Located in the Arabian Gulf, Bahrain is a leading financial centre in the Middle East. Bahrain’s financial services sector comprises of over 350 local and international financial institutions, including conventional and Islamic banks, investment advisors, insurance companies, and other financial service providers. The sector contributed approximately 17.3 percent of the country’s GDP in 2020.
Bahrain’s economic reforms have created the ideal business environment for international companies. These reforms aim to foster a greater role for the private sector in economic growth. The government is working to develop a legal framework to facilitate foreign direct investment. Its efforts to encourage foreign direct investment include investing in tourism, manufacturing, and logistics. These projects are expected to create jobs in the country. The Government has also introduced reforms in the education sector. Its goal is to raise the financial services sectors share of the economy to 20 percent by 2026.
The banking sector in Bahrain has remained healthy despite declining oil prices. The industry has grown, in part, because of a number of international banking organizations that have set up branches in the country. The country has also experienced strong growth due to prudent fiscal policies. The Central Bank of Bahrain is the single regulator for the entire financial sector. CBB has an integrated regulatory framework that covers both conventional and Islamic financial institutions. CBB has also implemented Basel II standards. It is working to bring the banking industry in Bahrain into compliance with Basel III standards.
Bahrain’s financial services sector has the potential to create jobs. There are approximately 13,737 workers in the financial sector. Many of them are locals. These workers can access credit on market terms. The government has a liberal approach to attracting foreign investment. It is also facilitating the free flow of portfolio investments. In addition to the banking sector, the government has established a credit reference bureau to monitor credit risks. The credit reference bureau is licensed by CBB.
The government of Bahrain is also focused on encouraging foreign direct investment in tourism and manufacturing. These investments will create jobs and transform infrastructure projects. In addition, the government is selling assets to the private sector, including telecommunications and utilities.