LESS IS MORE IF NOT OFTEN!

Action resumes at Al Madina Al Shamaliya site

Manama

After remaining in a state of limbo for about six months, the Kingdom’s budget finally received the Shura Council nod on Sunday.  The gaping deficit might come as a dampener. Call it a paradox or strange coincidence, same day, there also appeared a silver lining to offset the mood created by the dark clouds!

Yes, yesterday water treatment major VA Tech WABAG along with its JV firm Belhasa Projects was awarded its first engineering, procurement and construction (EPC) contract. The whopping $91.7 million (about BD34.6m) sewerage contract only further augments the sprawling Al Madina Al Shamaliya township competing with the standards set by developed countries.

So, what exactly is the relation between the awarding of this contract and the budget that got approved?  Those who dissect the Kingdom’s economy with surgical precision opine that by awarding the project, the country has reaffirmed its determination to steer the country away from the slough of oil-dependence.

Depending on oil is not that bad if only fossil fuel continues as a perennial source in bolstering the economy. But alas! The scene at ground zero presents a different picture.  It is here the contract bagged by VA Tech WABAG becomes pertinent.  For, it only confirms the deft move by the policy makers to test the waters of the lucrative and relatively stable real estate market in the Kingdom.

Cluttons’ International Research and Business Development Manager, Faisal Durrani drives the nail straight on the head:  “The government’s intentions are clear and the timing is near-perfect.”

Durrani adds that Bahrain’s residential market is enjoying a period of exceptional stability, with rental value growth coming in at roughly 1 to 1.5 per cent each quarter for the past 18 months or so.  The fact that, the country is ready to shake off its excessive dependence on oil is further confirmed by Central Bank of Bahrain (CBB)

“The share of non-oil revenue to a total revenue will mostly increase over the next years mainly due to the steady growth trend of non-oil GDP,” CBB predicted in the 2012 Economic Report.  The report further confirms that the contribution of crude petroleum and natural gas to GDP at constant price was BD 1,935.3m in fiscal 2011-2012.

It was, actually, an 8.5 per cent slump from that of the previous period. It is noteworthy that contribution from real estate and business activities saw a 2.9pc rise for the same period. This shows the Kingdom’s eagerness to extricating itself from the clutches of oil, the price of which goes up and down like a woman’s skirt according to changing fashions!

The writing on the wall is clear. So, should one be cowed down by the intimidating thoughts about a deficit budget?  The answer an affirmative ‘no’ if you ask us!