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Financial development in Bahrain continues despite global downturn

A report published by the World Economic Forum (WEF) concluded that Bahrain has the fourth most favourable tax regime in the world, out of the 55 leading economies surveyed.

The Financial Development Report ranked Bahrain 27th, overall, in terms of its financial system, up from 28th in 2008.

It concluded that Bahrain shows competitive advantages in the quality of its institutional environment, including a substantially liberalized financial sector and solid corporate governance.

As a result of its open, well-regulated economy Bahrain is ranked as having the fourth most favourable tax regime, is 12th in terms of being a low cost location to do business and was hailed for its substantially liberalised financial sector (16th) and solid corporate governance (20th).

The report also gave Bahrain high marks for liberalisation of the domestic financial sector, with Bahrain being ranked 1st for corporate governance and 2nd for private monitoring of the banking industry.

Shaikh Mohammed bin Essa Al Khalifa, Chief Executive of the Bahrain Economic Development Board (EDB) which has the overall responsibility for formulating and overseeing the economic strategy of the Kingdom and for creating the right climate to attract inward foreign investment commented, “Our performance in this year’s report illustrates Bahrain’s competitive advantage worldwide, particularly the favourable tax structure, sophisticated regulatory framework and reputation for transparency. Add to this our low operating costs and Bahrain is a very attractive place to do business.”

Bahrain’s strong position is testament to the efforts of the EDB and progressive policies introduced by the government in recent years, offering low taxes, robust and effective regulation, and a domestic environment which allows 100% foreign ownership of financial institutions.

By implementing these measures, Bahrain has created an attractive business environment for international investors and built the foundations for the country’s long-term prosperity. This approach is now enshrined in the Kingdom’s Vision 2030 and National Economic Strategy, designed to encourage the private sector to drive growth, support further diversification of the economy – already recognised as the most diversified in the Gulf – and ultimately elevate national living standards by creating greater opportunities for Bahrainis.

This virtuous circle of liberalised policies has also contributed to Bahrain’s banking system ranking as the 13th most stable within the financial stability category, and 1st in the lack of frequency of banking crises.

Overall, Bahrain performed very well within the region, the Kingdom of Saudi Arabia ranked 24th (2008: 27th), Kuwait ranked 30th (2008: 26th) and the UAE ranked 20th (2008: 14th). Alongside Saudi Arabia, Bahrain was the only GCC member to show an improving positional trend.

Further to the Financial Development Report rankings Bahrain was also rated as the 16th freest economy in the world in the 2009 Index of Economic Freedom and 33rd of 127 economies in Forbes’ Best Centres for Business 2009 report

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