Bahrain And ASEAN’s Maturing Partnership – Analysis

Throughout the twenty-first century, the inroads made by the Gulf Cooperation Council (GCC) countries into Southeast Asia have come under increasing scrutiny. Bahrain – unlike the other GCC members – has lacked particularly close ties with the Association of Southeast Asian Nations (ASEAN). Yet that situation has begun to change significantly in recent years.

Bahrain’s ties with ASEAN countries date back to the 1970s, but official ties were not established until the 1980s and 1990s. ASEAN countries began to realize the benefits they could reap from Bahrain, and – starting with Malaysia in 1974, Thailand in 1977, the Philippines in 1978, Indonesia in 1984, Singapore in 1985, Brunei Darussalam in 1988, Vietnam in 1995, Laos in 2002, and Cambodia in 2009 – they opened official diplomatic missions in Manama. Over time, Bahrain’s government has responded reciprocally.

Diplomatic contacts between ASEAN states and Bahrain have grown relatively strong. In 2009 the Ministers of Foreign Affairs of the member states of ASEAN and the GCC adopted the GCC-ASEAN Joint Vision in Manama. Four years later, the third GCC-ASEAN meeting took place in the Bahraini capital.

Various multilateral and organizational frameworks, including the Organization of Islamic Countries (OIC), particularly Muslim-majority Indonesia and Malaysia, the Asia Cooperation Dialogue (ACD), and the annual GCC-ASEAN meetings, have strengthened political ties between Southeast Asian states and Bahrain. Numerous political positions embraced by ASEAN members, which often align closely with Manama’s, have further cemented such bonds. In 2011 Malaysia supported Saudi/GCC initiatives with respect to “achieving peace, reconciliation, and long-term stability in Bahrain.” Interestingly, Bahrain’s royal Sunni family reportedly sought Indonesian and Malaysian mercenaries to help counter protestors from Bahrain’s Shi’ite community amid the island nation’s post-2011 political unrest.

Whereas energy largely defines ties between most GCC members and Southeast Asian countries, this sector is far less significant, although not entirely absent, in Bahrain’s relationship with ASEAN. In March 2016, the Bahrain Economic Development Board (EDB), a public agency dealing with attracting foreign investments to the country, and the Malaysia Petroleum Resources Corporation (MPRC) inked an MoU to boost Bahraini-Malaysian cooperation in the oil and natural gas sectors.

It is hardly surprising that energy plays a minor role in Bahraini-Southeast Asian relations given that the island kingdom exports gas and oil on a significantly smaller scale than do other Persian Gulf nations. Given the increasing energy demands in ASEAN markets, however, and growing interest among ASEAN state-owned companies to diversify their sources of energy, this reality may change. At the same time, it is difficult to forecast such future developments, as Bahrain, like other GCC states, is looking at policies aimed to transition away from oil.

Nonetheless, overall trade between Bahrain and ASEAN countries has increased significantly. In 2011 Bahrain’s trade volume with Indonesia surpassed USD 140 million. Although there is a lack of data on Bahrain’s trade with the other ASEAN countries, one can assume that these figures have grown as well for several reasons.

Southeast Asia, with approximately a USD 2.5 trillion GDP, has become a vital economic point for the Gulf Arab countries. This is largely due to the region’s large dependable consumer markets, with a total population of 620 million and positive long-term prospects rooted in a sustained annual GDP increase of 4.6 percent. This growth shows no signs of decreasing, especially after the establishment of the ASEAN Economic Community in late 2015. ASEAN countries are a source of primary resources, especially related to foods, commodities and labor. Meanwhile, for ASEAN governments to invest in Bahrain is beneficial, given that the island kingdom offers 100 percent foreign ownership of businesses with no taxation. Moreover, Bahrain is a relatively untouched, albeit small, consumer market and a hub for economic expansion in the Persian Gulf and the greater Middle East.

Agriculture has received significant attention from Bahraini investors in recent years. Amid increasing concern about food security in the Gulf region, Bahrain’s government has made strategic investments in ASEAN countries. For instance, it grows bananas on 1,000 hectares of land in the Philippines. Similarly, Thailand, with its substantial amount of arable land, has attracted investments from Bahrain. In fact, in 2012 Manama and Bangkok established a joint steering committee to address food and energy security issues.

Finance and Islamic banking also play an important role in the development of ties between Bahrain and ASEAN countries, with Malaysia, as the world center for Islamic banking, taking the lead. Several Bahraini banks have made their way to ASEAN. Bahrain’s Elaf Bank, for instance, started operations in Malaysia after receiving a license in 2011. In the same year, the Bahrain Financial Exchange and Bursa Malaysia Berhad signed an MoU on Bursa Suq Al Sila, which is a purposefully designed exchanged-traded platform to facilitate commodity Murabahah transactions, through which the two aim to strengthen cross-border financial traffic. This platform has great potential to facilitate liquidity flows from one financial center to another.

The growth of financial ties between Manama and Kuala Lumpur is not new. In 2001, the Central Bank of Bahrain and the Central Bank of Malaysia signed an MoU to jointly develop Islamic finance on a global scale. The 2009 visit of a Malaysian delegation, led by HRH Raja Dr. Najrin Shah, Crown Prince of the State of Perak and Malaysia’s financial ambassador, further cemented Bahraini-Malaysian relations in the financial sector.

The Central Bank of Bahrain has also worked closely with the Monetary Authority of Singapore (MAS). This cooperation has been accompanied by increasing people-to-people interactions, such as the annual participation of Malaysia in Bahrain’s World Islamic Banking Conference since 2008. Banking officials from Brunei, another one of the region’s Muslim-majority countries, have been making regular visits to Bahrain to learn more about Islamic finance.

Infrastructure is another area where Bahraini-Southeast Asian cooperation has grown. Several firms, including some Malaysian ones, have already established themselves in Bahrain and have been involved in major projects, such as the building of the Bahrain International Circuit and Bahrain City Centre. Malaysia’s Malakoff Corporation, one of Southeast Asia’s largest independent power producers, has also acquired stakes in Bahrain’s Hidd Power Company.

Efforts to identify prospects in business ventures, investments, and other areas of collaboration such as the Philippine-Bahrain Business Council (PBBC), the Bahrain-Philippines Business Council (BPBC), Bahrain-Malaysia Business Council, and the Indonesia-Bahrain Business Forum have bolstered economic cooperation between Manama and a host of ASEAN members. The increasing regulatory framework, marked by the conclusion of several agreements, including the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed by Manama and Kuala Lumpur in 2010, have accompanied these efforts, enabling authorities in the countries to exchange relevant tax information.

People-to-People Exchanges

People-to-people exchanges, mainly through migrant labor, have also shaped Bahrain’s ties with ASEAN countries. Although the vast majority of foreign workers in the Gulf state are from the subcontinent, Bahrain has become one of the top destinations for ASEAN workers. Reportedly, 300,000 Indonesians, most of whom are housemaids, live in Bahrain. An increasing number of Filipinos, estimated at over 67,000, have come to the island kingdom. In fact, this growing figure led Manama and Manila to sign an agreement to provide new rights for Filipino maids.

While clusters of expatriates from other ASEAN states, including Thais and Malaysians, are mostly low-skilled workers, there are also growing numbers of engineers and medical professionals. The number of tourists has also increased during the past several years. Undeniably, the presence of ASEAN people in Bahrain has not only created a strong awareness about the region, but it has also cemented the ties between the Persian Gulf island nation and Southeast Asia.

In addition to occasional encounters in the realm of sports, there is also educational engagement between Bahrain and ASEAN member states. Bahraini officials have previously discussed the prospect of educational partnership with the government in Manila to build on the achievements of the Philippine School in Bahrain which opened its doors in 1995. Over 233 Bahraini officials have attended courses organized by the Singapore Cooperation Programme in fields including urban development, information technology, and civil aviation. Singapore has also conducted six customized protocol-training courses for officials from Bahrain’s Foreign Ministry and Court of the Crown Prince, complemented by visits and promotions. Several universities from Malaysia participated at Bahrain EDUTEX13 in 2012. In addition, delegates from Songkla University in Thailand have also visited the RSCI Bahrain to promote further educational exchanges. Although relatively limited, education is a vital sphere which Bahrain and ASEAN countries could use to further strengthen their relationship.

The Bahrainis have also sought to promote goodwill in Southeast Asia through various assistance programs and deals. After Typhoon Haiyaan struck the Philippines in 2014, officials in Manama and Manila signed an agreement to build two vocational training centers and a 500-home residential complex in the most affected areas. Earlier in 2009, Bahrain also donated USD 5.34 million to the victims of tropical storms in the country.

Meanwhile, Bahraini officials and their ASEAN counterparts are exerting efforts to promote tourism. In 2010, Bahrain and the Philippines inked a deal allowing more flights between the two countries. Talks are also underway to resume flights between Bahrain and Brunei, which were suspended in 1997. These developments will not only allow Bahrain to enter ASEAN’s growing markets and strengthen soft-power ties between the two sides, but will also enhance Manama’s status as the Asian Capital of Tourism in 2014.

Future

The future appears promising, especially given ASEAN’s growing economic trajectory. In fact, even though Bahrain has no official ties with ASEAN periphery countries like Myanmar, this may change. In late 2015, the GCC Secretary General received the Myanmar Ambassador to Saudi Arabia to discuss potential for cooperation. This relationship will undoubtedly brighten the prospects for Bahrain to expand its ties with Myanmar. Manama also has plans to consolidate ties with Cambodia. On the table is an ASEAN-GCC Free Trade Agreement (FTA), which can create many new opportunities for the people of Bahrain and Southeast Asia to grow relations. Yet for these relationships to develop, more work is needed, particularly with respect to direct routes, framework agreements, and the leveraging of cultural and educational partnerships already in place.

Looking ahead, the future of Bahrain’s cooperation with ASEAN members will depend on both sides’ ability to boost ties not only in political and economic domains, but also in security spheres. In fact, the Singaporean Deputy Prime Minister and Minister for Defense Teo Chee Hean shared Southeast Asia’s security challenges at the 7th Manama Dialogue in 2010. This exchange of ideas re-affirms that the expansion of potential security and strategic dimensions, among others, should be explored. Furthermore, in order for Bahrain to benefit fully from all that Southeast Asia as a region offers the Gulf Arab nations, Manama must also strengthen ties with periphery countries such as Laos and Vietnam.

In the words of Prince Khalifa bin Salman Al Khalifa, ASEAN offers Bahrain many “great possibilities and opportunities.” Indeed, as a Bahraini politician once asserted, ASEAN is not only a considerable potential partner, but also a source of inspiration for regional blocs around the world.

About the author:
*Muhammad Zulfikar Rakhmat is a researcher at the University of Manchester in the U.K. His research focuses on Asia-Middle East relations.

Source:
Gulf State Analytics (@GulfStateAnalyt) originally published this article on June 9, 2016.