Bahrain: Overview Of Business Setup In Bahrain

Last Updated: 12 April 2018
Article by George SK and Smriti Ganotra


"A 'start-up' is a company that is confused about – what is products, who its customers are and how to make money."

Centrally located in the Gulf, stable economic climate, business-friendly atmosphere, state-of-art technology, and exceptional business opportunities are sufficient to convince an investor to invest in his Start-up. Bahrain is welcoming foreign investor since two decades now and has vast involvement in understanding the requirements of foreign investors. The unstoppable growth in the Middle-East economy, numerous companies, look forward to investing in this proliferating trillion-dollar economy, specifically in an era when other developed economies are struggling for investment, Bahrain is the right choice for your profitable business.

Considering the economic characteristic, Bahrain is popularly known as the freest commercial market in the whole Middle East as is ahead of G7 economies such as Japan, France, India, China, and Germany. Whatever it takes to retain its position as the freest market in the Gulf is the sole objective of the nation. Bahraini government plays a crucial role in enabling the private sector to drive growth and increasing productivity via employing skilled labor. In comparison with other Gulf states, Bahrain was the fastest in diversifying its economy away from oil thereby maintaining the agenda of an astable economy. This decision was a right move in the achieving the tag of the most favorable business environment.

Internationally, Bahrain is well-known due to its bilateral trade and economic agreements with more than 45 countries which include and is not limited to India, France, Germany, China, Singapore and the United Kingdom. One of the most trade-friendly agreement is with United States whereby under the agreement companies are allowed to charge 35% more for their products and services than in Bahrain and are subsequently allowed to a tariff-free trade in the U.S. market.  Trading companies can enjoy a worldwide exposure to Middle East markets with additional benefits of exporting worldwide just like a cherry on the top.

Ongoing reforms are it economic or legal promises the success of both Bahraini and Foreign businesses. Following are the few notable points about Bahrain's economy capable enough to attract foreign investors to invest in Bahrain free zone:

  1.  Lowest taxes in the Gulf, with no corporate, personal or withholding tax;
  2.  Hundred percent foreign ownership;
  3.  Restriction-free capital, profits or dividends;
  4.  Ranked as the 16th freest economy in the world;
  5.  The first country to have a free trade agreement with theU.S.

Gateway to Profit

Free Zones in Bahrain is ranked as the best in the world as it is known to be an optimum business environment for international companies to do business from and in. Bahrain in many ways is one sizeable Free Zone as it is i) Tax Exempt ii) allows for 100% foreign ownership in several industries iii) minimal customs duties. This benefit is a key attraction for international businesses seeking to establish a presence in a region anticipating desirable levels of economic growth. Bahrain has three central Free Trade Zones (FTZ). These include Bahrain Logistics Zone (BLZ), Bahrain International Investment Park (BIIP) and Bahrain Airport Zone (BIA). In comparison with other countries in the Middle East, Bahrain does not require a Bahrain national shareholder for trading and commercial activities.

BLZ ideally located adjacent to Khalifa bin Salman Port, which offers state-of-the-art warehouses and is 13km from the Bahrain International Airport and only 40km from Al Khobar in Saudi Arabia. BLZ provides the base which is comparatively cheaper than other free zones in the country for doing business in the Northern Gulf. Ergo, following are the main benefits of opting BLZ over different free zones:

  1. 100% foreign company ownership 
  2. Multimodal access by land sea and air 
  3. Flexible plot sizes starting from 4000 square meters onwards 
  4. Purpose-Built Infrastructure with a sufficient road network and plot entry allowances, designed explicitly for lorry traffic needs
  5. twenty-four-hour customs services
  6. Account managers to assist in setting-up and operating within the Bahrain Logistics Zone
  7. Essential services including facilities management and unique waste management
  8. A to Z services.

The Bahrain Logistics Zone (the BLZ) is the region's first boutique logistics area that effectively meets company's tenancy requirements. Being the first logistics hub in the Middle East, BLZ focuses on value-added and re-export logistics activities. The goods can be imported or exported acquiring zero tax and zero customs duties. BLZ is operated by Ports and Maritime Affairs (the PMA) at the Ministry of Transportation and Telecommunications. It offers regional and international companies a platform to run and take advantage of Bahrain's highly beneficial location to cater to the Northern Gulf market and to access GCC markets quickly and economically.BLZ encourages logistics firm that performs component assembly, labeling, packaging and re-packaging and mixing, weighing and filling, kitting and palletizing, and testing and repair but also appreciates retailers and distributors. Due to its location near the port, the BLZ will play an integral part in supporting the first initiative to drive Bahrain as a transshipment hub for the region.

BLZ offers customized services to complement and suit the operational needs of businesses. In addition to packaging, repackaging, logistics, export and re-export services, the BLZ have experienced account managers, who offer a custom-made, personalized service to provide end-to-end solutions. In coordination with related government and legal entities, these account managers can support with licensing, registration, visa processing, and other associated procedures to establish operations in Bahrain's Free Zones.

What the future beholds

BLZ also provides plots for leasing which starts from 4,000 square meters. Irrespective the choice of land size or usage, all parcels are equipped with full utilities, security, and other management services.The BLZ authorities are planning to expand the capacity of the zone by 150 percent which currently at 475,000m2which can attract US Dollars 600 million of direct investment.

Companies incorporated in the free zone have already started pre-booking such as CEVA logistics from the Netherlands, which has earmarked a 10,000m2 warehouse. Danzas AEI Intercontinental, which is the Bahraini working arm of DHL Global Forwarding, has likewise affirmed intends to offer a scope of logistics administrations from Bahrain Logistics Zone. Being a setup business and improvement center in the Middle East, the dispatch ofBLZ will fortify the position of the Kingdom as the essential exchanging focus, while producing ventures of more than US Dollars 280mn. The present designs of further extending the site by 150 percent would additionally add to immediate speculation of US Dollars 600mn. The primary period of Bahrain Logistics Zone is probably going to pull in more than 50 nearby, territorial and worldwide occupants, making around 2400 employment opportunities in logistics zone. Once completed, BLZ will offer leasable distribution center, retail and office space extending up to 475,000 sq. Mts., to its occupants. The General Organization of Sea Ports in Bahrain will work the traditions free logistics region of Bahrain.

Awards and Appreciation

BLZ is being advertised as the Middle East's first multi-demonstrate logistics center point, concentrating on re-export and value-adding exercises. BLZ got selected in the 'extraordinary accomplishment of the year' group last year's Supply Chain and Transport Awards (SCATA), in conjunction with Hala Supply Chain Services (HSCS), Gulf Agency Company (GAC), Gulftainer and the Dubai Department of Economic Development (DED).

Bahrain holds the second position in the Middle East, in the World Bank's Logistics Performance Index, and would have liked to be the point of convergence for neighborhood, regional and universal organizations meaning to extend their exchange a compelling way inside the locale. As indicated by the regulating body for the monetary improvement procedure of Bahrain, Bahrain now has the best logistics offices in theMiddle East. The zone is connected to significant ocean, land and air courses crosswise over developing Middle East economies of Qatar, Saudi Arabia, and UAE. It will help facilitate the obstacles which keep outside financial specialists from getting to the Middle East markets, and furthermore, the travel time for the conveyance of load to Kuwait, Iraq, Iran and other northern Gulf areas will get extensively decreased.

It is imperative to note that the investors considering company formation in Bahrain can establish three types of companies namely Free zone establishment, free zone company, and branch of a foreign or local company. Following are the documents required for submission to the above companies:

Document Title

FreeZone Establishment

Free Zone Company


Application form

Business Plan

Letter of Intent

Audited Financial report (past three years)

Company Profile

Bank statement of past six months

Letter of reference from bank

Passport copies of shareholders

Power of attorney, specimen signature, passport copy and resume of manager

NOC from sponsor

Register certificate from parent company

MOU and AOA of parent company

Board Resolution of Parent Company

Appointment letter, power of attorney, specimen signature and passport copy of legal representative

Power of attorney, specimen signature, and passport copy of director

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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