Macroeconomic trade context

Annual trade volume, 2024

• Total exports: US$18.5 billion (≈ BHD 7.0 billion), ↓ 8.84% from 2023
• Total imports: US$16.9 billion (≈ BHD 6.4 billion)
• Trade balance: US$1.6 billion surplus (≈ BHD 600 million)
• Merchandise trade balance: US$3.6 billion (2024)
• Exports per capita: US$11,700 (36th globally)
• Imports per capita: US$10,600 (49th globally)
• Global export rank: 81st of 226
• Global import rank: 95th of 226
• GDP (current US$): US$47.1 billion (98th globally)
• GDP per capita: US$47,100 (47th globally)
• Currency: Bahraini dinar (BHD), pegged to the US dollar at US$1 = BHD 0.376 (fixed)
• Economic Complexity Index (technology): −1.21 (81st of 96, 2021)
• Economic Complexity Index (research): −0.65 (91st of 137, 2024)

Key trade trends, 2024

Geographic distribution, 2024

Export markets (US$18.5B)

Sources: OEC, Trading Economics.

By region

• GCC countries: about 30% (Saudi Arabia, UAE, Qatar, Kuwait and Oman)
• Asia: about 15% (India, South Korea, Japan, Singapore and Thailand)
• Europe: about 10% (Netherlands, Italy, Spain, Greece and UK)
• North America: about 6.4% (United States)

Import origins (US$16.9B)

Source: OEC.

Trade balance by major partner

Detailed export product analysis

A. Refined petroleum products (HS 27)

1. Refined petroleum: US$5.49 billion (29.7% of total exports)

• Share of total exports: nearly 30%
• Refining capacity: Bahrain Petroleum Company (BAPCO), Sitra Refinery (267,000 bpd)
• Products: gasoline, diesel, jet fuel, naphtha and fuel oil
• Strategic advantage: access to Saudi crude by pipeline
• Primary destinations: GCC countries, Asia and Africa

B. Aluminium and metal products

1. Raw aluminium: US$3.56 billion (19.2% of total exports)

• World-class producer: Aluminium Bahrain (Alba), one of the world’s largest smelters
• Production capacity: 1.6 million metric tons a year
• Line 6 expansion: completed, making Alba the world’s largest smelter site
• Primary destinations: GCC, Asia, Europe and the United States

2. Aluminium wire: US$642 million (3.5% of total exports)

• World’s largest exporter of aluminium wire
• Value-added products: extrusions, rods and profiles
• Primary destinations: regional and international markets

3. Iron ore: US$1.68 billion (9.1% of total exports)

• Re-exports and processing
• Note: Bahrain does not mine iron ore domestically

C. Machinery and electrical equipment

• Gas turbines: US$551 million (3.0% of total exports); industrial machinery exports, re-exports and local assembly
• Machinery, nuclear reactors, boilers (HS 84): US$793 million (4.3% of exports); industrial machinery and mechanical appliances, mainly to regional markets
• Electrical and electronic equipment: US$227 million (1.2% of exports)

D. Other major export categories

E. Global export leadership

Bahrain is the world’s largest exporter of aluminium wire (US$642 million).

Detailed import product analysis

A. Industrial raw materials

1. Iron ore (HS 26): US$1.37 billion (8.1% of total imports)

• Primary sources: Australia and Brazil
• Purpose: processing and re-export (steel industry)

2. Aluminium oxide (HS 28): US$1.3 billion (7.7% of total imports)

• Primary sources: Australia and Brazil
• Purpose: feedstock for the Alba smelter
• Strategic importance: essential for aluminium production

B. Machinery and electrical equipment

1. Machinery, nuclear reactors, boilers (HS 84): US$1.72 billion (10.2% of imports)

• Industrial machinery: for manufacturing, oil and gas
• Construction equipment and power generation equipment
• Primary sources: China, USA, Germany and Japan

2. Electrical and electronic equipment (HS 85): US$1.18 billion (7.0% of imports)

• Products: telecommunications equipment, consumer electronics and electronic components
• Primary sources: China, South Korea and Japan

C. Transport equipment

1. Vehicles (HS 87): US$1.43 billion (8.5% of imports)

• Cars: US$1.1 billion
• Special purpose ships: US$717 million
• Other sea vessels: US$583 million
• Primary sources: Japan, USA, Germany and South Korea

D. Chemical and allied products

E. Precious metals and stones

• Pearls, precious stones, metals, coins (HS 71): US$636 million (3.8% of imports)
• Products: gold and jewellery
• Primary sources: Switzerland, UAE and India

F. Food and agricultural products

G. Other major import categories

H. Global import leadership

Bahrain is the world’s largest importer of pitch coke (US$201 million).

Trade procedures and regulations: deep dive

A. Customs legal framework

1. Primary authority

• Bahrain Customs Affairs (شؤون الجمارك)
• Website: customs.gov.bh

2. Legal framework

• GCC Common Customs Law: Bahrain applies the unified customs law of the Gulf Cooperation Council
• GCC Common Customs Tariff: a unified tariff structure (5% on most imports)
• National customs procedures: Bahrain-specific implementing regulations
• VAT Law: Decree-Law No. 48 of 2017 (implemented in 2019)

3. GCC Customs Union

• Members: Bahrain, Saudi Arabia, UAE, Qatar, Kuwait and Oman
• Common external tariff: 5% on most imports
• GCC-wide customs declaration accepted
• Revenue distribution mechanism among member states

4. International memberships

• WTO: member since 1995
• GAFTA (Greater Arab Free Trade Area): member
• GCC: founding member
• US–Bahrain FTA: bilateral free trade agreement (in force since 2006)

5. Regulatory updates, 2024

B. Foreign investment reform, 2024 (Decision No. 22 of 2024)

Key provision: wholly or partly foreign-owned companies may now be licensed as “authorised distributors” in these circumstances:

1. Existing local partnership: an active sole proprietorship or company with at least 51% Bahraini capital already practises “authorised distributor” activity for the same trademark in Bahrain
2. International brand owner: the company that owns the international brand distributes its products in Bahrain
3. Economic importance: the company is deemed of economic importance under the Minister of Commerce’s criteria, with Council of Ministers approval

• Impact: a significant liberalisation of the distribution sector that attracts international brands to set up direct operations and strengthens Bahrain’s position as a regional distribution hub

C. WTO Trade Facilitation Agreement (TFA) compliance

• TFA ratification: 23 September 2016
• Revised Kyoto Convention: signed 23 April 2012

D. Import procedures

1. Customs website and transparency

The Bahrain Customs website (customs.gov.bh) provides:

• Laws and regulations (published in the Official Gazette)
• A full description of all customs procedures
• Information on the appeal procedure
• All forms and documents required for import and export

• Advance rulings: Customs issues binding advance rulings on classification and valuation
• Opportunity to comment: the public may comment on new regulations before they take effect (Art. 2.1.1 TFA)

2. Electronic processing

• Customs accepts and processes data electronically before arrival (Art. 7.1 TFA)
• Final clearance formalities can be completed electronically after release
• Round-the-clock (24/7) automated processing at customs ports

3. Release times

• De minimis threshold: BHD 300 (≈ US$800) for B2C shipments; no de minimis for B2B

4. Inspection and risk management

• Risk-based selectivity: Customs uses risk management to select items for documentary or physical examination
• No multiple inspections: only Customs inspects; other agencies do not carry out separate examinations
• Fully coordinated inspections when required
• Clearance at the operator’s facility: air shipments are inspected at the operator’s facility, not transferred

5. Documentation requirements

• Not required: consular invoices or visas; pre-shipment inspection certificates; chamber of commerce certificates of origin (though these may be needed to claim preferences)
• Electronic documents: Customs accepts electronic and scanned supporting documents
• Express carrier privileges: express carriers may clear import shipments on behalf of the consignee without a licensed customs broker

E. Taxation and duties

1. Customs duties (GCC common external tariff)

• Standard rate: 5% on most imports (CIF value)
• Exemptions: basic food items, medical supplies, books and printed materials
• Higher rates: tobacco 100%; alcohol 100% (with religious restrictions)
• Preferential rates: 0% under GAFTA for qualifying Arab-origin goods; 0% under the US–Bahrain FTA for qualifying US-origin goods

2. Value added tax (VAT): standard rate 5% (introduced 1 January 2019)

• VAT on imported goods: goods imported into Bahrain are typically subject to 5% VAT, due on the same day as customs duty and payable to Bahrain Customs Affairs before release
• Value for VAT: customs value + customs duties + excise tax + transport, insurance and other charges to the first point of entry in Bahrain
• VAT exemptions: basic food items; precious metals sold for investment; pearls and precious stones; prescribed medicines and medical equipment; goods for persons with special needs (with documentation); diplomatic and military exemptions; returned goods; personal belongings of citizens and residents moving to Bahrain
• Zero-rated exports: exports of goods are subject to 0% VAT if shipped within 90 days of supply, not changed, used or sold before leaving, and the supplier keeps proof of shipment and obtains supporting documents within 90 days
• VAT deferral for registered importers: VAT-registered importers may defer payment to their tax return, provided they are registered in Bahrain, keep all import documents, comply with NBR requests, declare the VAT in the return for the period of import and hold NBR authorisation
• Recovery of import VAT: VAT-registered persons can claim import VAT as input tax if the goods are used for taxable supplies and the recovery rules are met; customs documents serve as proof

3. Customs duty exemptions (qualifying entities)

• Diplomatic missions (on a reciprocal basis)
• Military (official use)
• Returned goods (temporarily exported)
• Personal belongings of citizens and residents moving to Bahrain
• Passenger baggage and gifts (within limits)

F. Special trade regimes

• Bahrain Logistics Zone (BLZ): next to Khalifa Bin Salman Port; logistics and light manufacturing; duty-free imports and simplified procedures
• Bahrain International Investment Park (BIIP): an industrial zone near the causeway to Saudi Arabia; manufacturing focus; foreign ownership permitted
• Temporary admission: up to 6 months for exhibitions, professional equipment and samples; security required (bank guarantee or cash deposit); goods must be re-exported
• Bonded warehousing: storage without duty payment, for re-export or later local release, under customs supervision
• Re-export procedure: goods imported and re-exported without processing; simplified documents; time limits apply; goods must be shown not to have been consumed

G. Compliance and enforcement

• Post-clearance audit: Customs may demand additional duties within 5 years, with regular risk-based audits
• Appeals: a two-level system, first to a higher administrative level, then to an independent court (the specific process is not detailed); time limits for filing and for rulings are not known
• Customs valuation: transaction value basis; Customs may check online or ask for proof of payment, and sometimes uses valuation databases or reference prices
• Seizures: Customs seizes and holds illicit items at its warehouse; express carriers do not have to store seized goods

Trade agreements network

A. Multilateral agreements

B. Bilateral free trade agreements

US–Bahrain Free Trade Agreement (in force since 2006)

• Bahrain’s most significant bilateral FTA
• Immediate duty-free access for 100% of US industrial and consumer goods
• Strong intellectual property protection
• Services trade liberalisation
• Government procurement access

C. GCC collective agreements

D. Bilateral investment treaties

• Bilateral investment treaties: 30+ with major trading partners
• Double taxation agreements: 40+ countries

Major trade infrastructure

A. Ports (managed by APM Terminals Bahrain and others)

B. Airports

• Bahrain International Airport (BAH): over 1.0 million tons of cargo capacity a year, with a dedicated cargo terminal
• Airlines: Gulf Air cargo operations and a DHL hub
• Runway: 4,000 metres, accommodating the largest freighters
• New passenger terminal: opened in 2021, with cargo capacity expansion planned

C. Free zones and logistics zones

• Bahrain Logistics Zone (BLZ): next to Khalifa Bin Salman Port; 2.3 million square metres; warehousing, distribution, light assembly and re-export; 100% foreign ownership, duty-free imports and tax benefits
• Bahrain International Investment Park (BIIP): near the King Fahd Causeway (Saudi Arabia connection); 2.5 million square metres; manufacturing, logistics and food processing; foreign ownership, duty-free imports and streamlined licensing
• Bahrain FinTech Bay: a financial technology hub for trade finance innovation

D. Industrial zones

• Hidd Industrial Area: aluminium smelter (Alba) and industrial support
• Sitra Industrial Area: oil refinery (BAPCO) and petrochemicals
• Salman Industrial City: light manufacturing and food processing

E. Land border crossing: King Fahd Causeway

• Connection: Bahrain to Saudi Arabia (Khobar), 25 km
• Traffic: the major land route for goods and passengers, with 50,000+ vehicles a day (pre-COVID)
• Customs facilities: Bahraini and Saudi customs at the border

F. Key industrial assets

Emerging trends and future developments

A. Foreign investment liberalisation, 2024

• Decision No. 22 of 2024 (April): opens the authorised distribution sector to 100% foreign-owned companies and removes the previous local partner requirement, attracting international brands to set up direct operations and strengthening Bahrain’s position as a regional distribution hub

B. Aluminium sector expansion

• Alba’s global leadership: the world’s largest smelter (single site), with 1.6 million metric tons of annual capacity; raw aluminium exports of US$3.56 billion (19.2% of total exports); aluminium wire exports of US$642 million (world’s largest exporter)
• Downstream development: more value-added products, including automotive components, construction materials and packaging, diversifying exports beyond primary metal

C. Refinery modernisation

• BAPCO Modernisation Programme (BMP): a US$5+ billion investment for higher efficiency, cleaner fuels and more export capacity; refined petroleum exports reached US$5.49 billion (29.7% of exports)

D. GCC Customs Union enhancement

• Common external tariff implementation
• Coordinated risk management
• Mutual recognition of Authorised Economic Operators
• GCC-wide single window development

E. Digital transformation

• Customs digitalisation: 24/7 automated processing, electronic advance data submission, risk-based selectivity and QR code verification (similar to other GCC countries)
• E-government services: a single window for trade documents, electronic customs declarations and online VAT filing and payment

F. VAT framework

• Deferral scheme expansion: more registered importers eligible for VAT deferral, improving cash flow and simplifying compliance
• Zero-rated export conditions: clear documentation requirements, a 90-day shipment window and retention of proof of export

G. Trade facilitation

• WTO TFA compliance: advance rulings, electronic processing, risk management and a BHD 300 de minimis threshold for B2C

H. Using the US–Bahrain FTA

• Tariff-free access to the US market
• Growing non-oil exports to the US (US$1.19 billion in 2024)
• Attracting US investment in manufacturing and services

Key contacts and resources

A. Government agencies

1. Bahrain Customs Affairs: customs.gov.bh · info@customs.gov.bh · customs procedures, declarations, tariffs and advance rulings
2. Ministry of Industry and Commerce (MOIC): moic.gov.bh · commercial registration, trade policy, investment licensing, foreign investment approvals and implementation of Decision No. 22/2024
3. National Bureau for Revenue (NBR): nbr.gov.bh · VAT administration, registration, returns and payments; import VAT deferral authorisation
4. Bahrain Economic Development Board (EDB): bahrainedb.com · investment attraction, business facilitation and sector development
5. Information and eGovernment Authority: iga.gov.bh · e-government services and digital transformation
6. Central Bank of Bahrain (CBB): cbb.gov.bh · financial services regulation and trade finance
7. Ministry of Oil and Environment: petroleum sector regulation and environmental permits
8. Ministry of Health: moh.gov.bh · pharmaceutical and medical device approvals
9. Ministry of Municipalities Affairs and Agriculture: food safety and agricultural imports

B. Business organisations

1. Bahrain Chamber of Commerce and Industry (BCCI): bahrainchamber.bh · certificates of origin, business registration and trade promotion
2. Bahrain Businessmen’s Association (BBA): private sector advocacy
3. Bahrain Association of Banks: banking and financial services
4. American Chamber of Commerce in Bahrain (AmCham): US–Bahrain trade facilitation

C. Trade portals and digital platforms

D. Practical guidance for traders

For exporters to Bahrain

1. Standards: products must meet GCC or Bahraini standards
2. Arabic labelling: mandatory for all consumer products, food especially
3. Halal certification: required for meat and poultry, from approved bodies
4. Ministry approvals: restricted goods need prior approval (pharmaceuticals and medical devices: Ministry of Health; food products: Ministry of Municipalities; telecom equipment: TRA)
5. VAT compliance: 5% VAT is due on most imports; it can be deferred if the importer is VAT-registered with NBR authorisation; the correct CR and VAT number are essential for input tax recovery
6. Documentation: no consular invoices; electronic documents accepted; express carriers can clear on behalf of the consignee
7. De minimis: BHD 300 threshold for B2C shipments; none for B2B
8. Prohibited items: review the prohibited list (weapons, drugs and more)
9. US–Bahrain FTA benefits: US exporters may claim duty-free treatment

For importers from Bahrain

1. Certificate of origin: from the Bahrain Chamber of Commerce and Industry
2. Aluminium: directly from Alba (the world’s largest smelter)
3. Petrochemicals: GPIC for methanol, urea and ammonia
4. Refined products: BAPCO for petroleum products
5. Quality certificates: available from manufacturers (internationally recognised)
6. US–Bahrain FTA: Bahraini exporters to the US benefit from duty-free access

Economic impact and strategic position

A. Trade balance dynamics

• 2024 trade surplus: US$1.6 billion (merchandise balance US$3.6B)
• Export decline: 8.84%
• Export–import coverage ratio: 109% (US$18.5B of exports against US$16.9B of imports)

B. Global strategic position

1. Aluminium powerhouse: the world’s largest aluminium smelter (Alba), 19.2% of exports
2. Refining hub: BAPCO’s Sitra Refinery; refined petroleum makes up 29.7% of exports
3. GCC member: integrated with the Gulf Cooperation Council economies
4. US FTA partner: the only GCC country (with Oman) with a bilateral FTA with the United States
5. Logistics gateway: the King Fahd Causeway to Saudi Arabia (its largest export market)
6. Financial hub: Islamic finance and banking services
7. Small but open economy: one of the most trade-dependent in the region

C. Competitiveness indicators

D. Economic diversification

• Export concentration: the top 3 exports make up 58% of the total (refined petroleum 29.7%, raw aluminium 19.2%, iron ore 9.1%)
• Limited economic complexity: technology complexity rank 81 of 96; research complexity rank 91 of 137
• Positive developments: aluminium downstream expansion (world’s largest exporter of wire); growing non-oil exports (dairy, glass, plastics, fertilisers); services expansion (financial, logistics, tourism)

E. Challenges

1. Hydrocarbon dependence: 30%+ of exports from refined petroleum; declining oil reserves
2. Small domestic market: a population of about 1.5 million
3. Limited economic complexity: a low technology complexity score (−1.21)
4. Fiscal pressures: government debt and subsidy rationalisation
5. Regional competition: GCC neighbours’ ambitious diversification plans
6. Climate vulnerability: water scarcity and extreme temperatures

F. Opportunities

1. Alba expansion: the world’s largest smelter, with downstream value-added products
2. Refinery modernisation: cleaner fuels and export capacity
3. GCC integration: the causeway to Saudi Arabia and customs union benefits
4. US FTA: unique market access to the United States
5. Foreign investment reforms (2024): 100% foreign ownership in distribution
6. Logistics hub: strategic location and the King Fahd Causeway
7. Financial services: Islamic finance and fintech
8. Food security: agricultural investment and processing
9. Tourism: cultural and heritage tourism development

Summary of Bahrain’s trade characteristics

1. Dual export engine: refined petroleum (29.7%) and raw aluminium (19.2%) dominate, together nearly 50% of exports
2. Global niche champion: the world’s largest exporter of aluminium wire (US$642M) and largest importer of pitch coke (US$201M)
3. GCC integration: Saudi Arabia (No. 1 partner) and the UAE (No. 2) take 27.4% of exports; Saudi Arabia is also the No. 1 import origin
4. Aluminium powerhouse: Alba is the world’s largest smelter (1.6M tons); aluminium-related products are over 20% of total exports
5. Refining hub: BAPCO’s Sitra Refinery (267,000 bpd); refined petroleum exports of US$5.49B
6. US FTA partner: the only GCC country with a bilateral FTA with the United States; the US is the No. 3 export destination (US$1.19B)
7. 2024 regulatory reform: Decision No. 22/2024 allows 100% foreign ownership in the authorised distribution sector
8. Trade surplus normalising: US$1.6B surplus in 2024 (down from a peak of US$8.2B in 2022)
9. WTO TFA compliant: advanced electronic processing, advance rulings, risk management and a BHD 300 de minimis
10. VAT framework: 5% standard rate; deferral for registered importers; zero-rated exports with a 90-day shipment requirement

Bahrain is a small but highly open Gulf economy with a unique dual specialisation in aluminium and refined petroleum. With 49% of exports from these two sectors, it has built global leadership positions: Alba is the world’s largest aluminium smelter (1.6 million tons), and Bahrain is the world’s largest exporter of aluminium wire (US$642M).

2024 brought significant liberalisation: Decision No. 22/2024 opened the authorised distribution sector to 100% foreign-owned companies, removing the previous local partner requirement. The reform strengthens Bahrain’s position as a regional distribution hub and attracts international brands to set up direct operations.

Bahrain’s trade infrastructure is world-class, anchored by the King Fahd Causeway to Saudi Arabia, Khalifa Bin Salman Port (1.1M TEU capacity) and Bahrain International Airport. The US–Bahrain FTA provides unique access to the United States (US$1.19B of exports), while GCC integration ensures deep regional ties.

Bahrain’s trade future depends on diversifying beyond hydrocarbons and aluminium, attracting foreign investment through the 2024 reforms, capturing downstream value in aluminium processing and making the most of its strategic location and US FTA relationship. Its small size, open economy and proactive reform agenda position it for continued, if measured, growth.

Need more detail? For more detailed information or a specific market intelligence question, contact us.

Sources: OEC · Trading Economics · Global Express Association (Bahrain customs profile) · Zoho (VAT on import and export of goods)