Bahrain’s financial services sector presents 35% cost advantage in the region
A KPMG report, ‘Cost of doing business in Bahrain – Financial Services’, has revealed Bahrain as the most cost-effective place in the Gulf to set up and do business in the Financial Services sector, with companies enjoying up to 35% cost savings compared with the rest of the region.
Bahrain leads on a wide range of metrics in the report, including commercial rents up to four times lower, and staff costs that can be up to 60% below its neighbours. Such figures reinforce Bahrain’s position as the region’s financial centre. The Kingdom was the first country in the GCC to set up a banking system and is now home to over 400 financial institutions, all underpinned by a highly skilled and educated workforce.
The benefits of doing business in Bahrain are not just restricted to certain geographical areas or free zones. Instead, the whole country is subject to the same business-friendly rules, allowing companies to set up wherever they wish.
Such freedom also goes hand in hand with other key components for operating a successful business. For example, utility costs in Bahrain are up to 70% less than some other countries in the region, reducing the impact of an influential commercial overhead. Setting-up a company in Bahrain was also found to be quicker and more cost-effective, with the application fees to gain approval as a financial business being lower in Bahrain than in neighbouring countries, while a ‘dealing in investments as principal’ application costs just US$270 in Bahrain, further highlighting the appeal of starting a company in the country.
But, cost-effectiveness is far broader than the input costs that a company director will measure daily. The report also found that more holistic, lifestyle focussed determinants, are crucial to the success of any business. Bahrain has long enjoyed a liberal society and a cosmopolitan way of life, including offering a competitive cost of living. For example, the investment needed to educate one’s children is important for companies looking to attract employees to a country. In Bahrain, the average cost of living is just US$51,252 a year, below figures seen elsewhere in the region. Moreover, an education in the British and American curriculum is up to 50% less expensive in Bahrain, an attractive option for staff members with children.
The report also concluded that Bahrain is not just competitive in traditional financial services like banking, but also is at the forefront of emerging trends such as Islamic Finance and FinTech. Thomson Reuters placed Bahrain as the leader in the GCC and second globally in its Islamic Finance Development Report published in December 2018.
Dalal Buhejji, Senior Manager of Financial Services, Bahrain Economic Development Board, commented:
“The KPMG report highlights the progress Bahrain has made over the past 40 years as a regional hub for the Financial Services sector, attracting both foreign and local investment. Financial Services is undergoing a period of systemic change globally as FinTech continues to exponentially disrupt traditional banking services. And Bahrain is at the forefront of cutting-edge financial technology products and services, making it an important hub for the financial services industry.
A highly competitive cost of doing business is complemented by several other sector-leading developments. For example, Bahrain’s central role in the swiftly expanding FinTech industry was also highlighted during the annual FinTastic Bahrain Week in Manama from 24 – 25 February, that drew together experts from the financial and technology sectors. The week witnessed 1,000 delegates converge to learn more about the latest trends in the changing financial services sector and presented an important occasion for international and regional companies to work together to tackle the opportunities and challenges presented by disruption to the finance sector.
Dalal Buhejji said: “As the GCC’s most experienced financial services centre, we have both the soft and hard infrastructure in place for the finance industry to thrive. As a result, we are also well placed to host events like Fintastic Week, which draws some of the best minds from around the world to present insights on a dynamic sector and will be invaluable for companies looking to stay ahead of the technology trends expected in the coming year.”