The Free Trade Agreement (FTA) between Bahrain and the US has many facets of advantages to the kingdom, says Bruce Hall, Alba chief executive.

Just the enhanced relationship with the US alone could bring foreign investments here and help the country to improve its tertiary industries such as the services, tourism, financial and banking sectors, he forecasts.
“The FTA is a great thing. Look at what happened in Jordan. Hopefully the kind of export growth witnessed by that country will happen here.”
However, Hall does not see a scenario in which downstream industries will prop up suddenly and find a market that is economical for them to make a profit.
“The downstream industry here is going to grow as a result of developing businesses in the Gulf region and the customer base in the region. And there is a big opportunity as Iraq could become a huge market for our industries,’’ he says.
It is also questionable whether the FTA would help in the development of new downstream aluminium industries, he says. “You will always find refining near a bauxite deposit, a smelter where cheap power is available and a downstream industry close to a consumer market. In the Middle East we do not have a great consumer base. So it’s hard to imagine why an extrusion plant will be built in Bahrain because of the FTA. I don’t see the economy of that working.”
The key to export success is the development of industries which produce goods that give good payload, he says. “If an American company wants to produce engine blocks, that is possible because it can put 20 tonnes in a container, lowering the transport costs. But unless one can get a payload in the container, I don’t see why one would be making a product a long way away from its consumer base.
“You can make any product but if your market is on the other side of the world, I don’t see how you make money out of it.”
Hall feels that the fact that there is no income tax in Bahrain is very attractive. “There is got to be a way to market it to attract new ventures,’’ he says.
According to Hall, Bahrain firms will be well advised to compete on quality and label rather than price in the new markets. “People are still prepared to pay for quality or a label. Don’t work on trying to reduce prices, because one will never be able to match China in this,” he says. <