Bahrain focus

We look at some of the plus points and pitfalls of doing business

Bahrain has invested billions in its transport links.
Bahrain has invested billions in its transport links.
Demand for big kit may shift to the oil industry.
Demand for big kit may shift to the oil industry.
Bahrain has an established road network.
Bahrain has an established road network.

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While one of the smallest countries in the world, the island of Bahrain has been economically significant for many years, hence the number of people who choose to migrate to its shores. Like the other GCC countries the tiny island spent much of the 20th century diversifying away from pearling, fishing and into an oil-based economy.

Today sees the nation changing again, as tax incentives make the country a haven for the offshore banking industry, as well as having a developed construction industry and attractions such as a fully-fledged F1 track. In fact, the importance of taking advantage of all revenue streams was underlined in the National Economic Vision 2030 plan, which was launched last year, just as the recession began to bite.

Unfortunately the downturn did hit Bahrain very hard, with one report putting the number of shelved projects since last October at around 30%. This obviously has had a drastic effect on both contractors and investors alike – most of whom are waiting for their money.

From our perspective as fleet managers, perhaps the most interesting industry in Bahrain is the transport sector. While other countries still moot the idea of 100% foreign ownership of companies, Bahrain already does it, which has lead to the recent opening of a new industrial area, as well as a new seaport capable of handling the largest ships.

Steen Davidsen, manager of APM Terminals Bahrain said “Bahrain itself offers benefits for businesses, including a number of free trade agreements, a liberal tax regime and the allowance of foreign ownership. Operating from the port makes clear economic sense and being 40% closer to the upper Gulf ports saves money for shipping lines.”

“Bahrain has invested billions of dollars to develop the best transport links in the region, incorporating road, sea and air.”

He added: “Our strategic location can provide companies with road access to the booming economies in the Gulf, supported by the 25km causeway to Saudi Arabia and the forthcoming Friendship Causeway to Qatar, which is scheduled for completion in 2013.”

There is no railway on or near the island, so the freight needs to be moved by road, usually on the back of a trailer pulled by a middle-aged truck head. There is evidence that the industry is modernising though, as the recently-formed Bahrain Logistics Zone, with large fleet operators such as Danzas and CEVA starting operations.

Traffic

Currently, the only roadway on or off the island is the causeway into Saudi Arabia. This is often busy, as Saudi customs are notoriously slow and most truck drivers will have horror stories about being stuck for many, many hours. Steven Gomes from Bonaventure in Dharan noted that: “Trucks lined across the Saudi-Bahrain Causeway on both sides of the border present logistical nightmares for business, custom authorities, not forgetting the endless waiting times for the trucking crew to get across.”

Gomes also observed that waiting in the stifling heat (temperatures have been known to hit 52 degrees) was having a bad effect on the heath of the truck crews – something newcomers to the island should consider.

Of course, there is very little that can be done about there being only one road way out of the country, but is does make moving trucks, machinery and people somewhat harder. It should be noted though, that the lot of the Bahrani-based trucker is generally better than that of his Saudi counterpart in terms of wages and rights in general.

Oil and Gas

It would be churlish to write about Bahrain without mentioning the rebounding energy sector. Recently Dr Abdulhussain Mirza, the oil and gas affairs minister for Bahrain has said that the kingdom is planning to invest US$20 billion in the development of its hydrocarbons sector. As US$5 billion of this will be used to bring existing facilities up to date, it is likely that there will be work for heavy lift subcontractors, as well as work for regular cranes and equipment.

“We have started in earnest the modernisation process in Bahrain over the last few years after Noga came into existence in 2005,” Dr Mirza is reported as saying.

Infrastructure

Besides the road network, Bahrain has reasonable infrastructure, but it is clear that it is struggling with the island’s ambitious plans demand. The power grid, for example could just barely cope with the load put on it over the summer. Works Minister Fahmi Al Jowder said ealier this year that efforts were underway to limit the problem.

“People shouldn’t be blaming us for the cuts because the weather then reached 52C and I don’t believe any machine can withstand it,” he said. “Yes, we are trying to limit cuts, but it is impossible to stop them because anything may go wrong with the machines or the network.”

There were ambitious plans to develop the Tubli power plant, but the economic crisis has put this on hold for the time being.

Operators

Though the country prides itself on it’s human rights record, and that employees are allowed to unionise and no longer sponsored by their employers, it must be noted that Bahrain lags behind the UAE in terms of employee protection. Workers are still routinely carted about in open trucks, despite a ban on the practice. More seriously, overcrowded living quarters, with no proper cooking facilities have resulted in a number of horrific fires. Apart from this, some contractors have been caught in shocking HSE violations.

One was found to be using workers as counterweights when proof loading an elevator. Lead contractors are advised to watch subcontractors carefully for this kind of practice.

Factsheet: Kalifa Bin Salman Port
• Opened April 2009
• Wide range of port handling equipment, notably ZPMC rail mounted cranes.
• Capacity of 1.1 million TEU (containers) Possibility of expanding up to 3 million TEU These all need to be moved by heavy trucks.
• Allows easy movement of machinery, parts and other freight to Saudi and Qatar, as well as to new markets such as Kuwait and Iraq.
• Adjacent to a large industrial area.

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