Bahraini investment doubles on US trade agreement

Bahrain’s Free Trade Agreement (FTA) with the US has seen the Gulf state double its foreign direct investment (FDI), the country’s industry and commerce minister has said.

"The flow of FDI more than doubled in the three years before the FTA to three years since, from $3bn (BD1.13bn) to $6.5bn (BD2.4bn),” Dr Hassan Fakhro told the Gulf Daily News.

But amidst criticism that the FTA is only benefiting major industries, Fakhro warned that companies risked missing out on the new opportunities the FTA offered.

"As time goes on and more countries enter into FTAs with the US, as is the case with the recent signing of Oman, the window of opportunity narrows due to the enhanced competition," he said.

Fakhro added that while the government was actively spreading awareness of the FTA and the potential benefits for Bahraini businesses, it was up to individual companies to seize the opportunity for themselves.

The government has already launched an FTA Actualisation for Bahrain (FAB) programme, which has heled with a series of new joint venture partnerships, the minister said.

"In terms of classical economics, free trade and open markets result in economic gains through an increase in the volume of trade, welfare benefits and the flow of FDI). These positive benefits are already being witnessed in terms of growth of trade, investment and gross domestic product,” Fakhro told the newspaper.

"The main reason for such development and success has been the creation in Bahrain of a friendly and receptive environment, based on the foundation of the rule of law.”

Bahrain’s FTA with the US came into force in August 2006.

Overall, foreign direct investment (FDI) into the Middle East declined by nearly a quarter in 2009, mainly due to the tightening of credit markets, according to a new report by the United Nations Conference on Trade and Development (UNCTAD).

Cross-border mergers and acquisitions (M&As) and development projects in the region involving significant foreign investment were badly hit, the study – released at the end of last month - said.

FDI inflows to the region fell by 24 percent to $68bn in 2009, after six years of consecutive increase, added UNCTAD´s World Investment Report 2010.