Bahrain has been hurled into the maelstrom of globalisation, but it will best weather its challenges if its industries have the hallmark of quality and its products are competitively priced, Minister of Industry Dr Hassan Fakhro has said.

The kingdom’s competitiveness would also be put to the test in the Free Trade Agreement (FTA) it has signed with the USA and which, he said, “dictates that whatever products and services are generated, they must be able to compete with those generated by its partner.”
Dr Fakhro, in an exclusive interview with Gulf Industry, said dealing with the challenges would require coordination, flexibility in approach, the optimum use of natural resources and the presence of subsidiary industries and operations that could be capital intensive but not energy intensive.
“To compete in such a tough environment, coordination is needed not only at a national level but also on a regional level to guarantee a reasonable slice of the global turnover, commensurate with the size of the Bahraini economy in the total global economy,” said Dr Fakhro.
“There are some basic parameters that govern the success and survival of any industrial activity,” he observed. “Some of these factors are common and global, and some are specific to a region or even to a country. Since global market conditions are dynamic and affected by many factors, which may change with time, policies and plans should be flexible enough to respond effectively to these changes.
 “Some of these common and basic factors include availability of a reliable resource base as energy and feedstock, availability of skilled manpower, the existence of proper policies and practices, a good research base and development programme, and, most of all, an aggressive sales drive, to name but a few.
“Specific factors may include the selection of the type of industry most suited to a specific country, its endowment of natural resources, maturity of the basic industries on which subsidiary industries can be established, the availability of local capital and the ability to attract foreign capital, all bearing in mind the geopolitical status of the country and the manpower skills available.”
Dr Fakhro observed that Bahrain had managed to depend on its indigenous hydrocarbon resources, limited as they were in comparison with other states in the region.
“Sooner or later, however, it will have to supplement these resources with imported natural gas to ensure the continuity of industrial activities,” he commented. “It will soon be a net importer of energy and this imposes a heavy burden for a sound energy policy, not only focused on the supply-side efficiency, but, just as important, on demand-side efficiency as well.
“The supply-side aspects may include using every means possible to increase the hydrocarbons resource base through aggressive exploration and production programmes and the search for alternative non-conventional sources of energy including the utilisation of solar and wind energy.
“But this will necessarily dictate the importation of supplementary natural gas from reliable sources, and in the right quantities and at the right prices.”
The creation of a regional natural gas grid to serve GCC states was therefore an important means towards coordinating the region’s energy requirements, he said.
On the demand side, the minister termed as “crucial” the conservation of energy through the most efficient utilisation of primary energy and its conversion to secondary energy such as electric energy.
Fuel efficiency in power generation and an efficient transmission and distribution system were of paramount importance, he stressed.
The trend was towards gas-fired combined-cycle operations rather than centralised power plants and there was a dire need to save substantial amounts of energy by adopting more efficient approaches. The favoured approach in the energy market, whether primary or secondary, was liberalisation and allowing non-discriminatory access to newcomers in the areas of transmission and distribution in existing companies. This had resulted in the emergence of independent power producers (IPPs).
“The kingdom of Bahrain has managed to conclude the first agreement with an IPP recently, and hopefully there will be more on the way,” Dr Fakhro said, adding that it was necessary to exert efforts to liberalise and deregulate the market in all its sectors, maximise participation of the private sector and impart maximum transparency.
Considering the energy constraints and the tough competition for capital regionally and globally, the industries to encourage would be those that would be most efficient. In the last three decades Bahrain managed to establish several heavy, energy- and capital-intensive industries. In addition to the oil industry, which existed since the discovery of oil in the 1930s, Bahrain succeeded in establishing aluminium, petrochemical and iron industries, which were both capital- and energy-intensive.
“The limitation of energy and capital availability dictates that these industries be low energy users and utilise capital optimally. That is not to say these basic industries would be totally abandoned,” he said. Advances in energy utilisation should encourage heavy basic industries to use energy most efficiently and with the least adverse effects on the environment, while also helping to create spin-off industries. The strengthening of the basic iron industry would help in the establishment of a steel industry and ancillary units.
Bahrain, he said, would give special attention to high-tech industries including computer hardware as, although they were more capital-intensive than the subsidiary industries he had outlined, they were certainly not energy-intensive.
“They, nevertheless, require thorough market research to establish the industry and penetrate its market. They also require a more skilled manpower than either basic or subsidiary industries and as such this requirement should be integrated in manpower training and development programmes.”
The minister also referred to traditional craft, which, he said, Bahrain was very proud of and intended to safeguard by maximising their development and ensuring their economic viability. In addition to the cultural values they provided employment opportunities to an all-Bahraini workforce. Bahrain’s emphasis though should be on creating strong and viable subsidiary industries based on basic industries of the kind he had outlined.
“Research and studies have indicated that not only are downstream industries less energy intensive, but that they require less capital and provide more employment opportunities per dollar of capital expenditure than the energy and highly capital-intensive basic industries.
“Industrial policies should be able to generate job opportunities for citizens at an income level that allows a reasonable standard of living. These subsidiary industries are also more environmentally friendly.” That would be a good thing as industrial pollution and its impact on the eco-system was of global concern now.”
Dr Fakhro also touched on human resources, saying a factor determining the viability of any industry was the availability of the right manpower mix.
“Educational and training policies and programmes should ensure a labour force with the right skill to suit not only existing industries but emerging ones too. The trend is towards more sophisticated computer-controlled processes. This is not to say that traditional craft-oriented skills be ignored. There has to be a balance between academic and occupational expertise. Both are essential.
 “Global exposure dictates that managers and decision-makers should have a full grasp of the safety, environmental and legal aspects. Product liability should be an aspect to be familiar with if the products are to be globally acceptable.”
In his concluding remarks, Dr Fakhro recapitulated his observations saying a successful industrial policy would include a sound energy policy addressing both the supply end and the demand end and a right mix of industries. The industries would take into account energy and capital requirements; employment opportunities per dollar of capital expenditure; the environmental impact and further integration of an existing major industry.
A sound industrial policy would also entail a liberalised and deregulated market with the maximum participation of the private sector, transparency in policies and procedures and a right mix of manpower to ensure the sustainability of industrial activities.