The investment climate in the Kingdom of Bahrain is positive and relatively stable. Bahrain maintains a business-friendly attitude and liberal approach to attracting foreign investment and business.

In an economy dominated by state-owned enterprises, Bahrain aims to foster a greater role for the private sector to promote economic growth. Government of Bahrain (GOB) efforts focus on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, and tourism sectors.

Bahrain’s total FDI stock reached BD 11.537 billion (USD 30.683 billion) in 2020. Annual FDI inflows have dropped from BD 603 million (USD 1.6 billion) in 2018 to BD 355 million (USD 942 million) in 2019 and BD 333 million (USD 885 million) in 2020. The financial services, manufacturing, logistics, education, healthcare, real estate, tourism, and ICT sectors have attracted the majority of Bahrain’s FDI.

The Covid-19 pandemic, in tandem with the global oil price collapse in 2020, weakened GOB efforts to generate revenue and reduce public spending. In April 2020, Bahrain implemented a BD 4.3 billion (USD 11.4 billion) financial relief package, equivalent to 29 percent of GDP, to ease the economic impact of the pandemic. Key provisions of the package were continued into 2021. To strengthen Bahrain’s position as a startup hub in the region and to enhance its investment ecosystem, the GOB launched Bahrain FinTech Bay in 2018; issued new pro-business laws; and established the USD 100 million Al Waha venture capital fund for Bahraini investments and the USD 100 million superfund to support the startup growth. Since 2017, the Central Bank of Bahrain (CBB) has operated a financial technology regulatory sandbox to enable startups in Bahrain, including cryptocurrency and blockchain technologies, and regulates conventional and Sharia-compliant businesses.

Bahrain permits 100 percent foreign ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without Bahraini sponsors or local partners. In 2017, the GOB expanded the number of sectors in which foreigners are permitted to maintain 100 percent ownership in companies to include tourism services, sporting events production, mining and quarrying, real estate, water distribution, water transport operations, and crop cultivation and propagation.  In May 2019, the GOB loosened foreign ownership restrictions in the oil and gas sector, allowing 100 percent foreign ownership in oil and gas extraction projects under certain conditions.

For more information, please refer to: https://www.state.gov/reports/2021-investment-climate-statements/bahrain/

June 24         Saudi Arabia and Bahrain have launched the second phase of their industrial integration initiative, aiming to boost bilateral trade, investment, and cross-border supply chain cooperation. This comes amid strengthening economic ties between the countries, with the Saudi Arabia’s direct investments in Bahrain reaching SR35 billion ($9.33 billion) in 2023. 

June 13        Bahrain's economy will grow 3.5 % this year and 3% in 2026, according to the World Bank’s most recent forecast. It said growth in GCC states is forecast to increase to 3.2% in 2025, 4.5% in 2026, and 4.8% in 2027, as the phase-out of oil production cuts is expected to lead to rising oil production. 

May 8           Bahrain’s Ministry of Finance released the country’s 2024 economic report today. Bahrain’s real GDP growth rate for 2024 is 2.6%, with non-oil sectors growing by 3.8% and the oil sector contracting by 4.0%. 

May 8             Bahrain – Parliament unanimously approved a new tax on multinational enterprises: large multinational corporations that operate in multiple countries and generate at least 750 million euros in revenue in at least two of the previous four years are subject to a global minimum corporate tax rate of 15%. Finance and National Economy Minister said 348 multinational companies operating in Bahrain would fall within the scope of the new law, with projected annual tax revenues of approximately BD130 million.

April 24, Continued fiscal reform efforts, stable economic diversification, and financial support from Gulf Cooperation Council partners have led S&P Global Ratings to affirm Bahrain's long- and short-term foreign and local currency sovereign credit ratings at “B+/B.”  

April 3, Xpeng has inked a distributor deal to enter the Bahraini auto market, as the Chinese electric vehicle maker aims to double its international presence this year. The company recently entered into a strategic partnership with Ebrahim K. Kanoo, Bahrain's largest automotive distributor group. 

March 11      Bahrain has been ranked 55th freest economy in the world, according to the 2025 Index of Economic Freedom released by The Heritage Foundation. The kingdom achieved a score of 65.6, an increase of 2.2 points from the previous year.

March 4        Chinese car sales in Bahrain reached 5,358 units in 2024, showing an increase as more buyers opt for these vehicles.  

March 3        According to EY's "Cost of Doing Business in the GCC" reports, businesses operating in Bahrain benefit from significant annual operating cost advantages-up to 69% in logistics and up to 41% in manufacturing-compared to neighboring GCC countries. 

February 25, Fitch Ratings has affirmed Bahrain's long-term foreign-currency Issuer Default Rating (IDR) at B+, highlighting the nation's robust support from GCC partners and ongoing efforts to strengthen its fiscal position.

February 18, Bahrain and APM Terminals signed a letter of intent for the development of Khalifa bin Salman Port. At the signing ceremony, the Minister of Transportation and Telecommunications of Bahrain stated that Bahrain is eager to strengthen cooperation with international companies to develop relevant sectors.

January 20     Diyar, Bahrain's largest real estate developer, has signed a partnership agreement with China National Electric Engineering Company to evaluate the feasibility of adopting 3D printing technology in the construction and development of real estate projects.

January 16     The number of non-Bahrainis in Bahrain's government departments is 5,766, a decrease of 24% compared to 7,582 in 2019. This reflects the Bahraini government's efforts to implement Bahrainization while ensuring the quality of government services, gradually replacing foreign workers with Bahrainis in government departments. 

January 8      Bahrain is set to undergo a major urban redesign over the next 15 years to transform its cities and towns into thriving future-ready spaces.   

December 31, Bahrain's economy is expected to grow by 3% this year, with the growth rate rising to 3.5% in 2025, driven by financial services, technology, and industrial expansion, according to e International Monetary Fund's report. 

December 19, The partnership between the Abu Dhabi Fund for Development and the Government of Bahrain represents a model collaboration for sustainable development. To date, ADFD has financed 33 development projects in the country, totaling AED 23 billion, spanning critical sectors such as housing, energy, transport, and health. 

November 23   "Made in Bahrain" goods will soon take center stage in government procurement, as the nation pushes to cut back on imports and supercharge local production. The ambitious plan aims to showcase Bahraini industries, spotlight homegrown talent, and build a stronger, self-sufficient economy. 

November 14    BAIC Group inaugurated its first BAIC brand showroom in Bahrain, marking another significant step in its Middle Eastern expansion following a similar launch in Qatar.     

November 6     The Bahrain Development Bank has announced the launch of the kingdom’s first $265 million Private Credit SME Growth Fund. The fund aims to accelerate economic development by providing critical financial support to small and medium-sized enterprises (SMEs), which constitute over 93 per cent of Bahrain’s companies. 

October 27       Fakhro Motors, the exclusive distributor of BYD, the world's leading manufacturer of New Energy Vehicles, has announced the arrival of the BYD QIN PLUS and BYD SONG PLUS. These models are plug-in hybrids, which allow drivers to choose between petrol and electric power.

October 23     The financial and insurance Activities remained the highest contributor to real GDP at 17.1per cent in Q2, followed by the crude petroleum and natural gas sector at 14.8 per cent and manufacturing at 14.4 per cent.  

October 21       Bahrain has taken action to allow foreign companies to fully control certain areas in order to attract global businesses. According to the official gazette, foreign enterprises can now sell certain goods in Bahrain without the need for local partners. If foreign businesses operate in at least ten countries or have an annual income exceeding 750 million euros, they can fully own their own businesses.