Although foreign companies are not required to have local partners in most sectors and under the U.S.-Bahrain Free Trade Agreement U.S. companies can bid on tenders as a local company. they are often useful given their strong government contacts and ability to postively influence government decision-making. The “Bahrainization” of the labor force – a system incentivizing employers to employ Bahraini nationals – can lead to delays and confusion over work permit issuance and renewals for foreign nationals. In November 2023, Bahrain’s labor fund, Tamkeen, launched the National Employment Program aimed at incentivizing the private sector to hire Bahrainis through wage subsisides.
Many of Bahrain’s largest infrastructure projects are funded by its wealthier GCC neighbors. Although those projects are tendered via the Bahrain Tender Board, final award decisions are made by the country that funds specific projects, which may override the Tender Board’s recommendation and mandate the selection of a GCC registered company.
Since 2019, a reduction in electricity subsidies, rising global interest rates, and reduced access to financing among local banks have increased the cost of doing business among Bahrain’s small- and medium-sized enterprises. Projected increased energy costs, depleted natural gas reserves, and Bahrain’s small market size relative to its well-capitalized neighbors present challenges for larger manufacturers and enterprises.
In recent years, Bahrain has focused on streamlining customs clearance and commercial registration processes and building transparency in quality standards which U.S. companies report has made it easier to do business in Bahrain.