During our February 16 webinar "Cross-Border Business Development; Palm Beach & Bahrain" we were honored to have so many diplomats and professionals speak about the evolving relationship between the business and educational communities of Palm Beach and Bahrain, including The Deputy Chief of Mission, Maggie Nardi from the United States Embassy in Bahrain.
I appreciate the opportunity to address you all today, because, as has been noted, this is actually an exciting time to consider Bahrain. Like every other country, it suffered because of the pandemic — but it also had a twin hit with the substantial decrease in oil prices because oil and gas make up 70% of revenue here and over 18% of GDP. So that hit on top of the costs they had to spend to keep businesses afloat during the pandemic were tough.
The government invested $11.4 billion in SMEs in subsidies, they froze loan and interest payments, they subsidized water and electricity. They did a whole host of measures to make sure that the economy was not hit nearly as hard as some of the neighboring economies. And so while the GDP did contract in 2020, it has bounced back and grew almost 3% in 2021 and is expected to continue that with two to 3% growth through 2023.
So what I would say is they are not sitting on their laurels. It's not back to business as usual. They have already announced a very impressive and challenging, I think, business plan, of $30 billion in investment with private sector assistance over the next ten years.
They are hoping to attract another 3 billion in FDI by 2023. So those are very ambitious goals. They can't do it alone. It will have to be with private sector help, and they're looking to do it through a series of large scale projects in transportation, manufacturing, telecom, tourism, and the health sectors. And that will provide a lot of opportunities for US companies, both for exports and also for investment.
A couple of the examples are the new Bahrain Metro project, which is a light rail urban Metro transit system. It will cover 109 km and carry 43,000 passengers per hour. So the government is hoping to break ground on that later this year. Then there's the King Hamad Causeway, which is a 25 kilometer Causeway connecting Saudi Arabia and Bahrain, which will run parallel to the existing King Fad Causeway. And the government's finalizing that design and expects to tender it in 2023.
They're also looking to upgrade the national telecom backbone infrastructure with trusted vendors – we underscore – to increase broadband connectivity and efficiency. And there are opportunities to expand and build out new industrial facilities in downstream aluminum, petrochemicals, solar, waste energy and textiles.
So there are a lot of opportunities, but sort of the crowding glory for us because we signed an MOU at the beginning of 2021, is a dedicated US trade zone, which will be built out near the Seaport, which is only 45 minutes from the airport. So you have speed to air transit, and that will be a dedicated site for turnkey operations, US companies only.
It will be for both production, logistics and distribution, not just into Bahrain, but throughout the region, and doesn't have to be limited to the Gulf, but also beyond that. And so we are looking forward to supporting that. And, in fact, there will be a groundbreaking ceremony this Sunday to get that started. So I think what we are hoping is that with the establishment of this trade zone, that Bahrain will become more of a regional hub for American companies that are looking to establish themselves in the Gulf. So not just in Bahrain.
And the basis, as was discussed earlier by Al others, is the Free Trade Agreement, which went into force in 2006. And since that time, our trade and investment with Bahrain has tripled from $782,000,000 in 2005 to nearly 3 billion in 2018. Last year, with things were down a little two way trade exceeded $2 billion and contributed to the growth of companies, as well as new job creation and economic recovery. It eliminates tariffs and customs fees on virtually all merchandise and finished products traded between Bahrain and the US. And as was mentioned, Bahrain has a very welcoming business environment here.
You do not have to have a local partner. You can repatriate 100% of your proceeds. You can using the FTA, you can export products from Bahraini companies if you have 35% of Bahraini exports. There are lots of reasons to come here. In addition to the trade zone, which will be very close to transportation hub.
So whether it's as a logistics or a manufacturing hub, I would encourage you to consider Bahrain as an attractive gateway to the wider market, the GCC alone. Sorry, the Gulf Cooperation area has 50 million consumers, so that's just within the Gulf, and you can go beyond that. You can also export back to the United States. So there are companies here that are looking to export not just to the GCC, but to the broader Middle East and across East Africa and the IndoPacific region.
So there are a lot of good reasons to come to Bahrain. It's also a very high quality of life. There are direct flights to all sorts of places. And we are hoping there will be direct flights to the United States within the next year. That's something that the embassy is working very hard to facilitate, and that, of course, will make things much easier.
So at the embassy, we have a dedicated commercial officer.We have a commercial office and if you have any questions about exporting to or investing in Bahrain, please feel free to contact us. We're on the US embassy website expanding use of the free trade agreement and expanding the benefits of it to Bahrain any companies as well is a priority for the US embassy here. So we are here to help and so I thank you to Al for putting this together. I thank you, Mayor Weinroth, for supporting this effort and we look forward to your visit in the not too distant future.
Thank you.
— Maggie Nardi
Deputy Chief of Mission, U.S. Embassy in Bahrain
