6 September 2007

Moving too fast for our own good?

Standing at a pivotal location in the Middle East, Bahrain had the potential to be one of the strongest economies in the region. With the discovery of oil early last century, and the boom that followed placing the dependancy of the strongest world economies on oil, Bahrain had the potential to actually become one of the strongest economies in the world.

However, a few mistakes here and there, a few mis-calculations, a few bad judgements, a few people not taking action.. And Bahrain stayed stagnant..

Don't get me wrong, Bahrain's economy is growing, and growing pretty quickly. However, for the potential it had, it is nowhere near what it could have been. Other countries in the region jumped at the opportunity. The United Arab Emirates, and Dubai specifically, decided to take hold. They built the infrastructure, they created a new system, they opened up the market. "Build it and they shall come", it was once said. And yes, they came.

Dubai is now considered a hub in the region; whether it is business, technology, tourism, or any of the other specialities Dubai offers, it has taken control. Starting from almost scratch in the early '90's, in under ten years Dubai has created one of the fastest growing economies over the globe. And in the few years since then it has almost doubled in size. Unbelievably fast construction, unsurpassed growth, mammoth investment; Bahrain was left in the dust by comparison, and the economy of Bahrain, strong as it is, is dwarfed by the colossal Dubai only a few hundered miles away. It should have been Bahrain that had control of the region.

Obviously there is a lot of money in the region; unbelievable oil reserves have brought massive amounts of money into the area, and with the Dubai economy growing, everyone starts looking at it as a role model. Now it is time for Bahrain to pick up and take back what was originally supposed to be its own.

So I look around me here in Bahrain; from what was relatively slow growth in comparison, the past few years have signalled unbelievable construction. But only very recently, the past 3 years especially, the first Formula One circuit in the region was built, building of the Bahrain World Trade Center in Bahrain is on its way, the Bahrain Financial Harbor, and everywhere I drive I see some sort of great construction. Areas that were previously dead for years are blowing up; restaurants, coffee shops, new stores, all the way from Riffa to Juffair. Apartment buildings in Muharraq, new commercial buildings in Manama, land being reclaimed to build more and more and more. New companies, new banks, new financial institutions are popping up all over the country. Real estate is going crazy, prices in some areas are probably around 300% where they were 6 or 7 years ago. Prices are increasing. We are where Dubai probably was 10 years ago; and that is an amazing stage of growth.

Are we moving too fast though? We have always been a very small and close-knit community. Growth is promoting people working longer hours, families aren't as close any more, people get busy making money. And while some grow and start earning unbelievable incomes in their new jobs dealing with investments and real estate, and the general boom in the economy, others stay stagnant, earnning the same wages they have been earning for the past 10 years. And yet prices go up. Investment in the country is reaching new levels; investors buying and selling to other investors for large profits, who in turn sell to other investors for even higher profits.

Can we sustain this environment? Or will someone get hurt eventually? What about the people who cannot keep up with this growth; the lower-income earners? And what will the end to all this growth be? Is it a bubble, growing slowly, and then quicker, soon to reach a point where nothing will be able to help it grow but...

..burst?

Where will everyone be then? Lets just keep an eye on whats going on. Take a look at what happened in the late 70's and early 80's. Lets just be very careful....


Bahrain World Trade Center in its last stages of completion...
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Bahrain WTC next to Sheraton Tower. A while back this was probably the tallest building in Bahrain
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Bahrain Financial Harbor; stage 1 is pretty much ready
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Construction everywhere (a view of Seef Area)
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Abraj Al Lulu (Lulu Towers)
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Bahrain WTC taking over Bahrain's Skyline
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14 comments:

moon-light7 said...

I do agree with you that we are moving very quickly. Although isn't this the case all around the world and not just in Bahrain?
My point is, yes we are moving too quickly for our own good. I know I'm being more spirtual than practical by saying that life is supposed to be lived day by day and not rushed through quickly, but this is truely what it's all about. There are much more important things that need to be considered before thinking of buildings and business. Sometimes I feel that business and economy and it's continuation is becoming more important than us people, I mean where did we, a muslim country I must add, get this concept from! That can also be said about nature.
We're being unfair to ourselves, the land we live on, and nature around us. We should stop for a moment and take a look at what we've accomplished with what God gave us, and think if only for a second about the generations to come.
We think we're builing some world for them but we're literally distroying ourselves with our own hands. Nowadays we're seeing all kinds of diseases and natural disasters around the world as a response. I don't think I'm being pessemistic if I believed that one day all of this will go in the same way. God only knows when.

KJ said...

I am living in Dubai and am telling you that people here are scared shitloads from what is going on. Dubai is growing incredibly fast and prices have become unnecessarily expensive that people are becoming increasingly segregated and defined by total wealth and income

Nora Cassandra said...

My dear you are going a bit too fast! But nothing can stand on the face of that! I miss originality in this world! I miss people’s real identity these days! You can still find the proud ones about the past and their history, but then money comes and all that is thrown out from the back window! I look in Cyprus something that would actually tell me this is Cyprus; I can’t find it except in the mountains where the gluttony of life hasn’t reached them YET! Every country including UAE (Dubai) is not original anymore! The foreign investments are everywhere in this world changing its original face! Sad, but good at the same time! Good for economies of the people, countries and future! Bad for the history of human kind!

Ok the F1 track made me happy! :D That will be my reason to visit you some day! I hope I’ll get to see it before my Ice Man retires!

Anonymous said...

Come on Ammar Bahrain is still moving too slow, what is being done is nothing to what is planned, What happened in the Eghties has no relevence. different time ,different circumstances , different reasons, different political curcumstances.
There have been always rich,poor, and super rich. This is life and beleive me there is no bubble in Bahrain, maybe in Dubai but not Bahrain.

N. said...

The situation is somewhat similar to what is happening in Kuwait. With the increase in business and markets, the working class has yet to see an improvement in income. Even with the programs from the government to help out aren't keeping up.

Evil Odd said...

Ammar,

I think we appear to be moving fast but in reality, we're just building stuff. A case similar to plastic surgery really.

Bahrain has come a long way since the 70s and 80s, but where it is now is not due to its locals developing skills and building the infrastructure. The real reason seems to be the outsourcing of everything Bahrain seems to be good at.

For example, Bahrain's hospitality industry is top-notch, but how much of it is locally generated? Will Bahrain be sustainable if this 'outsourcing' of skills comes to an end? I doubt it. The same applies to the construction industry. If all the labourers leave Bahrain overnight, the country will come to a halt. Creepy.

The only thing we seem to be priding ourselves on is the financial sector. Yes, there are many Bahrainis out there who are doing well for themselves, but they are quite young and inexperienced. Another problem with this sector is lack of control, and people who are willing to review and implement controls over processes. It seemed that everyone I met while I was there was more interested in getting on the bandwagon and making money. Not many seemed interested in 'support activities' that are oh-so-important in developed countries.

We don't do things the 'right' way, we take shortcuts. And when people take shortcuts, they miss out on gaining a whole lot of knowledge.

Sunshine said...

dubai is scary in how fast its changed.. but i think bahrain is doing a better job of it.. we'll just have to wait and see wat happens next, wont we?

Merlin said...

Bahrain is a joke. Tell any economist your story and he will laugh. You think your moving too fast, you have no idea what economic growth is. This is not singapore, hong kong or even Thailand. You are merely touching the surface with what could be done. You want to find patheticness, look no further. Oh wow we built a couple of buildings this year, and a financial harbour that cant attract new comers so is just having those in the diplomatic area move there. We dont know how to build malls, or at least ones that have the interior feel like a kitchen, so we have the Emiratis to come do it for us. We wanted to claim the title away from Wild Wadi so we built something that resembles a communist era water park the Ukraine. PLEASE PLEASE PLEASE I am hurting dont remind me of our own patheticness and the self glorification that we keep try to sell to ourselves, because thats what it is .. no one on the outstide believes our CRAP.

ammaro.com said...

moonlight; true, i think all were doing (and i speak globally, not just in bahrain) is causing all the disasters and diseases... whether its building, pollution, global warming... etc.. scary stuff not knowing where were headed

KJ; yup, its freaky. I lived in Dubai back from 98 to 2003... when i visited in 2006 dubai was DOUBLED in size... now thats just scary...

nora; come on the day of the actual F1 race, its a lotta fun

anon; sure, its not moving THAT fast compared to some other places... but its moving REALLY fast by bahrain standards... in the past 4 years or so weve seen developments in a country that has been pretty much stagnant for years...

N; I guess its similar with other countries in the gulf... terrifying...

Evil; YES! youre actually correct. Theres a LOT going on but its all plastic... a few people i know have gotten A LOT WEALTHIER... and the whole economy is supposed to be moving faster and faster, more inflation... while the other 95% of the people stay in the same place with their tiny salaries...

Sunshine; i guess well just wait and see what happens...

Merlin; i'm pretty much with you on everything you've said

Re.Loaded Soul said...

Country:
"The land of a person's birth or citizenship"


This is how country is defined, the first and the elemental part is its people!!

We might find awesome buidlings, boosting economy, huge capitals to be invested...bla bla bla , yet many people here are living below the standards of basic living. Ammar, you were right when you said that only people who work in investements and real states firms are receiving some good bloody pay slips, at the end of each month. This is also a cycle that must come to an end !!!

Maybe we are having a good and fast economy, I don't know, but let us first define "good", "fast" , and even if we defined that, we are benchmarking or competing with who ??

Personally, I don't care about all these huge buildings, what do I care is:

How the hell our kids gonnna live after us? Are we gonna utilize one of these buildings for, at least, baby sitting them? I wonder.

Adel said...

I'm Anon post 4, merlin I agree with you on slow growth and Malls, with the exception of Seef Mall, but regarding buildings and Financial Harbour I say give them a year or two you will be surprised. Did not get your point about Paradise of Dilmon, it is indeed bigger than Wild Wadi been there twice, but I can't say it's better yet, will give it 2-3 months untill I can make a verdict it's too soon things might change. What do you mean like Ukrane please explain

Redbelt said...

Ammar

I see this as a planned economy problem. The government is pushing developments in certain areas, which is all well and good. but it is NOT the ORGANIC growth that happens from being a free market economy, where every person decides on what products or services to provide.
The growth therefore is inorganic and thus seems plastic.
This will also advance some and leave others behind, like you said, some are doing very well these days but others and other sectors are earning the same or less than before. It is however a transitional phase so right or wrong, hardships will be felt in both cases.

By the way, my Gahwa has increased its prices again this year. Maybe I should find a more economical solution.

ammaro.com said...

re.loaded; I don't have much concern for the buildings themselves, but they're all springing up, one after the other, and they're affecting us one way or the other. Not necessarily in a positive way - we have more jobs, and unfortunately this doesn't always mean jobs for the unemployed locals, it means more foreigners (not necessarily a bad thing, but in this situation it might be), and with them comes more traffic, more crime, a less closely knit community, more issues and problems, more drain on resources... And yes, a few of the locals benefit, but a lot DO NOT, and those few are the ones who drive the economy, so everyone else gets left behind. We're getting poorer, day by day.

adel; I hope so. But so far, the BFH has been open for a few months and so far how many companies have their offices there? two or three? And remember, there are tons of other buildings out there, either just ready or being built, all offering office space in what is supposedly the "perfect location" and offering the "perfect facilities". Shouldn't these have been snapped up and booked already? It's taking too long. I'm seeing a collapse of this whole situation sometime in the near future. I hope its not true, but so far, this is what it looks like.

Redbelt; 100% true. Certain areas are being "pushed" and don't actually have any demand for them; like my point above. THE FINANCIAL HUB of the middle east? And no one is booking office space? Come on... And this isn't just about this, so many problems are going to start appearing very soon...

Dubai Properties said...

I am agreed with you and it is an undeniable fact that Bahrain is lagging far behind its neighboring states like Dubai and Abu Dhabi and it's all because of the fact that neighboring states make full use of the opportunities but Bahrain authorities have now realized and they are also trying to follow exemplary progress of those countries.