H.E. Khalid Al-Rumaihi on Bahrain’s foreign investment, Saudi Arabia, and AWS, in 12 points.

In a recent interview with Bloomberg’s Erik Schatzker, the Bahrain Economic Development Board CE, H.E. Khalid Al-Rumaihi discussed the economic conditions in the Middle East, the developments in the Kingdom of Saudi Arabia, and his vision on Bahrain’s foreign investments.

What are Khalid’s main thoughts from the interview? Here are the top twelve, summarized:

  • The drop in oil prices is actually a blessing in disguise.

“It’s actually forced governments to take on policy changes and law changes that have been for the benefit … of attracting investments. You’ve seen some of those changes.”

Leading the Economic Development Board of Bahrain, Khalid Al-Rumaihi is spearheading Bahrain’s strategy to attract investment and development to diversify Bahrain’s economy.

However, with the recent developments in the region, that couldn’t be easy, Erik asks.

“Absolutely. At $100 oil, I don’t think we would have seen the opening of sectors, … because governments necessarily need to attract FDI. So, it’s made my job a lot easier. We’ve seen at least in [the] EDB the investment attraction double from 2014 to 2016. We went from $140 million to $280 million in 2016, and we’re gonna see over $700 million in 2017 [in foreign direct investment]”, Khalid answered.

  • Record numbers for the Kingdom of Bahrain in foreign direct investments.

“We’re seeing record numbers coming to the Kingdom of Bahrain. I think it’s down to A, the openness that the economy has always had … and B, because the government is looking to attract investors to take up the slack that the government is gonna leave behind as it manages its fiscal balance. On Saudi, I think it’s good news.

  • It’s not a zero-sum game. When Saudi Arabia grows, we all grow.

“I think people look at the region and see it as a zero sum game. ‘If the Kingdom of Saudi Arabia grows, what will it do to the other states?’ [they ask]. We don’t say that about Asia. We see Singapore, Malaysia, or Hong Kong, different city-states succeeding, and the success of one leads to the benefit of the others.”

  • This year’s biggest investment into Bahrain was Amazon Web Services (AWS).

“Well, it’s going to be hard to match … [the numbers achieved in 2017]. [In 2017] … we managed to attract Amazon Web Services”, that is, Amazon’s cloud services platform “to set up in [Bahrain], to set up their [regional] data centers, in Bahrain.

It’s a data center … that’s going to serve the entire Middle East and Africa. We looked at the Middle East and Africa and saw an absence of data centers, and we were encouraged by Amazon looking to set up something, and we convinced them to choose Bahrain.”

  • The datacenters are going to be launched by the first quarter of 2019, it’s a game changer.

“That’s under construction, we’re going to see that launched by the first quarter of 2019. It’s a game changer for Bahrain …[and] the region. It’s going to bring supercomputing power to the fingertips of startups and small businesses.” That is, the startups in the StartUp Bahrain ecosystem. “It’s going to allow people to work on the cloud. [It’s] going to enhance security, reduce cost, and as a government we could adopt the cloud first policy.”

“We’re going to ask every government entity not will you move to the cloud, [but] why wouldn’t you move to the cloud? And we’ve seen in just the initial steps that we’ve taken we’ve saved 90% of our costs by avoiding building our own data centers and moving to the cloud with Amazon and hopefully with others as well.”

In fact, ten government entities have already began the process of moving to the cloud.

  • The government of Bahrain are in talks with Microsoft and Google too.

“… We are talking to Google, Microsoft. We want our whole country to be a host to several of the leading companies. Not to have sales offices, but to actually have something of substance hopefully in the cloud and …, more data centers. We think this is a catalyst to develop a digital economy in the country that would serve the entire Middle East. We think that data is growing in importance, we see it in the terms of our supercomputers in our pocket, our mobile phones, and we think that the Middle East shouldn’t be neglecting that element and we think that will empower businesses.”

  • FinTech is going to be a big deal for Bahrain and the region.

“Well, you know outside of ICT, we’re also talking to investors in manufacturing. We have several sectors we’re focusing on as a country. So financial services, logistics manufacturing, but, we’re very excited about the potential of FinTech.

“We just launched a regulatory sandbox, in June of this year, we’ve introduced regulation on crowdfunding both equity and debt, we’re launching a co-working space, we’re very interested in technology of financial services we think that merging markets are going to lead on this. There’s a lot of un-banked portion of our un-banked population, we think it’s a more pressing problem for the emerging markets in the developed world, and we think the Bahrain can play a role as the hub for FinTech. And so we’re talking to companies, I met with some here in New York. We’re talking to companies about looking into the region and then using Bahrain as a hub for covering the Middle East.”

  • Bahrain can regulate across the country like a city-state can.

“We have … you know today the competition is among cities-states, but, Bahrain is the size of a city-state, so today you’re looking at should I invest in Beijing, Shanghai, Dubai, and the benefits of Bahrain is we are a small country that is like a city-state but can regulate across the country. And I think that gives us a competitive advantage.”

  • Allowing data to move across borders is a big challenge for companies.

“I think number one you know you have to allow data to move across borders, so companies have to feel comfortable about storing data outside of their country and you know this is an issue faced across the world. And what we are looking to introduce in Bahrain, is data privacy and data subroutine walls that would give comfort to corporate or government entities to store data in a neighboring country. … data centers have traditionally existed in Europe and the United States and so companies have been a bit reluctant about storing their data very far away from where their business lies. Now, having a presence in Bahrain, it’s closer in proximity, if we can develop the regulation that would give comfort, we think this is going to unleash a significant build up in contrasting, we project substantial growth in this area.”

  • Saudi Arabia is not messing around about reform, they’re serious.

“You know I think it’s an internal matter in the Kingdom of Saudi Arabia [the recent arrests], but, Eric you were with me in Fyai and you saw how serious the Kingdom of Saudi Arabia is about reform. And I think the op-ed piece in the Wall Street Journal yesterday that was posted by the Minister of Commerce and Investment really sums it up very well.

When a Kingdom is very serious about reform people have to look at this within the steps they’ve taken, and I think, don’t be quick to judge. I think this is allowing investors to see Saudi Arabia as being open for business allowing a level playing field for investors.”

  • What is happening in Saudi Arabia is an opportunity for Bahrain to become a gateway for investors.

“You know I look at the region, the Gulf, $1.5 trillion market, this is just the six countries of the GCC, we expect that to go to two trillion in the next four or five years, that’s the size of the economy of India, not the population of course, but size of the economy of India. … investors can’t ignore the size of GDP, the high spending per capita, the mobile penetration if you’re a technology company, and so for Bahrain we see ourselves as a potential gateway for an investor that wants to tap that. Into that opportunity. We’re one of the six countries of the GCC, this is an economic block, that is allowing investors, once the come into one country, to have access to the rest. So we see Bahrain as a potential gateway for entry into that one point five trillion dollar economy.”

  • Bahrain is going through reform that’s not dependant or reliant on neighboring support.

“We are not relying on support. We have an economic strategy and a fiscal strategy that is going to allow us to reach fiscal balance and we know the steps that we have to take in order to meet that fiscal challenge. And I’m quite confident, and I think it will be shown over time without a reliance on oil prices recovering, because we’re budgeting for 55 dollars even though oil prices are above that. I think that again I want to go back to saying as we execute that strategy we want to manage economic growth, we want to manage curtailing spending, we’re taken 22 government entities and merged them into 15. We’ve redirected subsidies such that it will basically lead to about two billion dollars in cost savings and reduce expenses for us over the next two or three years. So we’ve taken steps toward fixing the fiscal challenge. And we want to do it in a gradual manner we want to do it again without sacrificing growth.

I think investors as they come to the country, they see some of the initiatives, we have $32 billion dollars of infrastructure spending that’s off budget. … So, if we can make sure that investment in infrastructure and resorts takes place, we simplify regulation, we simplify business setting up procedures, we manage expenses, we continue to attract FDI, we think that is going to result in the steps, let’s not forget as a GCC as a whole, we’re introducing VAT, we’re introducing excise taxes so I think the combination of all those factors leads us to be quite comfortable with the fiscal challenge.”

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