework for
environmental sustainability and strategic prioritization of Travel & Tourism
Sources: Travel & Tourism Competitive Index (World Economic Forum), D&B Research & Analysis
276
…And lack of natural resource attractions & focus on regulatory
framework being the primary downside factors …
The Travel & Tourism Competitiveness Index (MENA)
• Bahrain ranks 5th in the region in terms of overall industry

competitiveness
• The Kingdom:
 Outperforms the Middle East average in terms of
Business Environment & Infrastructure
 Is equivalent to the Middle East average in terms of
human, cultural and natural resources and
 Fares lower than the Middle East average in terms of
the regulatory framework
Sources: Travel & Tourism Competitive Index (World Economic Forum), D&B Research & Analysis
277
The Travel Reservations sector is overcrowded and saturated due to
unchecked proliferation of fly by night bucket shops leading to market
dilution …
Market for conventional travel operators offering There is market evidence indicating weaknesses in
outbound travel reservation services is highly regulation and lack of industry intervention in travel
saturated reservation segment
• Bahrain has around 202* operators offering travel • Proliferation of unorganized operators, constituting 40% of
reservation services the landscape of travel reservation segment is the primary
 Around 150-170* of these estimated to be actually indication of the loopholes in regulation
registered operators with a CR • Although BARD and the CAA have mandated travel
• As per guidelines of global regulator IATA (International reservation service providers in Bahrain to charge a 7%
Association of Travel Agents); for a population of 1 service fees for services offered, this is not enforced by
million, there should be a recommended maximum of 60 operators with evidence of major price undercutting and
travel service / reservation providers discounting particularly by the micro bucket shops
• Outbound per capita tourist expenditure of Bahrain is  Such unregulated practices lead to market dilution
estimated to be BD 330 as compared to BD 947 in the UAE
– this reiterates lower potential for more market play in the
outbound travel reservation segment
According to ABTA, in light of

such unchecked proliferation of fly
• Out of these service providers; more than 40% are small fly
by night operators; ABTA has now
by night ‗bucket shops‘ serving expat labor clients through
taken steps towards direct
deals on low cost carriers (Air Arabia, Jazeera etc.)
intervention in the licensing
• Only 48 travel reservation providers are ABTA registered
process
members (Association of Travel agents in Bahrain)
*Does not reflect the exact number of registered / operational businesses in this sector
Sources: Industry reports, D&B Research & Analysis
278
Further the limited market size of the outbound travel
reservations market does not justify growth in number of
operators…
GCC Travel Market (Travel spend in BD billion)
• The total spend by outbound

tourists in Bahrain on Leisure
travel is estimated to be around
BD 0.4 billion (2008), with
Business Travel estimated to be
at BD 0.07 billion (2008)
• The total spend in outbound

tourism is lowest within the GCC
across both segments – leisure as
well as business
• The limited size Bahrain outbound

travel market further does not
justify growth of additional players
in the outbound travel services
segment
Source: World Travel and Tourism Council Report (2008)
Sources: Industry Reports, D&B Research & Analysis, World Travel & Tourism Council 279
Although a number of projects are underway to bridge the gap in
terms of family oriented attractions; indicators suggest the need for
investment to augment catchment of tourism spend …
• On an average, 38% of tourist arrivals in Bahrain are same day visitors (primarily
from Saudi) This implies a strong gap in terms
• The average length of overnight stay in Bahrain is one of the lowest in the region (2 of catchment of tourism spend in
nights as of 2009) Bahrain
A number of developments have been undertaken to bridge the prevalent gap in Bahrain for family oriented attractions:
• Developing Bahrain as a family oriented destination has been one of the charters of the Tourism Development Plan
• A number of family oriented attractions have been developed in the last 5 years, e.g. Al Areen Holding Company‘s water park,
Lost Paradise of Dilmun, and Tameer‘s Adhari Park
• Bahrain‘s malls and entertainment complexes have typically been a leading attraction in terms of bringing in weekend visitors
from the GCC, particularly from Saudi Arabia
 Majid Al Futtaim‘s City Centre Mall, which opened in October 2008, has been developed with the regional weekend
tourism market in perspective, seeking to offer retail, accommodation and entertainment in the same location
• Further, Khaleeji Investment Bank is now considering investing in a BD 377 million (USD 1billion) mixed-use leisure and
entertainment project in Bahrain, which is also likely to be located in the south of the island
Regional best practice further justifies investment in family based attractions - More than 30 multi-faceted entertainment
resorts and theme parks are expected to be built by 2012 with a projected investment of BD 22.8 billion (USD 62 billion),
according to CMPi UAE. However, development of such attractions has to built around a focused positioning strategy for
developing Travel and Tourism in the Kingdom

A niche strategy to develop Bahrain as a luxury weekend destination
would not only serve to augment tourist spend catchment, but also
enable segments such as adventure tour operators and tour guides …
• Bahrain could look at developing itself as a luxury weekend getaway with a focused development on a
product around its waterfronts, beaches and coast line
• The strategy would be directed primarily to catch high spending short staying tourists from the region
• Although Bahrain is an island; it does not have

any developed public beach parks (such as the
Luxury resorts Jumeirah Beach Park in Dubai)
• A project involving investment of BD 303 million

to develop a boardwalk, restaurants, and other
family-oriented recreational & entertainment
Product
elements for
facilities at Al Jazair Beach, is already underway
Water sports
family oriented Rehabilitation
& Beach
luxury weekend spas • A more comprehensive package incorporating the
Attractions
destination necessary ingredients for a luxury weekend
destination is required
• The development of such a niche package also

enables SME opportunities for adventure tour
Family oriented
cultural events
operators (water sport packages, beach safaris,
dhow cruise, scuba diving, snorkeling etc.) and
tour guides

With a rich cultural heritage dated back to the Dilmun Civilization as
well as the traditional Pearling Industry, heritage tourism offers a
strong niche potential for Bahrain to develop …
Bahrain has inherent potential for promotion of cultural and heritage tourism
• Bahrain has 108 attractions earmarked as tourist destinations by UNESCO

• Some of these heritage sites include the Bahrain National Museum, Bahrain fort, Al Fatih Mosque, The
Khamis Mosque, Riffa Fort
• Bahrain cultural heritage dates back to the Dilmun civilization
• The Government is making efforts towards the preservation of its Pearling heritage, under the patronage of
Shaikha Mai, Minister for Culture & Tourism
 Within Muharraq 17 historic houses are being restored, many of them once owned by pearl merchants,
or connected with the trade.
 The Qal‟at al-Bahrain, a 16th-century fort built over a bronze age settlement, listed as a world heritage
site in 2007, is being restored
 Two similar applications are pending at Unesco, relating to fields of Neolithic burial mounds as well as
the pearling project
 The World Heritage Committee is being organized in Bahrain in 2011 (it has been 14 years since any
country in the Arab World has hosted the World Heritage Committee)
 There are plans to establish the regional center of UNESCO in Bahrain
The development of heritage tourism in Bahrain around the traditional Pearling industry and Dilmun civilization heritage,
will proliferate the market for destination management companies and tour operators focused on promoting thematic
heritage tours (cultural walking tours, guided tours, thematic safaris, cultural shows / events)

282
Medical tourism is another strong growth opportunity for
Bahrain, wherein the Kingdom could capitalize ion ts well
integrated healthcare system …
Global Trends & Market Size
• Unlike other tourism sectors, medical tourism has grown during the economic downturn as countries around the world have
struggled to control health care costs and ensure medical procedures are available when needed
• In the US, there are 50 million people uninsured, 250 million underinsured, and 150 million without dental insurance; therefore if
they need medical services, high cost of local hospitals becomes a deterrent, in other countries like Canada and the UK, the
average wait times associated with procuring treatments serves as a deterrent
• Another key driver is the availability of certain medical procedures, which is a problem in underdeveloped countries and some
Middle Eastern states
• These factors have helped boost the value of the medical tourism industry to about BD 20 billion a year, with over 50 countries
actively seeking a slice of the pie
• It is estimated that people from Afro-Asian countries spend as much as BD 7.5 billion every year on healthcare services from
outside their countries
• The sector is associated with strong global play wherein Thailand, Malaysia and Singapore together currently attract as much as
ten times more medical tourists than India. Hong kong and South Africa are emerging as big medical tourism destinations along
with Israel, Jordan, Cuba and Costa Rica. Other countries like Greece and Croatia plan to be attractive healthcare destinations
As an integral part of the national economy of Bahrain, medical tourism offers further potential for growth
• With an integrated world-class healthcare system advanced medical practices backed by cutting-edge technology, specialized clinics,
comprehensive services and internationally renowned private hospitals offering utmost level of integrated healthcare to international
patients; Bahrain is in a unique position both in terms of culture and location to further tap potential in this segment
• The Al Farabi Care Centre in Busaiteen, a BD 12.8 million (USD 34 million), is already earmarked for development as a health resort
• Rehabilitation, Alternative medicine and Plastic and re-constructive surgery, offer attractive potential fro growth, with a need for specialist
clinics providing such services

283
…with focused investment around key consideration areas to
capture a slice of this BD 20 billion global opportunity …
Key Considerations for Opportunity Capture
• Quality of care offered with focus on development of GCC-wide medical accreditation standards
• Improvement in perception, including safety or quality of facilities and infrastructure, through investment in medical facilities
• Availability of leisure or cultural attractions, as medical tourists will often combine medical and leisure tourism
• Focused / specialized packages around niche / growing segments such as Dental Tourism, Cosmetic Surgery, Alternative Medicine and
Health Spas
Key Facilitators in Bahrain

• Promotion through government policy, facilitating effective working of entrepreneurs and tourist industry to attract medical tourists
• Medical expertise that is on par with international standards
• Medical entrepreneurs who develop hospitals with required infrastructure and management style
• Marketing events to increase visibility and acceptance of products in the region
• Healthcare projects such as the Dilumunia Health Island
• Development of family-based entertainment, cultural & heritage tourism as well as resorts and spas as part of a holistic approach for
promoting Bahrain is a key investment area
• Growing demand from GCC tourists for an all encompassing package of physiotherapy and rehabilitation services - on an average on
a weekly basis, the 7 physiotherapy centers in Bahrain receive 30% - 35% of patients coming from other GCC countries such as
Saudi, Qatar and Kuwait
• Niche positioning strategy and marketing campaign to capture regional potential (70% of tourists in Bahrain are from the region)
Regional Competition – Focus on UAE

The UAE is attempting to promote the “quality” of its healthcare services with 14 hospitals in the UAE having been accredited by the JCI
in the US, one of the world's leading accreditation organisations. It has also teamed up with Harvard Medical School to operate Dubai
Healthcare City, as a state-of-the-art 'centre of excellence' for clinical and wellness services, medical education and research aimed at
competing with low-cost health care providing countries in Asia. The UAE‘s Ministry of Health is at the forefront of developing the
necessary infrastructure to attract medical tourists

284
With strong recent performance, the MICE segment offers even
further potential for growth, on the back of a number of drivers …
Bahrain‟s MICE segment is pegged to be growing at 5% yoy. An estimated 21,000 visitors attended events at the
Bahrain Exhibition and Convention Authority (BECA) in 2008, with 27,000 visitors for 2009. Some of the key events
organized annually / bi-annually in Bahrain have been listed below
The BECA‘s efforts in netting

a number of exhibitions and
conferences is reflected in the
fact that business travelers
into the country have grown at
a CAGR of 18% between
2003 and 2009

285
…including planned capacity increase at BECA, growth in
number of planned events and venue facilities offered by the
planned @Bahrain project ….
Planned increase in
conference capacity • There is definitely potential
by BECA of promoting Bahrain as a
MICE hub, especially on the
back of:
o Bahrain‘s close proximity

to the Eastern province
Netting of international and potential for
conference contracts as MICE Growth Growth in events such attracting the MICE traffic
Offshore Middle East, as F1, Bahrain Air from this part of the
Arabian Property and Drivers Show
region
Made in China
o With overselling /
saturation of Dubai in the
Middle East as a key
MICE destination,
Increase in conference exhibition organizers are
capacity through now looking at alternative
initiatives such as destinations
@Bahrain
While there are strong growth drivers for Meetings, Conferences and Events (M,C,E) in
Bahrain; the maximization of Incentive management (I) needs to be focused on to
augment the level of catchment of tourist spend

286
…Which is viewed as an excellent initiative focused on augmenting
capacity for meetings, conferences and events as well as capturing
share of wallet of business tourists…
• @bahrain is a unique commercial, educational and entertainment destination that is strategically located on 1 million square
meters next to the Bahrain International Circuit (BIC). It provides rich, cutting edge experiences that span 10 interconnected
industry sectors: Exhibition & Convention Facility; Hotels; Multi-Purpose Indoor Arena; Lifestyle Plaza incorporating Retail &
Leisure and Techtainment; Auto Club and Engineering Facility; Research Institute; Techno park; Light Industry; and Education
and Training
• @bahrain is a state-of-the-art location for business growth – attracting foreign direct investment, joint venture partnership
arrangements, direct ownership and landlord-tenant relationships. @bahrain is an international trend-setter, with a focus on
environmental advocacy and innovative technological practices, ensuring that the overall composition of the business will
inspire future commercial strategies in the region.
• @bahrain will be home to the Middle East‘s largest purpose-built indoor arena holding seating for 10,000 people, dedicated to
staging world-class concerts, family shows and festivals space for auto shows, intimate events, premier sporting matches,
equestrian extravaganzas
• Arena@bahrain will use the latest technologies to accommodate as many different types of events as possible. Because of its
flexibility, the arena can be tailored to host events for a variety of audiences. The venue address meets an unmet demand for a
greater variety and quality of entertainment venue. As the first indoor arena in the region, @bahrain will be able to hold major
events regardless of the weather or staging requirements.
• Lifestyle@bahrain will offer a range of restaurants and boutiques to provide comfort and convenience to a wide array of
visitors. Customers will experience an intimate street-like atmosphere as opposed to that found in large-scale shopping malls.
Whilst the focus is primarily on providing food and beverage to visitors, there will be small merchandise and retail servicing
shops targeted at the types of visitors coming to @bahrain as well as additional entertainment options like cinemas and a
bowling centre. Techtainment@bahrain will also be located within Lifestyle@bahrain

287
While the MICE segment is pegged for strong growth across the
region; Bahrain faces stiff competition from emergent MICE segments
in Qatar, Oman and Abu Dhabi …
The region‟s MICE segment is pegged for strong growth: According to a study done by GIBTM 74% of buyers at the GIBTM would be holding
events in the Gulf and the Middle East North African region in the coming 12 months; furthermore, another 25% would hold more events in the
same regions in the coming 12 months. However, Bahrain faces strong competition from Qatar, Oman and UAE to capture share of wallet of
the lucrative MICE business
Qatar
• Concentrating on building up MICE infrastructure, on the back of an ambitious tourism development plan until 2010 with an outlay of BD 5.6 billion
• More than 40 hotels are being constructed in Qatar, a supply which should satisfy demand when MICE traffic increases in the future
• Current stock of approximately 3300 hotel rooms is expected to increase to 10,000 in the next 4 years, with the Qatar National Exhibition Centre being
extended while a brand new convention centre will be set up within close proximity of the city
• Like Bahrain, Qatar‘s strength lies in the conference, meeting and exhibition segment, though not so much in the incentive segment
Oman
• With its natural and cultural attractions that include old castles, forts, desert, flora and fauna, Oman provides a good setting for MICE events
• Further, Oman plans to build a tourism city or tourism integrated project, including hotels, tourist village, market, natural park, golf hotel, and malls, at
a cost of BD5.6 – 7.5 billion on an area of 34 square km
• The state is building up new projects such as 'The Wave', 'The Blue City', 'Assalam', etc.
• Oman has an advantage over Bahrain and Qatar in its rich cultural and natural attractions offering incentives for choice in venue to exhibition
organizers
UAE
• Dubai, followed by Abu Dhabi is still the emergent top MICE destination of the Middle East (although event organizers are now looking at other
regional venues with the saturation of Dubai especially in the exhibition segment)
• According to the Business Travel and Meetings Exhibition (GIBTM), held in March at the Abu Dhabi National Exhibition Centre, the top five
destinations for the multi-billion dollar MICE business in the coming years are likely to be Dubai, Abu Dhabi, Egypt, Morocco and Oman.

288
...Therefore, a holistic approach is required to capture MICE potential,
with a focus to increase Bahrain‘s share of meetings, conferences &
events coupled with maximized incentives offered to MICE tourists …
Cultural & Rehabilitation spas Luxury resorts

Heritage
tourism
Incentive Management
Water sports, Beach
Family Cultural parks, Family beach
events / shows Promotion of attractions (Safaris,
Bahrain as a Dhow Cruise, Island
Mini tour operators that luxury family tours)
organize, cultural oriented weekend
walking tours, guided getaway
tours, thematic safaris,
cultural shows / events
Growth in MICE
segment
Planned increase in
conference capacity by
BECA
International conference
contracts as Offshore Growth Growth in event s such Growth in Meetings,
Middle East, Arabian
Property and Made in Drivers as F1, Bahrain Air Show
Conferences and Exhibition
China segment
@ Bahrain

289
Additionally, a cohesive and unified approach amongst key industry
stakeholders is required for a unique branding of Bahrain within the
region …
Bahrain Tourism
BCCI (Tourism Promotion Project
Affairs) (Minsitry of Culture
& Tourism)
Key Industry
participants: e.g. Association of
Kanoo, Dadabhai Bahrain Travel
Agents (ABTA)
Bahrain Travel & Tourism Industry

Gulf Air Bahrain General
Stakeholders Tourism Authority
(BGTA)
Cohesive effort required to build a unified niche positioning for Bahrain (e.g. weekend luxury getaway)
• A cohesive and unified approach amongst the various industry stakeholders for effective branding of Bahrain
• Countries throughout the region are seen to be making effort and investment in developing a unique branding proposition
o Abu Dhabi has positioned itself as a cultural center for the Gulf
o Dubai positioned itself as a shopping / retail and entertainment destination
o Oman through the Muscat festival is increasingly being associated with a cultural and entertainment theme
o Saudi Arabia is the epitome for religious tourism , holding sanctity for Muslims all over the world
o Qatar is actively focusing on sports tourism

290
A focused approach for addressing gaps at midstream level will call for
investment in the Tours & Attractions segment in Bahrain…
A focused approach on addressing gaps at midstream level ….
Focus on promoting Focus on augmenting Focus on augmenting

Focus on Heritage /
Bahrain as a luxury MICE tourist potential regional tourist footfall
Cultural Tourism
weekend destination through incentivization and spend
…will further call for investment and addressal of gaps in the ‗Tours & Attractions segment‘
• Mini Tours:
 Guided city tours Although Bahrain has been making
 Cultural / Thematic tours around key attractions significant efforts in developing family
 Safaris oriented attractions over the recent
 Dhow Cruise / Yacht tours / Island Hops years; a focused approach around mini
 Guided heritage tours tours and attractions is essential in
order to augment the level of incentives
• Attractions and increase share of wallet of
 Water sports – jet ski, parasailing, glass bottom boat etc. international, regional and MICE
 Indoor attractions – gaming, bowling centers tourists
 Theme parks
 Mall attractions – family shows

291
The UAE and particularly Dubai serves as an exemplary model in the
region for thematic attractions, tours & entertainment, by virtue of which
the city has gained a world class reputation as a tourist destination …
Dubai is an exemplary model within the region for thematic attractions, tours and entertainment, by virtue of which the city has
gained a world class reputation as a tourist destination
• Key Attractions in Dubai include Dubai Museum, Madinat Jumeirah, Wild Wadi Water Theme Park, Majlis Gallery, Wonderland
Theme Park, Jumereiah Beach, Bastakiya District, Bait Al Wakeel, Dubai Zoo, Heritage Village and Diving Village, Magic Planet, Al
Nasr Leisureland, Uptown malls (MOE, Dubai Mall, Ibn Battuta Mall, Mirdiff, Sheikh Saeed‘s House, Palm Jumeirah, Hatta Heritage
Village, Atlantis Hotel)
• Another major contributor to the country‘s flourishing T&H sector is the Dubai Gold Souq, which has helped the city gain the
distinction as ‗the city of gold‘.
• Burj Khalifa, the tallest tower in the world; Ski Dubai, the world‘s largest snow park and the Burj Al Arab, one of the world‘s best
luxury hotels, also add to the UAE‘s reputation as a global travel destination
• Planned attractions between 2009 and 2010 include Aqua Dunya Theme Park (The largest theme park in the Middle East); Cirque
du Soleil (circus); Dubai Sports City (Mixed-use sports-orientated development); Dubai Zoo (new zoo at Dubailand); Dubailand
(Mega-project twice the size of Disney World); Great Dubai Wheel (The world's largest observation wheel); Marvel Theme Park
(Will feature rides themed around Marvel comic book superheroes such as Spiderman, the X-Men and the Fantastic Four);
Restless Planet (Educational theme park); Universal City and Studios (Theme Park)
• Additionally, there are over 100 tour operators in Dubai and around 51 in Abu Dhabi , promoting / selling mini tours such as skiing,
go-carting, bungee jumping, paragliding, scuba diving, ice skating, dhow cruising, desert skiing and city sightseeing tours
Backed by government prioritization, the UAE T&H sector recorded a 5- year CAGR of 24.8% reaching a total value of BD 15.3
billion in 2008. The UAE government is also focusing on Abu Dhabi to augment tourism, with a 2015 vision to attract 3 million
tourists (Leisure: 40.43%; MICE: 7.85%; Business (51.71%)
Sources: D&B Research & Analysis, Dubai Tourism, Abu Dhabi Tourism Authorities
292
Within the Logistics support segment, the Causeway and the recently
established KBS port have been instrumental in boosting tourism influx…
CAGR (Airport, 2003 to 2009): 15.6%

CAGR (Causeway, 2003 to 2009): 14.9%
CAGR (Ports, 2003 to 2009): 49.9%
**The number of tourist arrivals incorporates passengers transiting through Bahrain
• Overall, total travelers) by route has increased by a CAGR of 15.1%, with Ports showing the highest CAGR over the
same period (commensurate to the opening of the KBS port )
Sources: D&B Research & Analysis, Industry Reports

293
Within Air Logistics, while there is no apparent potential in the near term
for a third local carrier, there is room for play within the outbound air
network coverage as well as in air charter services …
The Logistics Support segment within the Travel & Tourism Value Chain comprises Airlines & Tourist Charters,
Ground Transportation (Rent a car companies, Limousine Services, Public taxis, Tour buses) and Cruise Lines
Airlines / Air Charter Services
Airlines
• Bahrain has a limited size market with no apparent requirement for an additional local carrier
• In terms of outbound traffic; there is still need to expand network connections into the following high yield regions:
China and Far East; South India ; North Africa; West Africa and Sub-Saharan Africa Indonesia and Russia
• Bahrain serves as a hub for 37 airlines operating to 52 destinations ; while in comparison, Dubai alone has 126 airlines
to 200 destinations - 1-2 major carriers per year over the next 5-6 years are being planned to be brought into Bahrain
Air Charter Services

• Currently there is one charter airline each from Holland, Germany, UK, etc. coming into Bahrain as a transit stop and
going to Colombo, Goa, Phuket, Maldives, etc.
• These charter airlines bring in revenues from fuelling, catering and duty free
• Therefore, there is an opportunity in the future to bring in more holiday charter airlines from UK, France, Belgium,
Germany, etc. flying into the far-east routes
• At the same time, there is no real opportunity for local charter companies to operate in Bahrain (i.e. ferrying business
passengers from Bahrain – there is already a company MENA Jets in this space, which is not doing very well)
• However, there is a space in this segment for 1 – 2 players to be based in Bahrain, while serving the region (flying
passengers from Abu Dhabi, Kuwait, Dubai, etc.)

294
Significant improvements are required and are being planned
by BAC for the airport to support the growing number of
passengers and aircraft movements…..
• While the airport currently has the capacity to handle 3

million passengers, it handles around 9 million
passengers
• Aircraft movements and number of passengers are

increasing substantially, but ground infrastructure has not
kept pace with this increase
There is a huge need for airport infrastructure

to be developed to support the increase in
passengers and aircraft movements.
Focus of Future Expansion Plans
• Terminal 2 is being planned by 2012-13. Thereafter, terminal 1A will be built over the next 2-3 years. Once built, these
two terminals will have the capacity to handle more than 9 million passengers and the current terminal will be
demolished and rebuilt as a new terminal
• The airport will ultimately create 110 stands, including 87 with contact gates. Currently there are 25 stands, including
seven air-bridges
• A cargo village (an expanded cargo handling facility capable of handling 1.5 million tonnes of cargo) is being planned
• The plan includes the development of an adjacent Airport City with state-of-the-art facilities and infrastructure, including
hotels, conference centers, retail, and recreational facilities.
With the planned developments, BAC forecasts that BIA will be able to handle 28 million passengers by 2038. The work of
the project will be completed in six phases between 2011 and 2038. The overall budget for the project is BD 1.8 billion.

295
On the back of the Kingdom‘s efforts in attracting cruise liners over the
recent past it is expecting to attract 145,000 cruise tourists in 2010;
Bahrain needs to make significant efforts in terms of augmenting cruise
tourist revenues through tours and attractions …
• The worldwide cruise industry carried 13.2 million passengers in 2008, a 4.8 per cent increase from 2007
• Within the region, Dubai is main hub for cruise tourists in the region, with 380,000 cruise tourists expected in 2010 up from 260,000 in
2009 – this is on the back of the new Cruise Terminal in Port Rashid is expected to be operational by early 2010
o The biggest cruise liner, ‗Brilliance of the Seas‘ (Royal Caribbean International) docked at the Port Rashid in January 2010
• In Abu Dhabi, the Tourism Authority (ADTA) is expecting nearly 200,000 new arrivals in the next season, which runs from November to
March 2010, compared to 125,000 in the same period last year
• In Oman, the number of ships docking in 2010 is expected to increase by 40 per cent compared to 2009
• In Bahrain, currently three cruise ships a week are docking in Manama, accounting for 120,000 passengers a year
Cruise Liners coming into Bahrain • The Kingdom aims to attract around 145,000 cruise visitors
in 2010
(**as part of a pan Gulf cruise including Abu Dhabi, • Bahrain is a newcomer to the regional cruise market and it
Fujairah, Muscat and Khasab) critical for the Kingdom to make sure that its infrastructure is
capable of handling higher passenger volumes
• Costa Cruises, Costa Luminosa • As part of the government‘s plans to promote cruise tourism,
Sheikh Khalifa bin Salman Port is to have a new passenger
• Royal Caribbean, RCL Brilliance of the Seas
terminal and a dedicated cruise liner terminal, which is in its
• Crystal Cruises, Crystal Serenity final stages of completion
• Costa Cruises, Costa Deliziosa • While none of these cruise liners actually commence from
• Silversea, Silver Wind Bahrain; and dock in the Kingdom as part of a larger Gulf
cruise; no real gap exists in this segment supporting market
• Sea Cloud Cruises, Sea Cloud Hassar entry for a Bahrain based cruise liner
The positioning of Bahrain as a luxury weekend destination within the region and augmenting the level of
incentivization through tours & attractions will compliment capture of cruise tourism revenues
Sources: Industry sources, D&B Research & Analysis

296
Within Ground Transportation, the Car rental and Taxi segments look
apparently overcrowded…
Ground Transportation
Taxis
• With over 1,000 private taxis in Bahrain in addition to the 150 taxis operated by Arabian Taxis; there
is no apparent gap prevalent in this segment . In contrast, in the UAE, taxi operators are mostly
licensed companies, with regulation to control proliferation of private / individual taxi operators
Car Rental Companies

• A number of international (such as Hertz, Avis, Sixth) and local car rental companies (such as
Bahrain Car Rental, etc.) make up the footprint of this segment (there are over 40* local mainline car
rental companies and over 60* mainline rent a car companies estimated to have a presence in
Bahrain)
Limousine / Chauffer driven taxi services

• There is currently a gap in terms of professional chauffer driven services in Bahrain - The need for
such services is to fill the gap between car rental companies and public taxis
*Does not reflect the exact number of registered businesses in this sector
Sources: Industry reports, D&B Research & Analysis
297
… however pockets of opportunity exist in Shuttle Services, Guided
Tour Buses and Chauffer driven limousine services …
Gaps/Opportunities in Land Transport
There is a strong movement of Saudi tourists coming via the causeway into Bahrain
Shuttle buses o Over 70% of tourists into Bahrain are same day visitors and primarily from Saudi
Arabia (with around 79% of such visitors coming via the causeway)
o Additionally, there is also a large scale movement of leisure / business passengers
from Saudi coming into Bahrain to fly from the Bahrain International Airport (BIA),
due to the shorter distance and facilities at the BIA (in comparison to the Saudi
International Airport)
• Currently, there are only a few operators e.g. Bahrain Limo – SABCO, BASETCO that offer
shuttle transit services between Saudi and Bahrain
• On the back of existing demand as well as potential from the Qatar – Bahrain Causeway,
there is likely room for at least 2-3 operators offering transit shuttle services between
Saudi and Bahrain.
• The need for shuttle buses is further augmented by prevalence of gaps in terms of local
shuttle services between he airport and key nodal points in Bahrain for shuttling and
ferrying airport passengers.
There are no tourist buses / local guided tour bus companies in Bahrain (e.g. the Big Bus
Tourist Buses Tour in Dubai) covering key attractions. However, this stems largely from gaps in inbound
tourism and the lack of inbound / mini tour operators.

Within the hospitality segment, Bahrain has around 101 starred hotels
and 82 hotel apartments; with length of stay averaging around 1.98
nights between 2003 and 2009 …
• The value added by hotels and other accommodation was

BD 100.3 million in 2008 (contribution of 1.2% to the GDP)
• Bahrain has a wide-range of hotels to suit every style and
budget
• Accommodations range from five-star luxury hotels (such
as the Ritz-Carlton, the Gulf Hotel) to the budget hotels to
hotel / serviced / non-serviced apartments
• As at December, 2009, the total stock of hotel rooms in
Bahrain stands at 6,722, with a total of 101 starred hotels
across the Kingdom
o As against this, UAE has a total of 434 hotels with
an inventory of 52,848 rooms
• Additionally, the Kingdom is estimated to have around 82
hotel apartments (serviced and non-serviced)
* As at December, 2009
• Bahrain‘s hotels performed particularly well in the last 5-6
years, and MICE tourism has been a major driver of
growth.
• The number of hotel occupancies rose from 695,027 in
2003 to 996,007 in 2009, and tourist nights in hotels rose
from 695,027 to 996,007 over the same period
• The average stay per person marginally increased from
1.89 nights in 2002 to 2 days in nights
• Length of stay has averaged 1.98 nights between 2003
and 2009
*Does not reflect the exact number of registered businesses in this sector
Sources: Industry reports, D&B Research & Analysis 299
…and overall occupancy levels across hotel accommodations around
54%...
• The consolidated occupancy levels

across all categories of starred hotels
stood at 54.1% (calculated as Total
rooms sold / Total rooms available)
• Occupancy levels of 2 star and 1 star

hotels remain low, primarily due to the
low influx of international budget tourists
into the Kingdom
• This is coupled with the high influx of

day trippers particularly from Saudi
whose occupancy remains largely
centered around weekends
• 5-star and 4-star hotel occupancy levels

have been doing reasonably well (in
context of the region) due to growth of
Overall Occupancy levels (across categories), 2009: business travelers into Bahrain
54.1%
Sources: Industry Reports, D&B Research & Analysis, Ministry of Information & Culture, Tourism dept 300
While the number of hotel tourists as well as the number of tourist
nights have projected a moderate growth since 2003, with average
length of stay slackening during the same period…
Period of slackening, further reflecting

stagnation in catchment
The metric of
international tourist
nights is seasonally
skewed largely
towards the F1
CAGR (2003 to 2009), Number of tourism nights: 7.2%

CAGR (2003 to 2009), Number of hotel guests: 6.2%
CAGR (2003 to 2009), Average stay: 0.9%
• The value added by hotels and other accommodation was BD 100.3 million in 2008 (contribution of 1.2% to the GDP)
• According to industry participants:
 Bahrain does not offer attractions (in comparison to Dubai) to be marketed as a destination for inbound tourism – therefore the
most optimum strategy is to market Bahrain as a business tourism destination (MICE segment) and create budget attractions
for catchment of tourist revenues from business travel groups/ conventions as well as families
 There is a strong gap in Bahrain in terms of budget attractions (especially around Bahrain‘s waterfront, beaches and coast
line) such as dhow cruise, glass bottom boat trips, safari trips, island hopping trips with strong market potential for adventure
tour operators to bridge this gap
Sources: Industry Reports, D&B Research & Analysis, Ministry of Information & Culture, Tourism dept 301
Bahrain is a laggard in the region in terms of number of rooms /1,000
tourists, accentuated due to the effect of the high influx of same day
visitors; however, the occupancy levels remain comparable…
No. of Rooms (in „000s) and No. of Rooms per 1,000 Occupancy Rates in Hotels and Similar Establishments
Overnight Tourists in 2007 in 2007 (in %)
* Data used pertains to 2007, which is the latest ‗common ‗ data available across countries used for comparison
All the countries under comparison had a higher number of In terms of occupancy levels in 2007, Bahrain had higher
rooms /1000 over-night tourists as compared to Bahrain occupancy levels as compared to Jordan, Oman, Saudi
Arabia and Qatar. However, it lagged behind Egypt and
Egypt and Saudi Arabia** had the highest ratio amongst all the Syria.
countries
The average occupancy rate in 2009 across starred hotels
**Saudi‟s share reflects the influx of religious tourists for „Haj‟ stands at 42%, with 60.5%, 61.4%, 42.1%, 26.4% and 20.9%
and „Oumrah‟ respectively for 5-star, 4-star, 3-star, 2-star and 1-star
accommodations
Sources: Industry Reports, World Tourism Organization, D&B Research & Analysis, Ministry of Information & Culture, Tourism dept
302
However, with the current pipeline of projects; an oversupply situation is
expected by 2011 …
• Overall, Bahrain will have 15 new five-star hotels and 14 four-star hotels within three years, creating nearly 5000 additional
rooms (Gulf Daily News 2008), bringing the total number of rooms from around 7200 currently to around 12,000
• Albeit strong growth driven by the MICE segment, with the current pipeline of planned projects (even at 70% completion),
an oversupply situation is likely to emerge by 2011
• The kingdom‘s luxury hotels and resorts have intensified their efforts to promote themselves overseas in a bid to capture a
share of the increasingly competitive international luxury tourism market
• The Bahrain Exhibition and Conference Authority (BECA) coordinated the presence of a number of Bahraini companies,
including the Banyan Tree Resort and Spa and the Gulf Hotel and Convention Centre, at the IMEX 2009 convention in
Frankfurt in a bid to raise Bahrain‘s profile as a business and luxury tourism destination
• Several international chains have entered and will enter the local market for the first time over the next three years:
 Japan‟s Nikko Hotels International plans to open the 300-room JAL Bahrain Resort and Spa in 2011
 Starwood has announced plans to open a 300-room St Regis Hotel on a reclaimed island just off the coast
of Manama, while Conrad Hilton will unveil a 250-room property on Reef Island; both are due to launch in
2011 and in addition, Rotana aims to open a 407-room five-star hotel in 2010
 Taj Hotels, Resorts and Palaces, plans to launch two five star hotels in Bahrain
 The Turkish brand Rixos has announced plans to develop a five-star, 286-room hotel as part of the Marina
West Development on the western coast, which will open in 2010
 Marriot International plans to develop a 323-room Marriot Renaissance in Amwaj Islands, which will
combine a waterfront location with easy access to Manama‟s airport
 Planned deluxe, mid-range and four-star hotels will target business tourists and families
o Accor plans to open a deluxe Sofitel in Zallaq, a luxury resort with a seawater spa, in 2010
o Meanwhile, IHG will open a Holiday Inn in Seef and a Holiday Inn Express in Manama in 2011
o In October 2008 Marriot entered the market with the launch of the Marriot Executive Apartments,
while Kempinski is set to open two separate Kempinski properties, with a combined total of 550
rooms, in the Bahrain City Centre development in the second half of 2009

303
At the same time, growth in the hospitality sector has strong potential
within the Resorts & Spa segment, in line with Bahrain‘s need to have a
niche positioning as a luxury weekend getaway…
In line with developing a niche strategy, growth in the Hospitality segment should ideally be around Luxury
resorts and waterfront property offering a consolidated package offering both leisure and rehabilitation
Potential for resort & spa segment developed around the concept of a luxury weekend destination
Part of this gap is likely to be filled with projects such as the Durrat Al Bahrain and Amwaj Islands; both of which feature
beaches and will provide a boost to the resort and spa segment
Despite being an island, Bahrain currently has very few beaches, though this will change as these major resort
developments come on-line

304
The Hospitality supplies & Support segment offers opportunities for
SMEs …
With a spate of hotel developments in the pipeline, the hotel supplies & support segment with a large play of SMEs remains
buoyant
• Laundry services: Professional laundry services in Bahrain to

cater to the requirements of international hotel chains setting up
base in Bahrain
• Hotel Maintenance Services: Integrated professional
companies offering a spectrum of services including air-
Spiral / Derived conditioning, plumbing and heating, kitchen / catering
• Five 5 star and fourteen 4- Demand refrigeration, cleaning, general housekeeping equipment, repair,
star hotels expected to carpentry and painting; covering the needs of various
come up in the next 3 accommodations through contracted services and / or reactive
years support
• Number of rooms expected o While it is estimated that there are over 70 SMES
to go up from 6700 providing contract cleaning and over 25 offering general
(current) to over 12,000 maintenance services; only a few specialize in hotel
maintenance services
• Hotel supplies: Currently the market for hotel supplies – linen,
shampoos, soaps - is highly disintegrated and served by
distributors who usually procure from Dubai wholesalers
o With expected growth in the Hospitality segment, demand
for integrated distributors specializing in hotel supplies
presents growth opportunities for SMEs

305
With over 2500 restaurants and cafes in Bahrain; the next spate of
growth will be driven by new developments taking place across the
Kingdom…
• With over 2500 restaurants & cafes in Bahrain;

Favorable
demographics the sector has representation from all the major
with more than fast food chains that have a presence in Bahrain
95% of
population under • The sector remains buoyant on the back of
65 growth in new developments across Bahrain as
well as expected increase in tourist footfall,
especially within the MICE segment
New
developments
Changing such as Amwaj, • Within the Restaurant & Cafe segment, the
lifestyle patterns @Bahrain, potential for Specialty Fine dining is relatively
Durrat Al low, based on the fact that the concept revolves
Restaurant Bahrain etc. around alcohol which is considered to be
& cafes inconsistent with Bahraini culture
Drivers
• Market buoyancy is contributed by growth
potential offered by the QSR industry (restaurant
franchising) with planned capacity expansion of
various existing players in Bahrain
Growth in
tourism
Population • The industry is estimated to be growing at the
especially on the rate of 10% to 15% yoy
growth (6% yoy)
back of MICE
segment
• Special cuisine budget restaurants offer strong
growth potential

306
While there is limited potential in fine dining; the QSR industry through
the franchising route remains buoyant, coupled with strong potential for
budget cuisine restaurants …
The growth of the QSR segment remains buoyant through the franchising route, with focus on specialty cuisine
restaurants
• Fakhro operates franchises for McDonalds, Gloria Jean‘s Café, Zeit Zetoon, Vapiano
Fakhroo • Fakhro is adding 2 McDonald stores as well as 1 Zeit Zetoon in virgin areas
Restaurants • The company plans to focus expansion plans on specialty budget cuisine format (Yellow Chilli)
• Yum Yum Tree operates franchises of Popeyes, Vanellis, Subway, Sukiyaki, Cultures, Teriyaki,
Yum Yum Tiki Ming, Pad Thai, Sushi hop and Tandori
Tree • The company‘s expansion plans are regional, with focus being on Qatar
• It is also opening 3 to 5 outlets across Bahrain
• It has recently acquired the franchise of Tandori (limited budget Indian cuisine) fro MYK Foods,
Canada
Diyafah • Bahrain‘s Global Banking Corporation has established a new limited liability company, Diyafa
Holdings Holdings Company
• Diyafa‘s focus is to be a key player, in the franchise market industry, targeting some of the
leading international food and hospitality brands, as well as creating and developing our own
brands in specific market segments
Pizza Inn • Part of the Sheikh Terki Al Khalifa Group of Companies; Pizza Inn has plans of opening 20 new
outlets within the next ten years

307
The tourism and hospitality sector focuses on strong soft skills
rather than technical skills
Current employment trends Employment – Current Occupation Description

CAGR: 8.2%
Employer requirements for

travel & hospitality sector
• Employment contribution of the travel and hospitality is around
5% of total Bahrain labor market and has witnessed a growth
of 8.2% between 2002 and 2007.
• Employers in the sector cited a need for strong soft skills
(communication, and customer communication skills) rather
than technical skills.
• Employment is the maximum for services and sales people,
followed by administrative services

Addressal of issues impacting people‘s perception towards travel
and hospitality as a viable career choice will help to recruit more
people and handle the high attrition in the industry…
• BTI and Baisan Institute of Hospitality Management offer training programs in travel and hospitality.
Potential Scope for More • In terms of training providers, besides BTI and BAISAN, there is a lack of professional hospitality training
Specialized Institutes / institutes in Bahrain since the ones that are present in the market operate largely for commercial interest.
Modular Courses
• There is still room to set up 1-2 professional hospitality training institutes (possibly government owned) to
impart comprehensive training and skills across functions, given the immense potential of job creation in the
sector.
• The Specific Council Travel & Hospitality. has a current capacity and potential to train and recruit around
20,000 Bahrainis across various functions (marketing, purchasing, services, maintenance, HR and
administration).
Negative Mindset • The key problems are the unfavorable mindset towards a career in the travel industry, especially amongst
Towards Jobs in the the Bahrainis, which also leads to a high attrition. Consequently, non-Bahraini male employment dominate
Sector the sector
• The primary focus of Tamkeen‘s intervention should be to create awareness and counsel students on
merits, demerits and nuances of the profession before they enter the industry.
• It can create a pool of students filtered through a criteria of fit and interest for potential employment in the
travel industry.
• Tamkeen can facilitate formation of an arbitration system which gives recourse to employers in the event of
High Attrition in the indiscipline projected by the Bahraini worker.
Industry
• Tamkeen can facilitate regulation that helps to handle rapid turnover of Bahraini workers.

Travel & Hospitality: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Travel & Hospitality sector
and is used to reflect the ‗absorptive capacity‘ of the Travel & Hospitality sector
Bahraini Travel & Hospitality sector value chain are termed as ‗market gaps‘
310
The Bahrain Travel & Hospitality Sector: A Snapshot of
Prominent Bottlenecks, Gaps

Travel reservation
No apparent gap
High Services Local Market gaps in terms of sectors have no / minimal

airline presence in Bahrain, however could potentially
Taxis present opportunities for existing players / new
Rent a car Hotels (5-star, 4-star) 1
services Cruise Tourism 9 assessment
Ground transport (except
Taxis & Rent a car)
QSRs 8
Resorts & Spas 2,b  Online travel engines (deemed to have low
Medium
potential in Bahrain)
Hotel support & Medical
MICE Infrastructure / Regulatory Bottlenecks
supplies tourism 4
Tourism 5,a (Disablers)
Market gaps in
Tourist air terms of under
Fine Dining Charter penetration
3,a
Restaurants services 6,c Heritage tourism
Local tour operators / a. Lack of unified focus on tourism strategy around
Low attractions 7,a cultural / heritage / family oriented attractions,
with no commensurate enabling infrastructure
b. Bahrainization criteria albeit low level of
Low Medium High attractiveness of Bahrainis towards the segment
Market Potential (assessed in terms of expected growth rate) c. Deficiency in airport infrastructure to support
growth
1. Albeit high growth potential in the near term; expected saturation by 2011, with new developments in the pipeline
2. Area of opportunity, contingent upon development of a solid tourism strategy to position Bahrain as a luxury weekend destination
3. Potential to develop Bahrain as a cultural / heritage tourist destination with its history of the Dilmun civilization and over 200 earmarked tourist attractions
4. Growth potential based on Bahrain‟s strategic focus to promote medical tourism, development of projects such as Dilmuniya Health Island and positioning of Bahrain in the
region as a hub for rehabilitation and physiotherapy services
5. Moderate to high growth potential, constrained / limited by competition from regional MICE markets, particularly Abu Dhabi and Qatar. Potential for impetus based on Bahrain‟s
tourism strategy to promote brand Bahrain as well as ability to capture share of the Saudi MICE market
6. Potential limited to air charter services from Europe transiting to the Far East; limited potential for Bahrain to serve as a hub to ferry business tourists in the region
7. Inbound tour operators comprise of companies that organize guided tours around key attractions, thematic safaris, cultural shows & events, as well as companies that organize
adventure tours such as safaris, dhow cruises, scuba diving, glass bottom boat trips, jet ski trips etc. Area of opportunity and growth potential with strong upside, contingent
upon Bahrain‟s strategy to develop resort – based attractions and / or cultural & heritage tourism
8. Expected growth estimated to be around 10-15%, through franchising route, driven by new developments and increasing adoption of budget specialty cuisines (Indian, Oriental)
9. While there is strong potential for Bahrain to augment cruise tourism revenues as the Kingdom plans to attract over 100,000 cruise tourists in 2010, the position of Cruise Tourism
the graphs represents low potential of a Bahrain based cruise liner ,in consideration of the already existing presence of cruise liners in the region covering pan Gulf cruise trips
311
Relative Sub-Sector Prioritization: Travel & Hospitality
the Travel & Hospitality sector as a ‗market gap‘
(Priority Index)
312
scores

1. Logistics Support Services is restricted to specialized land transport services such as shuttle buses (to ferry tourists between Saudi and Bahrain), tour buses and
chauffer driven limousine services and therefore does not include air carriers and marine logistics support which are deemed as saturated and low potential sub-
sectors respectively and not within the realm of consideration
2. Other Notes:
• All sub-sectors identified as areas of opportunity (within the Market Gap Scan report) have been plotted
formation issue

and C
315
Resorts & Spas MICE Tourism & Medical Logistics Support

Event Organizers Tourism Services (Land)
Heritage
Tourism Hotel Support Tour
& Supplies QSR Operators
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Travel & Hospitality
Potential to develop Bahrain as a hub for Medical

tourism, based on high quality of medical
facilities, increasing demand for rehabilitation
services in the region and investment in
projects such as Dilmuniya Island
……………
Potential for Bahrain to capture MICE

Potential to develop Bahrain as a heritage /
market of Saudi, through maximization
cultural hub within the region, based on its
strong lineage dating back to the Dilmun of incentives offered to business
civilization tourists, through attractions
Tourism & Hospitality Growth Drivers
Potential to develop Bahrain as a New developments and increasing

luxury weekend destination with adoption of budget specialty
Resorts, Spas, Rehabilitation and cuisines driving growth of QSR
Water Sports segment
markets

317
Trade & Wholesale
318
The trade industry comprises wholesale and retail trade as its
primary sectors…..

319
With Hypermarkets, Supermarkets, Specialty Stores, Department
Stores, Discount Stores, Convenience Stores, Warehouse Clubs and
Superstores as the key brick and mortar retail formats…..
Retail is further divided into internet (online), brick & mortar and vending machines formats
Further, Hypermarkets, Supermarkets, Specialty Stores, Department Stores, Discount Stores,

Convenience Stores, Warehouse Clubs and Superstores are the key brick and mortar retail formats
Format Examples in the US Examples in the Middle East
Hypermarkets Super Kmart, SuperTarget, Walmart Lulu hypermarkets, Carrefour

Supercenter, Carrefour
Supermarkets Kroger, Safeway Spinneys, Al Jazira, etc.
Convenience Stores Casey‘s, 7-Eleven Emarat stores at its gas stations
Specialty Stores Barnes & Noble (chain of bookstores) Sharaf DG (chain of electronics products),
Home Center (chain of home furnishings and
furniture)
Department Stores JC Penny, Sear, Macy‘s Galeries Lafayette in Dubai Mall, Debenhams in
Mall of Emirates, Dubai
Discount Stores Walmart, K-mart, Target Not present in the Middle East.
Warehouse Clubs Costco and Sam's Club Not present in the Middle East.
and Superstores

320
Retail sales in Bahrain are expected to grow at a CAGR of
2.2% over the next 5 years…..
• Wholesale and retail trade constitutes a significant share of business

activity in Bahrain in terms of its contribution to GDP (8%) and
employment (1/5th of total employment)
Market Size of Retail Sales, in BD billion
 GDP from trade increased at a CAGR of 15.7% from 2003 to
2008.
 The number of workers employed in the trading sector

increased at a CAGR of 24% from 2003 to 2008. CAGR: 2.2% (Retail Sales)
3.3% (Retail Sales/Capita)

• A favorable long-term economic outlook, growing interest in Western
styles of retailing, a steady rise in disposable incomes, and growing
tourism and urbanization are the key drivers for the trade industry in
Bahrain.
• Bahrain‘s malls are increasingly becoming recreational and social

meeting points, and are extremely popular with weekend visitors from
Saudi Arabia, Qatar and Kuwait, as well as the local and expatriate
populations in Bahrain
• The retail market in Bahrain is expected to grow at a CAGR of 2.2%

from 2008 to 2013 to reach a market size of BD 1.8 billion in 2013.

321
Bahrain‘s retail market size and potential growth is limited by the
small size of its population leading to a decline in regional retail
market share from 1.1% in 2008 to 0.8% in 2013…..
100.0
Regional Retail Market Size & Growth (in BD billion)
61.1
38.3
43.3
28.7 35.4
23.2 32.8
18.8
22.8 18.6
14.3
1.6 13.1 1.8
0.0
2008 2009F 2010F 2011F 2012F 2013F
Bahrain Egypt Israel Kuwait

Saudi Arabia South Africa UAE
Bahrain Egypt Israel Kuwait Saudi Arabia South Africa UAE
2.20% 13.30% 7.30% 5.60% 2.70% 9.20% 9.80%
• In 2008, the United Arab Emirates (UAE), Saudi Arabia, Egypt and South Africa together accounted for an estimated
79.5% of regional retail sales, and their combined share is expected to rise to 81.4% by 2013
• The small size of the local population is a significant limitation for the growth of mass retail in Bahrain
 The fact that Bahrain‘s retail market is growing at a lower rate as compared to the other countries and the
increasing regional market share of other regional countries is expected to lead to a likely fall in regional retail
market share for Bahrain from 1.1% in 2008 to 0.8% by 2013
• However, Bahrain is expected to benefit from growing number of visitors from Saudi Arabia and other GCC countries

322
Automotive, Consumer Electronics and Grocery accounted for 46% of
retail sales in 2008 and are expected to continue to account for the
majority of sales over the next 5 years (54% in 2013)…..
Structure of Retail Sales (in BD million and Percentage)
2008 2013
Automotive and grocery account for the majority share in Bahrain‘s retail sector (46% in 2008 ) and are expected to
continue to account for majority of the sales in 2013 (58% in 2013).
Automotive and grocery sales are forecasted to rise at a CAGR of approximately 6%; while sales of consumer electronics
are predicted to increase at a CAGR of approximately 5%.
Retail sales of over-the-counter (OTC) pharmaceuticals are expected to increase at the highest rate with a CAGR of
more than 8%, owing to a small base (from BD 1.5 million in 2008 to BD 2.3 million in 2013).

323
Grocery trade is dominated by the cold store format ,however this is
expected to change with the growth of Mass grocery retail (MGR);
wherein convenience stores will be the fastest growing category …
Structure of Grocery Retail Sector

1,600 cold stores (bakalas)
in Bahrain.
Although hypermarkets account for more than 50% of

the MGR sales, convenience stores are expected to
be the fastest growing category
– While many families visit hypermarkets on a weekly or

monthly basis, convenience stores and cold stores still
play an important role in day-to-day shopping
CAGR (2008E to 2013)

Supermarkets 8.80%
Hypermarkets 6.30%
Convenience Stores 10.40%
Total MGR 7.50%

324
The competitive landscape of organized grocery retail comprises
hypermarkets, supermarkets and convenience stores which are
operated by the importers and wholesalers themselves…..
Category B players operate supermarkets and

convenience stores (except Intercol)
Category A: Category B: Category C: Organized Category D:

Hypermarkets Importers and Retailers (besides Unorganized
Wholesalers hypermarkets) Retailers
• Supermarkets
• Lulu • TRAFCO
(operated by Al
• Carrefour AL Jazira
Jazira, Jawad,
• Ansar Gallery • Jawad • Cold Stores
BMMI, etc.)
• Geant • BMMI
• Convenience Stores
• Ramez • Intercol
(operated by Jawad,
BMMI, etc.)
Own private brands and

direct imports of fruits and Category B players act as suppliers for all
vegetables the other categories

325
There is a significant opportunity in the convenience stores
segment, due to limited presence of this format in Bahrain,
especially in the large new developments…..
Current Number of Stores Approx. 60

Current Status
Key Players Jawad, BMMI, Midway, etc.
of Convenience
Stores Retail in Sales/Outlet (2008) BD 0.04 million
Bahrain
Total Sales (2008) BD 2.4 million (1.8% of the total MGR sales) Future
CAGR (2008-13) 10.4% Growth
Prospects
Convenience Stores - a fledgling industry Bahrain is following the trend in the Middle East,
across the Middle East with future supported by large new developments in its
planned expansions (Planet Retail) outlying areas, such as Durrat Al Bahrain
Potential of opening 60 more
stores (100% growth in the
• Sales from convenience stores in • Signing of an agreement number of convenience
the Middle East expected to between Durrat al Bahrain and stores) in the near term
increase from BD 24 million ($65 Jawad group to supply
million) in 2008 to BD 38 million convenience stores across Growth of organized retail
($100 million) in 2014 – growing the island - Jawad Group will (specifically convenience
at a CAGR of 7.4%. initially supply two mid-sized, 24 stores) is expected to
hour convenience stores cannibalize the share of cold
• Huge plans of expansions in stores
UAE by Spinneys (10 • Signing of an agreement
convenience stores in between Durrat Al Bahrain and Due to low sales/outlet, the
collaboration with Souk Extra), Alosra management for a 120 sector‟s contribution to total
Lulu (with Lulu Express), Emarat sq. m. outlet, which opened for grocery retail will not
(with Fresh Plus), 24 Seven. business in July. increase significantly

326
New developments and high-end underpenetrated areas also
support the growth of supermarkets due to their potential to
offer bundled offerings close to the customers…..
Current Number of Stores Approx. 32

Current Status
of Supermarket Key Players Fu-Com International (Last Chance), Jawad,
Alosra, Al Jazira, etc.
Retail in
Bahrain Sales/Outlet (2008) BD 1.78 million
Total Sales (2008) BD 56.9 million (45.2% of the total MGR sales)
CAGR (2008-13) 8.8% Future
Growth
Certain underpenetrated areas and large new developments in outlying
areas, such as Durrat Al Bahrain
Prospects
There are certain high-end and new developments in Bahrain that do not have
supermarkets and will not have proximity to the hypermarkets being planned
Potential of opening 5-10
Alosra is planning to open a 2000 sq. m. supermarket in the Mahooz district of Durrat more supermarkets in
Al Bahrain. It will serve as the anchor store of a neighbourhood shopping mall (due to underpenetrated and newly
be constructed), and will be supported by an array of subsidiary outlets and services built areas, with „bundled‟
to provide a comprehensive retail experience. offerings (ATMs, Batelco
counters, other retail
Supermarkets are also considering development of existing stores to enable outlets etc.)
them to compete with the huge selling potential of the hypermarket format with wider
product ranges, added in-store offerings (coffee shops, etc.), improvement in the IT
infrastructure (adoption of CRM) and stepping-up of marketing and promotional
campaigns.

327
.
With planned expansions already in place and limited size of
the market; there is potential saturation in the hypermarket
segment…..
Current Number of Stores 6

Current Status
of Hypermarket Key Players Fu-Com International (Geant), EMKE Group
(Lulu – 2 hypermarkets), Carrefour , Ansar
Retail in
Gallery, Ramez Group
Bahrain
Sales/Outlet (2008) BD 16.64 million Future
Growth
Total Sales (2008) BD 66.7 million (53% of the total MGR sales)
Prospects
CAGR (2008-13) 6.3%
Planned expansions in the hypermarket space
There are 5-6 new hypermarkets already planned in the next 1-2 years
The hypermarket format has enjoyed considerable success in Bahrain, and Potential saturation in the
this segment of the market is poised for growth due to expansion plans of hypermarket segment owing to
Auchan and EMKE Group. the small size of the population
• Auchan signed an agreement in July 2008 to create Hypercorp, a joint

venture company that will open a chain of 10 hypermarkets across the GCC
region, including Bahrain.
• EMKE Group announced plans in July 2008 to invest BD 50 million
($131.58m) in two projects in Bahrain, which will create over 2000 jobs.
.
328
Within the distribution segment, nearly all major brands are
already represented / carried in Bahrain, thus limiting potential
market play for a new entrant…..
• Bahrain depends on imports for the majority of its industrial and

consumer goods
• Consequently, Bahrain‘s wholesale sector is largely dominated
by import and export agents
• Most of the grocery distributors /importers in Bahrain also operate
their own retail stores
 Al Jazira, Jawad, BMMI, Al Mannai Group (Universal There are no gaps at the
Enterprises) act as distributors for organized and distributor level for the
unorganized retail formats (cold stores) and also operate grocery segment.
their own supermarkets
 This is a limiting factor to market play particularly for
distributors
 In contrast, the landscape is different in the UAE since
there are only a few players (for e.g. Spinney‘s, Choithram)
with a similar structure (integrated retail & distribution
format)
• All major brands are already represented and carried by existing
players in Bahrain, thus limiting the potential market play for a
new entrant / operator

With moderate market growth and opening of additional hypermarkets
(with sections of consumer electronics), there is likely market saturation
expected in consumer electronics retail in the near term …
CAGR: 5.1%
In 2008, organized retailers accounted for
approximately 50% of the market for consumer
electronics products.
There are 10-11 large consumer electronic

outlets in Bahrain – including the hypermarkets
and the big box retailers. Some of these are
Geant, Home Electronics, Plug-ins, Max and
Sharaf DG.
There are expansions being planned in the

hypermarket domain.
Meanwhile, some IT distributors are also moving

into retail. For instance, Mars IT, traditionally a
distribution firm, has now opened its own
showrooms.
.
Due to limited market size coupled with the likely opening of 5-6 more hypermarkets, there is evident
saturation in the market with limited scope of entry for more players.

330
Although there is deemed to be a gap in terms of local
distribution, lack of a strong supply chain and high volumes
hinder the potential entry of a new player …
Hypermarkets and big-box retailers tend to import part of their electronic products from UAE (primarily
Dubai) and other countries due to lack of local distributors coupled with the limited range of stock
carried. Regulatory bottlenecks in the form of lack of an agency law supports these imports.
• Absence of local distributors for a number of established

Absence of distributors for a number brands/products, such as blackberries, iphones, karaoke, etc.
of brands • Absence of local distributors for a number of distributors for some of the
lesser known brands, such as , Oxo, Bang & Olufsen, etc.
• Largely, local distributors are found to carry multiple like-product in the

A single distributor carries a number category, thus gaining monopolies in pricing
of brands in the same product
category • Additionally, most distributors are found to carry a limited product range
of a single brand, with limited stock availability
• Limited range of models carried by local distributors; increased

propensity of consumers buying directly from Dubai (as per feedback
Limited range of models (especially from the market - lower prices, variety and availability of high-end models
high-end) with local distributors increases tendency of consumers to purchase from Dubai across
product categories (TVs, Home Theater Systems, Laptops, Cell Phones
etc.)
However, the lack of a strong supply chain and high volumes (which is hindered by the small size of the overall market)
are the key challenges limiting the potential entry of a new player

331
With the dominance of family dealerships and presence of most
auto brands in Bahrain, the automotive trade industry seems well
represented even in a growing environment…..
Bahrain Auto Sales and Foreign Trade

2008 2009F 2010F 2011F 2012F 2013F CAGR
Sales (BD mn) 317 317 352 374 397 423 6.0% Most of the automotive brands are already
Sales (CBUs) 44,650 44,446 49,218 51,956 55,110 58,655 5.6% present in Bahrain
Exports (BD mn) 14 17 11 7 9 19 6.8%
Exports (CBUs) 1,796 2,291 1,501 902 1,185 2,475 6.6% The industry is quite mature and
Imports (BD mn) 329 343 368 392 416 442 6.1% sophisticated. It is dominated by dealership
Imports (CBUs) 46,445 46,737 50,719 52,858 56,295 61,131 5.6% importers owned by a few large family-run
enterprises e.g. Kanoo and Bin Hindi
These dealerships offer a one stop shop for

Bahrain is a small market for automotive sales; however the sales and service support including car
growth outlook for automotive sales is stronger than most service, auto-components sale, automotive
developed markets leasing, etc.
Overall automotive sales expected to increase at a CAGR of A few small multiple brand showrooms
6% from 2008 to 2013 (accounting for only 20% of the automotive
sales) and independent service stations
Key reasons for growth are lack of public transportation (accounting for 50% of the service revenues)
system and the culture of owning multiple cars per person are also present
No prevalent gaps at the automotive distributor and retail level due to existing presence of major auto brands
represented by auto dealerships (usually family enterprises)

332
Online Retail and Discount Stores are alternative formats with
likely potential in Bahrain, while absence of consumer research
is a key gap in the peripheral support structure for the sector ..
Opportunity in online retail formats, mainly for certain specialty items,

such as jewellery, pearls, etc.
The segment could support expansion by existing players in the Bahraini

Retail format or entry of new players specializing in the online retail
Online Format format (on the lines of amazon.com, Tesco.com, etc.). However, the
scope for online retail is partially limited due to:
• Potential slow adoption in the near term
• Small addressable market (with required purchasing power)
• Low readiness of the delivery / distribution infrastructure
Areas of Opportunity
New Formats
and Support Opportunity for existing hypermarkets to introduce discount stores
Industries Discount
This offers strong potential for hypermarket players (Lulu, Carrefour) or
Stores other specialized players to introduce discount stores with a format
closer to convenience stores (such as 7-Eleven in the US).
Gaps in market research services
There is a prevalent gap in terms of market / consumer research

services, encompassing tracking of consumer data and development of
Consumer e-content / reports for consumers / players on product preferences, price
checks, product lists etc.
Research
Companies However, consumer research will be an attractive proposition only if an
operator considering entry is able to achieve market mass and scale

333
Growth in the retail industry may be further facilitated by
implementation of regulations to check the number of stores in
an area and to control the entry of pirated goods…..
There is a need for certain regulatory measures (potentially under the purview of MOIC) to check unsolicited
growth of retail stores within demarcated areas / zones and to check the entry of pirated goods coming into
the country.
Key Issues Include:
Absence of a regulatory framework to check unsolicited growth in the number of cold stores, supermarkets, or other
retail stores within an area
 Primary underlying cause for unorganized and unchecked growth of grocery retail, leading to a high proportion of cold
stores and ‗bakalas‘ per sq. km
 In the UK, there are councils at county level that plan community centers comprising a planned number of
stores – e.g. 1 supermarket, 1-2 pharmacies, 1 liquor store, etc. The council identifies gaps and regulates the
number of retail stores in a community.
Absence of a regulatory framework to check entry of pirated goods into the country
 Due to absence of agency law (worsened by the gaps at the consumer electronics distributor level), the retailers for
consumer electronics tend to import a number of brands/models from UAE (primarily Dubai) and other countries
 Other Middle Eastern countries, such as Iran, Iraq, UAE, Saudi Arabia, etc. have an appropriate regulatory structure
with an agency law allowing only authorized exclusive distributors to import brands that they represent
 There are a number of pirated goods that enter Bahrain and are then sold at much lower prices due to lack of checks/
controls in place that regulate the entry of pirated goods into the country

Trade is not so
CAGR: 24.0% constrained in finding
people with the
required skill sets
Employer requirements for trade sector
• Employers in the trade sector cited a need for strong soft skills
(communication, customer service and sales skills) rather than
technical skills
• Need for service and sales people is the maximum in the trade
sector

Addressal of issues impacting people‘s perception of trade as
a viable career choice and increasing the skills of people
aiming to enter the industry can support further growth of the
industry …
• The skill gaps facing the trade sector is less acute since trade has a low threshold for entry in terms of required skills.
Unfavorable perception of However, the key problem to address is the unfavorable perception towards trade as a viable career option, where one
Bahrainis towards trade as of the main reasons attributable to the same is the prevalence of multiple shifts requirements
a viable career choice, • Bahrainis accounted for only 21% of the total workforce in the trade sector in 2007.
especially among women • Women can be attracted to this sector by offering employment flexibility and ‗family friendly‘ workplace policies, such
as availability of part time work.
• Remuneration is often relatively low in trade compared to other sectors, both in Bahrain and elsewhere. A key reason
is the low level of education which is sufficient for many of the entry-level jobs in trade. However, if the skill level of
Low remuneration levels, trade employees is increased over time, remuneration can be expected to rise commensurate with this
which makes it difficult to
• Expansion in the sector is being hindered due to low attractiveness of the trade sector for Bahrainis coupled with the
attract and retain people
lack of relaxation norms in terms of Bahrainization targets
• Incentivization and training are the key areas / steps to augment the proportion of Bahraini skilled workforce into the
sector
• There are short courses being provided by BIHM, BIHR, BTI and BIRD, in areas, such as advanced customer service,
retail management, merchandising, etc. However, there is a need to bridge the gap between the industry‘s training
requirements and the courses being offered
Lack of degree courses in
• There are no degree courses offered by any institute in Bahrain. With the growth of the organized retail, there is
retail and specialized
definitely potential for university degree programs in retail management to be offered (similar to the programs offered
institute for automotive
trade by the University of Surrey)
• There is also a need for an Automotive Training Institute that can offer training for a range of profiles in automotive
trade – automotive repair technicians, security technicians, service representatives, sales representatives, etc. The
institute could collaborate with a university to provide a recognized diploma so that students from other countries could
also work in their home countries, thus helping Bahrain to become a regional hub in automotive training

Trade & Wholesale: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Trade & Wholesale sector
and is used to reflect the ‗absorptive capacity‘ of the Trade & Wholesale sector
Bahraini Trade & Wholesale sector value chain are termed as ‗market gaps‘
337
The Bahrain Trade & Wholesale Sector: A Snapshot of

Automotive Grocery
Distribution and Distribution No apparent gap Market gaps in terms of sectors have no
Retail / minimal presence in Bahrain, however

High could potentially present opportunities

for existing players / new entrants based
Consumer on market feasibility and assessment
Electronics Retail Hypermarkets Market gaps in terms
of under penetration
Consumer Electronics  Online retail
Distribution3  Discount stores
Medium
Supermarkets 1  Consumer research companies
Infrastructure / Regulatory Bottlenecks

(Disablers)
Low Convenience Stores

1,2  Absence of a regulatory body for
promoting trade, regulating and
formulating support policies for the
growth and development of the sector
Low Medium High
1. The growth of supermarkets and convenience stores is on the back of new developments and certain current underpenetrated high-end areas
2. There is growing demand for convenience stores since they offer modern retailing along with the convenience of the cold stores
3. Albeit gaps within the segment (in terms of under-representation of brands / product range lack for a strong supply chain and high volumes (which is
hindered by the small size of the overall market) are the key challenges hindering the potential entry of a new player

338
Relative Sub-Sector Prioritization: Trade & Wholesale
the Trade & Wholesale sector as a ‗market gap‘
(Priority Index)
339
scores

1. Consumer Research refers to market research companies that track consumer data and develop e-content / reports for consumers / players on product preferences,
price check, product lists etc. General consumer research companies do exist in Bahrain.
2. Other Notes:
formation issue
D&B Research 341

& Analysis 341
and C
342
Online
Retail
Discount Supermarkets Convenience Consumer

Stores Stores Research
Companies
20% 52% 57% 62% 67% 100%
Priority Index
Notes:

D&B Research 343

& Analysis 343
Key Sector Growth Drivers: Trade & Wholesale
Growing levels of consumer

sophistication for product
variety (particularly consumer
electronics)
……………
Long-term economic outlook, growing

Growing demand for convenience stores
interest in Western styles of retailing,
that offer modern retailing along with the
a steady rise in disposable incomes,
convenience of the cold stores
and growing tourism and urbanization
Trade & Wholesale
Growth Drivers
Large new developments in

Bahrain, such as the Durrat
Natural population growth (6%
Al Bahrain island, Amwaj
y-o-y)
Islands, etc.
markets

344
Transport & Logistics
345
The transport and logistics industry comprises infrastructure
operators, and providers of transportation services and support
services…..
Supply Chain Management Warehousing and Manufacturers of Transport
Companies Storage Facilities Vehicles (Auto Manufacturers,
Shipbuilding Companies, etc.)
Infrastructure used by the transportation service providers
Logistics Service Providers of Consignee

Consignors
Providers Transportation Services
Manufacturer/
Wholesaler/ Infrastructure for Transportation Services
Distributor/Retailers Freight Shipping Services
of Cargo
Freight Forwarding
Express Delivery Services Support Services Infrastructure for Air Infrastructure for Land Infrastructure for Water
Services Provider Offered Transport Transport Transport
Customs Brokering Railway Stations,

Airports and Airport Bridges, Tunnels and
Postal Services Terminals Ports
Tracks
Provider
Bus Stations
Marine Terminals
Metro Stations
Canal Tunnels
Providers of Support Services
Roads, Bridges and
Highways
Air Transportation- Land Transportation- Water Transportation- Pipelines

related Services related Services related Services
Operation and Providers of Air

Airport Management Rail Infrastructure Management of
Management Transportation Services
Services Freight Vessels
Services
Operation of Ports Airlines
Air Traffic Control Toll Road and Container
Services Management Terminals
Services
Cargo Loading and Helicopter
Road Infrastructure Unloading Services Services
Aircraft Maintenance Cargo and
Services Management Passengers
Services
Intermodal Services
Air Charter
Aircraft Certification Services
Services Navigation, Pilotage
and Berthing Providers of Land
Activities Transportation Services
Ground Services
Ship Repair, Testing
and Inspection Buses/Coaches Trucking
Services
Cargo
Freight Rail
Passenger Trains Passengers Transport
Metro Trains Pipelines
Transport and logistics sector has inter-linkages with majorly all the sectors,
especially manufacturing, petrochemicals, retail, tourism, etc. Providers of Water
Transportation Services
Business Services (like advertising), Financial Services (Banking, Insurance), IT,
and Education will have inter-linkages across the industry value chains and have
not been explicitly shown. Sea and Coastal Cargo Marine Shipping
Passenger Water Passengers
Transport
Inland Shipping Deep Sea

Shipping

346
The global transportation industry is growing at a CAGR of 6%,
with road and rail segment accounting for half of the industry
value…..
Global Transportation Industry (in BD Billion) Global Transportation Industry by Segments in 2007
• The global transportation industry grew by 6.2% in 2007 to reach a value of BD 1,296 billion
• Road and Rail segments account for the maximum share in total value (49%), followed by the Transportation
Infrastructure segment

347
The global logistics industry is growing at a CAGR of 6%, with
the retail segment accounting for two-third of industry value…..
Global Logistics Industry (in BD Billion) Global Logistics Industry by Segments in 2008
• The global logistics industry recorded a growth rate of 5.8% from 2004 to 2008 and generated total revenues of BD 315
billion in 2008
• The retail segment accounted for 64.1% of the market value in 2008

348
The transport and logistics industry in Bahrain reached a
market size (value of production) of BD 823 million in 2008,
with Air transport accounting for 3/4th of this market…..
• Transport and Logistics is critical to Bahrain and has been earmarked as a priority
sector in the Vision 2030 Air transport accounts
for majority of the
• The sector witnessed strong recent growth with the value of contribution to GDP by revenues, followed by
growing at a CAGR of 8% from 2002 to 2008 land transport
• The government is focusing on infrastructure development with expansion of the
Bahrain International Airport, construction of a new bridge to Qatar, a state of the art
Bahrain Logistics Zone and a larger port (Khalifa Bin Salman port)
• The sector has important linkages with other industries either as a driver industry or Structure of Transport & Logistics Industry (in BD million)
as peripheral support
125.5, 15%
o The growing Bahrain economy is expected to drive foreign trade and freight 7.3, 1% 24.2, 3%
demand. With an advanced freight transport infrastructure and competitive 38.4, 5%
ports, Bahrain will be well placed to maximize freight opportunities.
• Bahrain‘s transport infrastructure has already attracted DHL, Aramex, GAC Express
and TNT, who benefit from Bahrain‘s strategic location at the heart of the Northern
Gulf region 628.0, 76%
• The transport and logistics industry reached a market size (value of production)
of BD 823 million in 2008
Land Transport (incl. Pipelines)
• The sector contributed 2.4% to the GDP in 2008 and 2.2% to total employment Water Transport
in 2007 Air Transport
Warehousing and Support Activities for Transportation
Postal and Courier Activities

349
Bahrain ranks 4th in the Middle East and Africa freight transport
business environment ratings…..
Middle East and Africa Freight Transport Business Environment Ratings

Limits of Potential Returns Risks to Realisation of Returns Overall Score and Ranking
Freight
Infrastructure Country Market Country Transport Regional
Market Structure Limits Risks Risks Risks Rating Ranking
UAE 55.0 86.2 70.6 60.0 79.4 71.7 70.9 1
South Africa 52.5 84.0 68.2 65.0 67.2 66.3 67.7 2
Qatar 65.0 55.4 60.2 60.0 77.6 70.6 63.3 3
Bahrain 35.0 82.0 58.5 65.0 76.3 71.8 62.5 4
Kuwait 40.0 73.7 56.9 50.0 76.9 66.2 59.7 5
Israel 35.0 62.9 48.9 75.0 76.3 74.2 56.5 6
Egypt 52.5 54.0 53.3 50.0 63.7 58.2 54.7 7
Saudi Arabia 50.0 51.0 50.5 45.0 68.1 58.9 53.0 8
Kenya 35.0 70.7 52.9 60.0 41.5 48.9 51.7 9
Oman 40.0 41.4 40.7 60.0 76.8 70.1 49.5 10
Iran 42.5 46.6 44.6 45.0 54.0 50.4 46.3 11
Nigeria 42.5 7.9 25.2 55.0 44.4 48.6 32.2 12
Scores out of 100, with 100 being the highest
• Bahrain stands at 4th place with an overall rating of 62.5 (out of a theoretical maximum score of 100)
• This is composed of a score of 58.5 for potential returns (reflecting factors such as market size, growth, and the competitive
environment), which gets a 70% weighting, and a higher score of 71.8 for risks to those returns (reflecting factors such as
market orientation, regulatory environment, and other country-risk issues), which gets a 30% weighting

350
In terms of logistics performance index, Bahrain stands at the
second position in the GCC (after the UAE)…..
GCC World Rankings On The Logistics Performance Index
Performance Indicator Bahrain UAE KSA Kuwait Qatar Oman

Logistic Performance Index 36 20 41 44 46 48
Customs 22 20 45 59 67 46
Infrastructure 27 18 38 46 55 43
International Shipments 27 13 50 76 46 79
Logistics Competence 59 20 51 47 43 67
Tracking and Tracing Rank 47 23 43 32 38 63
Domestic Logistics Cost 140 98 106 130 56 20
Timeliness 84 17 39 32 38 24
Lower the score – higher the rank
• Bahrain compares relatively well to the rest of the world in logistics performance. The World Bank Logistics Performance
Indicator (LPI) ranks Bahrain in the 36th place out of 150 countries
• Within the GCC, Bahrain ranked second (after the UAE). According to the LPI, Bahrain‘s best performing indicators were
customs and the quality of transport and IT structure for logistics.
• The LPI indicates that Bahrain is well placed to establish itself as a regional transport and logistics hub,
particularly for the Northern Gulf region

351
In terms of freight turnover, maritime cargo is expected to reflect the
highest rate with the development of the new KBS port contributing
to the development of Bahrain as a trans-shipment hub…..
• The freight turnover is expected to grow at a CAGR of 8.2% from Freight Turnover – Domestic & International
(in Million Tonnes)
2008 to 2011 to reach a size of 69.7 million tones by 2011
Freight Turnover - Domestic and International
(in Million Tonnes)
• Maritime cargo accounts for the majority share in total cargo and CAGR: 8.2%
75.0
is expected to witness the highest growth.
69.7
70.0
o A key reason for this growth is the opening of the new
port, Khalifa bin Salman (KBS), which is expected to
increase Bahrain‘s cargo and container handling capacity, 65.0 64.0
and has the potential to become a major trans-shipment

hub for the Northern Gulf region 60.0 59.1
55.1
• Air cargo throughput is expected to expand by an annual average 55.0
of 5%
50.0
o DHL accounts for around 40% of total air cargo in the 2008 2009F 2010F 2011F
country, and is committed to maintaining its regional
headquarters in Bahrain
• Road haulage is expected to be boosted by the construction of

the causeway to Qatar

352
Structure of the Air Transportation Industry…..
Transportation Service Providers
• National Carriers: Gulf Air and

Bahrain Air
• Bahrain serves as the hub for 37

airlines flying to 52 destinations
Regulatory Body
Civil Aviation Authority
Support Services Providers Infrastructure Operator
• Bahrain Airport Services • Bahrain Airport Company

(Integrated Player) operates the Bahrain International
Airport (BIA) (**BIA handled 8.7
• BAFCO (Fuelling) million passengers, 101,203 aircraft
movements and 367,968 tonnes of
cargo in 2008)

353
Bahrain Airport Company has been formed to enhance the
services of Bahrain International Airport and its infrastructure
to meet regional and international standards …
In 2008, Bahrain International Airport handled 8.7 million passengers, 101,203 aircraft movements and 367,968
tonnes of cargo
Structure of Ownership and Operation of BIA Civil Aviation Affairs
Key Responsibility: Regulating the Aviation Sector

• Licensing airlines ,travel and cargo agents
• Providing operating permits and permissions for over
flight and landing, schedule clearance, airworthiness
Before 2008
certification s
BIA privatized with the • Ensuring compliance with international air safety and
• BIA owned by the government formation of Bahrain security standards
• CAA performed two roles: Airport Company in
2008
o Ownership and operation of BIA
The responsibilities of Bahrain Airport Company (BAC)
o Regulating the sector regulating and
operating divided Mumtalakat has 100% stake in BAC.
between CAA and
BAC. Key Responsibility: Ownership and Operation of BIA
• Enhance the services of BIA and its infrastructure to

meet regional and international standards

354
Significant improvements are required and are being planned
by BAC for the airport to support the growing number of
passengers and aircraft movements…..
• The airport has limited capacity to handle 3 million

passengers, but currently handlies around 9 million
passengers
• Aircraft movement and number of passengers is

increasing substantially, although ground infrastructure
has not kept pace with this increase
There is a huge need for airport infrastructure

to be developed to support the increase in
passengers and aircraft movements.
Focus of Future Expansion Plans
• Terminal 2 is being planned by 2012-13. Thereafter, terminal 1A will be built over the next 2-3 years. Once built, these
two terminals will have the capacity to handle more than 9 million passengers and the current terminal will be
demolished and rebuilt as a new terminal
• The airport will ultimately create 110 stands, including 87 with contact gates. Currently there are 25 stands, including
seven air-bridges
• A cargo village (an expanded cargo handling facility capable of handling 1.5 million tonnes of cargo) is being planned
• The plan includes the development of an adjacent Airport City with state-of-the-art facilities and infrastructure, including
hotels, conference centers, retail, and recreational facilities.
With the planned developments, BAC forecasts that BIA will be able to handle 28 million passengers by 2038. The work of
the project will be completed in six phases between 2011 and 2038. The overall budget for the project is BD 1.8 billion.

355
BAS is the integrated provider for support services to the
airport and the airlines, with the exception of fuelling services
which are handled by BAFCO…..
BAS is privately held by a number of individuals (primarily Kanoo Group, along with UNITAC,
Bahrain Airport Services (BAS)
etc.), with just 30% share held by Gulf Air. BAS is the integrated services provider for BIA.
Services related to passenger and baggage handling, load control, operations, aircraft ramp handling,
Traffic
security screening, public inquiries related to flight information, etc.
Services related to managing all kinds of air cargo coming in and going out of Bahrain , including services
Cargo
related to transshipments, inter-airport trucking, etc.
Services related to in-flight catering f(or commercial flights, private and charter flights, royal flags, etc.) and
Catering
managing the catering at the airport
Services related to :
Engineering
• Line maintenance - round the clock technical support (including ground checks, repairs and refueling of
aircrafts, provision of all ground support equipment to aircrafts as well as water, toilet servicing and
aircraft cabin cleaning.
• Ground Equipment Engineering department - repair and maintenance of all ground support equipment
BAFCO BAFCO is an affiliate of BAPCO, which has 69% share in the company.
Fuelling Supplies aviation fuel to airlines at Bahrain International Airport (no apparent gap in this segment)

Although a number GCC countries adopt the integrated
aviation support services model, BAS operates as a delineated
private operator …
A number of GCC countries follow the integrated aviation support services provider model
Model similar to the model in other GCC countries
• In the region, across Dubai, Abu Dhabi and Qatar, players operating in support services are usually part of a larger
holding group e.g. Dnata is part of the Emirates Group
o In a scenario of falling ticket revenues, combined with increasing operating costs; revenues from catering,
engineering and support services contribute in stabilizing fall in cash flows from core aviation operations
• In contrast with the Middle East, globally there are specialized players operating in aviation support services
The operating regime of BAS …
High Employment of Bahrainis
• BAS employs about 3,400 people from different countries with Bahrainis accounting for 80% of the
workforce (around 2,720 employees)
• Thus, entry of a new player may lead to job losses for Bahrainis
Price Regulation
• In spite of being a privately-held company, the prices of BAS are regulated by the government

357
Presence of a single integrated player in airport services has
led to a lack of price and quality competitiveness, thereby
leading to the consideration of a new model with specialized
players ……..
Advantages of having more specialized players for aviation support services
Increased price competitiveness
• Although, BAS‘ prices are regulated by CAA, entry of specialized players (for ground
handling, catering, etc.) will lead to competition, making the industry more efficient and
service oriented
Customized services as per the needs of the airlines
• The support service provider should be able to offer flexibility in terms of variety of product
offerings to suit the airlines‘ customized and specialized requirements. e.g. the low cost
airlines would like to charge customers on a per baggage basis; however BAS does not offer
such customized service flexibility
Outsourcing of certain services with BAS that are not high-yielding
• There are certain activities with BAS, such as handling check-ins ,which are not high yield
activities.
• Therefore , there is a possibility of these to be outsourced to specialized players.
However, the infrastructure at the

There is a need to evaluate the feasibility of having specialized airport will have to be developed in
players for aviation support services (currently being order to accommodate more players in
undertaken by BAC) specialized areas, such as ground-
handling, catering, etc.

358
Bahrain is a limited sized market with two national airlines –
Gulf Air and Bahrain Air in the full service and low cost
segments, respectively…..
Bahrain serves as a hub for

37 airlines operating to 52
destinations
In comparison, Dubai alone

has 126 airlines to 200
destinations
Bahrain has a limited size market with no apparent requirement for an additional local carrier

359
There is a prevalent gap in terms of network connections between
Bahrain and high yield countries in the passenger airline segment, as
well as additional scope in the cargo airline segment from the
perspective of developing Bahrain as a trans-shipment hub …
Passenger Airlines
The airport has recently gotten connected with the US and is very well connected with
Europe
However, there is still need to expand network connections into the following high yield It is planned that 1-2 major
regions: carriers per year over the
next 5-6 years will be
• China and Far East
brought into Bahrain
• South India (small gap)
• North Africa (it is currently covered, but there is scope of expansion)
• West Africa and Sub-Saharan Africa (still some scope of expansion)
• Indonesia
• Russia
Cargo Airlines With increasing local

developments in Bahrain
With focus on making Bahrain a trans-shipment hub, the air links to move cargo to the (Bahrain Investment Park,
ROW will have to be strengthened. CAA is working to gets cargo flights from Germany, Bahrain Investment Wharf,
Spain and to a lesser extent from China and the Far Eastern markets Financial Harbor etc.) as well as
regional developments in Saudi
DHL has its Middle East headquarters in Bahrain. It operates on a hub and spoke and the Eastern Province,
model with its regional distribution center based at the airport. There is scope for another
player (similar to DHL) to
establish operations based on
the hub and spoke model.
**The current state of infrastructure at the airport will have to be developed as a pre-requisite to accommodate
more aircraft and passenger movement to and from the airport
360
There is limited scope for additional holiday charters to come into
Bahrain as a transit hop over destination, while more business charter
services can be attracted to serve business passengers across the
Middle East …
Currently there is one charter airline each from Holland, Germany,

UK, etc. coming into Bahrain as a transit stop and going onwards to
Holiday Charters
Colombo, Goa, Phuket, Maldives, etc.
These charter airlines bring in revenues from fuelling, catering and

duty free
There is an opportunity in the near future to bring in more

holiday charter airlines from UK, France, Belgium, Germany,
Charter Air Services etc. flying into the far-east routes
There are a few licensed players such as Mena Aerospace (Jet

Charters) , which operate charter flights
Business At the same time, there is no real opportunity for local charter
Charter/General companies to operate in Bahrain (i.e. ferrying business passengers
Aviation Charter from Bahrain – there is already a company MENA Jets in this
Services space, which is not doing very well)
However, there is scope in this segment for 3-4 players to be

based in Bahrain, while serving the region (flying business /
MICE passengers from Abu Dhabi, Kuwait, Dubai, etc.)
more charter airlines coming in and going out of Bahrain.
361
There is an opportunity to attract MRO operators in Bahrain to
serve the regional market …..
There are no maintenance, repair and overhaul companies (MROs) in Bahrain. It is part of BAC‟s plan to attract at
least 2-3 specialized players in this segment, once the airport infrastructure has been developed
Status of MRO in Bahrain Status of MRO in the Middle East Opportunity for MRO in Bahrain
• Gulf Air currently does minor

refurbishments (seat cover • There is an opportunity for
change, etc.) and repair & • Qatar and Kuwait Airways have MRO companies to serve not
maintenance activities (Calendar their maintenance in-house just Gulf Air and Bahrain Air,
Checks) in house. For major • ADAT (Abu Dhabi Aircraft but to serve the wider region
maintenance (Cycle Checks and D Technology) handles the (including Africa) for a number of
Checks, the carrier employs the maintenance for Etihaad Airlines LCCs , such as Jazeera,
services of Singapore Engineering • GAMCO (previously called the Wataniya, etc.
Company (SIAEC) Saudi Al Salam Aircraft
Maintenance Company) is • The feasible model would be to
• Gulf Air also handles minor repairs present in Saudi Arabia attract companies, such as
(such as oil checks, tyre change) • Emirates Airlines has set up Singapore Engineering, to set up
for Bahrain Air Emirates Engineering as its repair base in Bahrain and develop
and overhaul arm local talent
• For major repairs (Cycle Checks, • Volga-Dnepr is present in Sharjah
D Checks) Bahrain Air sends its to maintain its own aircrafts and • A key role will have to be played
aircrafts to HAECO some of the foreign airlines by Tamkeen and Gulf Air in
order to create the required pool
of skilled people for this industry
and support MROs in setting base
362
Structure of the Land Transportation Industry…..
• Public Transport Buses: CARS

• Private buses, such as Capital and National Transportation
• Arabian Taxis
• Car rental companies, such as Hertz, Avis
• Trucking Companies , such as Al Wardi
Regulatory Body
• Ministry of Works
• Ministry of Interiors (General
Directorate of Traffic)
• Ministry of Transport

• Civil construction contractors
• Ministry of Works
and sub-contractors, such as:
• Roads Planning & Design
o Sayed Kadhem Al Durazi
Directorate
o EAMCO – Eastern Aspahlt
• Roads Projects & Maintenance
o NASS Contracting
Directorate
o Bahrain Asphalt
• BAPCO (for pipelines)

363
There are a number of land transport infrastructural
developments taking place in Bahrain…..
Current Status of Land Transport Infrastructure

• There are a total of 3,498 kms of roads on the island, of which 2,768km, or 79%, are paved
• The 25-kms causeway link to Saudi Arabia led to new business opportunities in road haulage over the recent past
Planned Developments
• Bahrain is upgrading its national road network by adopting the following measures:
o Around BD 260 million has been earmarked to increase capacity on the country‘s main highways and improve the vital connections
between the port, international airport, causeway and industrial zones
o An additional BD 146 million has been set aside as a rolling budget for the overall road plan, which includes new flyovers,
roundabouts, road-widening schemes and transport corridors
o In 2008 the Government approved a BD 185 million plan to build a 2.5-km underpass for the King Faisal Highway from the Bahrain
Financial Harbour to the Sheikh Isa bin Salman Al Khalifa Bridge in a move to ease congestion in Manama
o Bahrain also plans to introduce an integrated transport system within the next four years, which will include the creation of two control
centers capable of monitoring vehicle flow and marshalling traffic using variable road signs
• The construction of Bahrain-Qatar Causeway, which will provide direct access to Qatar is expected to start in 2013. The 45 km
causeway between Bahrain and Qatar will be the longest man-made sea bridge in the world and will further provide impetus to road
haulage
• The kingdom plans to develop a monorail network. Bahrain's cabinet approved the project and designs for the monorail by Scomi
Engineering at the end of September 2008
• In addition, a proposal has been put forward to develop a rail infrastructure connecting the GCC countries to each other, and then
onwards to Turkey

364
Public transport and the overall land transport industry is being
impacted by the absence of a centralized regulatory body…..
Land Transport does not have a centralized regulatory body (equivalent to CAA and GOSP for Air and
Water transport, respectively) promoting and regulating the sector.
Key Issues Arising due to the absence of a Regulatory Body
• A number of new infrastructural developments are taking place in

New developments taking place Bahrain in terms of roads, bridges etc.
without keeping public • These new developments lack planning in terms of a
transportation in mind requisite peripheral structure of public transport with
sufficient number of bus stops
• There is no authority promoting measures required to

No measures being adopted to
encourage people to use public transport e.g. Constructing
encourage people to use public
transport separate lanes for public transport to make traffic smoother for
public transport buses

365
In case of public transport buses, there is a prevalent gap
due to unchecked proliferation of private bus operators who
resort to malpractices due to lack of regulation …
CARS is a UAE-based private company and has the contract to

operate public transport buses in Bahrain in 2003 through a tender
process
The contract commenced in 2002 for a period of 5 years and has

been extended for another 5 years (till 2012)
CARS owns and operates the buses fleet, three terminals and the
bus depot at Issa Town
CARS has not been expanding its fleet and its network across Bahrain due to a number of issues:
• A number of private independent bus owners operate around 100 buses for various purposes – school buses, labor buses etc.
However, they also operate their buses as public transport buses leading to loss of revenues for CARS. These bus operators adopt
unsolicited malpractice, such as plying only in the most profitable peak hours, plying buses on networks prior to public buses (thus
leading to a loss of revenues for CARS)
• A key reason for this unchecked proliferation of private bus operators is the lack of regulation to cancel a public bus driver ‗s license
upon end of employment. This leads to unregulated competition from such private individuals operating their own private fleet
• Additionally, the level of stringency in obtaining a bus driving license in much lower (relative to UAE)
• CARS tried to collaborate with these private players to operate public transport in Bahrain; however the effort failed due to lack of
willingness on the part of these operators
If such proliferation of private players in regulated, there is scope for a total of 200 buses plying in Bahrain (an addition of 50
more buses over and above the 52 existing buses by CARS and 100 buses of private operators)

366
There are no prevalent gaps in taxis, car rental companies,
mono-rail, and school, university, and labor buses …
Land Transport Services With No Apparent Gaps
School, University, There are two key players operating buses in this segment, namely Bahrain Capital
Labor buses, etc. Transportation and National Transportation – operating a total fleet of 3,000 buses.
There are around 1,000 private taxis in Bahrain in addition to the 150 taxis operated by
Arabian Taxis. In contrast, in UAE, taxi operators are largely licensed operators (Dubai Taxi,
Arabian Taxis) with more stringent regulation in place to control proliferation of private /
individual taxi operators
Taxis
There are two kinds of taxis in Bahrain:
• Call Taxis: These only operate on call, such as Bahrain Limo, Speed Motor Service
• Regular Taxis: This segment includes larger operators such as Arabian Taxis and a number
of private individuals who have taxi licenses and run local taxis in Bahrain. Licenses for
these taxis are only given to Bahrainis
A number of international (Hertz , Avis, Sixth) and local car rental companies (such as
Car Rental Companies Bahrain Car Rental, etc.) make up the footprint of this segment (there are over 40 local car
rental companies and over 60 rent a car companies estimated to have a presence in Bahrain)
The government plans to develop a monorail network. Bahrain's cabinet approved the project
and designs for the monorail by Scomi Engineering (Malaysian company) at the end of
Mono Rail
September 2008. The first phase of the monorail is expected to start in 2010.

The key gap in land transportation services is in shuttle bus
services between Bahrain and Saudi as well as specialized
airport and tourist shuttle buses…..
Gaps/Opportunities in Land Transport
There is a strong movement of Saudi tourists coming via the causeway into Bahrain
Shuttle buses o Over 70% of tourists into Bahrain are same day visitors primarily from Saudi Arabia
(with around 79% of such visitors coming via the causeway)
o Additionally, there is also a large scale movement of leisure / business passengers
from Saudi coming into Bahrain to fly from the Bahrain International Airport (BIA),
due to the shorter distance and facilities at the BIA (in comparison to the Saudi
International Airport)
• Currently, there are only a few operators e.g. Bahrain Limo – SABCO, BASETCO that offer
shuttle transit services between Saudi and Bahrain
• On the back of existing demand as well as potential from the Qatar – Bahrain Causeway,
there is likely room for at least 2-3 operators offering transit shuttle services between
Saudi and Bahrain.
• The need for shuttle buses is further augmented by prevalence of gaps in terms of local
shuttle services between the airport and key nodal points in Bahrain for shuttling and
ferrying airport passengers
There are no tourist buses / local guided tour bus companies in Bahrain (e.g. the Big Bus
Tourist Buses Tour in Dubai) covering key attractions. However, this stems largely from gaps in inbound
tourism and the lack of inbound / mini tour operators

The trucking industry is saturated and dominated with multiple
small unorganized and semi-organized trucking companies…
There are around 65 medium to large trucking companies (with a minimum of15-20 trucks) transporting general cargo,
over-sized cargo, etc. In addition, there are a multiple small private players (with 2-3 trucks) operating in Bahrain
• The competition in the trucking market is based on price cuts rather than reputation / quality of service. The
small players (unorganized) have 30% - 40% lesser operating costs as compared to medium and large players (semi-
organized, organized), due to very low overheads (no offices/physical setup, minimal insurance expenses due to
lack of regulatory enforcement for obtaining insurance)
• 60% - 70% of the business is between Bahrain and Saudi. However, the customs process at the Saudi causeway
is inefficient due to various bottlenecks such as:
o Delays due to mandatory requirement of 100% cargo scanning across all shipments
o Payment of differential duty at the Saudi customs, due to lack of electronic interface end to end between 3PL /
cargo services provider, Bahraini Customs and Saudi customs
• These bottlenecks create delays/ downtime of weeks, leading to loss of business and reputation for the 3PLs
• According to the industry regulator, there is an attempt to get representation of the Saudi Customs in Bahrain, in order
to mitigate these problems
• Additionally, in terms of specialized product categories (food, pharmaceuticals), there are no apparent
supply gaps. E.g. Key players in the Food distribution segment, such as TRAFCO, BMMI, Al Jazira, Nada
Saudi, operate their own fleet and generally do not work with 3rd party operators
The trucking industry is saturated with multiple private players operating across product categories

369
There are no apparent gaps in the pipelines segment and
plans for a new pipeline between Bahrain and Saudi Arabia
are underway…..
Operator BAPCO
Current Status Current Infrastructure
of Pipelines in
- Crude Oil 56 kms
Bahrain
- Petroleum Products 16 kms
- Natural Gas 32 kms
Future
Growth
Prospects
There are no apparent gaps in terms of pipeline infrastructure and there are
expansion plans underway for crude oil
Bahrain and Saudi Arabia plan to replace and expand an oil pipeline connecting the two countries by 2011.
The engineering design for the 114 kilometer-long pipeline is expected to be completed by the end of this year, and
construction completed in 2011. The preliminary cost estimate for the project is BD 129 million. The infrastructure upgrade is
part of a plan to move toward a greener project since the new pipeline will be more ecologically and socially friendly as it will
be well away from built-up areas.
For natural gas, a pipeline could be built in the future based on a government contract with another country.

370
Structure of the Water Transportation Industry…..

Water Logistics
• GAC Bahrain
infrastructure such as
• Kanoo Shipping Agencies
the Khalifa Bin Salman
• Al Sharif Group
Port is being developed
• APL
with the objective of
• Maersk
developing Bahrain as a
strategic trans-shipment
hub, particularly for the
Northern Gulf region
Regulatory Body
General Organization of
Sea Ports
• Ship repair companies: ASRY

and BASREC APM Terminals: In 2005, APM
• Pilotage Services: Svitzer (sister Terminals was awarded the contract to
company of APM Terminals) operate Mina Salman and thereafter
Khalifa Bin Salman Port for 25 years

371
Khalifa Bin Salman port has also been established with the
objective to develop Bahrain into a trans-shipment hub for the
Northern Gulf ……
The Khalifa Bin Salman (KBS) Port
The port was opened in April 2009 in order to replace

the next biggest port, Mina Salman as the main
commercial port. The port promises to boost
Bahrain‟s container capacity from approximately
400,000 twenty-foot-equivalent units (TEUs) to 1.1
million TEUs in phase one of its development.
Strategy for the Port:

Cater to the increase in domestic cargo volumes
that Bahrain‘s expanding economy is expected to
attract
Serve as the trans-shipment hub for the northern

Gulf: Bahrain aims to take advantage of its
geographical position, nestled between Saudi
Arabia‘s east coast oil towns and the gas-rich country The port is located 5kms away
of Qatar, to establish itself as the gateway to the from BIA and adjacent to the
northern Gulf as far as Kuwait. Bahrain Logistics Zone to provide
the advantage of sea to air links
The port will allow mother ships from Europe, Asia (through BIA) and value-adding
and America to dock directly in Bahrain without service providers (that BLZ is trying
having to unload and transfer cargo at other regional to attract)
ports.

372
The Bahraini Marine Logistics operator landscape has the presence of
Shipping agencies, primarily represented through shipping agencies;
with potential gaps in shipping support services..…
The operators in the marine logistics segment are primarily of 3 types:
Bahrain has 25-30 shipping lines. These include:

• Small shipping lines: These have both spot business and regular principal business
Shipping Companies • Large shipping lines: These have large principal businesses. These companies are
well represented in Bahrain through joint ventures/fully owned operations or represented
through 3rd party agencies. E.g.: Maersk Line, United Arab Shipping Company
Shipping Companies and Third
Party Logistics Service Integrated companies that offer shipping lines and third party logistics services.
Providers
Shipping Agents, Third Party • Integrated companies acting as shipping agents for shipping companies, and also offering
Logistics Service Providers and third party logistics and freight forwarding services. E.g.GAC Logistics, Al-Sharif Group,
Freight Forwarding Agents Kanoo Shipping Agency
Potential gaps in Bunker Services amongst the support services………
• Ship Repair Services: There is no apparent gap in the ship repair segment since ASRY and BASREC are able to cater to the ship repair
requirements of all type of ships coming into Bahrain currently. ASRY caters to medium to large size ships while BASREC caters mainly to
the smaller ships.
• Pilotage and Berthing Services: APM Terminals manages the pilotage services by sub-contracting towage and pilotage services to its
sister company Svitzer (a Denmark-based company formerly known as Svitzer Wijsmuller).
• Bunker Services: This offers potential opportunity only if the bunkering costs in Bahrain are made comparable to international (such as
Singapore) levels. Currently, Fujairah is the pivotal hub for bunkering services in the GCC.

However, a strong prevalent gap is the lack of direct shipping services
between Bahrain and ROW, due to lack of tonnage of outbound
cargo, which is needed to attract mother vessels to come in …
Absence of Direct Shipping Liners (Mother vessels coming into Bahrain)
• There is a focus to make Bahrain a trans-shipment hub for the Northern Gulf (for countries such as
Iran, Iraq, Qatar, Saudi Arabia, etc.). However, Bahrain currently does not have tonnage scale to
attract mother vessels operated by international shipping lines. As a result, mother vessels prefer Jebel
Ali as a hub, and operate feeder vessels to Bahrain. The Jebel Ali port handles around 13 million
TEUs, whereas in comparison the Bahrain ports handle 270,000 TEUs.
• APL is the only shipping company that has started direct shipping liners into Bahrain to serve Saudi
Arabia, Iraq and Qatar.
• The Bahrain Logistics Zone (BLZ) has been attributed with the task of attracting 3 PL players to operate
and offer value added services including:
o Less than container load deconsolidation and reconsolidation: In a less than container load, the
load comes from a number of consignors to be shipped to a different consignees. For instance,
the containers will come from five different destinations, they will be deconsolidated and
reconsolidated to form groups according to where the containers need to be shipped
o Repackaging and Relabeling: Involving relabeling / repackaging as per customized standards
o Assembling of components: Involving assembly of parts / components into finished unit
• Whereas the strategic location of Bahrain is a major attraction factor for such logistics companies; the
absence of direct shipping lines between Bahrain and ROW is a hindrance
The current scenario is typified by a „chicken and egg‟ anomaly – whereas direct shipping lines are restricted to considering
Bahrain as a trans-shipment hub due to lack of outbound tonnage, logistics players are hindered from getting into Value add
activity due to absence of direct shipping services

374
The Bahrain Logistics Zone is therefore being developed to attract
and encourage integrated logistics companies to use the Port as
a trans-shipment hub and get into value added services …
The combination of highly developed

road, sea and air connections from
BLZ provide significant opportunities
for businesses wishing to deploy a
multi-modal logistics strategy.
• BLZ is a boutique logistics area, focusing on re-export and value-adding logistics activities, operated and regulated by GOSP
• It is a custom-free logistics ‗park‘ situated in the KBS Port with 475, 000 sq.m. of space to be leased to companies that specialize in
focused logistics services (3rd party logistics, freight forwarding and warehousing)
• BLZ is particularly focused on attracting and value-adding service companies such as kitting and palletizing, labeling, testing and
repair, deconsolidation and consolidation, weighing, mixing and filling, components assembly, packaging and repackaging
• However, in the current scenario with restrictions imposed in the usage of the facility only for trans-shipment warehousing with
complete disallowance of local warehousing; local logistics operators in Bahrain are dis-incentivized towards setting up base at the BLZ

Bahrain Logistics Zone It offers customs-free warehousing for import/export.
First Bahrain has launched a warehousing complex at BIW (in Hidd Industrial Area), which
will provide a cost-effective environment to meet the storage and logistics needs of SMEs in
While a number of companies offer warehousing and logistics
Bahrain. The complex will offer approximately 200 units for lease from 800 sq ft upwards.
services in Bahrain……
BIW has a 900,000 sq m area, which will accommodate various industries and offer a number
Bahrain Investment of logistics solutions, such as warehousing and storage, cold stores, packaging, and re-
Wharf (BIW) distribution facilities.
Key Companies Offering Warehousing and Other Logistics Services

GAC Group operates a container freight station/bonded warehouse inside Mina Salman dry
cargo port.
GAC Logistics, the freight forwarding and distribution arm of the GAC Group, specializes in a
comprehensive range of supply chain and logistics solutions. These include air and sea
freight, warehousing and distribution, door-to-door transportation, project logistics, DHL has its Middle East
GAC Group international moving and courier services. headquarters in Bahrain
First tenant of BLZ operates on a hub and spoke
Offers freight management and contract logistics services, supported by customs brokerage model with its regional
and value added services (kitting, co-packing, reverse logistics, etc.) distribution center based at
CEVA Logistics It has earmarked a 10,000 sq m warehouse at BLZ the airport.
DHL
Offer express delivery and logistics solutions
TNT Express With a fleet of 17 aircraft and 250
Offer supply chain management services, customs clearance, freight forwarding services and
warehousing in Bahrain. vehicles it operates an integrated
Aramex
air and land network.
Strategically situated in the Mina Salman Industrial Area and this enables it to be readily
available to potential markets in the Middle East It enjoys a 60% market share in
the logistics industry, making its
Offers 35,600 sq m of storage space to its clients presence in the Kingdom
significant.
Other services include: logistics consulting, project cargo handling, freight forwarding,
Gulf Warehousing & container consolidation, customs clearance, air and sea freight, local transportation,
Distribution Centre international warehousing consulting services, distribution and co-packing

…Specialized warehousing is an opportunity; however a number
of players have already expanded or entered Bahrain to fill this
gap…..
Gaps/Opportunities in Warehousing
• Third party warehousing has recently started to develop in Bahrain. However, the Recent Developments to Fill
supply of warehousing already exceeds the demand. the Gap
• In terms of cold chain storage warehousing only Danzas, GAC and Agility offer A number of third party
temperature controlled facilities. This is due to lack of push (specifically in the case of warehousing providers have
pharmaceuticals) in the form of a regulation by the MOH, mandating storage of either expanded their facilities
pharmaceuticals in temperature-controlled conditions. For instance, in the UAE, the or are planning to establish
MoH has issued detailed regulations for Good Distribution Practices for warehouses in Bahrain:
pharmaceuticals. The regulations define the conditions for storage, transportation,
personnel requirements, management and documentation requirements. However, o GAC has expanded its
even if such a regulation is introduced in Bahrain, it will only lead to utilization of warehouse area from 650 sq. m.
existing capacity, rather than a need for incremental capacity creation. to 14, 600 sq. m. between 2005
and 2009
• The fact that the BLZ restricts players from using facilities only for transshipment (and o A number of shipping and
not local warehousing) disincentivizes local warehousing players to set up base. logistics companies, such as
o The idea behind the restriction is the issue of mixing cleared and bonded Agility, Intercol, etc., have also
warehouses. However, this issue can be easily handled if the building is bolstered their warehousing
approved by the customs based on a framework of checks, balances and capacities
specifications and the areas for the two kinds of warehouses (bonded, non- o First Bahrain and a few other
bonded) are clearly differentiated. companies are developing
warehouse spaces at the
• A niche gap and potential opportunity lies in bonded warehousing for the oil Bahrain Investment Wharf
and gas industry with particular focus to serve the Saudi Market. There is no
free zone in Saudi. Opportunities exist if Bahrain can create bonded warehousing
facilities to serve the Saudi market by supplementing Jebel Ali facilities (MNCs from
Jebel Ali attracted to set up satellite offices/facilities in Bahrain).

377
In line with its focus on the Transport & Logistics Industry as a
priority sector, there is a pressing need for smoothening out
the Customs Bottleneck at the port and the causeway…
For instance: A Principal shipment

Bottlenecks Potential Solutions from a UK Chemicals Company is
Importer Risk profiling with seamless flow for low risk profile. deemed less risky than a spot
Delays, downtime and Principal Exporter consignments and 100% screening limited shipment from the Philippines
increased time to market only to High Risk profile consignments.
Steps – Already taken to solve
due to 100% inspection of all
goods at the port and the Corporatization of accounts (Large companies can have
the customs issues
causeway corporate accounts with the Customs Authority to deal with thus
enabling direct dealing instead of through 3PLs)
There is a High Commission for
Online (Real time connectivity) between Customs and
Transport and Logistics Sector,
Shipping Lines / 3 PLs / Freight forwarders, enabling faster and
which has representatives from
seamless information flow .
GOSP, BLZ and other
stakeholders as its members.
„Gold Programme‟ has been introduced at the Abu Dhabi
airport enabling electronic submission of Customs clearance
The High Commission is trying
documentation, ePayment facilities for consignment and
to make customs clearance
administration fees, access to a 90 day rolling-credit account
online and bring in a number of
with Customs, a very small percentage of consignments
changes to policies and
checked for the member companies .
procedures.
Delays due to payment of
differential duty on Online connectivity extended between Bahrain and Saudi
BLZ has recently been made a
consignments at the causeway customs (dependent on cooperation by the Saudi customs).
customs-free area. Customs
(for items not included as per
need to be paid only if the goods
Unified Customs Procedure)
go out of the BLZ.
Seeking of cooperation from the Saudi Immigration Authorities
Delays due to lax service for Services Orientation and Training of Customs Staff –
attitude of Saudi Customs This can only be done by incentivizing Saudi customs
staff
378
…and further enable the sophistication of the downstream
Customs Brokerage Industry …
Current Status of Customs Brokerage in Bahrain Suggested Measures
Higher level of sophistication downstream with

The custom brokers are a link between the customs and the respect to Customs Brokerage
consignee. The broker is appointed by the consignee and
coordinates with the logistics services provider, shipping
According to industry experts, there is scope for
agency and the customs.
around 10-12 sophisticated custom clearing
brokerage houses with integrated operations, such
In Bahrain, only a Bahraini can get a license to become a
as trucking, fork lifting, etc. to be set up.
custom broker.
This segment is highly unorganized in Bahrain with around 200-

These agencies need to have the right manpower
300 custom brokers (tend to be individual members rather than
and skills with proper computing, communication
organized businesses). Most of these individuals do not have
and liasoning capabilities.
the right skills for the role, especially in a scenario where the
Bahrain Customs has plans to digitize its entire process and
bring it online This efficiency will result in redundancy of multiple
unorganized players that exist; however will
In more developed countries (as well as the UAE), the Customs contribute in increased sophistication of the industry.
Brokerage industry is more sophisticated with 3PLs themselves
being licensed to offer integrated Customs brokerage services
E.g. World Class Shipping, Imex Shipping
The shipping industry needs to be supported by a sophisticated customs brokerage industry. The implementation of
online customs clearance processes will also support this move towards higher levels of sophistication.

379
There is a need to establish a maritime/marine training institute
in order to develop the maritime industry in Bahrain…
• A key gap in the maritime industry is the absence of skilled and semi-skilled maritime staff
• According to industry experts, there is no inflow of new staff being trained coupled with the fact that the existing
staff is ageing
• The current estimated workforce in Bahrain in the maritime industry is 3,370. Out of these, 2,060 are
expats and only 1,310 are Bahrainis.
• In the recent past, modular training was conducted by the United Arab Company in Dubai, however this has now
Absence of a Maritime ceased
/ Marine Training • There is potential for Bahrain to become the center of excellence for maritime training since most of the
Institute coupled wit h Middle East countries are facing manpower shortages in the shipping industry.
inadequate supply • While GOSP has both the credentials and willingness to be the certification issuing authority; however the set
pool up of a Maritime Training institute and associated infrastructure is warranted
• There are a range of job opportunities in the shipping industry
o On ships - ranging from electricians, chief cooks (BAISAN could train chief cooks to be on passenger
ships), etc.
o On Land – Marine craft fitters and engineers, cargo operators, super crane operators, etc.
o Staff in Shipping Companies – Staff for cleaning, Insurance team, Sales people, Cargo surveyors, etc.
o Highly skilled jobs, such as marine engineers, maritime lawyers, naval architects**, etc.
• The design of comprehensive and modular courses in Maritime training needs the combined participation and
initiative of the Ministry of Education, GOSP and industry participants
• With the need to build a supply pipeline of trained maritime professionals, Tamkeen (in collaboration with GOSP) could consider a
scholarship program to send students for modular / comprehensive maritime training (at the rate of 2- 4 students every year for the next
10 years) to cope up with the expected acute shortage of qualified Bahraini mariners
oTwo students could be sent to the World Maritime Institute, Switzerland every year.
o1-2 people could be sent every year to International Maritime law Institute (IMLI) – Maritime lawyers are required for a range of
activities, one of them being transposition of international laws to national laws.
**There is only 1 qualified expat naval architect in Bahrain
*GOP, D&B Research 380

Gulf Aviation academy has been established and it currently provides
orientation courses to pilot cadets; Within the land transport segment,
awarding of licenses to truck drivers needs to be aligned to
international best practices…
• Gulf Air and Bahrain Air provides all training internally, including the IATA certifications.
Modular Certification • Bahrain Polytechnic has started a course on logistics; however this lacks focus on certain modular courses in
and Accreditations for Aviation
Aviation Industry
• Gulf Aviation Academy (owned by Bahrain Mumtalakat Holding Company) has been established and currently
provides only an Ab-Initio Programme; incorporating orientation for Bahraini pilot cadets for the Airline Transport
Pilot‘s License (ATPL).
o It additionally has plans to provide training in a number of areas and specific accreditations for the
aviation industry.
• The trucking companies needs operators and drivers with valid licenses and experience
• Licensing requirements in Bahrain are not stringent as per international standards and do not adequately
Stringent Regulations consider experience levels of the applicant. This results in companies getting Bahraini employees who neither
for awarding driving have the right attitude to work nor are skilled to be able to handle heavy trucks
licenses to Truck
• In Egypt, licensing for heavy trucks is based on a graded evaluation process over a stipulated period of time
Drivers
o The time gap between each kind of license is 3-4 years. The system is as follows:
 The first license is the 3rd degree license – for 6 wheel – 16 seater buses.
The second license is the 2nd degree license – for 10 wheel trucks/more than 16 seater buses
The third license is the 1st degree license – for 40 ft truck or more trucks / 30-32 seater buses –
this license allows one to drive tourism/embassy and school buses and double tones trailers (80ft).
If such a system is introduced in Bahrain, it will ensure that the Bahraini drivers have the right skills
to be able to manage heavy trucks.

The sector employs largely Service & Sales people as well as
Engineers / technicians, with Communication Skills being cited
as the most important employer requirement by participants …
Current employment trends Employment – Current Occupation Description
Employment in Transport & Logistics
12,000.00
11,000.00
CAGR: 5.2%
10,000.00
9,000.00
11,272
8,000.00
(2.2% of Total
7,000.00 8,735 Emplyment)
(2.8% of Total
6,000.00
Employment)
5,000.00
4,000.00
2002 2007
Employer requirements for transport and logistics sector
• Employers in the transport and logistics sector cited a need for

strong soft skills (communication, and English language skills)
rather than technical skills.
• Employment is the maximum for services and sales people,

followed by engineers and technicians.

Transport & Logistics: A Snapshot of Prominent Bottlenecks,
Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Transport & Logistics sector
and is used to reflect the ‗absorptive capacity‘ of the Transport & Logistics sector
Bahraini Transport & Logistics sector value chain are termed as ‗market gaps‘
383
The Bahrain Transport & Logistics Sector: A Snapshot of

Special-purpose Buses &

No apparent gap
Trucking Cos. Custom Brokers e

High Market gaps in terms of sectors have no /
minimal presence in Bahrain, however
National Warehousing
Airlines
Pipelines existing players / new entrants based on
Market gaps in terms market feasibility and assessment
Medium Public Transport Buses5,a
 Maintenance, repair and overhaul
Charter Air companies
Services2,d Shipping Support Services1
Transit Passenger
Specialized road transportation services 4,a,c Infrastructure / Regulatory Bottlenecks
Flights2,d
(Disablers)
Low Air Cargo Carriers1,d 3PL players1,b
Direct Shipping a. Absence of a regulatory body for land
Specialized Airport Liners1,b transport
Support Services3,d b. Low level of sophistication of customs
processes and customs brokerage industry
c. Lack of support from Saudi Customs
Low Medium High
d. Airport infrastructure
e. Lack of regulation and support to check
proliferation of unsophisticated industry
1. The growth of 3PL players (especially in value-added services), air cargo carrier (similar to DHL) and shipping support services is on the back of focus to
develop the Bahrain as a trans-shipment hub (development of new port, planned expansion of the airport, setting up of BLZ). Potential in shipping support
services is in the niche bunker services (provided that these services are offered at competitive rates in line with international standards)
2. Transit passenger flights to a number of high-yield destinations and charter air services is on account of the potential of Bahrain to serve as a stop-over
destination for people flying from East to West and vice versa
3. Lack of price and quality competitiveness in the aviation support services segment is leading to a demand for specialized players
4. Demand for Specialized road transport services viz. shuttle services (to and from Saudi) , airport / tourist buses; on the back of increased tourist movement in
and out of Bahrain (particularly across Saudi)
5. Need to extend public transport network in order to encourage people to use public transport
Market gap sectors that are currently underpenetrated, however market potential is high based on buoyancy of expected growth rates
384
Relative Sub-Sector Prioritization: Transport & Logistics
the Transport & Logistics sector as a ‗market gap‘
(Priority Index)
385
scores

386
Bahrain Readiness (Relative)

Relative Sub-sector Prioritization
90.0% Shipping Support 3PL Players
Services Direct Ship Liners
80.0%
Air Cargo Carriers
70.0% MRO Companies
Public Transport 1
1
60.0% Spl. Airport Services
Air Charter
Services
50.0% Spl Road Transit
Transport Flight 1
40.0% Services Services
1 1
30.0%
30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Relative Sector Attractiveness

1. 3PL players include specialized value-added service providers i.e. companies offering services, such as less than container load deconsolidation and
reconsolidation, repackaging and relabeling, etc.
2. Air Charter Services includes both holiday charters flying from West to East part of the world (and vice versa) and stopping over at Bahrain; and business charter
services.
3. Notes:
formation issue

387
and C
388
Air Cargo Carriers
Transit Flight Direct Shipping

Services MRO Companies
LIners
Public Air Charter Shipping Specialized Road

Transport Services Support Transportation Specialized 3PL Players
Services Services Services Airport Services
20% 52% 57% 62% 67% 100%
Priority Index

Notes:


389
Key Sector Growth Drivers: Transport & Logistics
Focus on making Bahrain a trans-shipment Increased road haulage and cargo

hub has increased the need for value- movement with the planned opening of
adding service providers the Qatar Causeway
……………
Strategic location of Bahrain to serve as a Growing passenger traffic and the planned
trans-shipment hub for the Northern Gulf expansion of the airport – leading to an
and a stop-over destination for airlines increasing need for more efficient airport
flying from East to West and vice versa services
Transport and Logistics
Growth Drivers
High number of people

Growth in capability to handle
movement from Saudi to
marine cargo with the
Bahrain for leisure and for
development of the new port
taking flights from BIA
markets

390
Financial Services
391
The Financial Services Industry Map comprises Lending,
Insurance and Investing as primary sectors ….
Credit collection and Primary regulators and

services: Credit Credit card facilitators: Stock, Ultimate regulators:
reports e.g. D&B; processing commodity and other Central banks and
Financial
Credit collections e.g. firms exchanges, market makers, other regulators e.g.
Services
NCO Group underwriters, actuaries and CBB, SEC, RBI,
other related professionals, FMC
SPVs etc.
Investing and
Lending and other
Financial Services Insurance investment
banking operations
services
Pension funds, Hedge fund Investment banks:

Private equity, management: Large, medium
Accounting Consulting Mutual fund
Long short funds Citadel Invst, D.E. and small markets
services services management
and other Shaw, Soros Fund firms. Morgan
facilitators mgmt. Stanley, GS
Financial
legal Consumer finance
services companies: Auto Venture
Real estate Security brokers:
loans, Credit cards capital firm
investment Citi bank, Morgan Distribution
e.g. AmeriCredit,
trusts Stanley.
GE Consumer Distribution
finance
Mortgage Equity Financial planners

Consolidated Mortgage banking: REITs REITs and investment
Distribution
Banks and credit WaMu, advisors: Value
unions: JP Morgan Countrywide Line, Morning Star
Distribution
Chase, BOA, financial etc.
Reinsurers
Distribution
Title insurance
Developmental services: Owner
Insurance carriers
banking and lender
insurance services
Individual
Property and Life: Single and supplemental health: Managed health
casualty insurers: life, whole, term Covers the medical care: Group health
Home , cars, theft, and variable life treatments not insurance
marine, insurance policies. covered by group companies
health policies.
Distribution
Distribution Distribution
Distribution
Insurance
Consumer
agencies

392
…With Banking, Investing, Insurance and Financial Services as
the key sub-segments within Financial Services.
The theoretical construct of the Financial Services Industry broadly comprises financial services, lending and other
banking services, Insurance, Investing & other investment services. These form the core structure of the financial
services industry map. Other operators in the construct are linked to broad industry groups either as sub sectors or
at peripheral support level.
• The financial services industry typically consists of accounting and auditing firms, business consultants and legal consultants.
The group has both inter and intra industry connections with respect to services rendered. The typical industry size in the US
is estimated at around BD 37 billion
• Lending and other banking services broadly encompass commercial banks, credit unions, and specialist credit suppliers.
Service fees and interest spread are the key revenue drivers for the sub-groups of banking services and lending respectively.
The industry size in the US is estimated to be around BD 238 billion. Developmental banking has emerged as a major sub-
group especially in developing world economies.
• The insurance sub-group consists of primary underwriters and reinsurers. The group consists of integrated players present
across various specialties such as life, health etc. The industry also consists of other facilitators such as insurance agents,
actuaries and third party administrators . In the US, the industry size is estimated at around BD 377 billion.
• Investing and investment services includes various types of investment engines such as venture capital funds, mutual funds,
investment banks, REITs, security brokers etc. The second tier (downstream) of the industry comprises investment advisors,
financial planners, financial information providers having close ties with investment engines and other sub-groups such as
banking and financial services.
• The industry sub group also consists of regulators and facilitators such as stock exchanges, OTC exchanges, government
regulatory bodies, market makers etc.
• The industry is fairly fragmented with few global multinational giants peppered across all industry sub-groups. The industry
has recently witnessed major failures and consolidations followed by regulatory changes.

393
With 20% contribution to GDP* the Financial Services sector
retains its leading position in the Bahraini economy…..
Market Size Breakdown of Financial Services, in

• Bahrain's proximity to Kuwait and Saudi Arabia, coupled with its credible BD million
regulatory system, made it an attractive place to move to during the late
1970s, decimating Beirut's position as a regional financial centre
• CBB (which replaced BMA in 2006) with the responsibility of licensing,
supervision and regulation of the sector, has played a vital role in
liberalization, allowing the entry of foreign players in the market.
• The sector footprint extends to:
 Banks: 26 retail, 43 wholesale, 6 Islamic retail and 3 Islamic
wholesale
 Insurance: 30 Conventional, 9 Islamic and 37 restricted for business
outside Bahrain.
 Investing: 32 Wholesale investment banks, 45 investment
GDP contribution and Employment Generation
businesses and 1 stock exchange
• The sector has grown by a CAGR of 13.3% since 2004, fueling high value
add employment opportunities (highest per capita wage level of BD 1,960 /
month as compared to other sectors)
• The sector witnessed a ‗trickle down‘ effect of the global recession during
the 3rd quarter of 2008. During the fourth quarter of 2008, the balance
sheet of the wholesale banking sector had contracted, and the two largest
wholesale banks had suffered major losses on subprime investments before
being recapitalized by their (regional sovereign) shareholders
• Spreads on five year credit default swaps continue to show Bahrain trading
more widely than some `A' peers
Sources: CIO, TRA, Industry Reports, D&B Research & Analysis

394
The economy is witnessing a focus shift from saturated
Conventional Banking to the sunrise sub sectors of Islamic
Banking, Insurance and Investing…
The banking sector appears to be saturated
Sector Conventional Banking

Players 140 licensees
Total Market Size BD 1.67 billion (2008)
Total Assets Size BD 95.14 billion, 11.87 times of GDP, average asset size of BD
1.03 billion, (UAE BD 149.6 billion, 1.51 times of GDP, average
asset size of 2.88 billion)
The saturation is further reflected by the fact that the CBB is putting restrictions and stringent
filters on licensing more banks in Bahrain (especially Retail Banking)
Islamic banking, Insurance and Investing are expected to post healthy growth
Sector Islamic Banking, Insurance and Investing

Islamic Banking asset CAGR 33.9% (2000: USD 1.9 billion, 2009 (June): USD 26.3 billion
Islamic Banking share in 2000: 1.8%, 2009 (June): 11.1%
banking assets
Gross Insurance premium BD 187.05 million (2008), 34% increase yoy
underwritten
Insurance Penetration 1.83% (UAE 3.3%)
Number of listed companies 52
With corporatization of Bahrain Stock Exchange coupled with formation of regions first multy
asset class exchange, Bahrain Financial Exchange; Bahrain is well poised for robust growth.
Sources: CBB, Wikipedia, Industry Reports, D&B Research & Analysis

395
The Kingdom‘s long standing leading position in this sector has recently
been jeopardized, making UAE the regional leader for banking and
insurance while Saudi leads in terms of investing…
The UAE has emerged as a

leader in financial services with
a robust regulatory framework,
infrastructure and foreign
investment. Initiatives like the
DIFC are contributors to its
success
Sources: CBB, Industry Reports, D&B Research & Analysis

396
With 140 banking institutions in the country, the lending
segment of the industry appears overcrowded and
saturated….
26 retail, 43 wholesale, 6 retail Islamic and 3

wholesale Islamic banks
Consolidated asset size of 12 times of GDP

• With the saturation in the domestic
market, Bahraini banks are poised for
Peak penetration with the highest loan to GDP pan-GCC expansion; however, the major
ratio in GCC
players face regulatory barriers in
Shift to invest outside Bahrain indicating entering other GCC countries
domestic saturation. • CBB has initiated pan- GCC unification of
financial regulations. It has appointed a
Shrinking market size due to global financial
consultant to assess the feasibility of
crisis
unification and resolution of issues
regarding other regulations
Stringent licensing from CBB
Major wholesale banks losing on their

subprime investments
Market saturation

397
The saturated banking segment has pockets of opportunities in
Developmental banking, Islamic finance and Angel Funding…
Bahrain possesses strong untapped

potential opportunities for proliferation
of SMEs especially in ICT services,
Globally, the SME segment of the
downstream Aluminum** and Potential
market is considered to be the
Petrochemicals (Plastics) opportunities
backbone of the economy. Almost
at SME level
90-95% of entities in any economy
**Though the kingdom houses the world‘s
are employment generating SMEs
most developed aluminum downstream
industry, it has not yet exploited the
downstream SME potential to the fullest Developmental
banking
Bahrain government has initiated opportunity
BDB is the only entity in the kingdom
integrated efforts in developmental
in the development financing arena,
banking through SME focused private
through its 7 branches across the
sector support programs offered by
Kingdom. BDB has recently started Limited SME
Tamkeen which are supplemented by
offering overdraft facilities and small financing
financing schemes from Bahrain machinery
trader financing schemes. Its current
Developmental Bank. (Government has
portfolio size is BD 70-80 million.
also initiated social financing vehicles
BDB currently funds 40-50 cases a
such as Eskan Bank which focuses on
month.
housing finance schemes)

398
… with only 50% of developmental banking opportunities being
catered to through the current financing mechanism….
• The current SME funding mechanism

Commercial registry witnesses 200-
225 new registrations each month. caters only to 50% of SMEs that deserve /
require financing
• SMEs form an indispensible segment of
the economy and serve as a major tool for
40-50% (100-110) of new
diversification specially for Bahrain, an
entities require external
financing economy which is striving to reduce its
dependence on traditional oil related
businesses
• There is a need to bridge this prevalent
50% (40-50) cases gap with more funds channelized towards
are financed SME seed capital support
by
BDB.
CBB has recently granted licenses for micro finance banks (Ibda‟a / Creative Bank, Gramin Bank) extending micro-credit
facilities for low income Bahrainis. This will partially contribute in bridging the gap for start up venture financing in the
Kingdom (primarily directed towards micro startups). Further scope lies in terms of start up financing for small and
medium enterprises.

399
The absence of angel funding poses a gap in seed financing
through the equity mechanism…
Demand Out of 100-115 SMEs requiring external finance, only 40-50 currently receive financing. In this scenarios, Angel
funding poses an opportunity to act as a vital enabler for the Bahraini economy
Venture financing is not popular owing to the size and level of sophistication of the economy. The existing system
Supply approaches seed financing only though the debt route. Moreover existing financing schemes (BDB+ Tamkeen) do
not cater to purely Greenfield projects
Debt route Tamkeen +
BDB
An entity named ―Venture
Capital Bank‖ has been Greenfield
floated by BDB to promote Equity route
seed financing with a corpus ?
of BD 15 million focusing on SME
financing
Green field projects. The
entity is still not operational.
BDB, Tamkeen and
Brownfield other commercial
banks
According to industry experts:

• Bahrain‟s regulatory framework is robust enough to support venture capital financing businesses
• Absence of seed financing through equity participation is a major hindrance to SME development

400
However, in the current business environment, pre-requisites
for the sustainability of the angel fund and venture capital route
are missing within the Kingdom‘s Investing Ecosystem….
• While there is an apparent gap in terms of

equity driven startup / turnaround
financing through business angels / VCs
in the market; however this absence can
Prevalence of closely be attributed to the lack of certain
held family businesses fundamental enablers
• Closely held private businesses, coupled

with low activity levels within the capital
markets, effects liquidity levels
Lack of Disablers • As a result, typical exit routes for angel

fundamentally
innovative industries of angel Cultural barriers investors in the form of IPOs is limited
in Bahrain
funding • Fundamentally innovative industries e.g.
biotechnology which are the typical
targets of angel investors are not viable in
Bahrain
Lack of exit route for
angel investors through • The investing ecosystem is further
IPOs, because of lack of effected by cultural barriers amongst
liquidity in the market Bahraini family businesses in terms of
sharing control and being open to
strategic advise on business decisions
(typical in the case of equity participation)
by VCs
401
The breath taking growth rate of the sunrise Islamic Banking
sector stipulates regulatory attention….
Islamic Banking
• With more conservative risk policies, Islamic banks have managed to post
better results than conventional and international banks during the recent
past.
• Islamic banks‘ share in total lending assets grew from 4.1% in 2003 to 10%
in 2008. Assets posted a strong growth rate of 43.2% during the period from Islamic Banking
2003 to 2006 Number of players 26
Sector Asset size USD 26.3 Billion (June 2009)
• Increasing awareness of Sharia compliant financial products have fueled
Market Share of 11.1% (June 2009)
customer migration from conventional banking banking assets
• The market regulator is also expecting major growth from the Islamic Products offered Murbaha, Ijara, Mudaraba,
finance sector. It has responded to the increasing skill need of the sector by Musharaka, Al Salam and
establishing an educational fund called ―Waqf‖. Having 18 contributory Istitsna'a
Assets size CAGR 34% (2000-2009)
banks, the fund‘s sole purpose is to promote Islamic financial education Leading Banks Bahrain Islamic Bank, Shamil
amongst Bahraini graduates Bank
• With the presence of organizations such as Accounting and Auditing
Organization for Islamic Financial Institutions, International Islamic Financial
Market, Islamic International Rating Agency, the CBB offers a most robust
playground for Islamic banks
Islamic banking is a sunrise sector and merits attention from the regulator as a strong growth opportunity

402
To sum up, whereas Angel Funding and Developmental Banking may
be classified as largely untapped market gaps calling for active market
participation, Islamic Banking already enjoys a good footprint …
Penetration in Bahrain‟s Financial sector
High
Conventional retail and

wholesale banking
Islamic Banking
Medium
Developmental Banking
Low
Angel Funding
Low Medium High

Bottlenecks and Hindrances

403
With almost 100 market players, Bahrain‘s insurance industry
posted robust growth figures with General Insurance and
Takaful as strong performers….
The insurance segment has witnessed a boom recently, fuelled by an increasing expat population and solid economic growth
The industry consists of 26 local players, 11 overseas companies, along with 38 players restricted to business activities
No. of players outside Bahrain* .The downstream tier comprises 32 insurance brokers, 2 insurance managers and 4 insurance consultants
*With promulgation of insurance law in KSA, most companies „restricted for business outside Bahrain‟ are expected to relocate
With BD 187.5 million of premium in 2008, insurance penetration Bahrain (2.27%) stood second only to UAE in the GCC.
Penetration
Insurance premium collected was 0.88% of GDP in Bahrain as compared to 1.89% in UAE
Gross premium spread (2008)
Total AUM increased by 2% during 2008. While the total assets 7% of conventional
2%
insurance companies climbed 13%, Takaful
AUM 4% of Solidarity company
AUM witnessed a significant dip as result of the restructuring
Gross premium spread (2008) 28%
Premium spread 17%
57% of gross premium spread in 2008 was from
7% 2%the Motor Insurance and Long Terms Insurance sector
by sector 4%
28% 11%
ReinsuranceGross premium spread
of the(2008)
2%
Premium and Retakaful segments17% market grew by 30% to reach
29%the gross premium level of BD 252.3 million in
2008. Bahrain‘s first captive Insurance premium distribution (2008)
distribution 7% 2%insurance company, Tabreed Captive Insurance was licensed by CBB in November 2006.
4%
Gross premium spread
Gross Premium (2008)
Spread
11%
- 2008
28% 29%
2% Insurance Premium distribution - 2008
17% Reinsurance /
7% 2% Long term Conventional
Misc. financial loss Motor
4% Retakaful
Insurance
Medical Fire, property and 42%
11% 28% 49% liability Marine and aviation
2%
17% 29% Engineering Others
Long term Misc. financial loss Motor
Medical Fire, property and liability Marine and aviation
11%
29% Engineering2% Others
Long term Misc. financial loss Motor Overseas
Takaful Insurance
3% 6%
Engineering Others
Long term General Misc.
insurance
financial loss along Motor
with Takaful business emerged as strong performers in 2008
Engineering Others 404
In the rapidly expanding insurance business, life and health
insurance surfaced as underperformers ….
The life insurance segment contributed 28% towards the total premium collected during 2008. Overseas Insurance
Firms contributed 17% in total assets. The main contributors were the Conventional insurance firms with a 74%
contribution. The share of Bahraini insurance firms has significantly increased to register 56% of total Long-term
insurance premiums as compared to 32% in 2007.
Current penetration levels of the Life Insurance segment remain low due to:
Lack of incentive for Expatriate population
• Life insurance schemes offered in Bahrain are not structured as investment products as in international markets.
Thus, expatriates prefer taking life insurance in their respective home countries. The international insurance
companies having diverse geographical coverage position themselves better than local firms having limited
geographical presence.
Absence of push factors
• Push factors such as factors mandating life insurance with significant credit facilities are absent in Bahrain
(although leading banks insist on it)
Absence of regional synergies
• Like the banking industry, the insurance industry suffers from absence of regulatory synergies across GCC
countries.

405
…which is mainly attributable to the regulatory framework….
The health insurance sector is currently in the adolescent stage with growing opportunities in self funded and group
employee benefits, and TPAs. Moreover, the managed healthcare business does not exist in Bahrain and presents a
potential gap
Inherent business risk
• Health insurance is characterized as a high risk high reward business. Only players with high risk appetite tend
to delve in health insurance business.
Absence of regulatory push
• The healthcare services in Bahrain are free for all (including expatriate population) making health insurance
redundant. Recent talks regarding withdrawal of free medical aid have triggered speculations in the market.
However, dominant players in the market feel that Insurance companies do not have enough infrastructure to
support sudden swell caused by new regulation.
The expected regulation warranting mandatory medical insurance will result in a sudden surge in the sector.
Prevalent gap in terms of capacity of the sector (both in terms of number of players operating in the
segment as well as infrastructure to handle processing and claims) needs to be bridged.
The regional growth in insurance industry and especially general insurance has opened newer opportunities
for back office functions such as claim processing. Bahrain can certainly target a considerable market share
in the sunrise sector of Information Technology Enabled Services banking on its credible regulatory system,
Arabic speaking talent pool and existing financial services infrastructure.

406
Whereas General Insurance has matured is looking to emerge
saturation, Takaful has outperformed the conventional
insurance business in every sense….
• The general insurance segment, being the largest segment of the industry, is the most prominent. Total volume of Bahrain‘s
general insurance stood at BD 135 million (2008) registering an impressive growth of 32% year on year
• According to industry leaders, the general insurance segment has been sufficiently penetrated and the industry has entered
the ‗mature‘ stage of its life cycle.
Expected EGR
Expected EGR Asset management based ‗push ‗
High
Retakaful and
based on visible Medical Insurance and ‗pull‘ factors
Reinsurance potential
Expected Growth
Medium
Takaful Based on the low level of

Rate* (EGR)
General adoption by both local and expat

Potential surge expected
Captive on the back of regulation
population, due to lack of tax
requiring mandatory
Life and other regime, lack of investment
medical insurance of
Low
attraction value and low level of

long term expat workers
awareness around importance /
benefits of life insurance
Low Medium High
Bottlenecks and Hindrances
• Takaful business has had a growing response owing to increased awareness of Sharia compliant financial products in the
economy. With an annual market size of nearly BD 48 million, the Takaful business registered a massive growth rate of nearly
50%.
• Characterized as a high growth sector, the Takaful market is sufficiently penetrated reflected by the tightened licensing policy
by the regulator. International Takaful players such as Zurich Takaful are expected to enter the market in near future.

* Potential growth rates are assumed to be after the removal of bottlenecks and hindrances
407
With the absence of both ‗push‘ and ‗pull‘ factors, Asset
Management function does not constitute a large portion of
Insurance companies functions….
• Asset management, a vital function of insurance companies, is not handled domestically in Bahrain and insurance companies operating
in Bahrain do not undertake much of asset management activities.
• The private wealth management sector possesses a healthy potential for growth. The widely used business model of packaging wealth
management with conventional banking could be pursued in order to capitalize on the increasing wealth management requirements. With
easy access to global exposures through exchanges like BFX coupled with credible regulatory system, wealth management would
provide impetus for domestic investing. The CBB could also explore opportunities for developing and attracting independent asset
management companies involved in both fund raising and investing.
Push Factors Pull Factors
Mandatory Attractive domestic Domestic asset

Insurance management
levels of domestic investment
investment Companies opportunities functions
According to industry leaders, its not mandatory for any insurance company to invest locally
and most international companies have centralized asset & risk management functions with At the same time, Bahrain, as an
their respective head offices. investment destination fails to attract
As per global best practice, countries with developed insurance markets usually institute investors. Apart from specific classes of
mandatory investment requirements for insurance operators. The Indian Insurance investments such as Private Equity
Regulatory and Development Authority prescribes the approved class of investment along Funds, Real Estate etc, Bahraini
with allocation of assets to the approved classes with clearly defined guidelines for life, investment market is still in infancy and
general and annuity businesses. faces several bottlenecks

408
Bahrain‘s developed banking and financial services industry,
sound talent pool, credible regulator and track record make it
an ideal breeding ground for reinsurance companies...
• Bahrain currently houses 3 reinsurance and retakaful companies. Reinsurance and retakaful business offer robust
growth opportunities. Bahrain could look at capitalizing on its strengths in order to attract reinsurance businesses.
Reinsurance and Sources of risk: Reinsurers:

Policies Risk transferred Destination of
Retakaful Business
underwritten in through reinsurance assets under
 The reinsurance business is fueled with the US and Europe management
propensity to diversify and mitigate the risk in
direct underwriting. The direct underwriters look
to offload risk as a risk management technique.
The reinsurance and retakaful companies in a Bahrain:
diversified geographical and economic • Developed
environment, have better appetite for risk banking
underwritten by direct reinsurers industry
 Bahrain has a great potential for housing • Sound talent
reinsurance and retakaful players underwriting pool
the risk from global insurance companies. • Credible
Bahraini players, by investing in GCC market regulations
would act as an effective risk management
measure.
 Bahrain‘s developed banking and financial
services industry, sound talent pool, credible
regulator and track record make it an ideal
breeding ground for the reinsurance
companies.

409
Reinsurance, Asset Management, Health and Captive
Insurance are observed to be underserviced, whereas Life &
General insurance and Takaful stand sufficiently penetrated …
Increasing direct No regulatory requirement

insurance business to invest locally
Reinsurance Direct Insurance Providers Back office

And asset
Retakaful Life and management
other long General
term**
Insufficient number Underdeveloped
of reinsurers investment market
Increasing need for

Mandatory medical Medical Captive captive insurers to
insurance cover business risk
Visibly penetrated Takaful

Underpenetrated
Insurance
Ancillary
** Significant potential if life insurance products are structured as investment products as in
international markets and awareness around importance / benefits of life insurance is Services
created through private public participation

With nearly 49 Investment business and 2,697 mutual fund
schemes, Bahrain offers healthy growth. However, the
absence of major asset classes hinders opportunities….
The investment industry in Bahrain is limited in terms of its coverage mainly due to geographical and
Spread
economic constraints.
The Bahrain Stock Exchange (BSE) is the focus of capital market activities in Bahrain. The exchange has
Capital
markets
grown in the number of listed securities with 50 equities, 19 bonds (both conventional and Islamic) and 35
mutual funds currently listed. As at end June 2008, market capitalization stood at US$27.6 billion.
Bahrain Mumtalakat Holding Company, the Kingdon‘s sovereign fund, is the largest fund and a holding
company for several businesses across various industries. Bahrain also houses 30 licensed investment
Funds businesses and 32 licensed investment banks. Bahrain is looked upon as a base for investment activities in
the Gulf due its robust, flexible and exhaustive regulatory framework. Bahrain currently houses 2,560
offshore mutual funds along with 137 local funds.
• Bahrain‘s economic development recently opened up various asset classes previously not available to
investors (such as Real Estate). However, not all asset classes are available and are not liquid enough to
attract investment
Recent • Bahrain Stock exchange has recently initiated a process of corporatization through which it will switch to a
developments more transparent, stable and robust trading platform
• An Indian commodity exchange major MCX has recently ventured in Bahrain by establishing the region‘s first
multi asset class exchange, Bahrain Financial Exchange (BFX). BFX will focus mainly on derivatives
including commodities, foreign exchange and fixed income derivatives.

411
The Bahraini capital market is underdeveloped due to lack of
liquidity and sophisticated clearing and settlement systems….
Capital markets in Bahrain are currently solely represented by Bahrain Stock Exchange (BSE). Established in 1987, BSE
went live in 1989 and switched to electronic trading in year 2000. The exchange is currently owned by Bahrain
Government, and has initiated the process of corporatization of the exchange.
Lack of publicly traded Absence of exchange Absence of Electronic

companies based trading (GCC) Clearing System
• The corporate community and • Market traded equities do not
business environment currently • The funds settlement and clearing
appear to be a popular class of
do not provide the pre-requisites system in Bahrain‘s financial
investments in GCC countries
for expansion of capital markets services industry is still
• The GCC based markets are still conventionally based on the
• Most of the major business in infancy and hence fail to attract
houses in Bahrain are closely method of checks, and
much liquidity.
held family (private) owned with contemporary formats of
• Countries like UAE are still Electronic Clearing Systems
low propensity to go public struggling to get enough depth
• The business families tend to (ECS) have not been introduced
and liquidity in its markets.
retain absolute control over the **Electronic Clearing Service (ECS) is a
• However, countries like Saudi retail payment system that can be used to
business. Most of large Arabia have been successful in make bulk payments / receipts of a similar
businesses in Bahrain are not developing their capital markets. nature especially where each individual
listed on a stock exchange. SAMA* and other market payment is of a repetitive nature and of
• Large Government investors stakeholders initiated the process relatively smaller amount. This facility is
meant for companies and government
such as GOSI hold a major of taking larger companies public departments to make/receive large
chunk of stocks contributing to in order to increase depth and volumes of payments rather than for
the lack of liquidity in the market liquidity in the market. funds transfers by individuals
Bahrain has proposed to host the region‟s first multi asset class exchange, Bahrain Financial Exchange. BFX
also proposes to launch its own clearing house revolutionizing the clearing and settlement of trades in the GCC

*SAMA: Saudi Arabian Monetary Authority
412
The lack of a sophisticated clearing and settlement system
highlights need for integration between banking and investment
community and facilitation of such efforts by the regulator …
Absence of electronic clearing system hinders the settlement process which ultimately affects the liquidity
levels in the market. The establishment of a robust ECS needs consolidated and concerted efforts from the
banking and investment community triggered and facilitated by the regulator CBB.
Management industry
Banking industry
Investment and
Investment
Regulatory Regulatory
push and Electronic push and
facilitation settlement facilitation
system

413
The Electronic Clearing System expedites the settlement, reduces
transaction cost and increases liquidity in the market….
Clearing
Banks House (Stock
Market)
The stock market

clearing and settlement
system is automated
through an electronic
clearing system. It
expedites the process
and reduces transaction
cost, improving liquidity Exchange
Depository
Clients Brokers /
Clearing Electronic clearing system
Participants
Electronic trading system

414
growth in the Financial Services sector …
Lack of workplace ready

• Bahrain faces shortage of sufficient amount of resources with appropriate skills
candidates – impact on risk
especially Islamic finance and risk management.
management and Islamic
finance based functions
• As the educational institutions are not in sync with industry requirements, fresh recruits
do not possess requisite skill sets ,even though the titles of the courses they undertake
Low alignment between suggest so.
financial services industry & • The players in financial services industry pay a levy towards BIBF. However, the levy is
educational institutions imposed without any commitment and accountability on BIBF. BIBF is not mandated to
supply specific amount of resources to the players in return.
• Majority of the courses offered by BIBF are focused towards core banking operations.
Lack of specialisation / focus The specific skill sets required by Insurance and Investment activities do not get enough
attention.
• The banking sector has emerged as one of the highest paying employers in the
High attrition rates hindering economy. All the other sectors in the economy lose their resources against banks. This
the development of complex restricts Bahraini employees from building diversified skill sets.
skill sets • Frequent job changes hinder the development of job specific skills and increase the
training requirements for employees hired.

Current employment trends Wage levels (2008)
15000 12% Wage levels (BD/Month)

No. of employees in financial services
% of total Bahraini workforce

10%
10% Financial services 1,960
8%
9592 Trasport and communication 413
10000 8%
Tarde 235
sector
6%
5596
Construction 104
5000 4%
Manufacturing 207
2%
Agriculture 152
0 0%
0 500 1000 1500 2000 2500
2002 2008
No. of Employees % of Bahraini workforce
Employer skill requirements for financial services sector

• Increased employment contribution from 8% in 2002 to 10%
14% in 2008.
12% 11% • Surge in employment levels from 5596 employees in 2002 to
% of total reponses
10%
8% 8% 8% 8%
9592 employees in 2008.
8%
6%
• Risk management and treasury among top 5 requirements
4% indicating need for the development of specific skills sets.
2% • The financial services sector has the highest wage levels in
0%
Risk management Communication Customer service Human resource Treasury and the economy indicating highest value creation.
investment
*Source: CIO, Allen survey, D&B Research & Analysis 416

Financial Services: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Financial Services sector
and is used to reflect the ‗absorptive capacity‘ of the Financial Services sector
Bahraini Financial Services sector value chain are termed as ‗market gaps‘
417
The Bahrain Financial Services Sector - A Snapshot of
General insurance
No apparent gap Market gaps in terms of segment being

virtually absent in Bahrain, however

High
Conventional could potentially present opportunities for
banking existing players / new entrants based on
Islamic
banking 1
Takaful 1
Medium Medical Insurance 3,d  Angel Funding
Life Insurance e
Developmental Infrastructure / Regulatory Bottlenecks
banking 2,b (Disablers)
Low Investing a
Captive (Insurance) Reinsurance &
Retakaful 1 a. Absence of ECS, illiquid and
Asset management c underdeveloped stock markets
Market gaps in b. Regulatory push and availability of funds
Low Medium High
terms of under c. Mandatory domestic investments
penetration d. Government aided free for all medical
services, hindering natural growth of
1. The growth in Islamic Banking, Takaful and Retakaful & Reinsurance on account of increasing
awareness about Sharia compliant products and emergence of Bahrain as regional financial hub. sub- sector
2. Developmental Banking remains underpenetrated in context of number of startups getting e. Lack of regulatory incentivization for
financed versus number of startups requiring venture financing in Bahrain adoption
3. Regulatory reforms in the healthcare sector will promulgate growth in health insurance segment

418
Relative Sub-Sector Prioritization: Financial Services
the Financial Services sector as a ‗market gap‘
(Priority Index)
419
scores

Notes:
formation issue

and C
422
Medical Reinsurance
Insurance
Life Takaful Angel Funding Investing Asset Developmental Islamic

Insurance Management Banking Banking
20% 52% 57% 62% 68% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Financial Services
Increased awareness about

Sharia compliant financial
products in the market.
Increasing pan GCC synergies and efforts Expected regulatory reforms in the
……………
towards equivocal financial regulations healthcare sector with mandatory
across GCC. health insurance
Healthy increase in Gross Finacial Services Sector The formation of the regions first
Domestic Product. Growth Drivers multi asset class exchange
Natural population growth (6% Transparent, flexible and

y-o-y) stable regulatory platform.
markets

424
Agriculture & Food Processing
425
The Agriculture Industry Map comprises crop and animal
production, fishery, forestry, and food & beverage
manufacturing as the primary components of its value chain….
Research and
Petrochemicals / Agricultural and
Fishing boats, development:
chemicals: food processing Animal
nets Horticulture, bio
Fertilizers, machinery pharmaceuticals
manufacturing technology, genetic
insecticides etc. manufacturing
Agriculture, fishing, research etc
forestry, food and
beverages and related
industries
Agricultural Agricultural Fishing and Food and

crop animal related Forestry beverage
production production industries manufacturing
Animal
Cereals Timber Beverage
breeding Food and food
Fishing manufacturing manufacture
products
industry and bottling
Vegetabl
es and
melons Animal
Paper and Non-
keeping Fish Alcoholic
Roots paper products alcoholic
Processing beverages
and manufacturing beverages
tubers
Fruits, Paper pulp Sodas

Aquaculture
flowers mills
and nuts Fish products
manufacturing
Bottled
Animal food Paper or water
Pulses
and feed paper
manufacturing board mills
Vegetabl Food products
e fibers distributors Juices
Converter
plants
Oil crops
Milk and
related
Other cash products
crops: Tobacco,
Consumer: Individuals
rubber, spices
Cold storages, long term and institutional
etc
food preservation consumers Beverage
Bio products: Bio Mixtures
services transportation distributors
fuels, bio plastics,
facilities
bio pharmaceuticals
etc.

426
…With the Food & Beverage industry being broadly
categorized into food, food products, beverage manufacturing
and bottling
The theoretical construct of the Agriculture Industry broadly comprises crop and animal producers, fisheries, forestry
and its upstream Food & Beverage industry, which form the core structure of the industry map. Other operators in the
construct are linked to these players either through value chain relationships or at peripheral support level
• Agricultural companies can be classified as companies / organizations that produce, grow, harvest, process, store, market,
and / or sell food and other crops and livestock. At the root of all growth in the agriculture industry is the increasing world
population.
 Animal Production – Includes companies that breed, produce, raise, and sell animals for human consumption and / or
as working animals on farms. Large commercial animal feeding operations have become so efficient at raising animals
that smaller operators can't compete based solely on price. Large farms increasingly specialize in a single production
stage, lowering operating costs, making it difficult for independent farrow-to-finish operations to compete.
 Crop Production - Companies that grow, harvest, process, and package agricultural crops both for food and non-food
products. In the US, 12000 commercial crop farms with over BD 0.4 million in annual revenue account for almost half of
US crop production although total acreage devoted to farming has fallen steadily in the past 50 years
 Fishery – Aquaculture is the farm raising of fish, shell fish and other aquatic animals, while commercial fishing
comprises the catching of fish and other marine products from their natural habitat, which are either used for personal
consumption, sold to the end consumer, or sent for wholesaling / processing
 Food and Beverage - The processing industry in the US is fragmented with the 50 largest processors accounting for
45% of the largest revenue and the 50 largest distributors accounting for 1/3rd of segment revenue. Beverages include
alcoholic and non alcoholic beverages, while food includes dairy products, oil, poultry and seafood
• Global market forces are driving the continuous evolution of the food and beverage industry with consolidation, changing
consumer preferences and increasing government regulations dramatically impacting manufacturing and business strategy .
There is emphasis on cost effectively producing a greater variety and higher quality of products to meet consumer demand
Sources: Hoovers, Industry reports, D&B Research & Analysis

427
Overall contribution of agriculture and fishing production (in
percentage terms) to GDP has been witnessing a steady
decline since 2004…
Agriculture Contribution to GDP – BD million

• The GDP contribution of agricultural and fishing production was
0.21% and 0.12% respectively in 2008.
• The Protected Agriculture concept is now widely adopted in the
Kingdom for agricultural production
o Introduced in 1976, the major crops produced under
protection are vegetables
• The fisheries of Bahrain are entirely artisanal in nature, following
the prohibition on industrial shrimp trawling activities in 1998
• Over 2300 fishing boats operate in Bahrain waters
o These are mainly fiberglass boats (85 percent), with the Agricultural and fishing production (BD
rest made of wood (15 percent).
Million)
Agricultural and Fishing Production– BD million
• Bahrain's fish stocks have fallen drastically with an increase in 20
marine pollution as the major cause behind decline in fish stock
16
• Aquaculture is not a traditional activity in Bahrain - Since 52
percent of the freshwater produced in Bahrain (1997) was from 12
desalination plants, aquaculture has targeted marine fish species
8
• Recognizing the importance of aquaculture development, the
4
Government established the National Mariculture Centre to
undertake applied research in this field 0
• Currently there are no commercial mariculture projects in 2004 2005 2006 2007 2008
operation in Bahrain except for the applied research activities of
Agriculture Fishing
NMC.
Sources: CIO, National Accounts Industry Reports, D&B Research & Analysis
428
Although agriculture has historically been an important part of
the economy, Bahrain‘s cultivable area has reduced to less
than 1/3rds of its original area, after independence…
• Despite the scanty rainfall and poor soil, agriculture in Bahrain historically has been an important sector of the economy
• Before the development of the oil industry, date palm cultivation dominated Bahrain's agriculture, producing sufficient
dates for both domestic consumption and export
• By 1993 Bahrain's cultivated area had been reduced from 6,000 hectares before independence to 1,500 hectares
• Cultivated land consists of about 10,000 plots ranging in size from a few square meters to four hectares
o These plots are distributed among approximately 800 owners
• A minority of large owners, including individuals and institutions, are absentee landlords who control about 60 percent
of all cultivable land – these owners rent their plots to farmers, generally on the basis of three-year contracts
• There are approximately 2,400 farmers, 70 percent of whom do not own the land they cultivate
The cultivable land also witnessed a serious reduction due to other more lucrative options, mainly construction
developments attracting farmers to sell cultivable land to developers

429
…with total number of vegetables produced almost doubling
from 2004 to 2008
CAGR: 17%
CAGR: (1)%
CAGR: (1)%
CAGR: 15%
Tons
Tons
CAGR: 105%
CAGR: 44%
• Date production leads all crop production at approximately 13,000 tonnes a year (2008), followed by tomatoes at
4554 tonnes a year (2008)
• Cucumbers, gherkins , pumpkins, squash and gourds production have been the major contributors to the rapid
growth in vegetable production
• However, local production is too limited to enable / facilitate a robust fruit & vegetable processing industry
Sources: FAO, D&B Research

430
Commercial fishing is a small sector in Bahrain; Aquaculture /
mariculture, though not traditional activities, are showing signs
of development in Bahrain…
Fisheries & fishing activity in Bahrain

Marine Fisheries Aquaculture / Mariculture
• Fisheries in Bahrain are mainly artisanal in nature, following • Aquaculture is not a traditional activity in Bahrain
the ban on industrial shrimp trawling in 1998 • Since 82% of freshwater production in Bahrain is produced
• Fishermen in Bahrain may be classified into full time, part through desalination, aquaculture has targeted mainly
time, occassional and recreational fishermen, with 82% marine fish species
being professional fisherman (> 7200 fishermen – 2003) • In 1993, the National Mariculture Center was established
• Total fish landings peaked in 1996, however by 2001, focusing on certain species of fish such as orange spotted
landings were mainly of shrimp (39%) grouper, Mangrove red snapper, etc.
• Artificial Reef development program has been undertaken • In 2001, aquaculture produced about 0.1% of total supply
by the Fisheries Directorate and has been successful in • Products have been test marketed in the Bahraini market
breeding juvenile fish in the reefs • There are no commercial mariculture projects in Bahrain
Catch utilization
Local consumption Fish retailers Exports Processing industry
State of the industry

• Environmental issues remain a major concern for the fishing industry in Bahrain. Extensive land reclamation, dredging and
destruction of reef areas have had a significant impact on fish stock, in addition to over exploitation
Although the commercial fisheries sector is small and contributes minimally to GDP, the sector is the main employment
generator and economic activity in Bahrain‟s coastal villages
Sources: Primary interviews, D&B Research, FAO

431
Bahrain has a footprint in animal farming across both poultry
and livestock …
Commercial Animal Farming

Delmon Poultry Bahrain livestock company
• Delmon Poultry is a public share company established in • The company‘s products are limited to whole meat and
1983 and has an in house processing plant, a feedmill plant, carcasses of lamb and beef
and a hatching plant • There is no downstream production of processed packaged
• The company‘s products are limited to whole chicken, which products such as burgers, beef strips, etc.
are sold to retailers • Products are sold to butchers, the central market and retail
• There is no downstream production of processed packaged outlets with butcheries
products such as nuggets, chicken pieces, etc.
Fresh chicken production process in Bahrain Cattle / lamb meat production process in Bahrain
1 day old chicks Storage &
Eggs hatched
Import of eggs sold to farmers growth /
in the hatching Import cattle
from Brazil who rear chicks till maintenance of
plant (Delmon)
slaughter animals
Chickens are Repurchase

Cleaning /
slaughtered, from farmer
packaging / Slaughtering
processed, after 33 days
processing
packaged (Delmon)
There is absence of incentives for private players to operate such commercial animal farms or to get into downstream
production of packaged foods such as chicken nuggets, beef strips, etc.
Sources: D&B Research

432
…with greatest demand for chicken and goat meat
CAGR: (0.2)%
CAGR: 0%
Tons
CAGR: 0%
CAGR: 0%
CAGR: 0.5%
• Chicken and goat meat are the most popular in the Bahraini market, particularly as whole chicken and meat are
available at subsidized prices to citizens / residents; however, growth over the past few years has been relatively
stable
• Demand for livestock / poultry is higher than the current supply, with inadequate excess capacity required for
livestock processing in Bahrain
Sources: D&B Research

433
Although all GCC countries stand as net importers of all
agricultural and food products, Saudi Arabia has emerged as
the regional leader in agriculture and fishing…
Production output in Saudi Arabia – in tons

CAGR: Agricultural crop Saudi Arabia is lightly forested with less
production – 0.25%
than 1% of the land area constituting
forest land. The Kingdom has
undertaken a number of institutional and
CAGR: Animal products– / or legislative measures and fostered a
3.69%
number of projects to reduce the
CAGR: Fish production– 6% degradation of forests and also
conserve, expand and develop existing
forests
• Despite government subsidies and heavy investment, agricultural output decreased by just 1% from 2006 and 2007
• However, Saudi Arabia became self-sufficient in the production of table eggs, fresh milk, wheat and dates in addition to
satisfying a great part of its needs of fruits, vegetables and meat including fish
• Although there has been continuous decline in cultivated area, the Kingdom has been able to strengthen agricultural productivity
by promoting the use of modern machinery and equipment along with advanced technological expertise
• Animal products output in Saudi Arabia reached 2,303 thousand tons in 2007
o Among animal products, milk production has witnessed the highest growth rate as heavy investments have been made in
the dairy sector
o By the end of 2007, the Kingdom had achieved self sufficiency in the production of table eggs and fresh milk
• Aquaculture production, although still small in comparison with wild capture fisheries, is growing rapidly and represents around
18.5% of fish production in Saudi Arabia
Sources: Bioplan Associates, D&B Research and Analysis

434
..due to Government focus and production augmenting
initiatives…
Initiative Explanation Impact

Focus on Increasing Allocation of BD 3.6 billion (2009 state budget) for the Pouring substantial funds into infrastructure
Agricultural Agriculture and Water sectors, to be directed to – irrigation, drainage, mills, silos,
Productivity enhance productivity and create new incentives for desalination plants, etc.
farmers
Elimination of water Phased elimination of water intensive agricultural crops Selective agricultural development to
intensive agricultural such as Wheat and Alfalfa achieve a balance between water and food
crops security
Opening of the After becoming a member of the WTO in 2005, Saudi Along with an increase in food product
sector Arabia has opened up its agriculture sector and trading, Saudi Arabia has also established
increased market access for agriculture and related a new SPS (Sanitary and Phytosanitary)
industries regime as per the WTO SPS agreement.
Privatization of Supporting domestic and international private sector Privatization is being planned in the areas
Agriculture Services investments which focus on agricultural projects of agricultural and animal production
purposes
Foreign Investor Streamlining of bureaucratic procedures for foreign Possible joint-venture agreements and
Friendly Norms investors, along with a number of financial incentives investment opportunities in the sector
Exemption/Reduction In 2008, wheat, wheat flour and other grains were Decrease of impact of the rising cost of
of Import Duties exempted from import duties living on the Saudi Arabian population
Import Prohibitions Tying import duties to the level of domestic production Protection of local food processors from
and Licensing of similar products competitively priced imports

435
As in Saudi Arabia, the Bahraini food sector operates on a
scheme of massive government subsidies in order to keep the
price of staples low…
Bahrain‘s government has been subsidizing staple foods, such as red meat and wheat, since the 1970s and the spending on
these subsidies have been growing every year
Government expenditure on Food subsidies – BD million
CAGR: 29.1%
• The food subsidies have grown at a CAGR of 29% from 2004 to 2008
• The key component of the food subsidies is lamb & beef (accounting for 68% of the total subsidies in 2008), followed by flour
(28% of the total subsidies) and chicken (4% of the total subsidies)
• These subsidies help the industry by lowering the prices for customers and thus supporting continuous demand for food
products (although limiting incentives for private play in the food processing sector)

436
Retail sales of food have increased in Bahrain, and strong
growth is expected in the Halal food sector…
Food Retail Sales (in BD million) and Per Capita Consumption (in BD)
200
CAGR for Food Sales: 1.5%
190
180 CAGR for Per Capita Consumption: 2.7%
171 173 172 172
170 163
160 158
160 152
150
150 146
143
140 137
130
120
2008 2009F 2010F 2011F 2012F 2013F
Food Retail Sales (BD mn) Per Capita Food Consumption (BD)
• According to industry estimates, the total value of food retail sales in Bahrain is expected to reach BD 172 million by 2013 while
witnessing growth at a CAGR of 1.5% during the forecast period
• Although near-term economic weakness will affect retail sales, consumers are expected to continue to shift to higher value
products over the entire forecast period as both the domestic and regional food processing industries develop
• Moreover, the continued growth of the mass grocery retail sector will allow products to reach consumers more efficiently
• The per capita consumption is expected to increase at a higher rate (2.7%) during the same period due to decline in population
• The importance of the halal food industry is expected to climb above BD 245 billion by 2010 in the Middle East according to the
World Halal Forum (WHF), spurred by the growing Muslim Population

437
… and similar to the majority of countries in the Gulf region,
Bahrain also has a dynamic beverages industry……
Beverages Retail Sales ( BD million) and Per Capita Consumption ( BD)

CAGR for Beverages Sales: • Carbonated soft drinks remain the mainstay of the soft
Beverage Retail Sales2.2%
and Per Capita Consumption
100
CAGR for Per Capita Consumption: 3.4% drinks market (PepsiCo & Coca-Cola) with competition
90.7 91.5
90 83.1
86.9 from regional carbonate companies such as Mecca Cola
77.3 79.6
80 and ZamZam
70 • Its International Dairy and Juice Limited joint venture
60 with Saudi Arabia‘s leading dairy company Almarai has
50
bolstered the company‘s regional reputation and the
40 33.7 34.6
31 30 31.8 goodwill generated could boost sales of its carbonate
28.7
30
power brands
20
2008 2009F 2010F 2011F 2012F 2013F • On the functional drinks front, Austria-based Red Bull
Drinks Retail Sales (BD mn) Per Capita Drinks Consumption (BD) leads the market.
• The country‘s dry, hot climate contributes to the popularity of soft drinks such as carbonates, juices and bottled water
• Consumers are brand conscious and interested in new products, as witnessed by the increasing popularity of functional drinks
and innovative carbonate products
• According to industry estimates, soft drinks value sales are expected to increase by 2.2% and reach BD 35 million by 2013
• Demand for health and energy drinks has risen as consumers become more health conscious, particularly in light of rising levels
of diabetes and other diet-related illnesses
• Non-alcoholic beers and other malt beverages are also benefiting from stronger demand, particularly among young consumers
who are keen to experiment with new products
• Alcoholic drinks are available in Bahrain, although they are mainly sold in restaurants and hotels for consumption on site.
• The tea-bag market is dominated by Unilever‘s Lipton tea brand which has its regional manufacturing headquarters in Dubai

438
The Food processing industry is an emerging sector in
Bahrain…
This industry is based on the scientific concept of conversion processes such as drying, cooling, freezing, biological & chemical
processing & preserving of agricultural and animal products and water for presentation in the form of semi processed or
finished products
GVA as % of GDP– BD million GVA as % of Manufacturing GVA– BD million
• BMI reports more than 100 factories manufacturing different kinds of food and beverages in Bahrain; however, this number
includes businesses making chocolates & sweets, bakeries, pickles, etc.
• The total capital invested in this industry is nearly BD 0.32 million
• The number of people employed in the industry is almost 2,582 workers ,of whom 45% are Bahraini.

439
..as compared to Saudi Arabia, which has a booming Food &
Beverages Manufacturing sector…
F&B Manufacturing – BD million No. of F&B Manufacturing units

668
7,299 7,265 647
6,274
5,737
5,339
605
577
2004 2005 2006 2007 2008 2005 2006 2007 2008
• Saudi Arabia is the largest market for manufactured foods in the GCC valued at more BD13 bn.
• Growing population, personal incomes and education have increased the preference for processed foods among Saudi
nationals
• Saudi Arabia‘s Food and Beverage (F&B) sector is the most developed in the GCC with presence of 668 food and beverages
manufacturing industrial units
• The beverage processing sector in the Kingdom represents a very large segment of the food processing industry with over 90
licensed companies
• In addition, there are an estimated 15-20 unlicensed factories operating in the bottled-water sector.
• Though presently, Saudi Arabia has to depend on imports for its food supply, the country is developing its food manufacturing
sector to move towards increased self – sufficiency in the food sector
• The food processing units in the country employ about than 77000 people accounting for 1 % of the total employment and 18
% of the industrial employment
• Some of the important segments of food manufacturing sector in Saudi Arabia are edible oil, sugar and dairy

440
..which is driven by the Saudi Government‘s focus to increase
its self reliance in food…
F&B imports as a % of total consumption - The Saudi government has provided strong assistance
BD million
49.7% to the F&B sector by offering attractive financing
40.5% 38.5% 40.9% schemes, distributing free farmland,duty exemption for
28.5% equipment as well some raw and packaging materials.
During 2008, the Ministry of Commerce and Industry
issued 286 new licenses (total capital of BD 571.9
million) for setting up of new industrial units in the F&B
sector
2004 2005 2006 2007 2008
• Although, domestic production witnessed a 5 year CAGR of 12.8 percent, the Kingdom continues to rely on food imports to meet roughly
half of its food needs and as per the trend, this proportion is likely to increase going forward
• However, the strong support given by the local government has provided the much-needed boost for F&B companies to meet the majority
of the domestic demand for products like juices, dairy and confectionary products
o For example, import of beverages has declined over the years,because the country's installed capacity is already able to meet
the domestic demand
• Demand drivers include:
 Increasing demand for food owing to population growth and need for food security
 Favorable demographics with one-third of the population being below the age of 14 and almost two-thirds being under 30 combined
with changing food habits
 Continued government support to encourage selective agricultural production
 Increasing private sector investment in the agricultural services
 Vibrant Outlook for the F&B sector which is likely to see an influx of investors in the next few years
 Foreign investor-friendly bureaucratic and financial incentives offered by the Kingdom to generate more growth in the agricultural
sector.

441
Key industry developments in the Gulf include outward
investment in countries such as Turkey, Phillipines and
Australia…
Key industry developments (food) in the Gulf
• In April 2009, Leading Gulf-based halal food manufacturer Al Islami Foods entered Bahrain and Kuwait after securing
distributional agreements with Gulf Trading and Refrigeration Company (GTRC) and International Agencies Company (IAC)
• In February 2009, the Bahraini Ministry of Industry and Commerce released figures indicating that investors plan to pump
more than BD 1 billion into new industrial projects in Bahrain. There were 296 applications for projects in various industries,
including 34 in the food items and medicine, up from 27 projects in this category last year. The projects should provide
around 4,650 jobs, of which 1,692 should be for Bahrainis
• In late December 2008, Al Islami Foods entered the Saudi Arabian market after reaching a strategic distribution agreement
with Arabian Trading Supplies, to distribute a range of Al Islami's halal products under the Co-op Islami fascia. The firm is
also intent on growing its presence in other GCC countries in 2009
• In mid-November 2008, a Gulf investment vehicle consisting of the Bahrain based Ithmaar Bank and Gulf Finance House
and the UAE's Abu Dhabi Investment House announced their plans to invest at least BD 56 million (USD 150 million) in
Turkey's agricultural sector in 2009. Operating under an umbrella project called Vision3, the special investment vehicle was
earmarked to make investments in agriculture, infrastructure and hospitality.
• Bahrain wants to invest in rice farmland in the Philippines, the world‘s top importer of grain, in a move to boost food security
as global food supplies become increasingly expensive
• Bahrain is investing is its position as a key destination for livestock. Export trade has been further boosted with the signing
of an agreement with Australia.The MoU will also further improve animal welfare and includes guidelines for the offloading of
Australian animals arriving in the Middle East

442
Demand for food and beverages in Bahrain appears to be well
met overall, either through local production or through
imports…
Bahrain‟s F&B landscape is made up of 80% trading / distribution based activity and 20% Manufacturing as
highlighted below
Level of
Product Player profile local play
Awal Dai ry i s the onl y l ocal pl ayer i nvol ved i n the processi ng of dai ry products. Most of Awal 's products are not
Dai ry fresh products (such as UHT Mi l k); Awal mai nl y competes i n l ong shel f l i fe products. Awal al so has a strong share
Products i n i ce cream.
Carbonated Forei gn pl ayers such as Coca col a, Pepsi col a, domi nate thi s market. Local pl ayers such as Zamzam col a offer
dri nks l i mi ted competi ti on
Bahrai n Water & Bottl i ng company provi des 2 l ocal brands - Tyl os and Sal sabi l . Coca col a al so has i ts water
Bottl ed Water producti on operati ons i n Bahrai n (Arwa). Mai n pl ayers i n the 5 gal l on segment are Aquacol and Al Manal
Demand i s mai nl y met by i nternati onal brands. There i s some l evel of l ocal pl ay - Al Rabi a (Saudi ) produces
Tea herbal teas.
Not much l ocal pl ay i n the jui ce segment. Awal Dai ry produces jui ces i n the tetrapak segment. Jui ces are mai nl y
Jui ces i mported from Saudi and UAE
Poul try Del mon poul try sel l s whol e fresh chi cken but has not ventured i nto further downstream products (such as chi cken
producti on nuggets, chi cken pi eces, etc.)
Meat Bahrai n Li vestock Company i s the mai n l ocal pl ayers, suppl yi ng carcasses / whol e meat -cattl e, l amb and goat -
producti on to the Bahrai ni market. Ani mal stock i s mai nl y i mported
Fi sh There are several pl ayers such as Del mon Fi sh, Nati onal Fi sheri es, etc. i nvol ved i n fi sh processi ng. Such
producti on processed i tems are mai nl y exported
Fl our
producti on Bahrai n fl our mi l l s i s i n operati on and produces 420 tons of fl our / day whi ch i s suppl i ed to the Bahrai ni market
Frui ts & Bahrai n Fresh frui ts & vegetabl es mai nl y i mports, but has i ts own ri peni ng pl ant for bananas. There are several
Vegetabl es smal l er compani es / whol esal ers who i mport frui t & vegetabl es to sel l i n the Bahrai ni market
Packaged There i s l i mi ted l ocal pl ay i n the packaged food segment. Demand i s met through i nternati onal brands and some
products regi onal brands such as UAE's Al Kabeer i n the frozen foods market or Oman chi ps i n the packaged foods segment
Heal th Foods Absence of any l ocal / GCC manufacturers for heal th food products
Limited local play* Moderate - High local play* *Limited level of local play in a segment cannot be interpreted as a market gap or underpenetration
**According to BMI, there are over 100 units engaged in basic food processing in Bahrain, including making of sweets, pickles,
juices and bakeries Sources: D&B Research & Analysis
443
Demand for fruits and vegetables in Bahrain is mainly
met through imports…
In January 2003, the ―GCC Unified Customs Law and Single Customs Tariff‖ (UCL) was released, under which fresh fruits
and vegetables were exempt from tariffs.
• Bahrain mainly depends on imports to meet the local demand for fruits and vegetables
• Imports are mainly from India, Pakistan, Holland, UAE
• Bahrain has several companies focused on food and vegetable trading
• Such Trading companies cater to the needs of the wholesale market, food service and hospitality segment in addition to
major retailers
• Nearly all of Bahrain's food imports enter the country via the Salman and Khalifa ports
• Imports from Saudi Arabia usually arrive via the King Fahad causeway
• Bahrain International Airport also receives a considerable amount of food products, particularly fresh fruits and vegetables,
chilled meats and deli products
• Bahrain Fresh Fruits & Vegetables (100% owned by TRAFCO) is one of the few companies in the Middle East that have their
own ripening plants
Although Bahrain mainly depends on imports to meet demand for fruits and vegetables, import substitution
seems unlikely due to the limited available cultivable land

444
Although there is growing demand for dairy and dairy
products, there appears to be limited opportunity for new
players to enter this market…
Players Region • Awal Dairy is the sole player / processor in the dairy food and beverage
Almarai Saudi segment. Although it has limited play in the fresh food segment, its market
share is as follows:
Awal Dairy Bahrain
• 1 litre UHT milk – 33%
Nada Saudi • Thick cream – 60%
Nadec Saudi • UHT flavoured milk – 72% (market leader)
• Fresh products (laban, yoghurt, etc.) – 12% to 13%
Saudia (Milk) Saudi • Ice creams – 65%
In the dairy segment, it appears that there is limited opportunity for new players based on the following factors:
• All ingredients are 100% imported from Europe and Oceanic countries (emulsifiers, raw material, sugar)
• Competitiveness of Saudi Dairy derived from the fact that:
 Saudi players have their own farms (source of fresh farm milk) & heavy competition from players such as Almarai, Nadec
 Presence of enabling ecosystem – manufacturing of animal feed, vetinary services, etc.
 Monopoly in Tetrapak
 Aggressive marketing by Saudi players, whereby Bahraini players are restricted because of low budgets
• Higher cost of operations as compared to Saudi (double) and that of the UAE (30% higher)
• Subsidized industry in Bahrain restricting profit margins
• Bahrain industry being small, does not have significant control / bargaining power over suppliers
There appears to be untapped / realizable potential in the ice cream market, with Awal Dairy having the strongest market
share in the Bahraini market. Bahrain has the lowest per capita consumption of icecream in the region and players
assume an incremental opportunity of BD 100,000 / month. However, the icecream market is heavily dependent on
customer awareness, familiarity and building brand equity & trust

445
Demand for carbonated drinks, juices and tea appears to be
well met through international and regional players…
• International players such as Coca cola and Pepsi have a strong presence with almost 90% of
Carbonated drinks market share. 10% belongs to some local players such as Zam zam Cola
In this segment, there is primary play of multinational brands with limited opportunity for entry of local players (limited
market adoption of local drinks such as Zam zam cola)
• For a local juice manufacturer, the Bahraini juice market appears limited due to play of multiple brands
in the market. Awal Dairy (Bahraini) has captured some market share and competes with local niche
Juices manufacuturers such as Hassan Habib (cup juices supplied to cafeterias / schools) and regional
heavyweights like Almarai (Saudi), Lacnor (UAE). Although throughout the GCC, juice concentrate is
imported, Saudi has an advantage due to its flourishing packaging industry (monopoly in tetrapak)
Potential of entry of new local players seems limited due to the strong “trust” factor which needs to be built up in this
segment (that established players such as Almarai have managed to capture). However, new players can enter and
compete on distribution margins and capturing export markets (such as Oman, where per capita juice consumption is
lower than the regional average). Constraints include heavy capital investment in technology, procurement / sourcing of
wells with significant life, etc. Opportunity in the fresh juice segment is restricted.
• While this segment is dominated by multinational brands (Lipton), there are certain regional players
Tea such as Rabia tea (herbal tea) from Saudi
There are price wars in the tea segment, a sign of market saturation, thus restricting entry of new players

446
…although there is potential for new players in the 5 gallon
bottled water segment…
• Bahrain Water Bottling & Beverages Company (100% owned by TRAFCO) is a manufacturer of
Bottled Water – PET bottled water (330 mn, 500ml and 1.5 liters) and has about 25% market share with its 2 brands
bottles (upto 1.5 Tylos and Salsabil. It competes directly with Coca Cola‘s Arwa (25% Market share) and Nestle (18%
liters) market share). The remaining market is captured by fly by night operators from Kuwait / Saudi,
which compete by playing on margins
Restricted potential for players in the pet bottles water segment (upto 1.5 liters), due to low growth potential (around
10%), adequate levels of market play (local and multinational players), competition on cost efficiency (Bahrain Water
Bottling company has access to its own well, and therefore has lower operational costs, making it easier to compete on
margins with new players), and restrictions on imports in the region (strong stringency standards in Qatar / Kuwait)
Bottled Water – PC • This segment is primary focused on residential / commercial office supply. The 2 main players are
bottles (5 gallon Aquacol (50% market share) and Al Manal (20% market share) with a small portion of the market
bottles) (10%) held by Bahrain Water Bottling Company.
Market opportunity for new players lie on the back of strong segment growth (over 20% due to increasing population
and commercial development) and limited market play. The primary basis for competing in this segment is investment in
a strong distribution network with requisite infrastructure and paraphernalia for service / maintenance and logistics**
Additionally, any increase in play in this segment to capture underlying potential, either through new entry or increase
in existing industry capacity will have to be in the wake of likely regional competition (The Saudi Bottled Water Industry
is deemed to have excess capacity - estimated to be over 20% - and could be eyeing potential in this segment, by
playing on margins)
** required for servicing and maintenance of coolers / chillers Sources: D&B Research & Analysis
447
…There is a strong opportunity in terms of poultry (fresh
chicken) demand, however, there is low incentivization for
private players to enter this market…
Market share of fresh chicken is about 30%, while the rest is made up of frozen wholesale chicken imports. Delmon Poultry is
the sole fresh chicken producer in Bahrain
Opportunity for new player in the fresh chicken … With low incentive for private players
processing segment…
• Local Demand remains buoyant (the company • Lack of availability of land
manufactures 25,000 – 27,000 chickens / day and is • Lack of enabling ecosystem
facing ever increasing demand pressures) • Lack of capacity of farmers as well as lack of
• Export potential to Kuwait and Qatar incentivization in private sector play**
• Strong preference for fresh chicken in Bahrain, • Subsidization of chicken prices
despite poultry related disease scares ( Fresh • No incentivization for exports (subsidies are
chicken, which has a shelf life of 3 days is usually forfeited on exports)
sold out on the first day)
** In the current regime; the entire burden of risk of hatching and maximization of return on egg imports is borne by poultry producers such as Delmon, with farmers having requisite
incentives in the chick rearing / growing process. Within private play regime, farmers might be expected to play a larger role in terms of risk participation
• There is opportunity for new entrants in the fresh chicken processing segment, however, such a player would have to be
government backed due to lack of incentive for a private player to enter this segment
• Fresh chicken producers are not looking to invest in downstream processed chicken products (nuggets, etc.) due to lack of
excess capacity and inability to hedge commodity (chicken price) fluctuations within a subsidized regime

448
Bahrain‘s demand for livestock is mainly met through imports,
however, an increase in storage capacity needs to be
considered to meet demand…
• Bahrain has relatively minor livestock resources, mainly, sheep, goats and cattle, with a few horses and camels and depends
largely on imports for its supply of live animals and frozen meat, although some 13,000 head of cattle are maintained on
intensive dairy farms
• As an indication of the scale of livestock imports, Bahrain has imported between 300,000-500,000 live sheep annually from
Australia since 1992
Demand Supply
• In specific periods such as Ramadan, demand goes up to • Bahrain livestock company is the main supplier of cattle
3500 sheep a day, and upto 5000 sheep a day during and sheep in Bahrain
festivals such as Eid • The BLC distributes 2,500 sheep and 50 heads of cattle
• Demand for meat is high and continuously increasing as it per day
is the cheapest food item in Bahrain (One kg of ordinary • Bahrain is working on being a major export destination
with the signing of an agreement with Australia regarding
fish costs BD 2.500 but meat only BD1) *
the offloading of animals arriving in the Middle East.
• Customers such as Manama Central Market butchers
• Bahrain is Australia's third largest livestock market in the
claims that their profits were hit because the BLC was not
Middle East and is valued in Australia at BD 22.8 million in
providing them with sufficient quantities of meat (2009)
2008-2009
• Need to expand capacity of existing players (BLC) or incentivize new private players (through PPPs) to enter the livestock
slaughtering market in Bahrain to cater to the increasing demand

*current rates
449
Although the seafood processing market appears saturated,
there may be opportunity for growth in the downstream ready
meals market…
Food Processing
Processing market is currently Addressal of gaps may lead to
Current regulatory gaps
saturated future market opportunities
The market in Bahrain is quite Laxity of regulations with regard to It is assumed that if regulations are
saturated in terms of players in fish / food processing, hygiene, inspection tightened, players who have been
shell fish processing such as Delmon (products are often misrepresented) operating in the market to profit from
fish, Seashell Fisheries, National and limited understanding of imported laxity in inspection procedures will
reduce operations, thus allowing for
Fisheries, etc. products
new players to come in
Ready meals
The market is highly underpenetrated in this segment and offers room for increased play . However potential for retail
distribution is restricted and higher potential lies in ready meals for institutional clients such as hospitals / hotels / schools
Packaged foods
There is restricted opportunity for local frozen food players. Expatriates prefer foreign brands however, locals and dominant
expatriate communities prefer fresh food to packaged frozen food. Any attempt to enter into this market this has to be on the
back of heavy marketing efforts and increasing awareness propagating adoption of packaged foods
• While there is opportunity for players in the ready meal segment (to institutional customers), there is limited opportunity in
packaged foods. It is deemed that there may be opportunity in seafood processing only if regulatory challenges are addressed

450
..There are also pockets of opportunity in certain upstream
areas such as commercial mariculture…
• Commercial mariculture is in its infancy in Bahrain.

• Recognizing the importance of aquaculture development, the National Mariculture Centre was established to undertake
applied research in this field.
• Currently there are no commercial mariculture projects in operation in Bahrain, except for the applied research activities of
NMC which includes studies in the areas of nutrition, reproduction, hatchery, nursery and growout of various species
Conducive Rich in finfish and

Climate Location Market
Opportunity for environment shellfish resources
fish farming
Per capita consumption has been
Requirement Deficit in fish supply
increasing in the past 2 decades
Contribute to food security & self Earn foreign exchange through the
Benefits
sufficiency export of aquatic products
• The government's strategy should be designed to guide the sustainable growth & management of Bahrain's aquatic resources
for the production of high quality fish and seafood as well as for the generation of wealth and employment of the local population
• Expansion of extensive land-based developments would be at the expense of the marine environment
• It is therefore considered advantageous for the country to promote private sector investment in intensive tank-based mariculture
activities and open water cage culture as may be deemed feasible based on Bahrain‘s land and aquatic resources
Sources: D&B Research & Analysis, FAO

451
.. Food processing segment does not appear to offer any
ready opportunities for local players, without strong
government impetus…
Customer Needs: Low

• Limited market size: Food processing
industry would have to be created around
exports (due to Bahrain‘s limited size)
Regulatory facilitation: Low • Large variety of multinational and regional Competition: High
brands present in the market
• Subsidized products are stripped of • Saudi Arabia (30 year old
manufacturing sector) and UAE have
such subsidies if exported (lack of already established a strong presence
incentivization on exports) Inherent competitiveness: in this sector
• Limited availability of land Low • Other countries such as Oman have
established a presence in niche areas
• Prices of products such as flour,
(such as potato chips)
meat , farm chicken, milk etc. are • Most of these products being exported
regulated / subsidized thus Collaborative presence: Low into the Bahraini market and accepted
by Bahraini consumers
disincentivizing private sector play • Absence of a packaging industry with
limited availablity to compete with prices
offered by neighbouring Saudi Arabia
(due to high volumes)
• Need to import raw material
It is difficult to create a local food processing industry which would compete with various trusted international / regional brands in
the market, without strong government support and thrust
**Opportunities / Gaps in food processing at a sub-product / sub-segment level need to be examined further in terms of demand
assessment, export potential and competitive advantage of Bahrain Sources: D&B Research & Analysis 452
..although there is potential in regionally untapped niche
areas such as Health Foods…
• There might be pockets of opportunity in niche areas such as production of Health foods such as snack bars, energy bars, low
carb / low fat snacks, snacks for diabetics (particularly in light of growing diabetes in the region), gluten free products etc.
• Development of such a niche segment would be dependent on heavy marketing by the manufacturer of such products – the
manufacturer would have to develop the market by educating customers on the benefits of health foods to promote adoption
Growing Demand… Limited supply in the region.. Pocket of opportunity..
• Increased health • Lack of any regional • Cater to the increasing demand for wheat
based health food products
consciousness manufacturer of health food • Leverage on access to subsidized flour from
• Buoyant economy and a products offers an opportunity Bahrain Four Mills (Currently produces 420
tons of flour per day at 80% capacity
consequent rising disposable for Bahrain to get into this utilization)
income segment (based on a • Currently, limited presence of health foods
(high bran-low fat content) available in the
• Rising population feasibility analysis) with some market – e.g. biscuits, energy bars etc.
• Increasing number of travellers competition (from international • Need to develop the market and an
opportunity to create an association
to the region brands) between the first mover brand and health
foods in the minds of consumers
The Wheat based (High Bran, Low fat) Health Food segment in Bahrain presents pockets of opportunity for local processing
players, given the increasing demand for health foods, limited regional competition and access to subsidized flour from Bahrain
Flour Mills

453
Agriculture & Food Processing: A Snapshot of Prominent
Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Agriculture & Food
Processing sector
and is used to reflect the ‗absorptive capacity‘ of the Agriculture & Food Processing sector
Bahraini Agriculture & Food Processing sector value chain are termed as ‗market gaps‘
454
Agriculture, Food & Beverages Processing - A Snapshot of

Poultry / Meat / No apparent gap
Market gaps in terms of sectors have no /
Seafood
processed foods2 minimal presence in Bahrain, however could

Fruits & potentially present opportunities for existing

High vegetables Beverages 3
players / new entrants based on market
(processing) 2 feasibility and assessment
Milk &Dairy products
Fruits & vegetables (except ice cream) 2
(distribution)  Health food processing
Bottled Water
Market gaps in (5 gallons) 4
Poultry Infrastructure / Regulatory Bottlenecks
Medium terms of under Meat (cattle / goat/
producers1
sheep) producers1 (Disablers)
penetration
Ice Cream 5
Ready meals segment –  Lack of subsidies / Government support on

institutional customers7 exported products that are generally
subsidized in Bahrain
Low  Government support in terms of provision of
Fish farming 6 land, subsidized equipment etc. to encourage
food processing / fish farming
Low Medium High
1. The growth of demand for poultry / cattle meat is on the back of growing population, subsidized meat (leading to lowered prices) and demand for fresh food in Bahrain. However,
there are no incentives provided for private players to enter the market / expand due to lack of provisions of land, subsidies for exporting companies, etc.
2. The food processing sector is saturated in terms of international / regional players and products. In light of strong competition, lack of inherent competitiveness (raw material
import, lack of packaging industry, low population base) and limited food production (meat, vegetables, milk), due to constraints in terms of vegetation and land, the local food
manufacturing sector can develop only with strong government focus on achieving some levels of food security
3. In the beverage market, the juice market is dominated by regional players (Saudi, UAE) and the carbonated drinks segment is dominated by international players (Coca cola,
PepsiCo), leaving little room for local players to enter / grow. The bottled water market (>=1.5 litre) is saturated with local and regional players.
4. Growth potential on the back of growth in residential and commercial developments; however increase in local play may be constrained by regional competition (excess capacity
estimated in Saudi Bottled Water Industry with staying power / capacity of Saudi players to compete on margins)
5. Untapped potential in the ice cream market – however capitalization of opportunity has to based on creating strong brand equity, trust and awareness especially in a scenario of
dominance by Saudi Dairy & Dairy Product players
6. Growing demand for seafood can be met through local fish farming (aquaculture / mariculture) based on Bahrain‟s conducive environment (climate, location, market). However,
government intervention (land grants, subsidized equipment) facilitating private sector involvement in tank based mariculture, open cage culture is required
7. Ready meals is a growing segment on the back of demand by institutional customers such as hotels / hospitals / schools
455
Relative Sub-Sector Prioritization: Agriculture & Food Processing
the Agriculture & Food Processing sector as a ‗market gap‘
(Priority Index)
456
Relative Sub-Sector Prioritization: Agriculture, Food &
Beverages Processing
scores

1. Notes:
formation issue

Relative Sub-Sector Prioritization: Agriculture & Food Processing
and C
459
Ice Cream
Meat
Producers
Health Food Bottled Fish Ready meals for

Processing Water (5G) Poultry Farming Institutional
Producers customers
20% 52% 57% 62% 67% 100%
Priority Index

Notes:


Key Sector growth drivers: Agriculture and Food & Beverages
Processing
Low per capita consumption in ice Efforts to increase agricultural

cream vis-a vis the regional average, productivity, and alternative
signifying potential production such as
Aquaculture, Mariculture, etc.
……………
Increasing population growth Agriculture, Outward investment in agriculture,

Food & Beverage – livestock, etc. (For example, investing
Processing growth in rice land in the Phillipines)
drivers
Government food subsidies support Growing demand in niche areas such

continuous demand for products as the Halal food sector, the health
such as meat, chicken, flour, milk, etc. food segment, etc
markets

461
Oil and Gas & Petrochemicals
462
The Petrochemicals Industry Map comprises Upstream
Exploration and Downstream Refining as primary sectors ….

463
…With Exploration, transportation, refining and petrochemicals
as the basic industry sub-sectors…
The theoretical construct of the Oil and Gas Industry broadly comprises exploration, transportation, refining and
petrochemicals as the major sub-sectors. These form the core structure of the oil and gas industry map. Other
operators in the construct are linked to broad industry groups either as sub sectors or at peripheral support level.
Oil reserves of 50 oil companies (2007)

• The oil and gas industry has been a cornerstone of the global economic
growth post the second world war.
• Corresponding to industry growth, oil production and consumption has risen
with rapid speed.
• Currently, the US (with 21 million barrels per day) stands as the largest
consumer of petroleum, whereas Saudi Arabia (with 10 million barrels per day)
ranks first in oil production.
• With Bahrain's oil reserves getting rapidly exhausted, experts believe that the
world has passed the peak oil production, with crude reserves now becoming
sourer and heavier, thereby increasing refining costs. Crude oil prices
• Natural gas has emerged as a cleaner substitute of oil and oil based fuels and
chemicals. Russia has topped the list of countries with natural gas reserves
with 48 trillion cubic feet of reserves.
• Crude oil prices witnessed a continued rise till 2007; however witnessed a
tumble post 2008; resulting in major fiscal pressures across major oil
producing countries
Sources: D&B Research & Analysis, Wikipedia, Ney York Mercantile Exchange
464
Despite being the highest contributor to Bahrain‘s GDP, rapid
depletion in the country‘s oil reserves and hydrocarbon output
are leading to increased pressures for diversification …
• Bahrain pioneered the commercial production of crude oil in the middle east. In
GDP GDP
contribution,
Contribution in
(BDBD million
million)
partnership with SOCAL (currently known as Chevron), Bahrain Petroleum 2346.5
2500
Company (Bapco) was formed.
2000
o The Bahrain government acquired 100% of its shares in 1980. 1500 CAGR:25%
• Bahrain‘s oil and gas sector has remained one of the most important economic 1000
963.1
sectors - As the highest contributor to GDP* in 2008, (28%), oil and gas has 500
remained the corner stone of Bahraini economic progress. 0

2004 2008
• Energy revenues, while not entirely central to the economy, have contributed to
budget surpluses and GDP growth, which in turn have fuelled economic activity.
• However, Bahrain was also the first state to witness the decline in its hydrocarbon
outputs. GDP contribution (%)
Contribution to GDP (at current price)
o Oil output has been declining since the 1970s and has now stabilized at 100%
963.1 1267.4 1550.3 1709.7 2346.5
80%
around 35,000 barrels per day (bpd), with petroleum production and
refining accounting for 60% of Bahrain‘s export receipts. 60%
40% 3261.4 3793.2 4410 5236 5888.8

o In addition to oil, the Kingdom also produces about 1bn cubic ft per day of 20%
natural gas from its offshore Khuff formation. 0%
2004 2005 2006 2007 2008
• Rapid depletion of oil reserves instigated efforts for diversification in other
Non Oil Sector Oil Sector
industries and reduction on the dependence on hydrocarbon based businesses.

465
Although depleting crude oil production of Bahrain is being partially
hedged by increasing natural gas output; however potential growth in
domestic demand exert significant pressures on this supply …
The kingdom witnessed a steady decline in its crude oil production since 1977, with production now stabilizing at around
35000 bpd. On the other hand, natural gas production in the kingdom has been on the rise. The gas extraction from Khuff
oil field coupled with refinery and associated gas reached 530,000 million cubic feet during the year 2008.
Crude oil production (thousand barrels)

Crude Oil Production (Thousand barrels)
100000 Bahrain extracts crude oil from Abu Safa and
Bahrain oil fields which produced 12,500 and
80000
54,700 thousand barrels of crude oil respectively in
60000 2007. Bahrain shares the output of Abu Safa oil
40000
field with KSA. It holds an equity stake to the extent
of 150,000 bpd in the Abu Safa field.
20000
0
2003 2004 2005 2006 2007 2008 Natural gas production (million cubic feet)
Natural Gas (Million cubic feet)
Bahrain oil field Abu Safa oil field
600000
500000
Banagas extracts both Arab gas and associated gas, 400000

produced in crude oil refining. In 1990 Banagas estimated 300000
total natural gas reserves at 209 trillion cubic meters. More
than 15 wells were drilled to tap this gas, which is used as 200000
fuel to power the oil refinery, electric generators, aluminum 100000

and water desalination plants in the Kingdom. Bahrain
0
currently consumes all the gas it produces.
2003 2004 2005 2006 2007 2008
Sources: Industry Reports, D&B Research & Analysis, Company annual reports
466
Bahrain‘s current oil reserves fuel merely one sixth of its
250,000 bpd refining capacity….
Crude and refined oil constitute a major portion of Bahrain‘s exports as well as imports. Bahrain has an established crude oil
refining capacity of 250,000 bpd. Domestic crude production provides for only one sixth of established refining capacity of
Bahrain and hence the major chunk of input is imported, mainly from neighboring Saudi.
• Drilling and exploration activities for Bapco are carried on through a special purpose
vehicle called Tatweer (a joint venture between Bapco, Occidental and Mubadala – the
Abu Dhabi based investment company)
• Exploration technology assistance is provided by Occidental; Bapco has recently
Production of refined petroleum awarded 4 plots for exploration out of which 3 are allotted to Occidental
(thousand
Production of refinedbarrels)
oil (Thousand barrels) • Bapco carries on its refining activities through one of the oldest refineries in the GCC
located in Sitrah Industrial Area
100000
o The refinery is categorized as a mid sized one with a refining capacity of 250,000
bpd of crude oil
95000 • The installed refining capacity is at least five times the amount produced by the
island's oil wells
• More than 70 percent of the petroleum that the refinery processes comes via pipeline
90000 from Saudi Arabia
o The Sitrah refinery has been refining Saudi crude oil since 1938 and expects to
continue to do so in the near to medium term
85000
• The reinvestment of the oil revenues has historically been low; resulting in aging
2003 2004 2005 2006 2007 2008
infrastructure within the petrochemicals industry
• Availability of industrial land also poses a major barrier for the growth of the industry
o Petrochemicals, being a heavy industry, requires considerable amount of land.
o The supply of land in Bahrain is very limited and has restricted the industry from
expanding.

467
Bapco is considering capacity build-up for converting its heavy
outputs in to high value lighter distillates…
Bapco‘s product portfolio comprises of LPG, One of the major by products of crude refining process is
Naphtha, Gasoline, Kerosene, Aviation turbine
Sulfur. The sulfur output is highly dependent upon the type of
fuel, Diesel oil, Heavy lube distillate, Fuel oil and
crude oil and types of refined output to be generated. The sour
Asphalt. Bapco currently does not further process
crude oil generally generates approximately 2 kilograms of
these products down the value chain. It distributes
Sulfur per barrel refined. Bapco currently produces sulfur as a
aviation fuel through Bahrain Aviation Fuel
Company (BAFCO), in which the company is a by-product** of its crude oil refining process.
60% shareholder.
Exploration: Refining: Primary Conversion:

Tatweer (Bapco +
Sitrah Refinery Distillation: Heavy oil converted
Occidental +
(250,000 bpd) Fuels and heavy oil into lighter distillates
Mubadala)
The process converting the ‗bottom of the cracker outputs‘ is quite complex
and calls for heavy investment. Bapco‘s current refining structure emphasizes
on primary distillation. Bapco plans to invest to increase its current footprint in
lighter petroleum products through refinery master plan chalking out details for
up gradation of facilities suitable to produce higher value distillates.
** The Refinery Plan is also expected to generate a voluminous level of Coke (however, no local industry except Alba can utilize
this output. Additionally, feasibility of output – input grade assessment needs to be done as per the requirements of Alba

468
Although with Sulfur being produced as a major refinery output by
product, production of sulfuric acid in Bahrain appears to be
underpenetrated; however global and regional dynamics render its an
unfeasible opportunity….
Sulfur a major by product of the BAPCO Refining process and is currently primarily exported to India
• The 2 major application areas of sulfur are sulfuric acid (intermediate) and the fertilizer industry (end application of sulfuric acid, estimated to be
over 70%, largely superphosphate of lime and ammonium sulfate
o Additionally, sulfuric acid s widely used in the manufacture of chemicals, e.g., in making hydrochloric acid, nitric acid, sulfate salts,
synthetic detergents, dyes and pigments, explosives, and drugs.
o It is used in petroleum refining to wash impurities out of gasoline and other refinery products.
o Sulfuric acid is used in processing metals, e.g., in pickling (cleaning) iron and steel before plating them with tin or zinc
o Other application areas include manufacture of Rayon and as an input for lead-acid storage battery
Although, the production of sulfuric acid appears as a potential market gap in Bahrain, albeit with limited market potential because of
limited local application, volatile global demand and strong regional output by Saudi Arabia….
• Sour crude oil generally generates approximately 2 kilograms of Sulfur per barrel refined (The production of sulfur is highly dependent upon the
type of crude oil and types of refined output to be generated )
• The output of Sulfur is likely to further increase on the back of the Refinery Master Plan
• Footprint of application driver industries of sulfur and sulfuric acid in Bahrain is limited (PIC does not produce phosphate based fertilizers)
• Demand for sulfuric acid is mainly determined by the world fertilizer sector. The latter has experienced the influence of deteriorating global
economy situation resulting in markets going down in the second half of 2008 - the beginning of 2009. However, the improvements are on their
way and fertilizer markets are forecasted to rebound already in 2010, providing growth for sulfuric acid sector
• The world trade of sulfuric acid is insignificant and makes about 6% of production volume. Europe is the main exporting region, while North
America is the main importing one
• India and China (primarily) are other major importers of sulfuric acid for their domestic fertilizer industries ; however, China‘s import reliance is
likely to change with recent investrment towards capacity build up (n 2010, with the construction and exploitation of the largest sulfur production
base in China - Sichuan Dazhou Natural Gas Field, the sulfur output of China will get to 4.5 million tons. Also with the operation of gas fields in
Northeast of Sichuan Province of CNPC and CPCC, the tense supply situation of sulfur will be relieved.)
• In the region, Saudi is the largest manufacturer of sulfuric acid – The Saudi Arabian Mining Company (Ma‘aden) in a JV with Outokumpu
Technology set up one of the world‘s largest sulfuric acid plants , with an estimated total production of 13,500 tonnes per day of sulfuric acid
• With recently commenced production, Ma‘aden plans to use the whole acid production for its manufacture of phosphate based fertilizer

469
With OGHC as the holding company, Bahraini Oil & gas
sector has been structured through a combination of Bahraini
and foreign investment…
National Oil and National Oil and Gas holding company was incorporated under royal decree no. 77, with
Gas Authority
an object of acquiring Government‘s shareholding in the oil gas subsidiaries. Currently its
stands a holding company of BAPCO, BANAGAS, BAFCO and BNGEC along with one
third share in GPIC. The company‘s capital stands at BD 1.6 billion being the book value
Oil and Gas Holding
of its share in the subsidiaries
Company
Engaged in exploration, production, refining and storage of petroleum, Bapco exports 95%
Bahrain Petroleum of its production. Currently the exploration activity is carried on by Occidental and PTTEP
Company (100%) Thailand. Bapco has also formed the SPV, Tatweer for exploration and drilling.
Bahrain Natural Gas BANAGAS, a subsidiary of OG holdings (with minority stakes from Chevron and
Company (75%) APICORP), is the kingdom‘s natural gas exploration and production arm.
Bahrain Aviation BAFCO, a subsidiary of OG holdings (with minority stakes from Chevron and BPME), is
Fueling Company responsible for all refueling operations at Bahrain International Airport. However, Chevron
(60%) and BP sell fuel to individual airline through separate sales operations.
Gulf Petrochemical
GPIC ,a strategic joint venture between SABIC, PIC Kuwait and OG Holdings produces
Industries Company
(33%) natural gas based petrochemicals such as Methanol, Urea and Ammonia.
Bahrain National Gas

Expansion Company The compressor station constructed to process associated and refinery gas was
(100%) converted in to an independent entity, BNGEC during year 2008
Sources: Industry Reports, D&B Research & Analysis; Company annual reports
470
The sector is dominated by big ticket public players such as
BAPCO, BANAGAS and GPIC, which make up the Bahraini Oil
& Gas sector footprint…
National Oil and Gas Authority

Aluminum
Exploration and
Arab Gas Electricity
reserves: Natural gas
3250 production:
billion Banagas: Petrochemicals
cubic feet 538,233 million Petrochemicals:
Refinery gas
(2008) cubic feet GPIC: Petrochemicals
Ammonia: : GPIC: 1545
450 tt, thousand
Associated Urea: 650 tt, metric tones
gas Methanol: 450tt
Exploration Refining
Refining
Crude Crude Refined
capacity: Internal
reserves: Production: petroleum:
Bapco:
125 million Bapco and Bapco: 96,368 consumption
Tatweer: 66,864 97,455
barrels thousand and export
thousand barrels thousand
(2008) barrels
barrels
471
Due to fast declining natural reserves, the Kingdom‘s
concentration is on upstream and midstream activities…
Managerial National Oil and Gas Authority regulates the sector on the back of its shareholding
functions in industry operators. The developmental functions of the regulator are visible from
new initiatives including:
1. Enhanced oil recovery program
2. Boosting exploration through participation of foreign players in 4 new
Downstream
exploration blocks
3. Expanding oil imports from Saudi from 230 thousand barrels to 300 thousand
barrels.
4. Triggering the import of natural gas from neighboring gas rich Qatar and
Saudi by establishing gas receiving terminals.
and regulatory
5. Tapping renewable energy sources to ease-up the pressure on the

Supervisory
National conventional energy sources of Bahrain especially gas.

functions
Oil and
Gas Bapco is considering the refinery up gradation program to modernize its refining
Refining
Authority facilities and increasing the lighter high value distillate output.
The fast declining oil output of the

Kingdom has captured regulatory attention.
Developmental
Many of the new initiatives are focused on

functions
upstream activity. Most of the efforts in mid

and downstream segment are clustered
Drilling
around the Refinery up gradation program

of Bapco
472
Limited availability of natural gas threatens the competitive
advantage of backbone industries of the economy…
• Bahrain consumed 100% of its 530,000 million cubic feet natural gas production internally in 2008. Banagas, the Bahrain
government‘s natural gas production arm produces natural gas for the country. Banagas extracts Arab gas from its Khuff
gas field. Bapco passes on the associated gas along with refinery gas to Banagas for liquefying and further processing.
30% of total natural gas production is passed on to Gulf

Arab gas:
Petrochemicals (GPIC) which further processes natural gas
Khuff gas GPIC: 30%
field
into ammonia, urea and methanol
Bahrain produces electricity through its gas fired power

Associated Power plants. Electricity generated is consumed for domestic and
gas: Bapco Banagas production industrial purposes
Aluminum
Aluminum has been the largest consumer of gas in Bahrain.
Refinery
and other Bahrain‘s smelting, rolling, casting, atomizing and extrusion
gas: Bapco facilities are gas fired. In fact, availability of a cost effective
industries
energy source is considered a major competitive advantage
for the aluminum industry.
Availability of natural gas gives Bahrain a competitive advantage in managing the cost effectiveness of its industrial output.
However, Bahrain has natural constraints on the availability of gas. Some of the key industry players such as Alba have
been declined any additional supply of gas to fuel their expansion plans. The agreement for acquiring gas from gas rich
neighbor Qatar is under consideration. The imported gas would need to be procured by operators at market price (as
against the subsidized indigenous gas). This naturally constrains viability of manufacturing projects in the Kingdom which
would need to bear the burden of gas at market prices

473
GPIC, currently dealing with limited feedstock, is expected to
benefit from the enhanced oil recovery program of the
government…
• Established in 1979, GPIC is a joint venture equally owned by

Production of petrochemicals (Thousand Government of Bahrain, SABIC and PIC Kuwait
Production of petrochemicals (thousand tons)
tonnes)
• During the year 2008, GPIC produced 450 thousand tons of
1800
ammonia, 650 thousand tons of urea and 450 thousand tons
1500
of methanol.
1200
900 • These products are exported mainly to United Sates and

600 Australia.
300
• GPIC faces stumbling blocks in its expansion plans in the form
0
of limited supply of natural gas
2003 2004 2005 2006 2007 2008
o However, GPIC is expected to benefit from the
enhanced oil recovery program aiming to double the
current crude output of the kingdom.
Bahrain‘s footprint in the petrochemicals industry is very limited. Bapco, the premier petroleum company of the kingdom,
restricts its spread till refining, producing mainly fuels. Gulf Petrochemical Industries Company (GPIC) extends the natural
gas value chain till the production of basic petrochemicals (ammonia, urea and methanol)

474
Bahrain‘s footprint in the petrochemicals industry is limited to
the production of basic petrochemicals, namely ammonia,
urea and methanol by GPIC …
Current coverage
Sources: http://www.elmhurst.edu/~chm/vchembook/325petrochem.html; D&B Research and Analysis

475
Though pioneered by Bahrain, the regional Oil & Gas industry
is now completely dominated by KSA with astonishing volumes
being produced throughout the value chain…
Oil & Gas has historically been the driver industry of the GCC region. Bahrain pioneered the commercial production of crude
oil in the middle east. However, Bahrain was also the first country to witness a decline in its crude production. Currently
Bahrain ranks last in terms of oil & gas production amongst the GCC countries. Saudi Arabia, with the largest oil production
in the world has emerged as the leader across every segment of the oil & gas value chain.
Total
GCC Capacity - 58,744
Petrochemicals thousand
Production t/y
Capacity
Oman GCC countries in the recent past, realized the need for diversification and
3% value addition in their oil and gas businesses. Industry players, led by KSA
and Abu Dhabi, began focusing on the downstream areas of the industry
Saudi Qatar
16% value chain. Today, KSA stands as a leader in the production of crude oil,
Arabia
fuels, petrochemicals and petrochemicals based outputs.
73% Kuw ait
4%
Bahrain
UAE 2% GDP contribution of KSA: Refining vs. Petrochemicals
2% 2.9% 3.0% 2.9% 2.9%
SABIC top 5 outputs (by quantity)
Sr. Capacity (million tons 1.5% 1.5%

Product Name 1.3%
No. per year) 1.0%
1 Ethylene 7.19
2 Methanol 4.13
3 Gases 4.10
4 Polyethylene 4.10
2003 2004 2005 2006
5 Monoethylene Glycol (MEG) 3.51
Petroleum Refining Petrochemicals

476
The Kingdom‘s footprint in petrochemicals is restricted to
refining….
Base Performance OLEO
Steam Cracking
Refining Polymers
Chemicals Products Chemicals
LPG, Naphtha, HDPE
Ethylene Ethylene Glycol
Gasoline, Methyl Ester
Propylene VCM and PVC
Phenol
Kerosene,
Mixed C4 Fatty Alcohol
Aviation turbine EVA
Pyrolysis Ethoxylate
fuel, Diesel oil, Gasolene Ethanolamine Glycerin
LDPE
Heavy lube Cracker
Choline Chloride
Bottom LLDPE
distillate, Fuel oil
Hydrogen Applications Applications Applications
and Asphalt
Plastic bags, ropes Polyester fiber Bio diesels
and containers
• Bahrain‘s present footprint in the oil Electrical products Health and
Construction materials personal care
and gas industry ends at refining and pipes
Shampoo, liquid products
• Production of base chemicals and soaps, detergents
further refining upto downstream Shoe soles,
adhesives, films, Healthcare, food
applications pose as a major gap in and
the petrochemicals industry Coating products pharmaceuticals
Cables, toys, tanks
Sources: National centre of excellence for Petroleum, Petrochemicals and Advanced materials, Thailand;
D&B Research and Analysis
477
Strong regional competition and unavailability of crude and
natural gas makes petrochemical industry unattractive….
Chemicals
Route 1: Crude oil and naphtha

OLEO
Fatty Alcohol
Methyl Ester
Glycerin
The crude oil and naphtha route towards petrochemicals, calls for heavy
investment and strategic initiative. However, the current Bahraini landscape does
not pose as an ideal breeding ground for the industry sub-sector, mainly attributed
Performanc
e Products
CholineChloride
Ethylene Glycol
to:
Ethanolamine
Ethoxylate
1. External competition: The petrochemicals industry has been well penetrated

Phenol
and heavily dominated by large regional players such as Saudi Arabia, Kuwait
and Abu Dhabi. This would pose a major entry barrier for new entrants
2. Cost efficiency: Supported by the largest crude oil reserves in the world, Saudi
Polymers
Arabian petrochemicals industry is highly cost effective. Competing with Saudi

VCM and PVC
Arabia and other regional players would be a tough task for Bahrain.
LLDPE
HDPE
LDPE
EVA
Natural
reserves Petrochemical
Chemicals
The natural gas route for petrochemicals requires the natural gas reserves.
Base
Propylene
Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
Bahrain currently has footprint in gas based petrochemicals through GPIC,

Bottom
producing ammonia, urea and methanol. However, with limited natural gas
C r a c k i n g S t e a m feedstock, extending the product portfolio and value chain in natural gas
based petrochemicals looks remote.
The additional imported natural gas feedstock would have to be sourced as

Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
and Asphalt
international market price (as against subsidized prices), jeopardizing cost

Heavy lube
Kerosene,
Gasoline,
efficiency and competitive position.

Route 2: Natural gas

478
Bypassing the missing link of base chemicals, the polymers
route in the Bahrain Oil & Gas value chain can be traced to
Bahraini plastic products manufacturers…
Chemicals
• Current footprint of polymers exists in terms of plastic products manufacturers.

OLEO
Fatty Alcohol
• Plastic products manufacturing industry comprises players such as Bahrain Pipes, Gulf Plastics, Kanoo
Methyl Ester
Glycerin
Plastics and Maskati Plastics

• 100% feedstock such as LDPE and LLDP is imported from Saudi
Sr.
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
No. Player Profile

Ethoxylate
Phenol
1 Gulf Plastics Manufactures PVC pipes for soil, waste, duct, conduit and underground
applications; polyethylene pipes for cold water supply, irrigation and
portable water supply; CPVC pipes for hot water supply. It also
Polymers
VCM and PVC
manufacturers electrical conduit, cable duct pipes and sewerage pipes.

2 Kanoo Manufactures high quality XLPE compounds for cables (low and medium
LLDPE
HDPE
LDPE
EVA
Plastics voltage cable casings)

3 Bahrain Manufactures PVC pipes for waste, duct and underground applications;
Pipes Factory polyethylene pipes for cold water supply; CPVC pipes for hot water
Chemicals
supply. The major application areas for Bahrain Pipes product is

Base
Propylene
Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
construction and infrastructure products

Bottom
4 Maskati Manufactures polystyrene and polyethylene based plastic products. The

C r a c k i n g S t e a m
Commercial products include cups, trays (primitive plastics) and other low value
Services added products
5 Tylos Plastic Manufactures fittings made of PVC, CPVC, PVC-U, HDPE, LDPE, PPR and
Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Industry MDPE
Refining
and Asphalt
Heavy lube
Kerosene,
Gasoline,
6 Deeko Providers of consumable disposable packing products made from

Bahrain plastics. Dawanco Indistries, a sister concern of Deeko manufactures
plastic packing products

479
… However, the Kingdom‘s presence in plastic products is
weak and limited to low value add primitive plastic products…
Plastic products manufacturing sub – sector in Bahrain involves the manufacture of low value add
Chemicals
primitive plastic products such as pipes, packing material, cups and trays and cable casings. The
OLEO
Fatty Alcohol
Methyl Ester
value addition done to the inputs is considerably low.

Glycerin
Compounders
Resin
manufacturers
Petrochemicals
: Industrial
Mould and
manufacturers
Missing
chemicals
upstream link
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Elastomers
Ethoxylate
Phenol
Plastic products
Thermoplastics
Thermosets manufacturers
Polymers
VCM and PVC
LLDPE
HDPE
LDPE
Chemical /
EVA
Mechanical
Packaging Construction Auto feedstock
recycling
products products components recycling
Chemicals
Reinforced Electronic
Base
Industrial
Propylene
and and
Gasolene
Mixed C4
Hydrogen
Pyrolysis
machinery Bio plastics

Ethylene
Missing
Cracker
fiberglass electrical
Bottom
products
applications components
downstream link
Final Plastic waste Plastic

Sorting
consumer collectors recyclers

Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
and Asphalt
Heavy lube
Kerosene,
Gasoline,
Both upstream and downstream value creating links to and from the plastic products industry are
not present in the Kingdom

480
The missing link could be bridged through strategic and
political intervention…
Chemicals
In spite of non availability of feedstock, Bahrain‘s plastic industry has managed to survive depending
OLEO
Fatty Alcohol
Methyl Ester
completely on Saudi imports. With systematic raw material input risk, the plastic and rubber industry
Glycerin
in Bahrain can build its capacity by expanding in downstream activities. With enough regulatory
support, uninterrupted supply of raw material could be secured.
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Ethoxylate
Importing ethane and propane Bahrain will have to follow the petrochemicals route by importing
Phenol
Route 1 rich natural gas and developing natural gas. The route will fuel not only plastics but the complete
the entire spectrum of petrochemicals downstream industry. The route is more exhaustive and
petrochemical applications hence would require strategic focus from all stakeholders.
Polymers
Features:
VCM and PVC
 Heavy investment requirement

 Strategic intervention from the government is required
Raw
LLDPE
 The route opens the door for a vast segment of petrochemicals

HDPE
LDPE
EVA
material dependent industries

security  Detailed feasibility across product range is required
Chemicals
Base
Propylene
Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
The route focuses on building core capacity in plastics

Bottom
Importing plastic feedstock manufacturing through value added technology intensive

and focus on value added products. The feedstock imports from KSA and Kuwait will
Route 2 and engineering plastics continue fueling Bahraini plastic industry.
Features:
 Focuses on building core competencies in technology intensive
Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
products
and Asphalt
Heavy lube
Kerosene,
Gasoline,
 Continued dependence on imported feedstock

 The route focuses on reaping the benefits of Bahrain‘s competitive
advantage with respect to accessing technology from the US, on the
back of the FTA
481
With the applications in multiple industries, engineering
plastics pose a valuable opportunity…
Chemicals
The Kingdom currently has presence only in low value added primitive plastic manufacturing
OLEO
Fatty Alcohol
Methyl Ester
Glycerin
segment consisting mainly of construction products and packing materials. Additionally, regional
footprint in primitive plastics is high. Relevant high value engineering plastic products pose an
opportunity for Bahrain.
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Ethoxylate
Phenol
Plastics Downstream Industry: Injection molding, compression molding,

Polymers
Reaction molding, Blow molding

VCM and PVC
LLDPE
HDPE
LDPE
EVA
Reinforced
and
Application
Auto Bio plastics

Industries
fiberglass
Chemicals
components
application
Base
Propylene
Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
Bottom
Industrial Plastic
Electronic
C r a c k i n g S t e a m machinery recycling
components
products
Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
and Asphalt
Heavy lube
Kerosene,
Gasoline,

482
Access to superior technology has the potential to open doors
in engineering plastics segment…
Chemicals
The kingdom would count on its FTA with US to access the required technology for engineering
OLEO
Fatty Alcohol
Methyl Ester
Glycerin
plastics. However, the competitive advantage of access to technology is replicable by the regional
competitors. High value plastic products fueled by cost effective inputs might give the competitors an
edge over Bahrain.
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Ethoxylate
Phenol
• The value added plastics products industry stays technology intensive. Traditional technology
leaders such as US and European oil majors have dumped only primitive technology in Saudi and
UAE. In order to increase footprint in higher value add products these countries need to follow the
Polymers
VCM and PVC
inorganic route of investing in US and Europe

LLDPE
HDPE
LDPE
EVA
• If Bahrain were to have a strategic plan to focus on high value added products; and capitalize on the
US FTA to source the relevant technology; it would have a strategic competitive advantage in that
Saudi and Abu Dhabi are still dealing in dumped older technology. The FTA includes a IP law, which
Chemicals
would protect the usage of such technology by Saudi / other players.

Base
Propylene
Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
Bottom
• The demand for engineering plastics is expected to increase in near to medium term. The US
C r a c k i n g S t e a m demand for engineering plastics is projected to grow by 3.5% in year 2010.This is further supported
by industry trends supporting manufacturing facilities shifting from west to east globally and GCC
countries emerging as astrong contenders for this share. Manufacturing facilities such as Ras Al
Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
Khaimah Auto City, would trigger robust demand for high value add plastic auto components. .
and Asphalt
Heavy lube
Kerosene,
Gasoline,
Countries like UAE have already taken a step towards developing massive plastic production
facilities through Abu Dhabi Polymers Park with a total investment of BD 1.7 billion.

483
A combination of government initiatives, technology adoption and
private play could drive the plastic industry towards developing
core competencies in high value add engineering plastics …
Chemicals
OLEO
Fatty Alcohol
Methyl Ester
Glycerin
Oil /
Naphtha
Performanc
e Products
CholineChloride
Ethylene Glycol
Engineering Engineering
Ethanolamine
Ethoxylate
plastics raw plastics

Phenol
material base products

Ethane /
Polymers
associated
VCM and PVC
gas
LLDPE
HDPE
LDPE
EVA
Technology –
Chemicals
US (Based in
Base
Propylene
Gasolene
Mixed C4
FTA)
Hydrogen
Pyrolysis
Ethylene
Cracker
Bottom
C r a c k i n g S t e a m Government Initiative Private Play

Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
and Asphalt
Heavy lube
Kerosene,
Gasoline,
Combination of continued high quality raw material imports, government initiative, access
to technology and private initiatives would extend the value chain further.

484
Similar to plastics, synthetic rubber industry remains
constrained , although there is an opportunity to develop a
niche…
Chemicals
Bahrain rubber industry • Bahrain‘s reach in synthetic rubber manufacturing

OLEO
Fatty Alcohol
Methyl Ester
Functional area Molded and extruded rubber products industry is very weak. Identical to the plastics industry,
Glycerin
Players Bahrain Rubber co., Gulf Rubber Co. the feedstock (monomers) for synthetic rubber
etc. manufacturing industry is absent throughout the GCC.
Raw material Synthetic rubber, natural rubber and The polymerization process, producing EPDM is the
Performanc
requirement other chemical additives missing link across all countries in GCC. The industry
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Remote raw Monomers and polymerized output sub group follows the same business model as plastics
Ethoxylate
material and is involved in low to medium value added rubber

Phenol
Source of raw Natural rubber: Malaysia and other products.

materials Asian countries • The major portion of rubber industry is typically covered
Synthetic rubber: European counties by tire and tire related industries. Bahrain does not
Polymers
VCM and PVC
and US house any tire manufacturing or re-trading player.

Driver Oil and Gas, Construction, Cement, Although the downstream application for tires, auto
LLDPE
HDPE
LDPE
EVA
industries cement blocks and aggregate manufacturing is absent, replacement tires and re-
manufacturing trades pose a substantial opportunity.
Chemicals
Base
Propylene
Gasolene
Mixed C4
Hydrogen
Tires and other

Pyrolysis
Ethylene
Cracker
Polymerization
Bottom
Monomers: Ethylene, Synthetic rubber based

Petrochemicals
propylene and others rubber products
The road map for the shift in rubber production from low to medium value products to high value
Aviation turbine
fuel, Diesel oil,
LPG, Naphtha,
Refining
products could be chalked around the preferential access to technology. Capitalizing on its FTA with
and Asphalt
Heavy lube
Kerosene,
Gasoline,
the US, Bahrain can take a lead in the region within high value synthetic rubber production and allied
businesses.

485
With the absence of the cracking link, synthetic fiber, industrial
and life sciences chemicals look too remote…
Chemicals
Performance products, being the derivatives of base chemicals achieved through cracking, are not
OLEO
Fatty Alcohol
Methyl Ester
produced in Bahrain. The missing link bridging refining and base chemicals, limits the presence
Glycerin
throughout the downstream value chain. Performance products which lie further down the value
chain, need strategic focus and strong political will. Based on strategic intent and market potential,
foray into these segments would require attraction of domestic investment / FDIs
Performanc
e Products
CholineChloride
Ethylene Glycol
Ethanolamine
Ethoxylate
Phenol
PREVALANT GAPS (AT

MID / DOWN STREAM REMARKS / DOWNSTREAM APPLICATIONS
LEVEL)
Polymers
VCM and PVC
• Synthetic fiber including feedstock in the form of petrochemicals for

• Synthetic Fiber
synthetic fibers. The downstream application lie within the textile
LLDPE
HDPE
LDPE
industry.
EVA
• Paints and other coating products; dying chemicals and printing inks;
Chemicals
• Industrial Chemicals
Base
Propylene
adhesives and other fasteners; thickening agents; water treatment

Gasolene
Mixed C4
Hydrogen
Pyrolysis
Ethylene
Cracker
Bottom
chemicals;
• Life science • Fertilizers*, insecticides and pesticides and other agro-chemicals;

Aviation turbine
Chemicals pharmaceuticals; Cosmetics; detergents and cleaning agents etc.

fuel, Diesel oil,
LPG, Naphtha,
Refining
and Asphalt
Heavy lube
Kerosene,
Gasoline,
*Footprint of Bahrain in fertilizers exists through GPIC

486
Singapore presents a very successful business model within
the petrochemicals industry which could potentially considered
by Bahrain based on strategic intent and investment…
Exploration
• In spite of zero domestic oil reserves, Singaporean companies have become active in overseas exploration and production.
Singapore Petroleum Company (SPC) currently holds assets in Cambodia, Vietnam and offshore China
• In the transportation segment of the industry, SPC holds interests in three regional gas transmission pipelines transporting gas to
Singapore, mainly from Indonesia.
• Singapore has emerged as a refining hub, with a total crude oil refining capacity of approximately 1.3 million barrels per day (bbl/d)
as of January 2006
Refining
• The country‘s three refineries are ExxonMobil's Jurong/Pulau Ayer Chawan 605,000-bbl/d facility; Royal Dutch Shell's Pulau
Bukom 458,000-bbl/d complex; and the Singapore Petroleum Company‘s Pulau Merlimau 273,600-bbl/d refinery.
• However, regional rivals, especially Malaysia, Thailand and India; increasingly challenge Singapore's leading position in the Asian
market. New ethylene capacity from Saudi Arabia is also the prime concern, and is expected to drive companies to shift to other
product lines.
• In year 2008, Singapore had 3.06mn tpa of olefins production capacity, including 2.04mn tpa of ethylene and 1.02mn tpa of PL
• In the aromatics sector, it has 820,000 tpa of BN, 1.54mn tpa of XL, 360,000 tpa of EB, 350,000 tpa of TL, 280,000 tpa of CM,
Petrochemicals
175,000 tpa of CH and 60,000 tpa of BT

• In the polymers segment, Singapore has 1.17mn tpa of PE capacity, 875,000tpa of PP capacity and 80,000tpa of PS capacity
• Shell Eastern Petrochemical Complex (SEPC) on Bukom, the ExxonMobil Chemical complex on Jurong and the Jurong Aromatics
complex will form the cornerstone of the Singapore petrochemicals industry and together, these will add capacities of 2mn tpa of
EL, 1mn tpa of PL, 480,000 tpa of PE, 450,000 tpa of PP, 1.02mn tpa of BN, 1mn tpa of XL and 175,000tpa of BT
• By 2013, Singapore‘s EL capacity will have nearly doubled to 4.04mntpa, PE capacity will be up 40% to 1.65mn tpa and PP
capacity will be up 50% to 1.33mn tpa.
The significant expansion of Singapore‘s capacity is testament to its advantages of efficient feedstock from refineries, robust
infrastructure, qualified workforce, proximity to major markets and ease of business investment
Sources: Industry Reports, www.mindbranch.com, U.S. Energy Information Administration, D&B Research & Analysis
*PL= propylene; BN = benzene; XL = xylenes; EB = ethylbenzene; TL = toluene; CM = cumene; CH = cyclohexane; BT = butadiene; PE =
487
polyethylene; PP = polypropylene ; PS= polystyrene ; EL = ethylene,
growth in the Petrochemicals sector …
• The current requirement for chemical engineers (refining) and geophysicists

Lack of workplace ready (exploration) by the industry is hardly met by the existing educational system. BAPCO
candidates – lack of national invests heavily in training recruits (over a period of 3 to 5 years) and making them work
apprenticeship scheme ready
• The absence of apprenticeship programs causes a requirement for lengthy and
specialized training in order to be productive and innovative.
• As educational institutions are not in sync with industry requirements, fresh recruits do
Low alignment between
not possess requisite skill sets ,even though the titles of the courses they undertake
petrochemicals industry &
suggest so. Courses targeted specifically towards petrochemical industry are rare and
educational institutions
co-ordination between industry and educational institution is not very visible
• The educational training system is not aligned with the needs of the sector.
Lack of specialisation / focus • The educational standards are low and school drop outs lack the skill and the work
ethics needed to be productive
Low level of attraction for • Level of attractiveness in manufacturing sectors, especially for semi-skilled / manual
manual and semi-skilled roles roles in the economy remains low

Current employment trends Wage levels** (2008)
Wage levels (BD/Month)
Financial services 1,960
Trasport and communication 413
Tarde 235
Construction 104
Manufacturing 207
Agriculture 152
0 500 1000 1500 2000 2500
• Declined employment contribution from 9.42% in 2002 to 8.81% in 2007 indicating shift in countries sectoral economic
contribution.
• Marginal increase in employment from 3100 employees in 2002 to 3200 employees in 2008.
• Lower wage levels amongst the economic sectors
*Source: CIO, Allen survey

** The wage levels of petrochemicals sector are not separately available and are included in manufacturing sector 489
Relative Sub-Sector Prioritization: Petrochemicals
and C
490
The Bahrain Petrochemicals Sector - A Snapshot of Prominent
Bottlenecks, Gaps ….
Infrastructure / Regulatory Bottlenecks

Area of saturation
(Disablers)
Refining:
High
Primary
Exploration 1. Limited crude availability
2. Ethane and propane deficient natural gas
3. Strategic investment by regional players
Medium 4. Low reinvestment in the sector causing
Low value add Refining: Conversion*
plastics aging infrastructure
5. Lack of regulatory focus on downstream
Engineering plastics activity

Low
Polymers:
Market gaps in terms
Rubber
Low Medium High

Market gap sectors that are currently underpenetrated, however market potential is high
based on buoyancy of expected growth rates and market adoption
Market gap sectors that are currently underpenetrated, however market potential is deemed to
be high if bottlenecks are removed

* Refining: Conversion refers to the petroleum refining activity focusing on conversion of bottom of the cracker heavy products in to high value distillate 491
products.
the Petrochemicals sector as a ‗market gap‘
(Priority Index)
492
** The Priority Index has been calculated as a Hybrid Score of Sector Attractiveness and Bahrain Readiness

Notes:
formation issue

Petrochemicals: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Petrochemicals sector
and is used to reflect the ‗absorptive capacity‘ of the Petrochemicals sector
Bahraini Petrochemicals sector value chain are termed as ‗market gaps‘
495
Refining: Engineering
Conversion Plastics
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Oil and Gas & Petrochemicals
Shift in production capacity

Enhanced oil recovery program
from west to east
……………
Robust demand for high value

petrochemical products Strategic focus from Government
OIL & Gas Sector Growth

Drivers
Strategic ties with technology leaders

Increasing energy demand from
through FTA
emerging markets
markets

497
Manufacturing
498
The GDP contribution of the manufacturing sector has been
growing with the government‘s focus in promoting economic
growth through industrial development…..
• A key component of Bahrain's economic vision is its economic growth through

industrial development. Despite the slowing of manufacturing worldwide, the
kingdom maintains a steady course in drawing in significant industrial capital.
• Figures released by the Ministry of Industry and Commerce (MOIC) in early
February 2009 show that a total of 144 industrial projects - totaling an estimated GDP from Manufacturing Industry (in BD
value of BD 242.1 million (USD 640.6 million) - have been approved since the
million)
beginning of 2008.
GDP from Manufacturing (in BD million)
• The contribution of manufacturing to GDP has increased from 12% in 2002 to
14% in 2008, growing at a CAGR of 20%. 1,400.00
• The market size (value of production) of manufacturing was approximately BD 1,200.00

6,409 million in 2008. Manufacture of coke and refined petroleum products1 CAGR: 20%
1,000.00 1,144.56
accounted for the majority share (61% of the total), followed by (13.9% of GDP)
800.00
manufacture of basic metals2 (18%)**
• The government is expanding industrial land and creating special 600.00
investment clusters, such as Bahrain Investment Wharf (BIW) and Bahrain 400.00
International Investment Park (BIIP), to attract manufacturing companies 200.00
383.42
into Bahrain. (12% of GDP)
0.00
o BIW is trying to attract light to medium manufacturing companies,
2002 2008
whereas BIIP is trying to attract heavy manufacturing companies.
• The transport infrastructure is also being modernized to support the
manufacturing industry with the construction of the new port, the Cargo Oasis at
Bahrain International Airport, and the Qatar-Bahrain Causeway.
1. Manufacturing of coke, and refined petroleum products as well as downstream plastics, rubber and chemicals have been dealt with, within the Oil & Gas sector, treated
as a separate chapter in the report
2. Manufacturing of basic metals (Aluminum) has been treated as part of Manufacturing and has been blown up as an independent section
3. The Other Manufacturing Section within the Manufacturing Chapter comprises Auto Components, Textile, Garments & Leather, Electrical Equipment and Ship and Boat
Building which are sub-sectors where Bahrain is deemed to have a presence

499
In the region, Saudi emerges as the leader in manufacturing
both in terms of current footprint as well as directed investment
to further strengthen capabilities in manufacturing …
Saudi Arabia takes the lead position in the region in the manufacturing sector, with the highest impetus in
terms of investment in bolstering local manufacturing capabilities
• Saudi Arabia tops the other Gulf states in terms of investments made in the manufacturing sector
• The volume of investments made by the Kingdom amounted to $92 billion (BD 34.6 billion) out of a total of $150 billion (BD
56.4 billion) across the GCC ,until 2008
• The number of factories established in the Kingdom reached 4437 with a total workforce exceeding 472,000.
• Saudi Arabia's investments in the chemical and plastic industries reached $49.9 billion (BD 18.8billion) out of the total $81.9
billion (BD 30.8 billion) invested in this sector across the six GCC states.
• Investments in construction materials come second at $18.7 billion (BD 7.04 billion) across the GCC, of which the Kingdom's
stake is $12.8 billion (BD 4.8 billion)
• Construction materials were followed by mining industries with total investments of $13.2 billion (BD 4.97 billion) (Saudi
Arabia's stake is $9 billion / BD 3.39 billion), and basic mining industries come in the fourth position with $17 billion (BD 6 .4
billion), of which the Kingdom's stake is $7.2 billion (BD 2.7 billion)
• More than $7.7 billion (BD 2.9 billion) has been invested in the Kingdom's food, soft drinks and tobacco industries from a
total of $11.3 billion (BD 4.2 billion), and this was followed by paper industries with a total investment of $3.3 billon (BD 1.24
billion) (Kingdom's stake is $2.4 billion / BD 0.9 billion).
• Saudi Arabia's investments in the textiles, garments and leather industries amounted to $1.4 billion (BD 0.52 billion) from a
total of $2.1 billion (BD 0.79 billion), and this was followed by investments in the wood and transformation industries.
• According to the latest figures, there are a total of 12,316 factories in the GCC states, with a volume of investments worth
$150 billion (BD 56.5 billion).
• Saudi Arabia tops other GCC states in terms of the number of factories and workers as well
• According to the Gulf Industrial Investments Organization; the total number of factories in the fields of food, soft drinks and
tobacco in the GCC accounts for 1548 with a volume of investments worth $11.3 billion (BD 4.5 billion)
• Break-up of the factories is the following: Saudi Arabia 666, the UAE 409, Oman 212, Bahrain 119, Kuwait 80 and Qatar 62.
Sources: Gulf Industrial Investments Organization, D&B Research & Analysis

500
Bahrain has a minor footprint in local manufacturing across
segments …
World Trade Presence of GCC Presence of GCC World

Bahrain Imports Bahrain Imports Trade
Agriculture, Navigational,
construction, & measuring,
Computer and Electronics

mining mach. medical, & control
instruments
Industrial mach.
Semiconductor &
other electronic
Other general
components
purpose mach.
Machinery
Computer &
Engine, turbine,
peripheral equip.
& power
transmission Audio & video
equip. equip.
Commercial & Communications
service industry equip.
mach. mfg.
Other misc. mfg.
Metalworking
mach. mfg. Misc.
Medical equip. &
Electrical equip. supplies
Electricals
Other electrical Less than BD 143mn Less than BD 5.6bn

equip and ($380mn) ($15bn)
Segments offering high value
components opportunities in terms of More than BD 320mn More than BD 15bn
capturing of regional import ($850mn) ($40bn)
Lighting equip. substitution potential
More than BD 1.9 bn More than BD 37 bn
($5bn) ($100bn)
Sources: US economic census annual survey of manufactures 2006, LMRA, UN, NES, CRA analysis
501
…with low to moderate natural feasibility and relative inherent
competitiveness to foray into high tech sub-sectors …
Manufacturing Presence of GCC Imports World Trade

Sub-sector Bahrain
• Bahrain‟s endeavor to substantiate its
Motor vehicle footprint in high tech manufacturing
would be a function of strategic intent and
Aerospace products & the Kingdom‟s ability to attract inward
Transportation Equipment
parts investment and foster technical

Other transportation
collaborations especially for segments
equip. offering high value opportunities in terms
of capturing of regional export potential
Motor vehicle parts** (through import substitution)
Motor vehicle body &

trailer
Railroad rolling stock GCC Imports World Trade
Less than BD 143mn Less than BD 5.6bn
Pharma and medicine ($380mn) ($15bn)
Pesticide, fertilizer, etc. More than BD 320mn More than BD 15bn

($850mn) ($40bn)
Paint, coatings, etc.

Chemicals
More than BD 1.9 bn More than BD 37 bn

($5bn) ($100bn)
Other chemical product

and preparation
Segments offering high value
Resin, synthetic rubber, opportunities in terms of
capturing of regional import
& artificial synthetic substitution potential
fibers & filaments
** Opportunity in terms of aluminum based auto part based on high precision dies casting technology
Sources: US economic census annual survey of manufactures 2006, LMRA, UN, NES, CRA analysis 502
The MOIC has identified a number of industrial investment projects of
varying in technological intensity for which FDI / collaboration looks to
be the most feasible route …
Sector/ Product
Sub-sector
Medical CT and CT scan machines
Equipments
Portable X-ray machines
• No competitive advantage of Bahrain
Electronics/ Organic light emitting diode, light emitting polymer, • Highly technical products
Electrical organic electro luminescence and light emitting diode
Equipments • The only feasible route is technical
Gaming consoles, Programmable logic controllers,
collaborations with OEMs to capitalize on
Photovoltaic cells and panels, LCD panels, Non volatile
potential contract manufacturing /
memory (pen drives, hard drives etc.), LCD TVs, PCB
assembling opportunities
assembly, Set top boxes, Switches and routers, RFID
tags, Mobile handsets and cordless telephones
Exhaust fans, single-phase motors, heat exchangers
Pharmaceuticals Pharmaceutical ointments, creams and gels • Products with low to medium technology
intensiveness
Pharma dosage tablets
• The technology, machinery and other inputs
will have to be imported
Transdermal patches and oral fast dissolving strips
Medical Constant flow devices

Equipments
Sources: MOIC, D&B Research & Analysis

503
The Bahrain International Investment Park is an excellent
initiative to attract inward investment and augment Bahrain‘s
footprint in value add manufacturing…
Objective Key Success factors Focus

The BIIP is designed to • 0 tax for 10 years & no recruitment restrictions The BIIP‘s focus is to draw
attract export oriented • Duty free access to all GCC zones and exemptions
companies in manufacturing on import duties for raw material / equipment good quality, export oriented
and internationally traded • 100% foreign ownership & repatriation of capital companies which have high
services, with high value • Free Trade access to the US potential for growth and
projects that will contribute to • No minimum capital required
creating quality local • Cheap land – 500 fils (Bahraini) / sq m attract FDI through
employment • Proximity to port, airport & causeway international companies
Operations
Current status • 2/3rd of space has already been allocated. Out of 500 applications, received, only 73 were admitted, 47
of which are Bahraini companies and the rest being foreign companies
Screening • Screening criteria includes Quality of company, viability of business, access to funding, future potential,
Process management quality, element of value add, export potential, ability to address import substitution
Type of business • Already has a presence of businesses in food processing, fibreglass, software, boat building and aims to
– sector wise attract companies in IT, pharma / medical devices, food, claims processing, engineering
The BIIP‘s strategy is based on:

• Attracting global giants and growing value adding local companies (irrespective of sector) that can assist Bahrain in
developing standards and best practices for its own manufacturing sector
• Attracting FDI (through international overseas offices) and consequent employment of Bahrainis is expected to create a new
cadre of Bahraini managers through international best practices, thus increasing sector sophistication
• Promoting manufacturing industries that already exist, particularly in the areas of exports infrastructure, management &
marketing development, vocational training and building overseas networks is expected to harness their full export potential

504
The Bahrain Investment Wharf (BIW) is another of the
Kingdom‘s initiatives aimed at attracting light manufacturing
industries …
Objective Key Success Factors Focus

• BIW is a 100% undertaking of • Exemption of corporate, personal, and value-added tax The BIIP‘s focus is on attracting
Tameer. companies in various areas,
• Trade licenses for items to be sold in Bahrain are
conveniently obtained including:
• It was started in 2006 with the • Duty free access to all GCC zones and exemption of • Light industries, including
objective to attract light import duties for raw material / equipment warehousing and logistics
manufacturing and other
• 100% foreign ownership & repatriation of capital • Medium industries
value-add manufacturing
companies in Bahrain. • Free Trade access to the US • Business centers
• Proximity to the KBS port, airport & causeway and to the • Commercial and residential facilities
Hidd Power Station
Operations
Current status • It has already attracted a mix of local and international investors across the GCC, Europe and Middle East. 80% of
its infrastructure has been built; and 97% of its plots have been released.
Type of Some of the types of businesses that have already have a presence at the BIW include:
businesses – • A pharmaceutical distributor with temperature controlled warehousing facilities
sector wise • A project for insulin production
• A F&B processing unit (BAS has set up a facility for processing / production of ready meals as well as a catering
unit)
• An Aluminum fabrication unit
• A number of logistics and warehousing units
The strategic focus is now on capturing light manufacturing opportunities (e.g. there is a prospect Indian company
for elevator manufacturing). Besides these, the other target industries include: paper and paper products, furniture
manufacturing, textile manufacturing, electrical machinery and light electronic industries, chemicals, non-metallic
mineral products, light plastic and rubber products, etc.

505
Additionally, the Kingdom could also consider attracting foreign
investment and foster technical collaboration to strengthen Bahrain‘s
manufacturing footprint, with intended sector focus around segments
that offer high value regional export capture opportunity …
• Both the BIIP and BIW are excellent initiatives to augment Bahrain‟s presence in value added and light manufacturing through the
inward investment route
• However, with no intentional focus to attract specific sectors / sub-sectors; the strategy of these parks is to attract feasible
projects / businesses on the basis of basic screening criteria such as quality of company and viability of business
• Based on strategic consideration, the Kingdom could also look at attracting investment and fostering technical collaboration to
strengthen its local manufacturing base, particularly around segments that offer strong regional export potential
Bahrain International Investment Park

Bahrain Investment Wharf (BIW)
(BIIP)
Inward investment route
Bolster Bahrain‟s Manufacturing footprint
ADDITIONAL POTENTIAL SCENARIO (BASED ON STRATEGIC

CURRENT SCENARIO
CONSIDERATION)
• Attraction of international well established global players to set up
presence in Bahrain • Intended sector focus to target sectors that present high growth
• No intended sector focus approach screening criteria for companies opportunities in terms of regional import substitution potential
designed around quality of company, viability of business, access to (capturing export opportunities)
funding, future potential, management quality, element of value add, • Attraction of foreign investment and fostering of technical
export potential, ability to address import substitution collaboration to grow local manufacturing base
• Expansion of footprint based on attraction of global players • Expansion of footprint deemed to be more strategic with knowledge
transfer and development of local capabilities

506
Manufacturing: Aluminum
507
The Aluminum Manufacturing Industry Map comprises Primary,
Secondary Production and Downstream Operations….

508
…With Smelting, Extrusion, Rolling, Casting, Foundry, and
Atomizing as major activities …
The theoretical construct of the Aluminum Manufacturing Industry broadly comprises smelting, followed by
midstream production of aluminum and further downstream industry which received feed from various segments of
the midstream industry. The industry also includes the aluminum recycling segment connecting the end user to
midstream producers. Other operators in the construct are linked to broad industry groups either as sub sectors or
at peripheral support level
• The primary metals industry consists of firms engaged in

 Smelting and refining of ferrous and nonferrous metals from ore, pig, Cost Breakdown of Aluminum Smelting
and scrap.
 Rolling, drawing, and alloying of metals; 100%
Labor and
 Manufacturing of castings and other basic metal products. 90% other
80% costs,
• Major metals included within this industry are iron and steel, and the nonferrous 30%
metals of copper, aluminum, lead, titanium, and zinc. 70%
 Aluminum is the most abundant metal in the Earth's crust, and the third 60% Energy,
most abundant element therein, and makes up about 8% by weight of 25%
50%
the Earth‘s solid surface.
40%
 The chief source of aluminum is bauxite ore. Raw
30% material
• Aluminum smelting being the primary industry in the value chain, is categorized (Bauxite /
20%
as a basic and heavy industry requiring huge capital investments Alumina),
10% 45%
• The industry is usually clustered around either the source of raw material or the
0%
source of energy
Cost
• Raw material and energy account for almost 70% of the total costs of smelting

509
With rising input costs and environmental impact, smelting
facilities are migrating from the west to the east…
• Raw material and energy, being the most important ingredients, have emerged as the decisive factors in strategic shifts
within the industry.
• Smelting capacity has been witnessing a shift from the west to the east in recent years, in consideration of the
availability of raw material and cheaper energy sources.
• China has emerged as the single biggest producer of raw aluminum, accounting for one fifth of the total smelting
capacity of the world.
Aluminum Smelting Figures
100%
As depicted, North and South

80%
America lost their share in
aluminum smelting, mainly in favor
60%
of Europe (Specially East Europe)
and Asia (Specially China)
40%
20%
0%
1990 2000 2008
Africa North and South America Asia Europe Oceania
• Middle east emerged as a major contender for aluminum smelting due to its cheaper energy sources.
 Due to Bahrain's plentiful supply of gas, a consortium of international aluminum users chose Bahrain in May
1968 to locate an aluminum smelter. Subsequently, Aluminum Bahrain (ALBA) was incorporated in August 1968.

510
In the region, growth in smelting capacity has not translated
into growth in mid and downstream industry, except in
Bahrain…
Saudi
• Aluminum production which was once confined to Western Country Bahrain Oman Qatar
Arabia
UAE Total
countries, is now shifting to the developing world, and 213,000 --- --- --- 174,000 387,000
1990
specially to those countries that either have the raw
1995 450,709 --- --- --- 247,400 698,109
materials or the energy resources to produce aluminum –
namely the GCC region with its abundant energy resources 2000 509,308 --- --- --- 470,000 979,308
750,710 --- --- --- 722,000 1,472,710
• The share of GCC in total primary aluminum production of 2005
the world has steadily increased during the last three 2007e 873,000 --- --- --- 861,000 1,734,000
decades from 0.9% in 1975 to 4.9% in 2005 2009e 875,000 350,000 50,000 --- 920,000 2,195,000
• However, the countries failed to translate the smelting 2011e 880,000 350,000 585,000 300,000 1,560,000 3,675,000
growth in to the mid and downstream industries and
continued exporting raw aluminum
• A quantum jump is expected to take place during the next
decade raising total GCC share to around 10% by 2010 on
the back of expansion of existing smelters as well as In spite of having a first
commissioning of new smelters mover‘s advantage in the
region in terms of the most
• The GCC players have initiated the formation of Aluminum developed value chain,
clusters in their respective countries in order to attract Bahrain currently faces a
foreign players major threat in terms of losing
its midstream industry to other
• Bahrain being the leader in the regional Aluminum industry,
parts of the region
houses the most developed midstream and downstream
segment in the region

Estimated figures for 2009 and 2011
511
…However, with new smelters going operational across KSA,
UAE and Oman, these countries are now aiming at robust
growth in mid and downstream industries…
Sr. Country and Capacity Energy Domestic Production Price / Year of

No. Plant (Established / Availability availability of of liquid Proposed Commencement
Proposed) (TPA) Bauxite / Alumina Aluminum Price
1 KSA: Al 620,000 Y Y Y NA 2011

Zabriah
Aluminum
Project
2 KSA: Jizan 700,000 Y N Y NA 2011
Economic City
3 UAE: Dubal 890,000 Y Y* N NA Operational
4 UAE: Emal 800,000 (to be Y N Y LME + 0.0% Operational
expanded to 1.4
million tons)
5 Oman: Sohar 350,000 Y N Y LME + 0.5% Operational
6 Qatar: 585000 (to be Y N N NA Operational
Qatalum expanded to 1.2
million tons)
7 Bahrain: Alba 875,000 Y (but N Y LME + 2.0% Operational
constrained)
The terms of procurement from ALBA dictate premiums 3 times higher than the costs at which midstream players (Midal
Cables, BAMCO, GARMCO) can procure from the Oman smelter

* Dubal has entered into a joint venture with an Indian company to develop an alumina manufacturer in India
512
In Bahrain, the Aluminum Industry has continued to charter
growth along the value chain since 1968 …
Since 1968, the industry grew organically to become one of the largest industries in Bahrain second only to
Petrochemicals
• 4% contribution to GDP*.
• CAGR of 24% (2004-2008)
Features
• Primary aluminum production of 872 thousand metric tons (2008)
• Most developed aluminum downstream industry in the GCC with presence in all major components of
value chain.
Formation of Alba was succeeded by multiple entries in the value chain. Bahrain currently houses an
History and extrusion plant, a rolling mill, an atomizer, a master and subsequent alloy manufacturer and an aluminum
landmarks cable manufacturer. Bahrain is the only GCC country to use 60% of its aluminum smelting output
domestically.
1968 1973 1977 1986 1993 1996 2005
ALBA: BAI: Atomized BALEXCO: GARMCO: Aluwheel: BAMCO: BWP:

Smelting powder and Extrusion Rolling and Wheel alloys Aluminum Aluminum
billets Medal Cables: recycling alloys cable rods
Electric cables
rods and
conductors
Sources: Market Player‘s Websites, Industry Reports, D&B Research & Analysis
*GDP at current prices 513
Industry footprint comprises Aluminum Smelting and Recycling
/ Secondary Manufacturing at upstream level …
Primary & Secondary Aluminum Production Industries
Aluminum Smelter • ALBA (Aluminum Bahrain): Liquid aluminum, primary ingot, cast
slab and billet
Secondary / Recycling • BAMCO: wheel alloy and master alloy ingot based on liquid aluminum
Aluminum Pant
• Aluserve Middle East: Aluminum & alloy ingot from dross and scrap
• Bahrain Recycling: Aluminum ingot, sows from dross and scrap
• Saar Group: Aluminum & alloy ingot from dross and scrap, sand
casting
• Scrap Mould: Aluminum & alloy ingot from scrap, sand casting of
chair bases
• Crown Industries: Aluminum ingot, presently exports scrap

514
…Rolling Mill, Foil Mill, Coating, Casting, Foundry, Extrusion
and Aluminum Powder as segments at midstream level …
• GARMCO: 0.25 -3 mm thick, cold rolled coil, sheet & circles; feed stock
for foils and fin manufacture
Hot & Cold Rolling Mill
and foil mill
• GARMCO: 12 – 220 micron thick, 100 – 800 mm wide
• BALEXCO: powder coating and anodized extrusion

Aluminum Midstream Industry
Coating facilities (painting

/ powder coating / • Al Zamil Coating on Aluminum & Steel: Batch Coating
anodizing • East Aluminum: Aluminum powder coating
• Aluwheel: Blank wheel casting, wheel alloy ingot

• Midal Cables: Wire for electrical purposes, cables, redraw rod & wire, and metal
Casting Unit
form products
• Bahrain Welding Wire Products: Aluminum EC Rod, Alloy Rod, Wire & Alloy
ingot casting
• Bahrain Industries: Small quantity of dry casting products

Foundry
• National Foundry: Sand casting
• Tech Cast: Small quantity of die cast products like souvenir items
Extrusion Plant • BALEXCO: Extruded products from billet
Aluminum Powder Making • Bahrain Atomizer International Company: Powder (5 – 25 micron),

Plant Pellet (5 – 15 mm)

515
…And Aluminum Fabrication, Engineering Components, Kitchenware,
Wire Drawing, Wire Mesh Making, Rivets Manufacturing & aluminum
foil based products occupying downstream industry levels …
• Over 108 companies using over 5000 TPA of extruded products in addition to flat
Aluminum Fabrication products and accessories
Industry
• Products include doors, windows, chairs, stair cases, ladders, hand rails, profiles,
false ceilings, curtains, partitions, panels, cabinets and other architectural parts
Engineering Components • Metal of Bahrain (MEBA): Aluminum / Brass components

Aluminum Downstream Industry
Kitchenware • 11 companies producing cookware, utensils, kitchen ware and cabinets
Wire Drawing Plant • Wireco: 0.16 mm dia welding & metalllizing wire and 0.2 mm dia wire for net
• Wires International Company: Net made from 0.22 mm drawn wire

Wire Mesh Making Plant
• Quality Wire Products: Wire mesh
Rivets making Plant • Alfa Fastening System: Rivets drawn from aluminum wire
• Deeko Bahrain: Aluminum container and trays

Plants based on
aluminum foil as inputs • Zeera United Factories: Aluminum foil – cling film

516
The Kingdom currently utilizes 60% of its smelting output for
further value addition through a strong midstream industry…
Industry Bahrain‘s aluminum industry is dominated by large ticket public sector investments in upstream and
players midstream segment. The downstream industry features a large number of small and medium enterprises.
Downstream
Gulf Aluminum Aluminum rolling Aluminum electric
Rolling Mills: and foil mill
SME
Midal Cables: cables and
165,000 tons aluminum
conductors
rolling products products
Capacity per annum, 25,000 140,000 tons per
Capacity manufacturing
Midstream
tons foil products annum
industry
Upstream
per annum
Bahrain Alloy
Master alloy
Aluminum wheels Manufacturing
Aluwheel: manufacturing
Aluminum Aluminum manufacturing Company:
Bahrain: smelting 25,000 tons 28,000 tons per
Capacity
wheels per annum
875,000 tons
Capacity Capacity annum, 12,000 Bahrain
per annum Aluminum
wheel alloy per Welding Wire
Recyclers
cables Aluserve
annum Porducts
28,000 tons Middle East,
Bahrain Aluminum Capacity
per annum Bahrain
Atomizers powder and
International: pellets Bahrain Recycling, Saar
Aluminum
7,000 tons per Aluminum Group
Capacity extrusion
annum Extrusion:
25,000 tons per
Capacity
annum
Sources: Market Player‘s Websites, Industry Reports, D&B Research & Analysis
517
However, due to input constraints coupled with emerging
competition, the industry is now at the brink of serious
challenges…
Current
Bahrain‘s aluminum industry is standing at a very crucial stage in its journey. Both internal and external
Issues factors have triggered serious concerns specially in the midstream segment of the industry. Following are
the major issues
Availability of energy Availability of raw material
Most of the upstream and midstream aluminum Alba imports all its raw material from Alcoa‟s
plants are gas fired. Bahrain‟s gas availability is bauxite mines in Western Australia. The 10-year
limited and not sufficient to fuel even Alba‟s supply contract is now moving towards
proposed expansion plans. Non availability of expiration. Securing cost effective and smooth
cheap energy has threatened the supply would be very crucial for the upstream
competitiveness of the industry aluminum industry
Current Issues
Rising costs
External competition
Rising cost of inputs and energy has resulted in
GCC countries like UAE (Dubai and Emal),
higher smelting costs. Alba has managed to
Oman (Sohar), Qatar (Qatalum) and KSA are
transfer the price pressure further in the value
poised for massive smelting establishments.
chain. However, this has threatened the
GCC competition has jeopardized Bahrain‟s
margins of midstream industry players
leading position in the Aluminum industry.

518
Absence of assured supply and rising inputs costs call for
backward integration for the upstream smelting industry…
With 40-45% contribution, raw material in the form of alumina forms a chunk of smelting costs. Logistical costs also play a
decisive role in strategic maneuvering within the industry. The aluminum smelters are normally clustered around Bauxite
mines and alumina production facilities. Alba currently imports all its raw material from western Australia and has enough
reason to derisk itself through backward integration
Besides energy supply, the alumina is a key concern to smelters all over the world. Alba imports all its raw
Access to raw
material from Alcoa‘s bauxite mines in Western Australia. The 10-year supply contract is now moving
material
towards expiration.
Alba has been successfully competing on the basis of its cost effective energy supply. Bahrain‘s natural
Constrained gas reserves are not sufficient to fire the proposed expansion of Alba. Considering the uncertainty over
energy supply the outlook for the regional gas supply and pricing, Abla has a difficult decision to make on whether to
press ahead with the construction of a sixth production line.
With energy advantage being constrained, Alba needs to look for an alternative competitive advantage.
Competitive ALBA‘s current strategic focus needs to be around securing its supply of alumina as other smelters are
advantage being brought in the region. Moreover, neighboring KSA being blessed with Bauxite reserves and
equipped with upcoming smelters, will pose a major threat for the upstream and midstream aluminum
industry in Bahrain
Sources: D&B Research & Analysis, www.meed.com

519
Bahrain can consider adopting an inorganic route for backward
integration to ensure efficient and cost effective raw material
supply…
Alba can consider following a backward integration model by partnering with Alumina / Bauxite
Route for manufacturers to secure cost effective raw material supply or inorganic growth through the acquisition
backward route. Competitor Dubal has entered into a joint venture with an Indian company to develop an alumina
integration manufacturer in India at an estimated cost of BD 1.13 bn and is also negotiating equity investment in
alumina manufacturing in Guinea.
Lack of feasibility in
terms of time frame.
Organic expansion will
Depleting be time consuming
competitive Organic and capital intensive,
advantage of especially when the
Bahrain current contract for
supply is about to
Increasing expire.
Need for raw Need for
competition
material Backward
from GCC
integration
Lack of Cost effective

raw material supply Inorganic
assurance
Feasible, and quick.
India, Guinea, Australia
are the feasible
destinations.

520
In spite of getting a first mover‘s advantage within the region,
Bahrain‘s midstream industry is struggling for growth….
In spite of getting a first mover‘s advantage within the region, Bahrain‘s upstream and midstream industries are standing at a
crucial point in their life cycle.
Along with diseconomies of scale which have crept along the growth path, the industry also suffers from factors that are
considered ‗controllable‘
The bottlenecks and diseconomies of scale

are hindrances potent enough to threaten Infrastructural Market
the existence of the midstream aluminum Bottlenecks Bottlenecks
industry. Moreover external factors are
strong enough to pull investment out from
the Kingdom, in favor of other countries in
the region, primarily UAE and Oman External
Regulatory Elements –
bottlenecks Aluminum growth of smelting
Upstream capacity in the
region
and
Midstream
Industry

521
Absence of regulatory attention has resulted in lack of co-
ordination amongst players coupled with the virtual absence of
regulatory shelter …
Aluminum, being the most pivotal manufacturing industry in Bahrain, deserves warranted regulatory attention. The industry is
regulated by Ministry of Industry and Commerce. However, the Kingdoms sovereign wealth fund and the holding company of Alba,
Mumtalaqat exercises significant control over the industry.
Absence of regulatory initiative
The aluminum industry is regulated by Ministry of Industry and Commerce. However, Absence of grievance handling
the size and scale of industry activities warrant a dedicated regulator. Industry players
have expressed deep concerns on absence of dedicated regulatory attention. The lack
of regulatory attention has resulted in:
 Absence of grievance handling mechanisms;
 Lack of coordination between industry players;
Regulatory Bottlenecks
 Lack of cohesiveness between upstream and midstream segments. Lack of regulatory shelter
 Bureaucratic and time consuming procedures
Absence of regulatory shelter Lack of arbitration
The aluminum smelting industry is shifting towards low cost geographies. China being
accountable for one fifth of global production, has emerged as a major exporter of cost
effective aluminum. Bahrain has no anti dumping duties in place to protect its domestic Lack of coordination
industries from dumping of aluminum, especially from China. Absence of anti dumping
duties has posed a major road block in the industry‘s expansion plans. At the same
time, with the absence of FTA, Bahraini aluminum products face 6% import duty (3% for
Aluminum Alloys) in Europe making these products less competitive in international Bureaucratic procedures
markets. The absence of regulatory shelter to address these issues and protect local
manufacturers is seen as a detriment to the industry‘s export potential within the
European markets

522
Constraints in the availability of land, energy and integrated
logistical facilities constitute the primary infrastructural
bottlenecks…
Aluminum industry features heavy and bulky inputs and output. The industry is resource intensive and requires considerable
amount of power, investment and other resources. Logistics support plays a critical role in the sustained development of the
industry.
Constraints in Land and natural resources
• Bahrain has limited supply of land owing to its small size. Being a heavy and space intensive industry,
almost all big ticket players in Bahrain have limitations for domestic expansion. Constraints on availability
and supply of water also poses a major hindrance to select players within the midstream industry
Constraints in Logistical infrastructure
• Though the Kingdom has built a new sea port having adequate cargo handling facilities, the shipping
traffic for Bahrain is currently routed through Dubai and Saudi Arabia, increasing the cost of transportation.
(this flows from the lack of direct shipping liners between Bahrain and ROW; with major shipping liners
preferring to route mother vessel shipment through Jebel Ali and plying feeder vessels into Bahrain,
because of the lack of outbound tonnage capacity available for haulage from the Bahrain port)
Constraints in Energy supply
• Most of the upstream and midstream aluminum plants are gas fired. Bahrain‘s gas availability is limited and
not sufficient to fuel even Alba‘s proposed expansion plans. Non availability of cheap energy has
threatened the competitiveness of the industry. Moreover, neighboring competitors are offering long term
and cost effective contacts for energy supply, which act as a major pull for Bahrain‘s midstream players to
be attracted to these countries (particularly UAE : EMAL / DUBAL and Oman: Sohar)

523
Market bottlenecks include constraints on raw material, and
energy coupled with increasing price pressures …
The aluminum mid and downstream businesses are heavily dependent upon aluminum smelting capacity. The
smelting industry, hindered and constrained by raw material and energy availability has passed on the price
pressures along the value chain. Following are the major business ecosystem bottlenecks:
The cost of bauxite and alumina are rising. Alba imports all its raw material from Alcoa‘s bauxite mines in
Raw material Western Australia. The 10-year supply contract is now moving towards expiration. However, owing to its
monopolistic presence, Alba has managed to pass on the price pressure to its downstream industries.
The energy requirements of the industry and specially smelting activity are high. Limited availability of
Energy gas had put a question mark on Alba‘s expansion plans and has pushed its operating costs upwards.
Alba and other midstream players are looked upon as one of the biggest employment generators for the
Social issues Bahraini economy. Most of the players in the industry are overstaffed increasing costs and hindering their
competitiveness.
Alba has started transferring its incremental costs to the midstream industry. Alba has succeeded in
transferring price pressure owing to its dominant position and bargaining power. However, increasing
price pressures have squeezed midstream industry margins. The midstream industry has responded to
Price
pressures
the problem through corrective actions such as relocation and backward integration. Increasing costs and
inefficiencies coupled with attractive opportunities from regional upcoming competitors have threatened
existence of the midstream industry in Bahrain. The regional competition is geared to offer liquid
aluminum considered as the only ‗holding back‘ the midstream industry in Bahrain (vicinity of ALBA)

524
With both push and pull factors working in tandem, the
backbone midstream industry has enough reasons to move
away from Bahrain…
No grievance
Land & handling
Attractiveness of GCC
Energy No regulatory clusters
shelter
Logistical
Bottlenecks No arbitration,
coordination • Subsidized land
Bureaucratic
procedures • Long term (20 yr.) fixed
price supply contracts
• Long term (20 yr.) energy

supply contact
Bahraini Aluminum Industry • Access to liquid aluminum
Raw materials
Price pressure
Energy Midstream Push
Alba industry
Inefficiencies
Labor Pull
With Bahrain, virtually losing its midstream industry to other countries in the region (Oman, UAE); this is likely to
have a detrimental impact in terms of loss of jobs, GDP contribution and opportunity to develop a vibrant
downstream industry
Sources: D&B Research & Analysis.

525
With a foothold in Casting, Foundry, Forging and Powder Metallurgy;
Bahrain is perfectly poised to become a hub for manufacturing of high
precision Automotive & Engineering Components...
The Kingdom has a distinct competitive advantage to capitalize on its existing footprint across the following segments to
develop itself as a regional hub for auto components manufacturing:
 Casting / Forging: Aluwheel, Midal Cables (Currently Aluwheel manufactures alloys based only on Low Pressure Die Casting)
 Foundry: Bahrain Industries, National Foundry, Tech Cast
 Powder Metallurgy: Bahrain Atomizers
Prevalent market gaps across these segments (at midstream level) include:
Gravity Die Casting, High Pressure Die Casting, Strip Casting, Die Forging & Hammer Forging and Powder Metallurgy products
for Aluminum alloys. These segments / technologies have widespread applications in high precision automotive parts and
engineering components
• Bahrain has strong potential to become a low cost base for aluminum based high precision Auto parts & Engineering
Components as well as applications in fabricated aluminum auto accessories
• This potential is further accentuated on the basis of:
 Shift of auto manufacturing from the high cost Western markets to low cost hubs, coupled with the expanding
footprint of the GCC in auto manufacturing through initiatives such as UAE‟s Auto City in Ras Al Khaimah
 Derived demand for auto spare parts (replacement market) in the region, particularly Saudi
• While Strip Casting also qualifies as market gap in the fact that it is virtually absent in Bahrain, however this is a high capital
investment industry, coupled with the high level of competitiveness of Chinese manufacturers in this segment (China‟s cost
of production is 20% less that that of local manufacturers)
• Similarly, Hammer Forging also qualifies as a market gap by virtue of being absent in Bahrain; however, the feasibility of the
segment is questionable on the back of limitation in market potential and competitiveness of Asia Pac and European players
• The production of industrial dies still remains a virgin area for GCC countries
 The aluminum based dies have widespread industry applications including die casting
 Currently these dies are largely imported from China and Korea

526
On the back of a key application area in solar cells, Atomizing could
witness exponential growth driven by increasing awareness and
demand for renewable energy across the globe…
The Kingdom has a noticeable existence in Aluminum Powder manufacturing through Bahrain Atomizer International. With
the annual capacity of 7000 tons, BAI is jointly owned by Bahrain Development Bank and Eckart Werke. Aluminum powder
has industry wide generic applications.
Solar cells is a key application area for Aluminum Powder which is used to produce thick film pastes that are applied to the
back side of silicon in the manufacture of solar cells. These pastes are screen printed on the back side of solar cells and then
metallized to create an electrical conductor that makes the cell work properly. With increase in global demand for solar
panels and photovoltaic cells, the demand for aluminum powder is expected to witness a spur.
Global non-conventional energy industry
• Worldwide photovoltaic installations increased by 5.948 MW in 2008, up from 2,826 MW installed during
the previous year. In 1985, annual solar installation demand was only 21 MW.
• Clocking global growth rate of 30% per annum for last 15 years, cell production in China and Taiwan
reached 3,304 MW in 2008, with Europe at 1,729 MW ahead of Japanese production at 1,172 MW in 2008.
GCC non-conventional energy industry
• GCC utilities are under extreme strain with demand for water and power at a record high and still rising
• Authorities are being forced to review Middle East energy policy and are seeking alternative sources of
renewable power in line with a global movement to reduce green house emissions.
• Abu Dhabi's Masdar City is to spend US$2 billion on producing solar technology (Abu Dhabi, the home to
the International Renewable Energy Agency (IRENA), hosted World Future Energy Summit in Jan‘ 2010)
• Saudi Arabia and Qatar are looking to position themselves as centers for solar energy research and
thereby become a net exporter of renewable energy
• On the back of such developments and demand for renewable energy, there is potential for Bahrain to
capitalize on its footprint and for the BAI to virtually double its capacity,
Sources: Industry Reports, www.middleeastelectricity.com, www.alcoa.com, D&B Research & Analysis

527
With its current footprint in Casting as well as feedstock for wires and
cables; Bahrain (Midal Cables) could consider capitalizing on forward
integration synergies to get into Wire & Cable manufacturing …
Aluminum wire rods and bars are manufactured by several different processes. The largest application for wire, rods and
cables is electrical and telecommunication transmission. Midal Cables currently manufactures wire rods and overhead wire
conductors in Bahrain with the capacity of 60,000 TPA. The wire rods are the thickest form of wire, from which wire and
cables are manufactured.
Aluminum and Electrical

aluminum alloy ingot Feedstock for and
Aluminum wire and
and molten metal: cables Telecom
Midal Cables
Alba and Bamco applications
Bahrain currently does not manufacture wires and In view of the potential for wire
cables. Midal cables currently manufactures the rods, UAE based wire rods major
feed stock required for manufacturing cables and has firm plans of expanding in the
wires. The demand for wires and cables, driven by value chain partnering with EMAL.
the infrastructural growth in GCC translates into The proposed expansion plan is
potential for forward integration. Midal Cables can estimated to increase its capacity
potentially expand along the value chain to from 30,000 TPA to 100,000 TPA.
manufacture cables and wires themselves.

528
With a well established presence in Rolling Mills (GARMCO);
there are pockets of opportunities in Rolling midstream and
downstream applications that Bahrain could capitalize on …
Aluminum rolling is the process where aluminum is passed between rolls under pressure to make it
thinner and longer in the direction in which it is moving. This simple process is the basis for aluminum‘s
most widely used forms: plate, sheet, and foil. Bahrain‟s current footprint extends to a rolling mill
with the capacity of 165,000 TPA. The rolled products are very generic in nature and have industry
R o l l i n g
circles and foils

Plates, sheets,
wide application. GARMCO currently produces cold rolled coil, aluminum circles with various gauges,
alloys and tempers.
The basic rolled products are further rolled to produce foils. Bahrain extended its footprint in the
area of foil manufacturing through forward integration initiatives by rolling major, GARMCO.
The current production facility produces 25,000 tons of foil per annum.
A l u m i n u m
The fin stock is a derivative of rolled aluminum used in automobiles and air conditioners. The fin stock
is currently manufactured in Bahrain by GARMCO through their foil mill. However, in absence of down
stream application industry such as auto and air conditioners manufacturing, the sector has limited
local demand.
GARMCO‟s existing footprint is limited to:
• Hot & Cold Rolling Mill: 0..25 to 3.2 mm thick cold rolled coil, sheet & circles; feedstock for foil
and fin manufacture
• Foil Mill: 12-220 micron thick, 100 to 800 mm wide

529
…Such as Can Stock, Litho Sheets and Finstock; which have
further downstream applications in beverage can, printing plate
and auto component manufacturing respectively …
PREVALENT GAPS (AT

REMARKS / DOWNSTREAM APPLICATIONS
MIDSTREAM LEVEL)
• Manufacture of Can • Application in the form of feed material for aluminum beverage can manufacturing
Stock (can body • Currently, there is no manufacturer of beverage can stock in the region
stock, coated can end • However, this gap is likely to be filled based on recent developments
stock and can tab  ADBIC (Abu Dhabi) has already announced plans of manufacturing canstock with a capacity
of 200,000 TPA (Current estimated regional market demand is 150,000 TPA)
stock)
 Maden in collaboration with technical partner Alcoa (with capabilities in Rolling) has
announced plans of getting into canstock manufacturing on the back of Maden‘s aggressive
plans of bolstering foothold in smelting
• Manufacture of Litho • Litho sheets find widespread application the printing industry (manufacture of printing plates)
Plates • Litho sheets are presently not manufactured across the GCC and hence pose a another strong
opportunity for Bahrain‘s midstream expansion (rolling)*
• Bahrain could look at tapping high growth countries in the region like Egypt and Qatar, which have
high potential demand for litho sheets derived from vibrant printing and publication industries
 In terms of publications, Egypt is forecasted to project a CAGR of 4% between 2007 and
2012, with Qatar projecting a CAGR of 2.6% within the same period
• Manufacture of • Aluminum tread plates offer strong, light weight, corrosion resistant flooring mainly for
Aluminum Tread Plates pharmaceuticals manufacturing, food and beverage and automobile industry
• Aluminum tread plates are currently not manufactured across the GCC. The driver industries such
as food & beverages manufacturing and retailing currently procure plates manufactured outside
GCC
• With the global annual expected volume of 150 thousand MT**, USA stands as the biggest
consumer of tread plates. With a considerable cost advantage Bahrain can compete effectively
with existing plate manufacturers.
*GARMCO has firm plans to initiate the Litho Sheets manufacturing plant as of January 2010. However, till the time the commercial production starts, Litho plates still remain a gap
**Source: MOIC 530
Within Coating / Cladding, prevalent market gaps at midstream
level further lead to gaps in manufacturing of construction feed
at downstream level …
PREVANT GAPS (AT

REMARKS / DOWNSTREAM APPLICATIONS
MIDSREAM LEVEL)
• Application mainly in supplying ready feed to the Fabrication Industry

• Manufacture of Coated Wide
• Limited market size in Bahrain combined with saturation in regional markets hinders feasibility
Aluminum Coils
 The regional market for aluminum coils is dominated and saturated by Chinese products
 Most traders (importers) in the region have their own exclusive coating facilities
• Application in honeycomb or sheet substrate with covering of real wood veneer
• Manufacture of Aluwood Panels • Limited market size in Bahrain combined with saturation in Middle East hinders potential
• Niche opportunity in high end wood finish panels with optimum route in the form of collaboration /
JV with Italian partner with capabilities in the segment (inward investment route)
• Application for food packaging industry, with potential to make inroads into Saudi
• The GCC food packaging industry is estimated to a US$ 2.8 billion industry, with Saudi accounting
• Aluminum foils
for 70% of total market.
• GARMCO currently supplies ‗mother coils‘ for conversion into foils to GCC based converters which
leads to opportunities for product cannibalization. The untapped market of lighter foils (below 20
microns) also poses an important gap.
• Printed Aluminum Laminates
• Diversified feed for Construction sector
• Honeycomb Aluminum Panels
• Potential across applications such as insulating panels
• Aluminum foam panels
• Diversified feed for Construction sector such as insulating panels (aluminum panels)
• Rigid Polyurethane Sandwich
• Relatively high level of saturation in the region
Panels
• Manufacture of lamitubes • Application in packaging of tooth paste, gels, creams, lotions, shampoos etc.

531
While the extrusion product market looks saturated within GCC, growth
of niche applications in heat treated extrusion remains an untapped
segment …
Extrusion is among the most widely used of the aluminum forming processes. It begins with the creation of a metal die that
precisely matches the profile of the shape specified by the designer. Aluminum billets or logs, produced from ingots, are
heated and forced under pressure through the die to form the required shape. Once the profile is extruded, it can be
further fabricated, cut to length, machined, drilled, punched, notched, bent, and assembled into a semi-finished product.
BALEXCO currently operates with a capacity of 24,000 TPA and it sells

only 15-18% of its output domestically. KSA constitutes a major market
accounting for 40% of the its output. However, the GCC countries and
especially KSA already house large ticket extrusion players such as
ALUPCO and Gulf Extrusions.
Saturation in
Competition Dip in the Overcapacity Aluminum
from other demand from (estimated to be Extrusion with
GCC based construction around 150,000 limited
players sector tons per annum) untapped
market gap
There is no manufacturer of Hollow profiles (derived The extrusion product market is driven by
demand from Construction) within the Aluminum Construction applications. According to industry
Extrusion industry. However, potential is limited due to experts 90-95% of the demand for extrusion
overcapacity in the region. At the same time, heat treated products is fueled by construction sector. The
durable extrusion products pose export opportunities for growth in demand fueled by construction segment
multiple diverse applications in aerospace, automobile, witnessed a slow down during year 2009.
oil and gas and general engineering industries.

532
With all necessary ingredients in place, downstream aluminum
industry poses a relatively underpenetrated industry presenting
significant unfilled gaps across various applications …
Sr. No. Downstream Industry Group Raw material Application industry Current footprint*
requirement
1 Transportation products: Bicycles, auto Rolling, casting, forging, Auto and auto components;
components, aircraft equipments etc. foundry, atomizing and engineering components
extrusion products
2 Packing products Rolled aluminum and foil Food and beverages
(*Aerosol Cans presents an opportunity, manufacturing, transportation,
where there are no manufacturers in the FMCG, Pharmaceuticals
region)
3 Construction products Extrusion, casting and Construction (Furniture, interior
rolled products decoration)
4 Household products (including furniture, Rolled and extrusion FMCG

clothes hangers etc.) products
5 Infrastructure products Extrusion, casting and Construction (Infrastructure)

rolled products
6 Wire and cable manufacturing Wire rods Electricity distribution and

telecommunication
7 Electrical equipment (e.g. electrolytic Rolled and extrusion Electrical components

capacitors) products manufacturing
In spite of housing the most developed downstream industry in GCC, Bahrain still consumes merely 10-15% of the midstream aluminum output. The
downstream industry holds great potential for development. Diversification from traditional low value add fabrication based manufacturing into high value add
industrial, infrastructural , automotive, engineering and consumer applications would be the logical road map for expansion of the downstream industry

*Bahrain‘s current footprint is based on current product portfolio coverage. It does not take in to account the demand assessment at either Bahrain or 533
GCC level.
Another segment where Bahrain‘s strategic location coupled
with weak regional footprint make it attractive, is aluminum
Recycling ….
Aluminum recycling is the process by which scrap aluminum can be reused in products after its initial production. The process
involves simply re-melting the metal, which is far less expensive and energy intensive than creating virgin metal. Bahrain‘s
footprint in aluminum recycling industry incorporates 5 major aluminum recycling players.
Aluminum recycling is looked upon as a major cost saver in the metal industry. Aluminum does not lose any
Cost saving of its properties in the recycling process. The energy consumption for aluminum recycling accounts for 5% of
its total production cost as against 30% in case of virgin aluminum. The recycling plants do not require major
investments and the process of production is relatively simple. The process avoids the cost of transport by
producing raw aluminum locally.
Environmental
Aluminum recycling saves considerable energy. Over the long term, even larger national savings are made
benefits when the reduction in the capital costs associated with landfills, mines and international shipping of raw
aluminum are considered.
Regional Regional footprint of Aluminum recycling is very generic. Recycling is looked upon as a very generic industry
footprint and specialized production facilities are almost absent.
Bahrain currently is a leader in producing virgin aluminum. Bahrain has a strategic location for Aluminum
Bahraini fit recycling. Neighboring UAE has the most sophisticated scrap collecting and re-exporting business. North
African Scrap market is highly penetrated by Dubai based players who ultimately ex-export it to traditional
scrap processing destinations such as China and India.
Recycling focused on secondary casting output (billets, ingots, alloys) possesses strong potential for growth.
Bahrain can capitalize on its existing footprint in Recycling to augment secondary casting produce. This has
further widespread applications across auto parts & components such as Auto Cylinder Heads

534
Global trends, proximity to scrap and robust demand potential
from the local industry, further accentuate potential for
Recycling….
As depicted, global aluminum industry is seen to

be moving away from primary smelting towards
recycling. Aluminum (unlike steel) does not lose
any of its properties in the process of recycling.
Countries like Japan, have taken a conscious
step towards cutting down primary smelting
capacities in favor of recycled aluminum. The
middle east aluminum recycling is still in infancy
and considered generic
The global aluminum industry is moving towards secondary aluminum as the

Global
prime source of raw aluminum. In the regions like US, EU and Japan,
trend
recycling output has exceeded the smelting output.
Bahrain has the strategic advantage of proximity to the scrap trading hub of
Supply of
Dubai. Dubai traded 46,000 metric tons of scrap aluminum in 2007. European
scrap
and North African scrap can be directly accessed through Dubai.
Bahraini midstream industry consumes nearly 400,000 tons of raw aluminum

Robust
every year. Robust demand coupled with availability of scrap makes Bahrain
demand the most feasible recycling destination.
Sources: Industry Reports, D&B Research & Analysis, Dubai Export Development Corporation,
International Aluminum Institute
535
…with enough impetus for Bahrain to expand its Recycling
footprint and position itself as a Regional Hub …
Foray into raw

material intensive
Constraints in segments such as
logistics High Pressure &
Gravity Die
Casting
Export potential to
Constraints inland Robust demand of
Constraints in Northern Gulf at
and natural local midstream
Energy Supply cost effective
resources industry
prices
Hindered supply of
liquid aluminum, Strong Market Drivers
ingot, casting slabs
and billets
Strong potential for Bahrain to expand footprint in

Recycling and position itself as a regional hub

536
Aluminum: A Snapshot of Prominent Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Aluminum sector
and is used to reflect the ‗absorptive capacity‘ of the Aluminum sector
Bahraini Aluminum sector value chain are termed as ‗market gaps‘
537
The Bahrain Aluminum manufacturing Sector - A Snapshot of
Prominent Bottlenecks, Gaps ….
MARKET GAPS
No apparent gap Market gaps in terms of segment being virtually
Smelting absent in Bahrain, however could potentially

High Extrusion present opportunities for existing players / new

Rolling
assessment
Wires & Rods

 Casting: Gravity Die Casting, High Pressure Die
Coating, Casting, Strip Casting
Medium Cladding 1 Atomizing  Forging: Die Forging, Hammer Forging
2  Atomizing: Powder Metallurgy products for
Recycling
Aluminum alloys
Downstream Casting, Foundry &  Rolling: Manufacture of Litho sheets, Can stock and
aluminum Forging Finstock
 Coating / Cladding: Manufacture of Coated Wide
Low Aluminum Coils, Aluwood Panels, Lacquered
aluminum foils, Printed Aluminum Laminates,
Market gaps in terms
Honeycomb Aluminum Panels, Aluminum foam
of under penetration panels, Rigid Polyurethane Sandwich Panels,
Lamitubes
Low Medium High  Extrusion: Aluminum Tapered Poles (street lights)
• Midstream segments have been depicted in the graph Infrastructure / Regulatory Bottlenecks (Disablers)
• Assessment of market potential is on the basis of potential of downstream applications of depicted
segments coupled with assessment of Bahrain‘s position (drivers, footprint, regional potential to
capitalize) on related opportunities
1. Potential for coating / cladding restricted to only niche applications • Hindered capacity in supply of liquid aluminum,
2. Potential for Recycling based on potential derived from secondary casting output, e.g. auto parts ingots, casting slabs and billets due to:
(auto cylinder heads)  Absence of regulatory attention
 Limited energy availability
 Constraints on land availability
 Lack of marine transportation facilities
538
Relative Sub-Sector Prioritization: Aluminum
the Aluminum sector as a ‗market gap‘
(Priority Index)
539
scores

Notes:
formation issue

and C
542
Coating / Wire rods

cladding Recycling
Rolling Atomizing Casting,

Downstream forging,
aluminum foundry
20% 52% 57% 62% 67% 100%
Priority Index
Notes:


Key Sector Growth Drivers: Aluminum
Increased awareness about

emission, mandating
recycling
……………
Increasing industrialization of GCC
Increasing regional footprint In
countries shooting the demand
manufacturing of automotive
for aluminum across
and engineering components
infrastructure applications and
Construction
Aluminum Manufacturing
Growth Drivers
Natural population growth driving First movers advantage in almost

demand for household every segment in the Bahraini
products Aluminum industry
markets

544
Manufacturing: Other
Manufacturing & Allied Services
Textile, Apparel & Leather
Ship & Boat Building
Auto & Auto Components
Electrical Equipment
545
Industry Map for Textiles, Apparel, and Leather and Related
Goods Manufacturing
Commodity Brokers Manufacturers of
and Farm Textile Machinery
Cooperatives and Machinery Parts
Natural Fibers (cotton, wool, etc.)
Textile Mills
Synthetic Fibers (olefin, polyester, etc.)
Chemical
Manufacturers Textile Manufacturing Process and Output at Each Step
1. Conversion of raw materials into yarn 2. Conversion of yarn into fabric 3. Dyeing and finishing of fabric 4. Production of simple consumer products
Consumer Products
Yarn Unfinished Fabrics Finished Fabrics
(rugs, carpets, etc,)
Wholesaler/Retailers for
Home Furnishings and
Other Textile Mills Floor Covering Stores
(for further finishing)
Automotive,
Wholesaler/ Healthcare, Apparel End Consumer
Distributor/ Retailer Pharmaceuticals and Manufacturers
Other Industries
By Product Nature By Business Model

End Consumer
Integrated
Knitting MIlls
Manufacturers
Finished Apparels
Cut and Sew Contract
Operations Manufacturers
Licensees Finished Apparels
Manufacturers of Wholesaler/
Suppliers of Animal Plastic and Rubber
Machinery for Leather Distributor/Retailer
Hides and Fur Skins Manufacturers
and Related Products
Leather Tanneries/
Manufacturers of Leather End Consumer
Companies Dyeing or
and Related Products
Dressing Furs
By Products By Business Model
Integrated Finished Goods

Footwear Manufacturers
Wholesaler/
Finished Goods End Consumer
Distributor/Retailer
Luggage,
Handbags and Contract
Purses Manufacturers
Other Products –
Finished Goods
non metallic watch Licensees
bands, belts, etc.
Business Services (like advertising), Financial Services (Banking, Insurance), IT, Education, and
Sources: Hoovers, D&B Research & Analysis explicitly shown
Transport and Logistics will have inter-linkages across the industry value chains and have not been
546
Garment, textile and leather goods manufacturing account for
only 0.52% of Bahrain‘s GDP…..
Gross Value Added (in BD million) - 2008

Leather and
Textile Apparel Related Products Total
Gross Value Added (GVA) 1.02 37.35 4.33 42.70
GVA as a % of Manufacturing GVA 0.09% 3.26% 0.38% 3.73%
GVA as a % of GDP 0.01% 0.45% 0.05% 0.52%
• The market size for textile and garment manufacturing in Bahrain is estimated to be around BD 150-200 million (in 2008)
o Out of this, garment manufacturing accounts for BD 40-50 million
• Overall, textile, apparel and leather goods manufacturing industry contributed only 0.52% to the total GDP and 3.7% to the
manufacturing sector.in 2008
NumberofofTextile
Number Textileand
andApparel
ApparelManufacturers
Manufacturers Currently, there are only 3 garment factories and 3
35 textile manufacturing companies* in Bahrain as
29 compared to 200 textile units in Saudi Arabia
30
25
19 The Bahrain textile and apparel industry has been facing a major
20
downturn witnessing the closure of a number of companies
15
(between 2002 to 2005) due to :a delay in signing of the FTA
10 7 with the US, coupled with the lifting of the Multi-Fiber
6
arrangement (MFA)
5
0 Consequently, Bahrain has been losing to low-cost countries,

2002 2004 2005 2008 such as Bangladesh, Cambodia and Vietnam
** The leather goods manufacturing landscape in Bahrain is made up of a few small workshops

547
Textile manufacturing is a 100% export market focused on
home textiles, denim fabric and greige fabrics …
Competitive Scenario of the Textile Manufacturing Industry (Market Shares of Key Players)
Market Share of Key Players in Textile Industry
Manama Textile
Mills
20%
Celtex Weaving
Westpoint
20%
Furnishings
60%
Areas of Work End Products End Customers/Markets
Westpoint Integrated player – from Home Furnishings – bedsheets, US retailers, such as Walmart, JC
Furnishings spinning to stitching comforters, quilts, duvets Penny
Manama Integrated player – from Denim and Greige Fabric Companies in the US and Europe
Textile Mills spinning to finishing and greige fabrics to Westpoint
Celtex Specialized player into Greige Fabrics Textile companies in the US,
Weaving spinning and weaving Europe, and Westpoint
Textile manufacturing is a 100% export market focused on home textiles, denim fabric and greige fabrics

548
The opportunities in Bahrain lie in vertically integrated textile
manufacturing companies producing standardized products that
attract high custom duties for non FTA export countries …
The key advantage that Bahrain has is its FTA with the US. In the absence of FTA, there are a number of
product categories that attract high duties from the non FTA exporting countries to the US.
Moreover, the production of these items is less labor intensive as compared to garment textile
manufacturing.
Scrubs for the Healthcare • Scrubs attract a duty of 33% in the US and are a very
Industry standardized product Currently, not being
manufactured in
Bahrain
• These products require minimal customization and
Standardized Products, such as
economies of scale can be generated; thereby offsetting
towels, linen, etc.
relatively higher costs of labor in Bahrain
• The denim fabric attracts an 18% duty in the US.

Denim Fabric • Manama Textile Mills is already producing denim fabric in
Bahrain Offer scope of
expansion for
existing players
• Less labor intensive as compared to garment textile or entry of a new
Home Textiles manufacturing. Low cost countries, such as Bangladesh, are player
not focusing so much on this category
• WestPoint is the only player into home textiles in Bahrain

Specialized weaving and garment textile manufacturing
businesses do not offer much potential in Bahrain…..
Gaps/Opportunities - Not Attractive for Bahrain to consider entering / expansion of current presence
• A weaving player will not be able to generate economies of scale due to limited market size
Specialized (mainly West Point)
Weaving Players • The trend worldwide is for manufacturing and export of finished textiles and not for semi-finished
items.
• Bangladesh has a well-established low-cost textile manufacturing industry with significant

economies of scale and an export footprint in the US and Europe
• Garment textile manufacturing is more labor-intensive as compared to home textile manufacturing
o A garment textile manufacturing factory typically employs 3,000-4,000 people and generates the
Manufacturing same amount of output as a home textile manufacturing factory employing 1,500-2,000 people
Textiles for o Thus, Bahrain would not be able to compete with the low costs of labor in Bangladesh.
Garments • Additionally, domestic players do not have an opportunity to cater to domestic garment
manufacturers due to the exception of TPL (Tariff Preference Levels)** in the FTA with the US
(thereby incentivizing domestic garment manufacturers to import from the low cost countries
and capitalize on the export potential offered in the form of unutilized TPL capacity to the tune
of 50 million sq. m)
• The key input for synthetic textiles is polyester – which is being imported in Bahrain from China.
Manufacturing of • Saudi Arabia has two key synthetic fiber manufacturers - National Polyester Company (Al-Rajhi
Synthetic Group) and Arabian Industrial Fibers Company, which have the advantage of procuring polymer feed
Fibers from SABIC.
• However, it is not feasible for Bahrain to manufacture polyester as it is primarily being
manufactured in low-cost countries which enjoy significant economies of scale and have
**explained in a later section established domestic demand as well as export potential

550
Apparel manufacturing is a 100% US-export market segment,
primarily for staple kind of garments…..
MarketofShare
Competitive Scenario of KeyManufacturing
Apparel Players in Industry (Market Shares of Key Players)
Apparel Manufacturing Industry
Ambattur
Garments
25%
MRS Fashions
50%
Noble
MRS Fashions is the market leader in the apparel
Garments manufacturing industry with its key market being the US
25%
End Products End Customers/Markets
MRS Denim and cotton-based US retailers - JC Penny, Kohl‘s, Macey‘s ,

Fashions garments Walmart (only 10% of their output) Only the staple type of
garments are produced by
Noble Synthetic (polyester-based) US brands these players in Bahrain
Garments jackets and bottoms
Ambattur Synthetic garments US brands, such as GAP
Garments

551
There is an untapped opportunity to export 50 million sq. m. of
garments to the US by utilizing the advantage of using imported
low-cost textiles…..
Bahrain‟s key advantage for textile and garments industry is its The other advantages for the
textile and garment
FTA with the US
manufacturing industry are the
• As per the FTA, there are no customs duties on “originating goods”*.
low cost of energy, proximity to
Europe and absence of a
• As an exception to the FTA, the agreement provides “tariff preference levels” (TPL) for 65 burdening tax regime.
million sq. m of garments from Bahrain whereby these garments will be exempt from
custom duties in the US, even if the textile inputs into these garments are not locally produced
in Bahrain.
Total Utilization of TPL/year

There is an opportunity for Bahrain-based garment
manufacturers to produce and export to the US approx. 50
MRS Fashions: 5-7 mn sq. m. million sq. m. of garments manufactured using low-cost textiles
Noble Garments: 3-4 mn sq. m. from countries, such as Bangladesh.
Ambattoor Garments: 3 -4mn sq. m.
The advantage in the form of the unutilized export potential that
Total utilization of TPL: 13-15 mn sq. m. Bahrain has can only be capitalized through active government
intervention and capacity expansion through funding
Advantage for Garment Manufacturers

Ability to manufacture garments at lower costs by importing cheaper textiles and
*A textile or apparel qualifies as an originating good
only if all processing after fiber formation, such as
still be able to get the benefit of exporting to the US without custom duties.
yarn-spinning, fabric production, cutting, and
assembly, takes place in Bahrain or the US or both. Disadvantage for Textile Manufacturers
Loss of opportunity to manufacture textiles to cater to the requirements of domestic
garment manufacturers.

552
Opportunities in Bahrain are in staple garments with lower labor
intensity as well as synthetic garments that attract high custom
duties from non - FTA exporting countries to the US …
Bahrain faces tough competition from low cost countries such as China, Bangladesh, Vietnam etc. due to
higher labor costs in Bahrain. Therefore, there are limited opportunities for Bahrain.
• Bahrain can have an advantage over the low cost countries

Staple Garments requiring only in the staple kind of products requiring lesser amount of Currently, not being
less labor content labor and a higher proportion of automation e.g. leggings, manufactured in
knitted products, athlete body suits, etc. Bahrain
• US has a 33% duty on imports of these goods from other Offers scope of
countries (with whom it does not have the FTA). expansion by
Synthetic fabric garments existing players
• The potential in this segment is reflected by the fact that two or entry of a new
out of the three players in the industry have started player
producing synthetic garments
• A number of low cost countries (like India) are producing cotton garments.
It is not feasible to support
additional players in the • Cotton garments will not be an attractive area for a new player since MRS has a
cotton garments category strong foothold in this segment (first mover‘s advantage), making it difficult for a new
entrant to replicate this (well established client base, economies of production)

553
There is no manufacturing of leather goods taking place in
Bahrain currently; with semi automated manufacturing across
leather products offering room for entry and / or capacity
expansion…..
Currently, there are no companies producing leather and related products in Bahrain.
There are only a few small workshops, such as Super Fine Shoe Factory, manufacturing shoes.
These workshops import leather from other countries (such as India) since there are no leather tanneries in Bahrain.
Although there were a few Bahraini players in this segment a few years back, however these have closed down due to
challenges faced by the sector:
• The primary challenge for the sector is the lack of government support for capacity expansion and exports
• Although the FTA applies to the sector, players have not been traditionally receiving impetus in the form of funding to fuel
capacity expansions
• There is regional competition from Syria, Egypt and Iraq amongst the export markets
• Foray into leather goods will have to be based on the strategic intent of the Government, with inputs (leather, technology,
expertise, etc.) being brought in from other countries.
• Leather goods manufacturing is a capital intensive industry and Bahrain can look at semi-automated operations across
various categories – shoes, belts, bags, leather upholstery, etc.
• Further strategic intent needs to be backed by preferential procurement from local manufacturers, in order to encourage
the industry

554
555
Industry map for ship and boat building and repair comprises
manufacturers, repair service providers and dealers for ships
and boats
Some manufacturers also
do repair work, operate
marinas, and sell auxiliary
equipment
Marine Equipment
Manufacturers of
Manufacturers and Boat Dealers End Consumers
Boats
Service Providers
Components and Other Inputs

Exclusive Boat
Dealers
Fiberglass,
Aluminum and Manufacturing of Boats
Resin, Gelcoat,
Steel
Epoxies
Dealers Dealing
Power Trains with Multiple
Boat Engines (propellers, Brands
exhausts)
Design and
Engineering
Molds and
Generators
Fixtures
Marine Glazing Manufacture of Could be sub-

Electrical conracted to
(e.g: customized Hull and Other
Equipments 3rd parties
windows, doors) Parts
Timber and Upholstery and

Furniture Furnishing
Assembly of
Components
Installation,
Other Marine
Engineering and
Equipments
Other Services
Trials and
Finishing
Ship Building and

Manufacturing Process of Ships
Repair Yards
Manufacture & Fishing Fleets, Cruise Lines, Cargo

Repair of Shipping Companies, Barge
Commercial Ships Operators, Ferry Operating Entities
Manufacture &
Repair of Military Government
Ships

Business Services, Financial Services (Banking, Insurance), IT, Transport and Logistics and Education
556
will have inter-linkages across the industry value chains and have not been explicitly shown
The market for boats is growing in Bahrain and the region as
reflected by the increase in capacity by key industry players …
Al Dhaen Craft
Al Dhaen is the biggest boat manufacturer in Bahrain and plans to double
its production between 2007 and 2010
It manufactures a broad range of boats including pleasure boats, commercial

(fishing) boats, and military/patrol boats. It also offers a huge range of
branded boats and accessories produced by leading manufacturers, such as
Mercury, Suzuki, Bradley, Mylon , etc.
Additionally it also exports to the US, Europe, South America, Asia and other
GCC countries.
In addition to these key players, there

AJM Kooheji are a number of small players producing
10-15 fishing boats every year to serve
AJM Kooheji produces a range of pleasure and fishing boats and produces
the local market.
15-20 boats every year.
It is the oldest boat manufacturer in Bahrain. Over the years, it had scaled
down manufacturing, but is now considering refocus
In addition to distribution of accessories from various manufacturers, it is one

of the region‘s first and the largest distributors of Yamaha‘s land and marine
equipments. It also acts as a distributor of boats for international brands, such
as Princess and Rodriguez Yachts

557
Pleasure boats are expected to register high growth leading to
a need for expansion by current players or entry of new
players…..
Al Dhaen Craft, AJM Kooheji and Gulf Craft (UAE-based company with only distribution in Bahrain) are the key players catering to the
demand for pleasure boats in Bahrain. Additionally, there multiple international brands that are distributed in Bahrain.
There is expected to be a high demand for pleasure boats (fishing and otherwise) leading to a need for expansion by current
players (already taking place) or entry of new players
Growth Drivers for the Pleasure Boat Market
• Increase in number of expats with a lifestyle preference involving sailing / water sports
• Increasing adoption of sailing as a sport / hobby amongst the younger local population
• Development of new islands, such as Amwaj Islands, Durrat Al Bahrain with a total 4,000-5,000 houses being built in these
developments.
• The BD 0.94 billion Marsa Al Seef project, one of the largest marina developments in the Middle East, off the coast of Bahrain, is being
pursued by real estate development company GREDCO (development manager working on behalf of Global Banking Corporation)
o The addressable demand from these developments is estimated to be at least 10% of the new houses being built i.e.
400-500/year (most buyers of the residential development in Bahrain are likely to be nationals of other Gulf countries with few
Europeans looking for second homes, distinctly different from investors in Dubai‘s residential market)
o According to leisure marine distributors, in the past the maximum number of imported boats in the good years has only been
about 30; however, with the new waterfront developments, the market over the next four years for both boat and engine sales is
expected to show substantial growth
o Key player are seeking more boat brands to represent in Bahrain
• Increasing demand in the Middle East with the development of Palm islands, Pearl islands (Qatar), etc. Although Dubai based
players are already catering to the regional demand; Bahraini players can look to capture at least 15-20% of the market based on
incremental demand forecasted in the near term

558
Commercial fishing boats and military boats also have an
expected high growth; however the latter category poses high
entry barriers …..
The future demand for fishing boats is limited to the niche potential offered by the
Commercial Fishing Boats replacement market
There are a number of small fishing boat manufacturers (such as Durrazi, Jaffer, etc.) present in Bahrain, who are
competing on low price (although lower quality) with Al Dhaen and AJM Kooheji
The expected demand for fishing boats is limited potential offered by the replacement market, on the back
of a trend of ageing observed within the existing fleet
Commercial Military Boats Military boats is a strong growth area but has high entry barriers.
Al Dhaen Craft is the only player in Bahrain in this segment. It has recently entered this segment by fulfilling
manufacturing contracts for Iraq, Saudi Arabia, India, Kuwait and Miami Coastguard authorities. The company views
this segment as a strong growth area / opportunity on the back of winning long term contracts
However, it is difficult for a new player to enter this segment due to high level of technology, certifications,
approvals etc. that are required for manufacturing military boats.
Service and spare parts for boats are provided by the manufacturers as part of their after sales service and no apparent
gap is observed within this component of the value chain

559
Increase in demand for boats in Bahrain in turn drives the need
for more marinas and marina management companies…..
There are three marinas1 in Bahrain with a total of 950 berths.
• Marina Club: 400 boats

• Al-Bandar resort: 300 boats
• Yacht Club: 250 boats
Current and Future Gaps (considering growth in boat sales by 400-500 per year)
1 There will be a need for more parking spaces/marinas for the boats since:
• Durrat Al Bahrain is yet to be become operational and inhabited
• Amwaj Islands is considered expensive
• Marina West has a very small planned parking space (60-70 slots for 2,000 houses)
2 There a prevalent gap in terms of professional Marina management companies.

The current trend in Bahrain is for marinas to be managed on an unprofessional /
unorganized basis by contractual staff hired by the developer, as against professional
marina management companies (as in the West as well as Dubai e.g. Art Marine LLC
and Island Global Yachting).
1 A marina is defined as facility for personally owned sailboats and yachts, typically offering docking, fuel, off-season out-of-water storage and other services;
sometimes with a restaurant.

560
There is scope for players to enter into boats & accessories
distribution, as well as local manufacturing…
Other Gaps / Opportunities (with Minimal Bottlenecks)
Al Dhaen and AJM Kooheji are both into distribution of boats, yachts, jet skis, etc. and accessories for
key OEMs (Original Equipment Manufacturers) / brands
Accessories and
Boat Distribution
However, there is a huge gap at the distribution level wherein a number of brands of boats and
accessories are not currently represented in the region including Bahrain and Dubai
Additionally, there is an opportunity for accessories dealers, especially within the modern retail formats –
hypermarkets, etc.
Manufacturing of aluminum pipes (leveraging Bahrain's strength in aluminum) is identified as

Aluminum Pipes another gap on the back of increased play in pleasure boat manufacturing, with demand for pipes
for new boats as well as for the replacement market (products to be sold through distributors/retailers
such as AJM Kooheji).
Currently, although a few unorganized players manufacture such pipes in the GCC, industry need for
higher quality aluminum pipes and related products is mostly being met through imports from the US
(directly sold to boat manufacturers / distributors)
These products are not highly technical and will have demand from the boat manufacturers in Bahrain
as well as UAE (which is the boat manufacturing hub in GCC). Due to Bahrain‘s well developed
aluminum ecosystem, it is estimated that Bahrain will be well placed to meet this demand for high quality
pipes. However, as with other downstream aluminum products, manufacturing of pipes is a relatively low
margin business, implying that feasibility and market capture will be contingent on volume and price play

…of certain lesser technology-intensive inputs for boats
manufacturing …..
Other Gaps / Opportunities (with Minimal Bottlenecks)
• Fibreglass is currently being imported from US, Europe and Japan. The smaller players also buy low-
cost fiberglass from China
Fibreglass • There is no single player in the GCC currently manufacturing fibreglass, although there are several
Manufacturing players who manufacture products from fibreglass
 The current annual demand for glass fibre reinforcements in the Middle East (including the GCC,
Egypt, Iran, Jordan with negligible demand from Syria and Lebanon) is around 176 000 tons/year
and is expected to grow to 300,000 tons/year by 2015 (CAGR of 8% from ‟08-‟15)
 Historical growth of demand in the Middle East and future projections clearly show that demand is
growing at a rate almost double the current global industry growth of 4-5%, which is in tune with
the growth trend of composites in the principal emerging economies
 The principal market for fibreglass comes from the construction industry (CAGR of 18% from
2002-08 in Bahrain), closely followed by the automotive and marine sectors
 Has a myriad of applications including awnings, canopies, indoor swimming pools, sanitary ware
products, patio covers, lighting devices and doors, storage tanks, etc.
 increased play in the boats manufacturing segment within the GCC
• There could be potential opportunity for Fibreglass manufacturing to meet the demand arising
from fibreglass product manufacturers throughout the Middle East who cater to various
industries (construction, marine, auto). This is based on whether a local player can achieve
economies of production and scale to offer competitive pricing
• The BIIP is already planning to intiate meeting the Middle East demand by attracting companies such
as Abahsein Fibreglass (initial production of 30,000 tonnes / year, expected to increase to 200,000
tonnes / year in 2012)

There are gaps in manufacturing of certain technologically
advanced inputs; however foray into such segments is based
on import of technology, expertise, skills and investment...
Other Gaps (with High Bottlenecks / Low Competitive Advantage for Bahrain)
• There are gaps in terms of local manufacturing of accessories in Bahrain, with 90% of
Manufacturing of accessories currently being imported from France, the rest of Europe, US, China, etc. Some
Accessories and of these product categories are:
Equipments o Fuel Tanks (plastic and aluminum)
o Electrical equipments, such as marine batteries, generators
o Refrigeration systems
o Navigation systems, etc.
• Manufacturing of most of these requires heavy investments, certifications and approvals

from BIC (US).
• Additionally, the Middle East has a limited capacity market for marine electronics (the region
accounts for only 1% of worldwide sales of Rayler Marine).Consequently, there are no
manufacturers of such equipment even in the UAE
• A feasible route to foray into the manufacturing of such equipment (based on strategic intent)
would be through inward investment with attraction of technical know-how and expertise to set up
base in Bahrain
Jet Skis have a high demand in the GCC; however they are currently not being
manufactured in Bahrain or anywhere across the GCC (including UAE).
Manufacturing of However, Bahrain does not offer any apparent competitive advantage in this regard, especially
Jet Skis given the fact that manufacturing of Jet Skis is a highly technical and sophisticated process
requiring a steep experience curve

ASRY and BASREC are the two prominent players in the ship repair
segment, with no apparent gaps in the industry; the competitiveness
of Bahrain to foray into ship building is deemed to be low…..
Bahrain does not have the requisite competitiveness to foray into the ship building industry. Consideration will have to be based on strategic
intent with the entire spectrum of inputs - material, labor, supervision, technology, etc. - brought into the Kingdom through the inward
investment route. However, ship repair remains buoyant with the presence of ASRY and BASREC
Arab Ship Repair Yard (ASRY)
ASRY caters to medium and large-size ships.
• In 2007 alone, the yard handled over 145 vessels, 121 of which were in the 70,000 dwt range
• These marine resources are backed by large workshops, equipped to handle every kind of repair work required by modern ships, including diesel
engine repair, electrical and mechanical installations, pipe work, steel and boiler services, and blasting and painting of internal tank surfaces
• Demand for dock spaces has been buoyant with over 65 bookings in 2008
• While the Arab and European markets have been contributing to the tune of around BD 11million each, a large contribution to ASRY‘s sales has
come form the Americas (with sales by more than 400% BD 8.5 million in 2008)
• Demand for specialist services to offshore vessels remains high, with contracts completed on offshore lay barges, drill rigs and support vessels
o This market was due to grow dramatically with the recent opening of two new slipways being targeted at offshore supply boat operators
o The new facilities are capable of handling all such requirements for specialist vessels, ranging from supply boats through to anchor handlers,
pipe-carriers, crew boats and DSVs and of handling a maximum vessel length of 140m, a breadth of 20m and a displacement of 5,000 tons -
this facility will significantly increase ASRY's ship repair market share for small and medium size vessels of around 15,000 dwt
o Additionally, the commissioning of the slipways has enabled ASRY to take on the repair of more 30m to 80m workboats
• The demand for blasting and painting has remained high (1.2m sq/m of painting and260,000 sq/m of blasting undertaken in 2008)
• Boiler repairs have reflected an increase in demand (recording an increase of 100% in 2008 over 2007), while steel repairs have remained consistent
with a yard of this size
Bahrain Ship Repair and Engineering Company (BASREC)

• BASREC provides a full-service facility for a wide spectrum of marine repairs, specializing in oil industry support vessels, ocean-going tugs, fishing
vessels, barges and dredgers. It primarily caters to small-size ships
• The yard also performs onshore steel fabrication and runs a successful container repair facility within the Mina Salman container terminal.
Demand for ship repair services has been buoyant on the back of large spending by European operators, with demand primarily coming from
specialist services to offshore vessels, blasting & painting & boiler repairs. With no apparent gaps in the segment, ASRY and BASREC are
perfectly poised to capitalize om incremental demand in high growth services

564
However, there are gaps in the support activities for the ship
repair industry for which Bahrain can consider attracting
companies…..
There are certain support services for ship repair that are outsourced to
Support Activities for Ship Repair Industry
contractors in Bahrain and outside.
ASRY has been developing its own infrastructure attracting companies to set up base in its repair
yard over the years to cover the shortfall of specialist companies existing in Bahrain.
Support Activities
with No Gaps Some of the activities for which it has introduced recognized specialist contractors** to
bridge prevalent gaps are:
• Instrumentation / Automation (UAE based Topaz)
• Hydraulics (UAE based Hydrolink)
• Lifeboat / Liferaft repairs (UAE based Solas)
• Fuel injection
• Turbo chargers
• Boiler repairs
• Reconditioning of machinery plants
**These operators also offer services to BASREC
There are a number of other activities where there is a need to establish a sound and
reliable specialist contractor base in Bahrain, such as:
• On board air conditioning and refrigeration (current players do not operate or provide the
Support Activities standard of specialist activity required)
with Gaps • Repair and Installation of Navigation Equipment
o There are a few generalist companies in Bahrain that provide these services, such as
Sultan, Wilhemsen, Fazz, etc. However, these companies do not provide the array of
specialized services required for high quality ships e.g. major overhauls of equipment
including the coordinating of support trades as required,design and full sytem installations

565
Although there is a gap in terms of local stockists for material &
equipment, lack of a strong supply chain coupled with low
volumes, do not support entry of a new player …
All the material and equipment required for ship repair is imported from the Far East, Europe, Japan, Korea,
China, etc. There are limited stockists in the region for some of these input materials, primarily in Dubai, with virtually
no regional distribution capacity for materials including high quality ship plates, paints, machinery and electrical
equipments, pipe fittings and cables for ships.
ASRY has been trying to negotiate with steel plate stockists for consignments of steel plates to be held in Bahrain.
Market Gaps deemed low in terms of feasibility …
Setting up manufacturing plants for such equipment is not feasible as the market demand does not warrant
Bahrain to become a production hub.
Prevalent gaps in stocking, warehousing and distribution, can only be translated into opportunity if
operators are able to sustain margins and offer competitive prices with respect to existing regional and
global distributors from Dubai and China. Currently, lack of strong supply chain, coupled with low
volumes hinder the potential entry of a new player into this segment

566
567
Industry Map for auto and auto components

568
Automotive and auto components manufacturing contributes
only 0.28% to Bahrain‘s GDP…..
Gross Value Added (in BD million)
Auto and Auto Components

Market Size (Value of Production) 50.71
Gross Value Added (GVA) 23.07
GVA as a % of Manufacturing GVA 2.02%
GVA as a % of GDP 0.28%
• The market size (value of production) of automotive and automotive components was approximately BD 51 million
in 2008 and the gross value added from the sector was BD 23 million.
• It contributed 2 % to the gross value added from the manufacturing sector and 0.28 % to the overall GDP.

569
The only footprint that Bahrain has in the auto components
segment is in aluminum based alloy wheels through Aluwheel..
Aluwheel
Aluwheel has been in operation for 16 years and is 100% owned by Midal cables. The company originally started as a JV with
BBS. In 1996, 100% shares of BBS were purchased by Midal Cables.
Out of the 850,000 tons of Aluminum produced by ALBA, 30% is consumed by Aluwheel.
Core Areas of Operation of Aluwheel
Aluminum Alloy Wheels Aluminum Alloys

• Aluwheel is the only alloy wheel company in the • Aluwheel manufactures 95 different types of ingots
Middle East and 100% of its products are exported, and primarily markets them to wheel OEMs in
primarily to US, New Zealand and Europe. Europe.
• In the passenger car line; Aluwheel supplies 95% of its • Borbett (Germany) buys 3 different alloys from
output to OEMs; while in trucks 95% of its output is Aluwheel.
supplied to the replacement market.
• In total, the company produces 15,000 tons of ingot per
• For truck wheels (currently the focus of the company), year.
Aluwheel has end to end capabilities (including
painting), due to its acquisition of Swedish company,
(and its painting line) Tuna Wheels.
• For passenger car tyres, the alloy wheel is sent for

painting directly to the OEM

570
RUF is the only player in the automobile manufacturing in
however; has not been successful since it commenced
operation …
RUF Automobile
RUF Automobile‘s plant in Bahrain was the Middle East‘s first car manufacturing plant. It was opened in April 2007 by
the German carmaker RUF Automobile with an investment of BD 7.5 million.
RUF cars are based on Porsche 911 body shells and have a top speed of 360 kilometers per hour.
RUF manufactures only about 35 cars a year, which are purchased by car enthusiasts and race drivers.
The Bahrain plant planned to have limited production volumes at first, but it had plans to raise it to around 20 units
per year.
Uncertainty surrounds the proposed construction of Bahrain‘s 2nd production plant, which was set out in a MoU
between Meena Investments (Bahrain), Malaysia‘s LM Star and Premium Paramount International Automobile
signed in Q405. The plant was to manufacture China‘s DADI models.
There is negligible market potential envisaged for auto manufacturing in Bahrain, given the limited uptake
and appetite of the domestic and regional export markets for locally produced cars

571
However, with a foothold in Casting, Foundry, Forging and Powder
Metallurgy; Bahrain is perfectly poised to become a hub for
manufacturing of high precision Automotive & Engineering
Components...
The Kingdom has a distinct competitive advantage to capitalize on its existing footprint across the following
segments to develop itself as a regional hub for auto components manufacturing:
 Casting / Forging: Aluwheel, Midal Cables (Currently Aluwheel manufactures alloys based only on Low Pressure Die
Casting)
 Foundry: Bahrain Industries, National Foundry, Tech Cast
 Powder Metallurgy: Bahrain Atomizers
Prevalent market across these segments (at midstream level) include:

Gravity Die Casting, High Pressure Die Casting, Strip Casting, Die Forging & Hammer Forging and Powder
Metallurgy products for Aluminum alloys. These segments / technologies have widespread applications in high
precision automotive parts and engineering components
• Bahrain has strong potential to become a low cost base for aluminum based high precision Auto parts &
Engineering Components as well as applications in fabricated aluminum auto accessories
• This potential is further accentuated on the basis of:
 Shift of auto manufacturing from the high cost Western markets to low cost hubs, coupled with the
expanding footprint of the GCC in auto manufacturing through initiatives such as UAE‟s Auto City in
Ras Al Khaimah
 Derived demand for auto spare parts (replacement market) in the region, particularly Saudi

572
573
The Machinery and electrical equipments manufacturing map
comprises machinery manufacturers and electrical equipment
(batteries, wiring and wiring devices, etc.) manufacturers…
Industrial Machinery Manufacturing
Suppliers of High
Manufacturers of All Kinds Suppliers of Steel,
Speed Steel, Tungsten Wholesalers/
Machine Tools and Manufacturing Brass, Aluminum,
Carbide Distributors
Metal Presses Companies Copper, Plastic
Manufacturers of
Dies and Molds
Manufacturers of Manufacturers of Manufacturers of
Industrial General Machinery Special-purpose
Manufacturers of Automation and (motors, pumps etc.) Machinery
Manufacturers of Cutting Tools Control Products
Sale through either through wholesalers or directly
Material Handling
Equipment (Conveyors, Manufacturers of
All Kinds of Commercial Users
Storage Racks, Sorters) Machining
Manufacturing (Construction,
Centers
Companies Agriculture, etc.)
Specific Manufacturing
Applications
End Consumers
(E.g:Textile
Manufacturing.)
Electrical Equipment Manufacturing

Machine Tools, Automation Tools, Material Handling Equip.,
General and Special Machinery
Manufacturers of Suppliers of Plastic,

Suppliers of Wholesalers/ Aluminum, Copper, Wires
Home and
Aluminum, Steel Distributors/ End Consumer Nickel and
Commercial
and Plastics Retailers Wiring Devices
Appliances
Wires and Wiring Devices Manufacturers of

Wires and Wiring
Devices
Batteries
Batteries
Wires and Wiring Devices
Electronic Wholesalers/
Products Distributors/
Manufacturers Retailer
Suppliers of Lead,
Manufacturers of
Cadmium, Nickel
Batteries
and Mercury Transportation
End Consumer
Primary Batteries Wholesalers/

Battery Recycling Distributors/ End Consumer
Centers Retailer
Storage Batteries
Commercial Users
Batteries recycled by consumers (e.g. Telecom
Service Providers)
Manufacturers of
Wholesalers/
Lighting Equipment
Distributors/ End Consumer
Retailer
Manufacturing Process
Inputs from industrial machinery
manufacturing firms to electrical
Suppliers of Glass, equipment manufacturing firms
Manufacture of Automotive and and vice versa
Tungsten, Copper
Lamp Bulbs Other Industries
and Inert Gases
Assembly of Bulb
and Fixture
Business Services (like advertising), IT, Financial Services (Banking,
Suppliers of Steel, Insurance), Education and Transport & Logistics will have inter-linkages
Manufacture of
Aluminum, Copper, across the industry value chains and have not been explicitly shown
Lamp Fixtures
Brass, Plastics

574
Machinery and electrical equipment contributes only 0.65% to
Bahrain‘s GDP…..
Market Size (Value of Production) and Gross Value Added (in BD million)
Machinery and Electrical

Equipment Equipment Total
Market Size (Value of Production) 16.35 230.53 246.88
Gross Value Added (GVA) 7.03 46.31 53.34
GVA as a % of Manufacturing GVA 0.61% 4.05% 4.66%
GVA as a % of GDP 0.09% 0.56% 0.65%
• The market size (value of production) of machinery and electrical equipment manufacturing was approximately
BD 247 million in 2008.
• It contributed only 0.65% to the gross value added as a % of total GDP and 5% to the gross value added from the
manufacturing sector.

575
There are gaps in manufacturing and assembling of machinery;
however Bahrain‘s small market along with lack of cost advantage
and expertise restricts Bahrain‘s potential to focus on these
sectors…..
All the machinery and machine tool required by industries in Bahrain are currently being imported and no
manufacturing or assembling is being undertaken in Bahrain.
There are no manufacturers for machine tools in Bahrain.
Machine Tools The key company for machine tools, MidTech Engineering Solutions LLC, in Bahrain and the
Middle East, does not manufacture machine tools. The company only represents the major
global machine tools‘ suppliers (such as Cincinnati Machine Limited, Takisawa CNC Turning
Centers, Proth Surface Grinders, etc.) in the Middle East (incl. the UAE, Saudi Arabia, Bahrain,
Oman, Qatar and Kuwait).
Material Handling There is no manufacturing of machinery being undertaken in Bahrain currently.

Equipments, Special
and General The companies distributing machinery in Bahrain only sell or lease machineries manufactured
Machinery by global companies
Key factors affecting Bahrain‟s ability to compete are lack of a cost advantage (as compared to
multinational players who manufacture such machinery for various markets), competitiveness (in terms of
technology and expertise), Bahrain‟s small market and limited export potential. These factors restrict its
ability to focus on manufacturing or assembling of machine tools and machinery.

576
With some presence in manufacturing certain electrical
equipment; Bahrain could consider expanding its footprint in
this segment to serve the construction industry in GCC…..
Bahrain has a limited footprint in electrical equipment manufacturing. This equipment offers potential for exports to
the other countries in GCC to serve the construction industry.
However, Bahrain does not offer any key advantages over other players in the region to venture into this segment
In the GCC the only country that manufacturers electrical equipment (transformers, solar panels, etc.) is Saudi Arabia. The reason for this is
the large internal absorptive capacity within the country and almost 30 years of manufacturing experience. Apart from domestic use, Saudi
also exports this equipment worldwide.
Ameeri Industries is the only manufacturer of guardrails in Bahrain. It provides 30%-40% of

the volume required in Bahrain; the remaining 60%-70% is imported from Saudi Arabia, India &
Germany.
Guardrails
In the GCC – there are two guardrail manufacturers : 1 in Saudi and in the other one in Abu
Dhabi.
There is potential for guardrail manufacturing in Bahrain on the back of export potential to
countries in the GCC, including Kuwait, Qatar and Oman (estimated market of a total of BD 20-25
million).
The current demand in Bahrain is estimated to be BD 3-5 million. This demand is currently
being catered to by Saudi manufacturers (primarily Al Babtein and Omega who meet 80%
of the demand). The remaining demand is being catered by Ameeri Industries and a few other
Lightpoles
local players.
There is potential for Bahrain-based players to export to countries, such as Qatar, Kuwait and
Muscat, as well as to increase their own share in Bahrain. **This opportunity needs to be
analyzed further by assessing market potential as well as competitive dynamics.

577
With its current footprint in Casting as well as feedstock for wires
and cables; Bahrain (through Midal Cables) could consider
capitalizing on forward integration synergies to get into Wire & Cable
manufacturing …
Aluminum wire rods and bars are manufactured by several different processes. The largest application for wire, rods and cables is
electrical and telecommunication transmission. Midal Cables currently manufactures wire rods and overhead wire conductors in Bahrain
with the capacity of 60,000 TPA. The wire rods serve as inputs for wire and cables
Aluminum and Electrical

aluminum alloy ingot Feedstock for and
Aluminum wire and
and molten metal: cables Telecom
Midal Cables
Alba and Bamco applications
Bahrain currently does not manufacture wires and

cables. Midal cables currently manufactures the feed stock In view of the potential for wire rods,
required for manufacturing cables and wires. The demand UAE based wire rods company has
for wires and cables, driven by the infrastructural growth in firm plans of expanding in the value
GCC translates into potential for forward integration. Midal chain partnering with EMAL. The
Cables can potentially expand along the value chain to proposed expansion plan is
foray into cables and wires manufacturing supposed to increase its capacity
from 30,000 TPA to 100,000 TPA.

578
Moreover, with all the key components for wires and cables being
manufactured in Bahrain; wire and cable manufacturing offers
potential opportunity for new players/ expansion by Midal Cables…
Components of Wires & Cables
Manufacturing of Manufacturing of XLPE

LLDPE casings (low voltage wires) Cable Manufacturing
Imported from Saudi Local footprint: Kanoo
Arabia Plastics
Currently the entire cable requirement

of Bahrain is imported, with Low grade
Potential for BAPCO to integrate its Manufacturing of Aluminum coming from Turkey, Medium grade
petrochemical process to get into Core for Wires from UAE, Jordan and High Grade from
production of polephins as naphtha is a by Local footprint: Midal Cables Saudi Arabia
product of the petrochemical
processing/distillation process.
Enough potential demand and
substitution potential for Bahrain exists
However, there are significant barriers
Manufacturing of Palettes to „grow‟ independent cable
Bahrain faces in producing LLDPE,
Local footprint: Shafco manufacturers.
given the prevalence of a highly
competitive environment for polymers
Currently Kanoo‘s customers actually re-
in Saudi. This is coupled with Bahrain‟s
export back to Bahrain.
need to focus on upstream activities in
the Oil & Gas industry viz. exploration,
Gaps in Wires and Cables Manufacturing
drilling and primary refining Value Chain
Another potential opportunity is the manufacturing and export of cable trays. These are currently being manufactured in Bahrain by
Ameeri Industries and a few other players.
There is demand for cable trays in the GCC for Commercial & Industrial buildings. The GCC market demand is estimated to be a BD 2
million annually.
579
Bahraini switchgears assemblers already cater to almost 80% of the
local demand and there is limited export potential since there are a
number of local manufacturers in the GCC…..
Switchgears
Total demand for switchgears in Bahrain is approximately BD 10 million annually. With special
projects, it increased by another BD 10 million (according to industry leaders) in the past year. With
Market many planned projects in the pipeline, demand is expected to register an exponential increase
Scenario
Major players in the market are: BSLI (40%-50% market share), Ameeri (10% -15% market share);
Saudi players (20% market share) ; ABB & others (about 30% -35% market share)
Switchgears are only assembled in Bahrain.

Manufacturing
Scenario The switches are imported from big players such as GE and Schneider. Local companies (such as
Ameeri Electricals) manufacture the outside cover boxes or panels, which are made of steel
(imported from Saudi Arabia). Further galvanization (painting & coating) is also undertaken locally
Bahraini manufacturers already cater to most of the local demand and there is no export
Future potential since there are a number of local manufacturers in other GCC countries.
Potential
Switches are not manufactured in Bahrain since a certain manufacturing mass / volume is required
to attain profitability, in addition to the relevant expertise and technology

580
There are no potential opportunities in the battery market due
to the existing presence of big players to serve the
replacement market…..
Batteries (Automotive and Inverter)
There is a market for 4.5 million batteries in the GCC currently and is increasing at 4% every year.
Out of this Saudi players account for 3.4 million of the market volume
Market
Scenario
The battery manufacturers in Bahrain and in GCC are primarily addressing the battery
replacement market since there are no auto manufacturers in the GCC.
Gulf Power Beat is the only manufacturer of batteries in Bahrain. It has not currently started
Manufacturing manufacturing and plans to commence in 2010 with 30% of total capacity.
Scenario
The company plans to start producing two types of batteries - automotive & inverter
There is restricted room for new entrants due to:

• Capital investment constraints (large initial investment of about BD 8-10 million for 0.5 mn
Future batteries output annually)
Potential • Opportunity limited to replacement batteries where larger players already have an
advantage through ready distributors and tie ups with car dealerships, governments, etc.
• Not enough unmet demand in the market to warrant a new player

581
Addressing issues impacting Bahrainis‘ perceptions towards
working in the manufacturing sector can help resolve skills issues
in the industry…
The key problem related to skills is not the lack of courses / educational institutes; but the unfavorable attitude of
Bahrainis with regard to working in the manufacturing sector.
• The key roles offered in the manufacturing industry are those of technicians, machine operators, electricians, supervisors,
etc.
• In terms of skills, the industry needs people with basic technical skills as well as mechanical and production engineers.
However, it is difficult to employ Bahrainis due to their lack of willingness to work in the manufacturing industry
• There are a number of courses in engineering and other technical skills being offered by University of Bahrain, University
College of Bahrain, Arab Open University, Gulf University and BTI
• A number of companies provide training on their own. For instance, Alba has a dedicated Training Centre that provides a
range of managerial, technical and general development courses throughout the year
• The key problem for the industry is to attract and retain Bahrainis to work in a manufacturing environment. This is
true for all kinds of manufacturing industries. The number of Bahraini males employed in manufacturing dropped from
16,557 in 2002 to 13,290 in 2007 (a decrease of 19.7%). The number of Bahraini female manufacturing workers dropped
from 4,144 in 2002 to 2,817 in 2007 (a decrease of 32.0%).
• A key reason for this decline is that Bahrainis tend to opt for more comfortable jobs as compared to the tough working
environment in a manufacturing set-up

The need for technical people in manufacturing sector is
increasing; but the proportion of Bahrainis in the manufacturing
workforce is declining…..
Current employment trends in manufacturing Employment – Current Occupation Description
CAGR: 7%
Employer requirements for manufacturing sector

• While the number of workers employed in manufacturing grew
at a CAGR of 5% over 2002-07, the sector‘s share of Bahrain‘s
total labor force dropped from 16% to 13%.
• The employment in the manufacturing sector is dominated by
non-Bahrainis and their share is expected to rise from 74.6 %
in 2007 to 83.9 % in 2012.
• Employers in the manufacturing sector cited a need for strong

technical skills rather than soft skills such as communication
and sales skills.

Other Manufacturing & Allied Services: A Snapshot of Prominent
Bottlenecks, Gaps
• The following section summarizes and presents a snapshot of the Market Gaps identified within the Other Manufacturing & Allied
Services sector
and is used to reflect the ‗absorptive capacity‘ of the Other Manufacturing & Allied Services sector
Bahraini Other Manufacturing & Allied Services sector value chain are termed as ‗market gaps‘
584
The Other Manufacturing & Allied Services Sectors - A
Snapshot of Prominent Bottlenecks, Gaps ….

No apparent gap
High
Ship Repair Market gaps in terms of sectors have no /
Switchgears & minimal presence in Bahrain, however
batteries Market gaps in terms
of under penetration could potentially present opportunities for
Support
Medium services for Electrical
ship repair4 Equipments5 Boat Mfg3,  Material and Equipment stockists for ship
Textile &
Garment Mfg1,a Distribution of boats repairs (deemed to have very low potential
& accessories3 due to limited local demand, supply chain
Materials for Wires bottlenecks etc. )
Leather boat mfg3 & Cables2,b
Goods Mfg1,a Infrastructure / Regulatory Bottlenecks
Low (Disablers)
Marinas and marina
mgt companies3 Auto Components Mfg2,b
a. High cost of labor as compared to low-

Low Medium High
cost countries such as Bangladesh,
Pakistan etc.
b. Constraints in Aluminum ecosystem as
1. Growth on the back of FTA with the US and lower costs as compared to the US and Europe well as supporting regulation for
2. Growth on account of assessment of Bahrain‟s position (drivers, footprint, regional potential) proliferation of downstream plastics
to capitalize on downstream opportunities in aluminum
3. Growth on account of the growing boats market in Bahrain and the entire GCC with the coming up of
new developments and the growing expat population
4. Growth on account of existing presence of the ship repair industry and its growth due to development of the new port to attract more ships into Bahrain
5. Limited potential to export guardrails, light poles, etc. to GCC‟s construction industry (however overall lack of competitiveness as compared to Saudi)

585
Relative Sub-Sector Prioritization: Other Manufacturing & Allied
Services
the Other Manufacturing & Allied Services sector as a ‗market gap‘
(Priority Index)
586
Services
scores

Services
1. Other Notes:
formation issue
D&B Research 588

& Analysis 588
Services
and C
589
Services
Boat Building Auto Components

Textile &
Boat Bldg
Garment Mfg
Material Mfg
Other Support Wires & Distrbn. of Marinas &

Electrical Services – Cables Boats & Marina Mgt
Equip Ship Repair Accessories Services
20% 52% 57% 62% 67% 100%
Priority Index
Notes:

D&B Research 590

& Analysis 590
Key Sector Growth Drivers: Other Manufacturing & Allied
Services
Increasing industrialization of
GCC countries shooting the
demand for aluminum across
infrastructure applications
and Construction
……………
Growing boats market in the entire GCC Increasing regional footprint In

with the coming up of new developments manufacturing of automotive and
and growing expat population engineering components
Other Manufacturing
& Allied Services Growth Drivers
FTA with the US supporting the Potential growth in the ship repair
textile and garment industry with development of
manufacturing industry the new port
markets

591

• Sector Scan
2. Education
5. IT
6. Media
13. Manufacturing
I. Background
II. Aluminum
592
Relative Sector Prioritization: Consolidated View
Relative Sector Prioritization: Average Gap Attractiveness & Average Bahraini

Readiness (% scores)
593
Relative Sector Positioning: Consolidated View
• The sector plot reflects the relative position of each sector in terms of ‗Overall Priority Index‘
• The scores represented in the plot are sector averages determined as the composite average of the ‗Relative Sub- Sector Priority
Index‘ scores awarded to each sub-sector identified within the sector as market gaps
• The Priority Index score is calculated as a hybrid of the Relative Sub-Sector Attractiveness and Relative Bahraini Readiness scores
• The Priority Index score reflects recommended relative priority for Tamkeen‘s intervention and focus (investment allocation approach)
in terms of sub-sectors / gaps that have an inherently higher sector attractiveness combined with a faster realizable potential based
on higher level of readiness as compared to other sectors
594
Relative Sector Prioritization: Consolidated View
Construction Travel & Sectors (gaps) that offer

Other Hospitality Telecom
Trade
& Real Estate relatively higher
Mfg.
Petrochemicals attractiveness with more
Education immediate translatable
impact
Aluminum Media Health & Transport & Information Financial
Agriculture & Pharma Logistics Technology Services
Food Processing
20%
52% 57% 62% 67% 100%
Priority Index

Address:
PO Box 18131, BCCI Tower

(Burj Al Tujjar) 519, Road 1010, Block 410,
Sanabis, Switchboard No. 17383333
Email: Info@tamkeen.bh
Website: www.tamkeen.bh

The Market Gap Report - 2009

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The Market Gap Report - 2009

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1

Market Gap Report: Agenda

• Market Gap Identification : Background & Methodology

• Market Gap Identification : Background & Methodology

Within the following report:

• Aluminum, Petrochemicals have been dealt as separate sections

Market segments found to

Core causes for gaps Impact Type of Gaps

• Lack of technology Under penetration of

D&B – Sector / Sub-Sector Gap Analysis

Need for Government Intervention to Remove Barriers

• This model broadly rates various sub-sectors on the following heads

D&B Research & Analysis 10

• These various elements of the Priortization Matrix are explained as below

D&B Research & Analysis 11

• The parameters illustrated between 1 to 4 form the ‗Core Sector Attractiveness‘

D&B Research & Analysis 12

Illustration A: Core Sub-sector Attractiveness

Illustration B: Core Sub-sector Attractiveness

D&B Research & Analysis 15

1 Explained in a later section

• Market Gap Identification : Background & Methodology

• Relative Sector Prioritization: Consolidated View

Technology Medical Medical

Primary Secondary Tertiary Ambulance

Sources: Hoovers, D&B Research & Analysis

Sources: Hoovers, D&B Research & Analysis

with the establishment of Government healthcare centers which provide 100.00

Sources: CIO, Industry Reports, D&B Research & Analysis

Institution Type No. Specialization %

Sources: CIO, Industry Reports, D&B Research & Analysis

1930 beds • Salmaniya Medical Complex, the main provider of

Sources: Industry Reports, D&B Research & Analysis

60 order to provide the capital accessibility, skill-sets and

Sources: Industry Reports, D&B Research & Analysis

Outpatient visits by institution - 2007

With a growing and ageing population, the requirement for a focused

Sources: Industry Reports, D&B Research & Analysis, Ministry of Health

Admissions at SMH by type of treatment - 2007

Sources: Industry Reports, D&B Research & Analysis, Ministry of Health

Sources: Industry Reports, D&B Research & Analysis, Ministry of Health

• Directly related to:

• There are currently 7 licensed physiotherapy centers in Bahrain

Sources: Industry Reports, D&B Research & Analysis

• Demand for alternative medicine in Bahrain is related to:

• There are currently 7 licensed alternative medicine centers in Bahrain

• A growing belief in complementary and alternative medicine

Sources: Industry Reports, D&B Research & Analysis

Sources: Industry Reports, D&B Research & Analysis

Target segments Bahrain‟s advantages Economic growth

Sources: Industry Reports, D&B Research & Analysis

• Research is urgently needed to help address the burden

Characteristics of Bahrain Medical Insurance Industry

• Currently about 50,000 subscribers for medical insurance in Bahrain

Sources: Industry Reports, D&B Research & Analysis

National Health Insurance scheme breakdown

Phase V Health insurance for all expatriates, including domestic workers

Sources: Industry Reports, BNI, D&B Research & Analysis

Estimated demand growth Current Supply scenario

• Presently, Bahrain has a small health insurance market

Vigilance is required from the regulator when handling

Sources: Industry Reports, D&B Research & Analysis, BNI

Sources: Industry Reports, D&B Research & Analysis

Sources: Industry Reports, D&B Research & Analysis