At a time when the GDP share of Bahrain's banking and oil and gas sectors dipped in 2001, the manufacturing and trading sectors had theirs advancing marginally, a sign that they hold promise as potentially pivotal builders of the national economy.

Manufacturing contributed BD332.4 million last year compared with BD311.4 million in 2000, enabling it to have a 12.2 per cent share in the GDP against 12 per cent in the year before. GDP in real terms amounted to BD2.73 billion in 2001 against BD2.6 billion.

Trading arrogated for itself a GDP share of 12.9 per cent compared with 12.8 per cent in 2000, while the financial sector and the oil and gas sector suffered drops of 2.6 per cent and 0.6 per cent respectively in their portions of the GDP.

Bahrain wants its industrialists to join hands with players from abroad in ventures that could benefit from the proximity to Saudi Arabia and its considerable oil and gas resources. There have been partnerships of this kind, the Gulf Petrochemical Industries Company (GPIC) serving as a good example with two of its major shareholders being the Saudi petrochemical giant Sabic and the Kuwaiti company PIC.

Downstream aluminium industries too have become active in marketing their expertise through joint ventures abroad. Balexco, which already has a joint venture in Qatar, recently announced plans it would co-own an operation in South Yemen's port city of Aden.

Manama has said it is serious about privatisation and as if to prove it means business it announced that the busy ports of Mina Salman and Mina Khalifa bin Salman would be thrown open to private shareholding. Minister of Finance and National Economy Abdulla Saif has been assigned to prepare the implementation programme that could well be the blueprint for similar important projects in the future.

Bahrain was the first GCC country to introduce diversification, aware it possesed only meagre energy resources and would have to tap business from the overspill of regional oil and gas rather than directly from that sector. The establishment of Aluminium Alba in 1971 put the country firmly on the path of industrialisation even while the government encouraged the banking sector to consolidate itself and become the region's financial hub. With a GDP share of 17.2 per cent from oil and gas and moderate shares from the financial, manufacturing, trading, real estate and hospitality and transport sectors, the kingdom is the most diversified country in the region.

The government has asserted it considers private enterprise the cornerstone of a new 10-year economic development strategy and has said it will encourage private business to take the lead in nation building. It has stressed that foreign investors will benefit from streamlined licensing and other procedures developed by the Economic Development Board (EDB) whose membership embraces relevant ministries and the private sector. Abdulla Saif, several months ago, told the Chicago Council on Foreign Relations, that a new specialist private hospital would complement other private sector health facilities. The remark was meant to assure his audience that Bahrain was interested in having private ownership and expertise in areas even beyond manufacturing and oil and gas services.

In the last two years, the government entered into a flurry of trade agreements with governments worldwide in the hope that entrepreneurs there would be encouraged to organise tie-ups for ventures in Bahrain. On its own part it has pledged more revenues for what it describes as "special projects". These are obviously infrastructural in nature. Strong financial support is being extended to the vital Shaikh Khalifa bin Salman Port and Industrial Area, part of the BD250 million ($664 million) Hidd Development Plan that will create a super port, an industrial park and a free trade zone. One of the largest contracts in the project, worth nearly BD70 million, was awarded to the US-based Great Lakes Company and involves the preparation of land for the port and the industrial area as well as a seven-kilometre causeway linking the two areas.

In keeping with the times, Bahrain is studying the draft of an e-commerce law that will provide businesses in the country with the legal infrastructure needed to transact business over the Internet. According to EDB chief executive Jamal Hazeem, the draft law takes the best of Canadian, US, EU, Singapore and Honk Kong experience in creating an environment conducive to e-business and shapes it to suit Bahrain's needs.

From the manufacturing standpoint, Bahrain's proud operation, Aluminium Bahrain (Alba), has been in the news, not only for the expansion it has undergone in recent months but also for what it aspires to do in the near future. The smelter is set to increase its capacity by 50 per cent to 750,000 tonnes per year, having signed an agreement with Aluminium Pechiney to utilise its Potline 4 technology for Potline 5. Alba also plans to undertake another major expansion by the end of the decade that should make the company an even stronger player in the world aluminium market. Alba's board has approved a strategic alliance agreement with US-based Alcoa Inc for evaluating the additional capacity of 277,000 tonnes per year that will put it past the million-tonne mark.

In one of the great projects of the region, Alba last year built a $400 million coke calcining plant, making it self-sufficient in its coke requirements. As part of the wider calcining plant project, a seawater desalination unit was set up (to utilise heat generated from the operations) and the jetty upgraded at the smelter's marine terminal. The plant is meeting the smelter's requirements for calcined petroleum coke of around 250,000 tonnes, leaving another 200,000 tonnes for exports.

The availability of 41,000 cu m per day of potable water to the national network was an important outcome of the project, while the unit itself has the potential to contribute $50 million annually to the national exchequer. It was also a good example of import substitution, Alba no longer needing to import some 250,000 tonnes per year of calcined coke from the US and Argentina.

Alba recently introduced a new product, the foundry ingot A356.2, alloy that will enable it to meet growing demand from the car industry for the production of aluminium wheels.

Another important force in Bahraini industry, GPIC, managed to make profits of $25.19 million in 2001 despite fierce world competition. The company increased production of ammonia, methanol and urea to 1,479 tonnes, eight per cent more than "the budgeted figure". Urea achieved the highest production level with 41 per cent, followed by ammonia, 31 per cent and methanol, 28 per cent. The company had reported a profit of $40 million in 2000. GPIC products went to the US, South America, the Indian subcontinent and Japan, among other places.

Bahrain's industrialists are working hard to make themselves more competitive in the international market. Bahrain Pipes Factory, for instance, recently purchased virtually an entire factory from a Thai company. With this development, it will more than double production capacity by the end of 2002 and fulfil demand it is now not able to meet in PVC and polyethylene-based items. The factory's current production is 4,800 tonnes per year, a figure set to rise to 12,000 tonnes with the plant acquisition. The turnover will also subsequently expand from the current BD2.4 million to BD6 million.

Bahrain Pipes has been helped by a recent Bahrain-Jordanian bilateral agreement, which bestowed customs benefits on Jordanians who imported Bahraini goods. A company official said Jordan was now opening up well and several large shipments had been made as a result of the agreement.

Bahrain Rubber Company (BRC) has announced it plans to double production of polyurethane items, manufacture more tyre fillings and set up a new unit for making and recoating printing rollers.

It said good demand from aluminium and steel mills had prompted BRC to expand production of polyurethane items from the current level of 36 tonnes per year.

BRC has been producing tyre refills for less than a year but the product having been well accepted in the Bahrain market, the company wishes to expand capacity. The material supplied by BRC is special grade soft rubber which acts like a cushion within the tyres making them "puncture proof". It is being used in tyres for forklifts and earth-moving vehicles. Production is now about a tonne per month, and one of the buyers is Alba. The refills are yet another example of import substitution that Bahrainis have accomplished.

A company that is grittily fighting adverse business conditions, brought on by oversupply in the yards, is Bahrain Ship Repairing and Engineering Company (Basrec). Since the company's creation in the early 1960s, several shipyards gave been established in the region and the field is now crowded, leaving surplus capacity and a continuous price war. But Basrec is fighting to stay in contention and has other lines to draw from. It has an agency agreement from a company called Philadelphia Resin, which makes a chemical component for propeller engines and generators. The company is also the Bahrain agent for Metalock under which it repairs steel by stitching. A trading company it has formed with the name Teams Bahrain deals in electrical equipment such as switchboards and lighting for the general industry.