GLOBAL INSIGHT / Bahrain report 2019

Moving Bahrain forward by implementing $32 billion on projects

The kingdom of Bahrain is strengthening its position as a hub for international businesses in the Middle East by investing in interconnected transport infrastructure.

GLOBAL INSIGHT

In February 2019, the courier giant FedEx Express signed up as the anchor tenant for a $58.5-million, 25,000-square-meter new cargo area at Bahrain International Airport (BIA).

“This demonstrates the kingdom’s strong international reputation as a regional hub for businesses in the Middle East. Our island nation is a gateway to the Gulf Cooperation Council (GCC) market including the transforming Saudi Arabia, which is only 25 minutes away by causeway,” said Bahraini Minister of Transportation and Telecommunications Kamal bin Ahmed Mohammed.

FedEx Express is not the only firm moving to the archipelago in the Arabian Gulf. In fact, in the first nine months of 2018, foreign direct investment into Japan’s fifth-biggest trading partner increased by 138 percent. In addition to Bahrain’s strategic location, investors are drawn by its well-coordinated policies and incentives for building the private sector, cost competitiveness and a highly trained workforce — all of which are contributing to an economy that is growing at 3-4 percent a year.

Perhaps Bahrain’s biggest draw is its infrastructure. It has always been good, which is why leading logistics companies such as DHL have used Bahrain as a base for their Middle East operations since the 1980s. But now the kingdom is investing a record $32 billion into new infrastructure projects, including ones that will further expand and connect the country’s transportation network both locally and internationally.

The minister explained the strategy behind this investment: “Without moving goods and people — be it by air, land or sea — efficiently and effectively, the kingdom cannot compete. To enhance our competitiveness, the government is increasing Bahrain’s connectivity, which will facilitate growth in all of our economic sectors. We could not fully develop our potential in logistics, tourism and manufacturing, for example, if we did not have an excellent transportation and logistics network.”

At the heart of this expanding network is BIA, which is currently undergoing a $1.1-billion modernization program, described by Mohamed Yousif Al Binfalah, CEO of its operator Bahrain Airport Company (BAC), as “the kingdom’s key gateway to the world.”

This year will see BAC complete the construction of a state-of-the-art new passenger terminal building four times the size of the current facility, increasing BIA’s capacity to 14 million passengers a year. Once that is complete, other aspects of BIA such as its runway will be upgraded, said Al Binfalah: “Between now and around 2021, every single infrastructural element in this airport will be new.”

Within approximately five years, an extensive new light-railway system that could cost up to $2 billion to construct will further improve connectivity between the airport and the rest of Bahrain. This metro, which will use driverless trains to move 43,000 people an hour, will consist of six lines covering 109 kilometers and allow optimal interconnections between all of the country’s key locations. “We assigned a Spanish consultant, IDOM, to help us plan the routes that we needed, the phasing of the development and the technology we should use,” stated the minister.

“The government has now started the next stage of its light-rail project. In February 2019, we launched an international tender to appoint a consultant to manage the tendering process for the development of the first phase of the metro system — two lines that are 32 kilometers long in total with 20 stations. We hope to make an appointment this summer,” he said.

The gateway to the Gulf region

When it comes to moving goods around the kingdom and further afield, just 13 kilometers away from BIA is another important node in Bahrain’s transport network: Khalifa bin Salman Port, a first-class transshipment hub for the world’s largest ocean vessels. Between the air and seaport is a third vital facility: the in-demand Bahrain Logistics Zone, which is also being expanded.

The government now intends to build a 70-kilometer-long railway to connect these three nodes to the GCC rail network, which is progressively linking the transport systems of all Gulf countries. Goods and passengers will be able to travel seamlessly by train throughout the region via a planned second causeway between Bahrain and Saudi Arabia.

“The King Hamad Causeway will make our economic, political and trade relations even stronger,” noted the minister, who added that a tender had been released for a consultant for the $3-4 billion project, which is likely to be carried out under a public-private partnership.

Alongside the rail line, the proposed causeway includes four road lanes, which will further improve connectivity to Saudi Arabia by reducing vehicle traffic on the existent King Fahd Causeway over which more than 2 million people travel every month.

As Bahrain’s transport infrastructure becomes increasingly robust and integrated, it is no wonder that logistics and cargo operators are among the many foreign investors looking to use Bahrain as a regional business hub.

The minister said: “We are currently negotiating with two companies, in addition to FedEx Express, wishing to operate warehouse space at BIA’s new cargo area. I do not think any other countries offer the connectivity between air, sea and land transport that Bahrain does.”