Bahrain - Open, Dynamic, and Ready for UK Business

 

Small but strategically poised, Bahrain is an island state located east of Saudi Arabia and northwest of Qatar. Its open regulatory environment, strong financial services sector, and reform-driven economy make it a valuable testbed for UK SMEs and service providers seeking to enter the region – especially the important market of Saudi Arabia.

Unusually for the region, Bahrain offers 100% foreign business ownership in most sectors, no corporate income tax (except for oil and gas companies), and a relatively low cost of doing business. The country also has a skilled workforce and a robust infrastructure, including free trade zones and a well-developed logistics network. 

Bahrain’s oil revenue has declined in recent years, and the nation has diversified into the communication and transport sectors with the aim of attracting foreign investment and multinationals. This has been a successful strategy so far, but oil still provides about 70% of government revenue.

Bahrain’s commitment to economic diversification creates demand for British expertise across manufacturing, fintech, healthcare, and logistics. For SMEs seeking a Gulf market foothold, Bahrain offers a commercially accessible and high-potential entry point.

Trade Snapshot

  • UK–Bahrain bilateral trade reached £3.1 billion in 2022—a near doubling (+93.5%) from 2021; with UK exports at £763 million (+40.5%) and imports at £2.3 billion (+121%).
  • Bahrain ranks as the UK’s 60th largest trading partner, growing fast from a small base and with balanced goods/services mix (~50/50 split).

Leading Sectors & Demand

  • Financial Services & FinTech - Bahrain’s financial sector makes up around 18 % of GDP and is a fintech hub for the region — over 350 licensed financial institutions, with strong regulatory support via the Central Bank’s Sandbox and Bahrain FinTech Bay fostering innovation.
  • ICT & Digital Transformation - fast-growing investments in AI, cloud, cybersecurity and e-commerce; supported by digital strategy and major tech players like AWS and Microsoft establishing regional centres.
  • Manufacturing & Industrial Development - Bahrain’s manufacturing sector—anchored by large players like Aluminium Bahrain (ALBA)—accounts for a significant share of non‑oil GDP; the kingdom offers duty‑free export access and advanced infrastructure in industrial zones.
  • Logistics & Supply Chain - home to Khalifa Bin Salman Port, a GCC logistics hub; connectivity via the King Fahd Causeway enables efficient access to Saudi markets; government targets major logistics growth by 2030.
  • Tourism & Hospitality - tourism contributed ~6.7 % of GDP in 2022; driven by luxury resorts, F1 events, cultural attractions, and investment in MICE infrastructure and new venues.

Market Appeal & Opportunities

  • Bahrain’s diversifying economy, investor‑friendly environment, and Gulf connectivity make it an attractive entry market for UK SMEs and financial/digital service providers.
  • Its financial services and fintech sectors are advanced; Bahrain is positioning as a regional fintech hub where UK firms can bring expertise and partnerships.

Why is Bahrain a Key Market for UK Firms?

  • Rapid trade growth and diversifying sectors
  • Strong pipeline for UK exports in goods and services—especially machinery, automotive components, professional services and fintech
  • Strategic gateway with GCC access—ideal for SMEs to test Gulf markets
  • Government reforms improving ease‑of‑doing business and investment access

Recommendations

  • Target demand in financial services (fintech, Islamic banking), professional services, education, infrastructure, energy, manufacturing equipment, and vehicle/machinery components
  • SME engagement: build partnerships via UK‑Saudi trade bodies (e.g. Bahrain British Business, Department for Business & Trade), and Chamber International.
  • Explore opportunities in financial free zones like Bahrain FinTech Bay and manufacturing parks
  • Monitor GCC–UK FTA progress to maximise market access benefits
 

Telephone one of our specialists on 0845 0347200 or email for advice.

Exporting to the Arab World? Apply online for your Certificates of Origin here.