Bahrain's India Connection

Nadodikattu (vagabond wind), a 1987 Malayalam satirical movie, revolves around the travails of two unemployed youth who were conned into believing that they were taken to Dubai while actually being dumped offshore Chennai coast. For the protagonists in the film, who believed they had swam into Dubai, the abundance of too familiar sign boards and South Indian faces instead of the Arab physiognomies they expected were too big a surprise.

The number of Keralites one will come across in Bahrain, the tiny Island nation with expatriates accounting for half its 1.2 million population, might give a first time visitor a real life Nadodikattu feel, as Kerala presence is too evident to ignore.

“All 400 employees in my company are from Kerala”, the candid admission of Kamal Bin Ahmed, minister of transportation and acting Chief Executive of the Economic Development Board (EDB) of the government of Bahrain, illustrates the depth of Indian presence in the country that is just 25 kms away from the Gulf region’s biggest economy - Saudi Arabia.

In fact, 85 per cent of the 350,000 Indians in Bahrain are from the South Indian states. While 220,000 are from Kerala, roughly 80,000 are from Tamil Nadu and Andhra Pradesh.

According to India’s Ministry of External Affairs, the exponential increase in number of Indian expatriates in Bahrain happened during the last decade. There were only 90,000 Indian nationals working in Bahrain in the year 2000.

“For us to grow, we need this employment from abroad, because the supply of local employees is not sufficient enough to cater to our economic growth”, Ahmed says.

Bahrain, which claims to be the most “free (liberalised) economy” in the Gulf region, is expecting to sustain its job creation opportunities irrespective of the global economic gloom. “In 2008, during the time of global financial crisis, we were growing. And we are growing even today. We expect our GDP to grow 3.5 to 4 per cent this year, and more than 5 per cent in 2014-15. So things are back to its regular rate of growth, which is fantastic”, Ahmed says.

“The good thing is Bahrain is ideally located at the heart of the Gulf. And the Gulf is a growing market. The per capita income is high, the number of high net worth individuals is high and therefore, all companies, all over the world want to be in the Gulf”, he explains, adding: “We tell them if you want to be in the Gulf, the Gulf is mainly Saudi Arabia, and the best way to serve that market is Bahrain”.

 

However, vast majority of Indian expatriates, i.e., over 70 per cent, are unskilled labourers who have found jobs during the infrastructure development spree that happened all over the Gulf region, including Bahrain, during the 2003-10 period.  While big investment projects took a hit across the Gulf region during the global economic crisis, Bahrain has rebounded and is looking to invest more in domestic highways, develop bridges to connect to neighbouring countries (a 40 km bridge across sea to Qatar is on cards), build skyscrapers on reclaimed land, and expand its industrial parks and cargo terminals. These are expected to sustain jobs in the infrastructure sector, though the lure of unskilled work in terms of earnings may not remain for long due to rising wages in India.

On the other hand, high value job and business opportunities seem to be on the rise in Bahrain as the country is positioning itself as a skilled job market – especially in areas like financial services, information technology and healthcare services. It also wants to be the trading gateway to the $ 1.4 trillion gulf region.

“We are creating jobs. But we need to create better quality jobs. All economies want to attract skilled jobs because these (skilled jobs) will be more rewarding and at the end of the day, our entire objective is to ensure that the growth of economy and GDP reflects in the way we live”, Ahmed says.

Bahrain’s Economic Development Board (ECB) is pitching for foreign direct investments in non-oil sectors to diversify its economy. “Anything in the medium and high skill levels, service industry, consultancy, healthcare, education. I am looking at such industries as they don’t need big land, they don’t need gas, and they can create good jobs”, Ahmed adds. “We need good jobs in sectors that have a value proposition. What I offer is connectivity to (gulf) markets, low cost business environment, and clear, legal and transparent regulatory systems”.

The move is in line with the United Nations Conference on Trade and Development (UNCTAD) observation that economic diversification has taken high political priority in the gulf region, “as the lack of job prospects for a rapidly growing, educated and young population was a key trigger of political unrest”.

Commonly termed as Arab spring, the series of protests that saw youngsters expressing their displeasure against ruling establishments in several gulf countries, had a resonance in Bahrain too, though not in a very big scale.

Ahmed however, says unemployment is not an issue in Bahrain. “Most of unemployed people are ladies who are not sure whether they are looking for a job. We have an unemployment scheme. So if you are unemployed, for the first six months, you get salary from the government. During that time, you will be trained, and you will be given a job. So you have the choice to work. Only if you refuse to utilize such opportunities thrice, you will get removed from the scheme”, he says.

For the well-to-do Indian expatriates, working in sectors such as banking, medicine, management and the ones who run business establishments, companies and industries , the economic reforms brought in by the Bahrain government may provide more opportunities. However, they will also see Bahrain nationals also entering into the skilled job market in an increasing manner.

“If we know that we have enough Baharinies (qualified to do the job) in a sector, we will have some reservation. But we don’t have to force people to recruit Bahrainies”, Ahmed says. 

For instance, in financial services, an area preferred by the citizens of that country, 67 per cent of the employees are Bahrainies. The country has more than 400 financial institutions and act as regional hub for several global financial institutions. Expats, however, continue to play a major role in its economic growth, both as employee and as employer.

Information Technology is one of the sectors that have been developed significantly in the last couple of years. “We have lot of Indian companies here. TCS, Wipro etc. are all here. They are serving the (gulf) region, and also the local market in Bahrain”, Ahmed says. “We have also managed to develop lot of skills. These companies are today outsourcing work to Bahrain companies”.

Though, India’s bilateral trade with Bahrain which stood at $702.31 million in 2011-12, was primarily oil driven, India’s engagement with Bahrain is not unique.

The Nadodikattu feel can be experienced with the same intensity across the gulf region. Indians are the largest expatriate community not only in Bahrain, but also in all the six Gulf Cooperation Council (GCC) member countries that include Bahrain. While Saudi Arabia has 2 million Indian expats, the numbers for other GCC member countries are 1.75 million (UAE), 7, 18,252(Oman), 6, 41,000 (Kuwait) and 50,000 (Qatar). The history of India’s trade relations with the region is perhaps as old as the history of trade winds that aided trade since time immemorial.

The depth of the Indian connection with the Gulf region can also be gauged from the fact that with $71,715.91 million, UAE was India’s second largest global trade partner after China in 2011-12. For the current year (April-December 2012 period), UAE has even surpassed China and remains the biggest global trade partner with $54,817.67 million worth bilateral trade.

Trade across the Arab region, which includes GCC and countries like Iraq, Israel, Jordan, Lebanon, Yemen, Syria, Algeria, Egypt, Morocco, Libya, Sudan and Tunisia, is expected to touch $200 billion in 2012-13, nearly double the size of India’s trade with this region in 2009-10. The bilateral trade in the region, has increased by 75.91 per cent  from $10,7360.14 million in 2009-10 to $188867.66 million in 2011-12.

While India’s exports primarily consists of gems & jewellery, petroleum (crude & products), transport equipment, basmati rice, readymade garments (cotton), sugar, meat preparations, drugs — pharmaceuticals & fine hemicals, electronic goods etc., the major import items are petroleum products, chemicals and gold.

India, however, feels that the engagement, though big, is not enough as it’s only the trade that is growing but not capital investments (foreign direct investments) that can trigger a much larger economic cooperation.

In February, Anand Sharma, Union Minister for Commerce, Industry & Textiles told Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade, UAE that the “bilateral trade does not reflect the full potential and can be further exploited to mutual advantage of both the countries” and wanted UAE to take the lead in “reenergizing the negotiations for concluding the India-GCC FTA talks”. The India-GCC free trade agreement talk, initiated in 2004, is yet to conclude.

While India is looking for investments in sectors such as power and utilities, roads and highways, ports, urban infrastructure, etc., it wants the domestic industry to go for outbound investments in energy intensive manufacturing, infrastructure, services, tourism and hospitality, pharmaceuticals and healthcare, financial services, agro-based value chain and education in the gulf region.

And if that happens, and India turns as attractive for Arabian nations as the gulf region is for our expatriates today, we may have to script a different screenplay for Nadodikattu.