In this interview with The Worldfolio, Mr. Qays H Zu’bi, President of AMCHAM Bahrain, discusses the relationship between the US and Bahrain, the opportunities arising from US-Bahrain FTA, and the reasons why Bahrain is an attractive investment destination for US companies.
Bahrain and the US share more than 100 years of friendship and established diplomatic bilateral relations 47 years ago. A major milestone was the signing of the Bahrain–US Free Trade Agreement that came into force in 2006. From a commercial and investment point of view, how would you describe Bahrain-US relationship?
As you stated the relations between Bahrain and the United States go back a very long way – I would say around at least 120 years with the opening of the American Mission Hospital. And then we went into the era of oil production. We moved also into the era of banking. There have been different eras of relations between the US and Bahrain, and the US found in Bahrain a very stable partner. And that's why one of the free trade agreements was signed with the US here in Bahrain as a stepping stone to develop further the relationship.
Since the signing of the FTA, two-way trade between both nations has more than doubled hitting the $2 billion mark. However, it is fair to mention that trade between both nations could be much higher. How can the volume of trade exchange between both nations increase to take full advantage of the FTA? What role does AMCHAM play in this process?
We want to support the medium and small businesses, and try to get them to take advantage of the agreement. The FTA is underutilized at the moment by SMEs. We are trying to get a better understanding of how to do business as AmCham. And we are trying to support that through having experts come to explain to us how Bahraini companies can penetrate the US markets.
We start regional and try to see whether the products in Bahrain have been accepted within the region. Then we try to expand these products further into the United States.
An important reaffirmation of Bahrain as a key strategic partner to the US has been the recent visit of His Royal Highness Crown Prince Salman bin Hamad Al Khalifa to the White House in November 2017, during which $10 billion worth of MoUs were signed between both nations. How do you view this visit and its impact on further bolstering of joint relations?
The meeting I think was very important to AmCham Bahrain because it is with a new administration that has a different overview towards trade and investment. The new administration to a certain extent was revising agreements like NAFTA, and other free trade agreements, because it believes that the interest of the United States are not best served.
But we have managed – for the time being – to ride the wave and start a new relationship between Bahrain and the United States. This is only one meeting among many meetings that have taken place with the US administration. We have a lot of people coming from the Department of Trade here and the State Department to Bahrain. And so there are a lot of meetings that are taking place at the lower level, basically to support this new vision of developing trade and commerce between both countries.
And AmCham is a catalyst. We to a certain extent facilitate. We attend meetings. We are advocates. For instance, we sometimes go and knock on doors in the United States, take up issues that we believe US companies in Bahrain might be having. We tend to do a lot of that in addition to trying to promote the free trade agreement.
The Trump administration is looking to impose tariffs on products like aluminium. Is this something Bahrain should be concerned about?
I think the matter is still in its infancy. We don't know too much about it yet and how it's going to impact us or not. But definitely as AmCham we will be supporting the aluminium industry in Bahrain. We've already initiated contacts with the US to protect the companies that might be affected.
How would you describe the Bahrain business and investment climate? What can US investors expect of a market like Bahrain?
I will tell you. Historically if we go back to the '70s when the rest of the gulf was not developed Bahrain had developed infrastructure. And that's why with the problems that ensued in Lebanon, the war there and so on, a lot of the international banks moved to Bahrain.
Bahrain became a hub for the banking industry. It also became a school, or a college, or a university for teaching bankers. So if you look at many of the bankers around the region a lot of them graduated from the city banks of Bahrain.
In addition we have for instance Gulf Air. A lot of the staff of Gulf Air are not who they used to be. They work in Etihad. They work in Emirates. Bahrain has been a college for producing good people. A lot of the very sophisticated professionals graduated from Bapco, the oil company, or Alba. In fact, Bahrain is very well placed in that sense. We have our ups and downs. We are today part of international trade. With signing a free trade agreement you lose your sovereignty. You're no longer a sovereign country when it comes to trade.
What that imposes on you is new criteria, new laws, and you have to adhere and change your local laws to be able to adhere to these international agreements that you have signed, and Bahrain is doing it slowly.
We have moved in three stages. The first stage was in the '70s with the banking industry and the petro dollars coming in.
Then we had stage two where the money that came in helped Bahrain develop its infrastructure. So you had the highways, the schools, the hospitals. So there was a boom at the time in construction and what have you.
Then stage three was the opening of the bridge with Saudi Arabia that brought us investment and brought us tourism.
So then stage four: I was hoping that would be Formula One. We paid a lot for it, and I was hoping that this will turn into an industry. But unfortunately it hasn't. Today going forward we have to rely on the clean energy industry. We have to rely on companies that are technology-related, because we are going into the direction of artificial intelligence. And I think Bahrainis are very well educated, and a lot of them could find opportunities in this new era of Amazon, FedEx, etc. These are new opportunities that we are trying to activate at the moment.
How do small and medium-size companies from US engage with AmCham if they want to tap a market like Bahrain?
They start by contacting us. And then every month we also have speakers who come. We invite a lot of people to our functions. And we have a lot of support from the banks like the Citibank and JP Morgan who will come on and sponsor some of our events. We have ongoing events.
At some of the events for instance they touch directly on American companies or American individuals. For instance when there is a revision of the tax in the US some people did not understand it so they come to us. We tried to bring somebody to come, like one of our members or non-members to come and give a speech on that to explain the situation.
Bahrain recently rectified FATCA. And on this basis there are a lot of questions that the document when you see it it's quite cumbersome and difficult to understand for regular people. These are some things that we would take on. And we have some experts to explain the situation.