The Malaysian Insider

NOV 1 — There is a story that top bureaucrats in the tiny Gulf state of Bahrain like to tell to illustrate its struggle for economic relevance.

An international accounting firm had initially been based in Bahrain but decided to move the regional office to Riyadh, the capital of neighbouring Saudi Arabia.

After a few years of operating there, the firm closed the Riyadh office and moved back to Bahrain. And it was the unwritten reasons for doing so that were the most interesting.

“The head of the firm apparently said that he could not stand his wife calling him at 2pm every day, badgering him to come home,” says Mahmood Hashim Al-Kooheji, the deputy chief executive officer of state investment holding company Mumtalakat.

According to him, she was bored to tears because the laws in Saudi Arabia do not allow her to drive or to leave the house unaccompanied.

“After they moved back to Bahrain, that CEO told me he now has the opposite problem,” continues Mahmood. “She’s never at home when he comes home even after six!”

The kingdom of Bahrain has always thrived on being a surprising oasis of openness in the oil-rich Middle East, where the popular perception is that the influence of Islam is uniformly writ large in the rules and customs of society.

Men and women go to work in traditional Islamic attire, but it is not compulsory or even preferred. There is a strong emphasis on family values (civil servants finish work at 2.15pm), but women are otherwise left to do as they please and go where they want.

The local people fraternise openly with expatriate colleagues and friends in the many international bars and restaurants that dot the island. Alcohol flows freely, as long as the establishment is at least partly owned by foreigners.

“You don’t get this anywhere else in the Middle East, so expats want to come and work here,” says Sheikh Mohammed Essa Al Khalifa, a member of the Bahraini royal family who also heads the nation’s powerful Economic Development Board (EDB).

And even though one might think that it might grate in this part of the world to be affectionately known as “Sin Island” — touting it, even, as a competitive advantage — Sheikh Mohammed says his neighbours have long become used to Bahrain’s unique role and position in the Gulf.

“Everyone knows we have no choice but to be open,” he says matter-of-factly, taking a sip of Diet Coke as he talks to the gaggle of Singapore reporters on a media familiarisation visit.

“We are small and don’t have the benefit of vast natural resources.”

Indeed, Bahrain is only 750 sq km in size and has a population of slightly less than one million.

It has some aluminium, natural gas and oil reserves, but these are a drop in the ocean compared to what its immediate neighbours — Saudi Arabia to the west and Qatar to the south — possess.

All it really can leverage on, therefore, is its strategic geographical location as a trading hub in the Gulf between East and West and the talent of its people, says Sheikh Mohammed.

This is why Bahrain has always done things differently. It was the first country in the Gulf to invest in public education in 1919 and educate women in 1928. Today, all Bahrainis speak English fluently in addition to the national language of Arabic — a key attraction for doing business there.

In a drive to distinguish itself in the region, Bahrain also became the first to establish a banking sector (1970s), install a computer (1978) and introduce democratic reforms (2001).

Last year, the King even appointed a Jewish woman, Houda Ezra Ebrahim Nonoo, as his ambassador to the United States.

Bahrain’s situation is very much similar to a place like Singapore, says Sheikh Mohammed, and this is why it has tried to emulate the latter’s success in many ways.

It has taken a leaf from the 710 sq km Lion City in everything, from diversifying the economy and establishing a Temasek-like entity (Mumtalakat) to invest reserves and drive improvements, to having state-owned companies like Aluminium Bahrain (Alba), Batelco and Gulf Air.

“We even consulted Temasek on the decor of this place,” jokes Mumtalakat”s Mahmood. “They told us, whatever you do, have lots of meeting rooms!”

Like some of his Singapore counterparts, the articulate and urbane Mahmood wears many hats — perhaps because the establishment feels there is not enough top talent to go around in a country the size of Bahrain. In addition to being deputy CEO of Mumtalakat, he is chairman of Alba.

The CEO of Mumtalakat, Talal Al Zain, is also chairman of Gulf Air, a position he recently took over from Mahmood.

Over dinner, before rushing off to attend another two events on his hectic diary, Zain tells us that his top priority is to make Gulf Air punch above its weight.

Success is critical, Zain and his colleagues agree, because shouting above the crowd will increasingly become critical at a time when richer rival cities like Abu Dhabi and Dubai are hogging the limelight.

Even though Bahrain’s financial centre has more than 40 years of history and boasts more than 4,000 banks, it has recently been eclipsed by Dubai, where every international banking giant has set up shop.

“Hundreds of office towers have been built in Dubai,” says a British banker who used to work there. “How many towers are there in Bahrain? It’s still mostly flat.”

Dubai also has one of the busiest ports in the world, handling more than 14 million 20-foot equivalent units (TEUs) annually. Bahrain’s new Khalifa bin Salman port, which was recently tendered out to shipping giant AP Moller-Maersk to operate, currently handles just 300,000 TEUs a year.

Such comparisons do not seem to faze the Bahrainis, at least not outwardly. One expat businessman who spoke to The Sunday Times during the trip says it is not the culture in the Gulf to make competitive comparisons openly.

So the Bahrainis address the issue by saying that the success of these sister cities serves only to attract more foreign interest in the US$1 trillion (RM3.36 trillion) Gulf market.

“I don’t view this as competition because there is a big difference between what we are doing and what our neighbours are doing,” says EDB’s Sheikh Mohammed.

Dubai chose to grow through the import of people, he points out. Indeed, the city’s population has reportedly shrunk about 20 per cent since the start of the financial crisis. Mega building projects have also been halted.

“In Bahrain, development must serve a purpose, not simply growth for growth’s sake,” he adds.

As one looks around the city, it is clear that Bahrain is not standing still.

Its gleaming Formula One track, which won awards for its design in 2004, was the original trigger for other Gulf cities to jump on the bandwagon.

It is situated in Al Areen, a massive 2 million sq m leisure and entertainment site in the desert. Singapore’s Banyan Tree group has already set up a spa there and there will be huge wildlife and water parks.

In the city, on another 1 million sq m of reclaimed land is the new Bahrain Bay development, which will comprise hotels, malls and condos. Singapore’s CapitaLand has invested in a US$600 million retail and residential development on the Bay.

Overshadowed by the hype surrounding its glitzy neighbours, Bahrain’s own slow but steady approach seems positively out of step with the times.

“We are the tortoise racing against the hare,” says Sheikh Mohammed. “But only what is right can ultimately be sustained.

“Just don’t confuse that with a lack of ambition.” — Straits Times