An Economic Development Board executive speaking to Reuters revealed that Bahrain is undergoing advanced talks with cloud computing companies from the United States, China, and the United Arab Emirates, as part of the country’s goal of diversifying its oil-based economy.
An article originally published by Reuters highlighted cloud computing and foreign direct investment as “key planks” of Bahrain’s economic recovery programme, which aims to grow non-oil domestic product by 5% in 2022, and includes $30 billion in strategic projects.
Competitive Cloud-driven Diversification Across Middle East
According to a report by Markets and Markets, the Middle East cloud computing market is expected to grow from 14.2 billion USD to 31.4 USD by 2026, at a compound annual growth rate (CAGR) of 17.2% during the forecast period. Cloud computing industry giants, including IBM, Oracle, AWS, and Google, have also been expanding their business in the region to capitalise on growing cloud adoption within the Middle East by local enterprises.
Cloud computing companies are also not new to the Bahrain market: in July 2019, AWS opened the first AWS Middle East Region in Bahrain, and signed agreements with the Information and eGovernment Authority Bahrain.
However, Reuters observed that Bahrain was not the only country seeking to diversify its economy by scaling up on technology. Notably, major regional economic players, Saudi Arabia and the UAE, have also been banking on technology to reduce their heavy dependence on oil as a driver of their economy.
Even oil companies within the Middle East have been expanding into cloud computing. For instance, Saudi Aramco Development Co. a subsidiary of oil behemoth Aramco, teamed up with Google Cloud to offer its servers to customers based in Saudi Arabia. The UAE is also opening three new Amazon Web Services (AWS) centres in 2022.
Hence, Bahrain will likely face considerable competition from its regional neighbours, as it attempts to draw in investments from major cloud computing companies. In addition, Bahrain has taken steps to assure customers that they can retain data sovereignty. Bahrain introduced a “data embassy law”, the first of its kind in the Middle East, which allows other countries to store data in Bahrain while allowing the data to still be governed by their own country’s domestic data protection law.
Bahrain’s Economic Recovery Targets
Reuters noted that Bahrain aimed to achieve fiscal balance by 2024, but had been delayed from meeting this target due to economic disruption from the pandemic.
While Bahrain managed to avert a credit crunch owing to a $10 billion aid package from Kuwait, Saudi Arabia, and the UAE, Bahrain has begun implementing a more viable, long-term plan for economic recovery through foreign direct investments.
Ali Al Mudaifa, Chief Investment Officer of Bahrain’s Economic Development Board, told Reuters that “we’re willing to compete for big projects.”
“We think our value proposition stands on its own two feet, and we are also looking for synergistic opportunities between the countries.”
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