Pay attention, because this concerns you very much.
In a recent conference that I have attended, Mumtalakat, the investment arm of the government of Bahrain, announced that they will invest 150 million dollars in Bahrain this year alone. The amount will be somewhat divided and invested in three sectors, real estate, aluminium downstream, and tourism and events. I personally believe that spending money in the first two will yield great results, so there’s no issue that money there is money well spent. However, I believe there’s much explanation to do with regards to tourism and events.
As far as I know, the investment this year in tourism and events is suggested to be somewhere around 45 million dollars. This should be your focus for today, so kindly read on.
Mumtalakat made good success in real estate, such as partnering in Durrat Al Bahrain. Their future plan is to further invest in the surroundings of this project to enhance the attractiveness it already possesses. With a careful project plan, real estate will always remain successful, because it serves as an asset, and will not disappear like unreal investments in stocks, currency exchanges and so on. I could argue that they should instead invest in incomplete projects like the Financial Harbor and Marina West, but perhaps they’re looking into greater returns.
Aluminium downstream is without any doubt an excellent investment. This is called establishing ISI (Important Substitute Industrialization), whereby you replace what you import with a local industry that produces it. The idea is to then turn ISI into EOI (Export-Oriented Industrialization), where in time, and after you have successfully mastered this industry, you start competing internationally and begin exporting your locally made product. China successfully implemented this methodology. Of course this is not simple, because the government would have to ratify protectionist regulations in order to create demand for the locally made product. So it is going to be interesting to see if the regulations in Bahrain will work well with Mumtalakat’s investment in aluminium downstream.
Now to what’s interesting, millions in tourism and events. What is different from this type of investment and the two mentioned above is that this is a highly dependent investment, has much higher risk of unsuccessfulness, cannot be gauged properly in terms of success, and not clear if the money spent will stay in Bahrain.
Many small and medium businesses in Bahrain are looking to make use of this 45 million dollars that will be spent in tourism and events. If the government provides a good umbrella to this industry, the best way forward for Mumtalakat is utilize local skills and businesses instead of contracting with foreign companies in events management, marketing consultancy, and all the logistical support. The only reason I see Mumtalakat looking to invest in Bahrain and not elsewhere is because there was a political reason that influenced this economic decision.
Mumtalakat, therefore, should save small and medium Bahraini businesses and assist in their growth by honoring them and only them the 45 million dollars contracts. Under the right business environment with the vital support of the Judicial branch, this is the best way forward, because SMEs mostly target the local market. This would also ensure that all the suspected doubts of failure are tackled.
Bahrain has successfully made available soft loans, establishment support packages, and proper training tools to SMEs through Tamkeen, Bahrain’s labor fund, and now is the time to get them in action.