Bahrain has been actively promoting its manufacturing and industrial sectors as part of its efforts to reduce dependency on oil and diversify its economy. These diversification efforts align with Bahrain's Economic Vision 2030, a comprehensive development plan aimed at transforming the country's economy.
Last year, Bahrain launched its Industrial Sector Strategy (2022-2026) and is firmly on track to achieve the targets outlined in this plan, including an ambition to be a regional hub for manufacturing, logistics and new industries.
The strategy, as part of Bahrain’s Economic Recovery Plan, aims to attract international investment, through the development of new additional industrial parks in Bahrain (US Trade Zone and the expansion of Sitra Industrial Park). Such plans will increase the allocated land for manufacturing, encourage technological infrastructure and digitizing manufacturing and increase the sector’s contribution to the kingdom’s GDP.
The adoption of advanced technologies, such as artificial intelligence and robotics, is transforming the manufacturing sector and it is becoming more interconnected, automated and data-driven than ever before.
The new technologies are bringing in efficiency and productivity, while creating new job opportunities.
iFactories
Bahrain has unveiled a national initiative called iFactories, designed to propel the industrial sector into the era of the Fourth Industrial Revolution, also known as Industry 4.0. This move is part of the industrial sector’s 2022-2026 strategy.
The initiative, launched in strategic partnership with Tamkeen, aims to assess the readiness of factories, measure their level of digital maturity, and enable them to invest in technology infrastructure and manufacturing automation.
Unveiling the key initiative, Abdullah bin Adel Fakhro, Minister of Industry and Commerce, said the scheme aims to transform 300 factories into smart factories by 2026.
It seeks to adopt the best regional and global practices in managing production lines to ensure the sustainability of the industrial sector’s resources, raise its productivity, increase its efficiency, and reduce dependence on unskilled manpower, and shift towards automation and modern technologies, in order to create promising job opportunities for citizens, he stated.
Mr Fakhro valued the government’s support for further developing the industrial sector to strengthen national industries and increase their efficiency and global competitiveness.
Maha Mufeez, the CEO of Tamkeen, emphasised that this partnership aligns with their objectives of fostering the private sector as the primary driver of economic growth in the kingdom and promoting Bahrainis as the preferred choice for employment in the labor market.
In-country value
The kingdom also launched a new programme called ‘Takamul’ that aims to reward industries for increasing their local content and generating more economic benefits within Bahrain.
The programme, which focuses on ‘In-Country Value’, has laid down six criteria under which all national industrial establishments can be evaluated.
A measure of the economic benefits that a company or project generates within a country, In-Country Value is calculated by taking into account factors such as local expenditure on manufacturing, local products and services, investments, the hiring and training of Bahrainis, the creation of job opportunities and the amount of exports generated.
Industries that meet the specified criteria and percentages will be granted a certificate entitling them to a 10 percent preference when bidding on government contracts.
Among key goals of the programme are strategically localising supply chains, developing new local industries and services and stimulating and attracting foreign investments.
Opportunities for investment exist in digitization of manufacturing, renewable energy and aluminum downstream.
Major industries
Key sectors such as aluminum production, petrochemicals, steel, and food and beverage manufacturing have shown promising growth and attracted foreign direct investment (FDI).
Despite a 0.9 percent decline in the manufacturing sector in the second quarter compared to the same period last year, it still accounted for 13.6pc of the country's real GDP.
There have also been notable achievements in specific industries during the period. The Gulf Petrochemical Industries Company (GPIC) reported a strong 6.5pc YoY gain in production, while Aluminum Bahrain (Alba) recorded a 2.3% YoY increase in production. However, a drop in global aluminum prices impacted the profits of Alba during the period.
Alba, one of the largest aluminium smelters in the world, is currently considering an expansion with a feasibility study underway for the seventh potline.
Alba has signed up Bechtel, a global leader in engineering, procurement and construction (EPC) sector, to conduct a feasibility study for its Line 7 project. Now due for completion, the study will provide a comprehensive evaluation of all factors to determine the viability of the Line 7, which is expected to have a similar production capacity as Line 6 – within the range of 540,000 tonnes per annum.
Additionally, Alba this year began commissioning the Forced Cooling Network (FCN) Project at Potlines 4 and 5. The project has enabled Alba increase its production capacity by approximately 17,000 metric tonnes per annum.
With a production of 1,600,111 metric tonnes (MT) in 2022, Alba continues to be the world’s largest aluminium smelter ex-China, according to a rating released by Wood Mackenzie.
Work is currently in progress on Alba’s Power Station 5 (PS5) Block 4 Project, which is expected to be operational in Q4 2024. Block 4 will increase the nameplate capacity of the PS5 Complex from 1,800
MW to 2,481 MW and reduce its overall greenhouse gas emissions intensity ratio by 0.5 tonnes of CO2 per 1 tonne of aluminium produced.
Alba recently marked a new milestone on the project with the arrival of Mitsubishi Power’s M701JAC Gas Turbine (GT), which is a first-of-its-kind gas turbine in the world manufactured for a primary aluminium smelter.
Alba is also installing 11,300 solar photovoltaic (PV) panels over 37,000 sq m with a capacity of more than 6 MW. The solar farm will consist of around 11,300 panels to be fixed on the rooftop of Alba’s car parks and some of its buildings including its Spent Pot Lining Treatment (SPL) Plant. The project will generate around 10,539 MWHr per year and reduce 7,591,760 kg of carbon emissions per
year – corresponding to a total reduction of 189.79 million kg of carbon emissions over a 25-year span, Alba said.
Among other key expansion projects, Bahrain Steel Company, a fully owned unit of industrial group Foulath Holding Company and a leading producer of highgrade iron pellets, has embarked upon projects worth $250 million. These include establishing a storage shed and 100 MW solar energy plant on industrial land dedicated for the company’s broad operations.
The new stockyard shed, due to be completed in 2026, is expected to be the world’s largest pre-engineered building, according to the Gulf Daily News.
Food and Beverage
Food and beverage manufacturing is also identified as a key growth area in Bahrain Economic Vision 2030. Major international brands like Mondelez International and Arla Foods have expanded their operations in Bahrain.
The launch of the Bahrain Agricultural Foods Storage and Security Factory in January 2023 at the Bahrain Business Incubator Center in Al Hidd has further strengthened the food-processing sector. This initiative enhances supply chains for local grain producers and boosts food security.
Logistics
The logistics sector is a priority sector under the kingdom’s Economic Recovery Plan, which aims to position Bahrain as one of the top 20 global destinations for logistic services and increase the sector’s GDP contribution in 2030 to 10 per cent from 4.7pc.
To achieve this goal, the four-year Logistics Services Sector Strategy (2022-26), launched in November 2021, focuses on strategic initiatives such as regulatory review, infrastructure development, policy enhancement, investor incentives, and the promotion of investment opportunities. Simultaneously, it aims to strengthen regional and international engagement.
The kingdom, meanwhile, witnessed some significant logistics deals in the recent past.
Southeast Asia’s leading air cargo charter services provider, the Asia Cargo Network (ACN) group, and MENA Aerospace, a Bahraini aviation services provider, have started their operations in the MENA region from Bahrain.
As part of its growth plan, ACN placed an investment worth $135 million to become the biggest shareholder in MAE Aircraft Management (the aircraft and management division of MENA Aerospace) with a 49pc stake during the 2022 edition of the Bahrain International Airshow. The partnership operations will be under the MENA Cargo brand, the freight cargo subsidiary of MAE, and will be fully managed by ACN moving forward as it holds an Air Operator’s Certificate (AOC) in Bahrain which allows for the expansion of routes to the MENA region.
The ACN-MEA strategic partnership deployed two units of B737-300F aircraft that are currently in operations across the MENA continents connecting the GCC and Africa. The Bahraini operator says that plans are on track to end the year with five additional freighter aircraft made up of few units of B737-800F and B767-300F aircraft that will provide the connectivity between the Middle East, Africa, all of Asia and European markets.
Denmark-headquartered DSV opened a new 14,000 sqm logistics facility in the Bahrain Logistics Zone (BLZ) in Hidd with a $18 million investment in November 2022. During the opening of the unit, Elias Monem, Mena region executive vice-president for solutions and road at DSV, said: “Bahrain’s advanced infrastructure and favourable geographical placement are central factors in choosing to extend our business in the country. The new facility in Bahrain Logistics Zone will allow us to respond to the high demand and better serve customers in the region.”
Meanwhile, Malca-Amit, a leading global logistics provider for high-value goods, opened its first regional office in Bahrain. The office will provide door-to-door services, personal vaulting storage, and storage for jewellery and precious items.
Bahrain also achieved significant recognition in the field of logistics, solidifying its position as the most improving country in the GCC region, according to the Logistics Performance Index 2023 published by the World Bank. The kingdom climbed an impressive 25 positions since 2018, now ranking 34th globally and second in the Arab world. This remarkable advancement is attributed to milestone projects and initiatives implemented within the logistics sector over the past year.
By Zainab Salman