Unmatched Cost Advantages for Logistics & Manufacturing Firms

Bahrain This Week

31-03-2025

According to the 'Cost of Doing Business in the GCC', manufacturing and logistics sector reports published by the EY's US office, businesses operating in Bahrain benefit from annual operating cost advantages of up to 69% in logistics, and up to 41% in manufacturing compared to neighbouring Gulf Cooperation Council (GCC) countries.
The in-depth study, which reported Bahrain International Investment Park and Bahrain Logistics Zone as the most cost-competitive special economic zone (SEZ) in the GCC to operate a manufacturing or logistics business. The reports collected and analysed key data, factoring in both direct and indirect annual costs associated with operating companies, such as office space, labour, transport and logistics, taxes, utilities, business registration and licensing comparing Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
The island nation of Bahrain, strategically located at the heart of the Gulf serving as a gateway to the region, has prioritised maintaining its cost competitiveness. A cornerstone of its strategy of maintaining its position as a trusted destination of choice for foreign investment with a focus on attracting investments into high-value sectors, coupled with its national priorities of realising key infrastructure projects and continuing to upskill and future-proof its talent pool, Bahrain continues to work towards building a diversified and resilient economy. Exemplifying investor trust, Bahrain's FDI Stock Relative to GDP is more than double the global average, standing at 93.6% as of 2023 (GCC:27.5%, World: 44.9%)
Commenting on the findings, Ali Al Mudaifa, Chief of Business Development at the Bahrain Economic Development Board (Bahrain EDB), said, 'Offering long-standing stability and strong interregional cooperative ties, the Gulf region continues to attract investments driven by ambitious growth visions – GCC economies collectively grew by 22% from 2021 to 2023, to reach a combined total of about USD 2.1 trillion; this is expected to reach USD 2.8 trillion by 2030 according to the IMF.'
Bahrain stands out as a trading hub providing significant savings in various operational areas. Within the logistics report, the cost of port storage costs are up to 52% more competitive, enhancing Bahrain's attractiveness for businesses seeking to set up or expand into the region. From both sector reports, EY indicated that annual labour costs in Bahrain are lower than the GCC average – up to 30% less for logistics companies and up to 24% less for manufacturing.
The Chief of Business Development at Bahrain EDB added, 'Bahrain's competitive advantages, favourable tax environment, and agile regulatory policies underscore a steadfast commitment to fostering a seamless and business-friendly investment environment, positioning our island nation as the ideal destination for logistics and manufacturing companies looking to expand in the GCC and beyond.'
Andrew Phillips, Partner/Principal & Co-leader of Quantitative Economics & Statistics (QUEST) at Ernst & Young said, 'Special economic zones and other measures are helping GCC governments to continue to diversify by attracting large-scale projects to reshape national economies by developing industries of the future. For manufacturing and logistics firms eyeing the region in search of a competitive cost environment, our sector reports determined that Bahrain is the most cost-competitive across the Gulf special economic zones we analyzed based on attractive labor, real estate rental, and utility costs for businesses and a low cost of living for employees.'
Bahrain's strategic location at the heart of the GCC further enhances its appeal, particularly for road transport. Companies can save 71% and 65% on average when shipping 40-foot containers to Dammam and Riyadh, offering significant value. With the fastest customs clearance times and the shortest transit routes between seaports, airports, and logistics zones, Bahrain is emerging as the Gulf's most efficient and cost-effective logistics gateway.
The island nation is home to several global companies that have successfully leveraged these advantages. Notable players in the logistics sector include DHL, which has established a significant operational presence in Bahrain; FedEx, the anchor tenant of Bahrain Cargo Village, and DSV, a global leader in supply chain services. On the manufacturing side, companies like Mondelez and Arla have chosen Bahrain as a strategic base for their regional operations, benefiting from cost efficiencies, logistical advantages, and a highly skilled talent pool.