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eOpportunities in the
Kingdom of Bahrain
His Royal Highness
Prince Khalifa Bin Salman Al Khalifa
His Majesty
King Hamad Bin Isa Al Khalifa
Prime Minister
King of Bahrain
His Royal Highness
Prince Salman Bin Hamad Al Khalifa
Crown Prince & Deputy
Supreme Commander of Bahrain Defence Force
His Royal Highness
Prince Khalifa Bin Salman Al Khalifa
His Majesty
King Hamad Bin Isa Al Khalifa
His Royal Highness
Prince Salman Bin Hamad Al Khalifa
Prime Minister
King of Bahrain
Crown Prince & Deputy
Supreme Commander of Bahrain Defence Force
eOpportunities in the Kingdom of Bahrain
Contents
Introduction
2
7
eOpportunitiesin Bahrain
11
Outsourcing Opportunities
41
Setting up eCommerce-based business in Bahrain
47
Risks and Challenges
55
Case Studies
59
eCommerce
69
About Bahrain
73
Final Click
79
Table of figures
Figure 1 - Step-by-step guide to setting up eCommerce-based business in Bahrain
49
Figure 2 - Entities in eCommerce transacting with each other
69
Figure 3 - Standard eCommerce models
70
Figure 4 - eCommerce as flow of information, funds, goods and services
71
For more information, please contact us
Directorate of eCommerc&Information Technology
Ministry of Industry&Commerce, Kingdom of Bahrain
Tel: +973 17574806
Fax: +973 17530276
email: [email protected]
Website: www.moic.gov.bh
Building 175, Street 1703, Block 317,
Diplomatic Area, P.O. Box: 5479, Manama, Kingdom of Bahrain
Copyright is reserved by Ministry of Industry&Commerce Kingdom of Bahrain
3
4
H.E. Dr. Hassan A. Fakhro
Minister of Industry & Commerce
Kingdom of Bahrain
eCommerce in my opinion has become an inalienable component of strategic decision
making in today’s emerging global economy and provides significant impetus to the
development of digital economies all over the world.
eCommerce has demonstrated strong capabilities to shrink boundaries, thus,
providing global reach for every business, anywhere in the world. In fact, it has offered
the significant possibility to optimize costs, better reach to customers and to establish
competitive survival in the market. Statistics over the last decade has demonstrated
accelerated trends in eCommerce and it is evident that more and more new types
of businesses have stated to utilize the electronic commerce opportunities. Regional
reports have shown that the Kingdom of Bahrain has always been on the forefront in
ICT adoption and services.
We at the Ministry of Industry and Commerce (MOIC) have initiated a comprehensive
study in form of a handbook to assess the scope of eCommerce, investment
opportunities in eCommerce and the availability of enablers like telecommunication,
ICT services, real estate, etc.
We hope that the handbook “eOpportunities in the Kingdom of Bahrain”, is an
important source of information for all investors interested in establishing eCommerce
businesses in Bahrain.
This handbook offers a glimpse of the untapped vastness of opportunities in the
Kingdom of Bahrain in the perspective of electronic commerce and electronic
businesses. While we have listed 25 potential ICT opportunities to meet the current
and future needs, there are many more.
Ministry of Industry and Commerce has well defined effective processes and business
friendly staff to take investor’s interest forward. It is our pledge to provide all possible
assistance to investors and businessmen in order to expedite the formalities needed
to realize these electronic opportunities into sustainable and prosperous businesses
in the shortest possible time.
We welcome each of you to make use of this handbook to tap into the enormous
potential within the eCommerce environs in the Kingdom of Bahrain.
5
Introduction
6
Introduction
The Middle East is one of the most dynamic and fastest growing regions in the world
today. Bahrain, being the epicenter of banking and financial services is
riding high on the recovering economic surge and is seeing sustainable
growth in economic activities across industries. Bahrain also offers world
class facilities, which attract investors from all parts of the world. As
Bahrain continues its relentless acceleration towards economic growth, it is
becoming eminent to assess the current stature of information and Internet
technology in commerce and to take initiatives in upgrading it to the next level. This is
to establish itself as the leader in application and adoption of information technology
in commercial activities.
In this regard, the Ministry of Industry & Commerce (MOIC) is responsible for a diverse
range of activities, which make up the commercial environment in Bahrain. MOIC is
responsible for the registration of all forms of commercial business, commercial
agencies, industrial property, standards and metrology, foreign trade as well as a
number of other related activities. In general, the ministry’s aim is to ensure the
maintenance of an open, transparent and market driven commercial environment
so as to develop Bahrain’s economic competitiveness and to encourage inward
investment, at the same time promoting employment for the local population.
The Directorate of eCommerce and Information Technology at the Ministry of
Industry and Commerce is the regulator/promoter of eCommerce in the Kingdom
of Bahrain. It is the focal point and the functional arm for all activities related
to eCommerce, both on a local and international scale, in liaison with the other
directorates within the ministry and other related organizations in the public and
private sectors. The directorate seeks to promote eCommerce infrastructure
development both in piloting new and innovative eCommerce products and solutions
and also in partnering with commercial businesses to attract infrastructure
resources to the Kingdom, thus fueling the competitive advantage to organizations/
businesses operating in and from the Kingdom. This handbook comes as one of the
attempts to highlight the opportunities in eCommerce in the Kingdom. This in turn
helps in the creation of a hassle-free environment for the eInvestors.
In keeping with the increasing importance of eCommerce, the Directorate of
eCommerce and Information Technology at the Ministry of Industry and Commerce
is proud to launch the ‘eOpportunities in the Kingdom of Bahrain Handbook’. This
handbook aims at highlighting supply, demand, trends, practices, opportunities, gap,
risk and challenges in the present day in relation to eCommerce across economic
sectors, industries and various other parameters in the Kingdom of Bahrain.
7
The objective of this handbook is to aid investors and entrepreneurs in their decision
making process regarding investment in eCommerce-based businesses in the
Kingdom.
This handbook comes as one of the attempts of the Ministry of Industry and Commerce
to highlight the opportunities in eCommerce and Internet-based businesses in the
Kingdom to aid the decision making process of potential businessmen and investors.
This handbook is divided into eight chapters; the first two chapters highlight
opportunities identified during interactions with participants of the survey.
Opportunities have been classified in terms of model of operation and capital
requirement. The report further describes business process outsourcing as
outsourcing business opportunities in the Kingdom. Chapter three illustrates a stepby-step guide to setup eCommerce- based business in the Kingdom. Chapter four
provides details about the survey conducted as part of the study and its key findings.
Responses from the survey are illustrated as figures, graphs and diagrams with key
findings highlighted. Chapter five highlights the key risks and challenges faced by
eCommerce-based businesses. Chapter six is, which includes local and international
case studies, is an added perspective to this report. These case studies are based
on researches that had been undertaken by credible and prominent organizations
worldwide.
Chapter seven provides a quick overview on eCommerce, work models and its
applications. Chapter eight is a brief on the Kingdom of Bahrain in terms of geography,
legal structure, demographics and economy.
Survey methodology: This research has been conducted by Ernst & Young with the
consent of the Directorate of eCommerce and Information Technology in 2009.
Ernst & Young assisted the Directorate in designing the framework of the research,
acquiring and analyzing data and preparing the report. This research highlights
trends, achievements, areas of concerns and the researcher’s insight on Internet
and Internet- based businesses in the Kingdom. For reasons of statistical uniformity,
8
we limited our survey participation to private organizations only. The survey was
conducted in two phases, covering the enabler (supply) and the demand side of the
value chain. Based on the discussions, questionnaire and meetings, more than 80
participants across 18 economic sectors in the Kingdom provided their responses
on eCommerce. The subsequent findings were analyzed and representations were
drawn based on the adequacy of responses. The overall trends for the key topics
have been highlighted and supported by diagrams and illustrations.
The opinions and information contained in this publication are solely based on
responses provided by the participants. Hence, the Ministry of Industry and
Commerce, the Directorate of eCommerce and Information Technology, or Ernst &
Young does not assume any responsibility for the accuracy, authenticity or objectivity
of the data.
9
10
Chapter 1
eOpportunities in Bahrain
The Internet economy today continues to grow robustly, with both new and established
companies reaping profits online. There still is a huge untapped potential in eCommerce.
Typically, large companies implement Internet technologies to streamline and
improve their bottom lines; however, today these initiatives have been seen as the key
differentiator. Internet today can have an even larger impact on smaller companies as
they are more flexible than their larger counterparts. A small company that integrates
Internet technologies into its business model is assured to achieve greater visibility and
market share and can penetrate new markets more effectively.
During this study (conducted in 2009), participants were asked to highlight the gap.
This gap became ground zero for eOpportunities in the Kingdom. Following is the list
of identified opportunities. These initiatives are expected not only to help introduce
greater efficiency, but also help to support the economic growth in the kingdom of
Bahrain. Global research shows that a 10% increase in electronic payments in a
country can generate a 0.5% increase in overall consumers spending.
The fund requirement mentioned herein has been calculated for Internet-based
businesses only. Funding an eOpportunitiy has two major components - fixed and
recurring costs. Prices discussed herein are subjective. These prices have been
estimated assuming that a particular eOpportunity initiative is completely new or is an
online extention of exsisting business in the Kingdom . Any existing physical business
in Bahrain intending to offer eCommerce-based services shall use only the second
section of the costing structure.
11
Costing structure for eOpportunities
Cost for setting up completely new eCommerce Business
Particulars
Estd. in USD
Estd. in BD
Details/Source
Business Setup Cost
Establishment Cost Component
Commercial Registration (CR)
82
30
Office equipment (Fixtures)
5,406
2,000
Total Establishment Cost (A)
5,488
2,030
Office Rent Yearly
9,730
3,600
547
200
80
30
1،200
444
Office Consumables Yearly
Commercial License renewal
Administration - Yearly
Payroll - Yearly
129،730
21،600
Total Re -occuring expenses (B)
141،287
25،874
200
74
6،757
2،500
500
185
Registration fee 30 BD for eCommerce based business in Kingdom of
Bahrain
Standard calculation for 5 employee
@ 6 BD per sq meter per month (developed business district), 10 sq
meter per employee, 5 employees
Office Supplies like paper, stationery, Printer Supplies
@ 20 BD per year
Postage, accounting expenses etc.
3 employees at different levels 400BD x 2, 600x1
eCommerce Component
Establishment Cost Component
Domain name registration
Web development
Copy Writing
As per Internet Corporation for Assigned Names and Numbers
(“ICANN”) policies
From BD 1,000 to 5,000 on a basic site, with ecommerce capability
@ 185 BD one time fee
Computer - Hardware
5،406
1،200
Standard calculation for 3 employee setup
Computer - Software
3،500
1،295
Standard calculation for 3 employee
16،363
5،245
Electronic payment systems
(Yearly)
6،000
2،200
“Source - 1. Average of leading payment gateway companies in US.
2. In Bahrain typically payment gateway charges 2-3% per transaction
with no or very less setup charges.” @ 160
Internet service - Yearly
5،406
2،000
BD per month, Download speed 8-10 Mbps, Upload speed 512 Kbps,
unlimited data usage volume @ 50 BD
Telephone
1،622
600
per month (Assumption)
500
185
@ 136 BD per year Security Assessment, Marketing insights
Website hosting - Yearly
1،200
444
@ 37 BD per month, Industrial strength, SSL security, cgi-bin access,
unlimited space, Mysql database @
Website Maintenance - Yearly
Total Establishment Cost (C)
Recurring Component
Professional services - Yearly
5،676
2،100
Site Analystics
60
22
Shopping Cart
600
222
@ 1.5 BD per month, Unlimited product catalog, 2000MB Disk Space,
100GB Bandwidth
SEO - Search Engine Optimization
600
222
@ 13.6 BD per year, Search Engine Visibility, Web site listed with
Google®, Yahoo!®, MSN® and others
Advertising - Offline - Yearly
541
200
Advertising - Online - Yearly
1،200
444
23،405
8,659
Total Re-occuring expenses (D)
Total for first year (C+D)
39،768
13,913
Grand Total (A+B+C+D)
186،543
41,817
35 BD per hour, 5 hours per month
Site statistics, real time statistics conversion tracking
@ 37 BD per month
Cost for setting up completely new eCommerce Business
Opportunities categorized by capital requirement are based on the complexity or scale of operation into high, medium and low.
Opportunity Category
Scale/Complexity Factor
Cost for setting up completely new eCommerce Business in BD
12
High
Medium
Low
2
1
0.5
83,634
41,817
20,909
The above estimates are guidelines to provide a high level overview of cost structure. The mentioned amount is an approximation of the probable
cost for a component, computed as an average on the basis of available information. The cost estimated is a planning estimate based on the market
prices in 2010 and is subject to change. These cost estimates are built on the assumptions mentioned in the details column. Cost estimate for
specific opportunity will have to be carefully examined as part of investment decisions and such considerations should include scale of the opportunity, complexity of the opportunity, infrastructure models, choice of location etc. Smaller businesses desirous of start up eCommerce infrastructure
could aim to significantly reduce cost of set up by using shared service and outsourcing model. In such cases, a start up eCommerce initiative could
be realized at a lower cost basis starting from approximately BD 3000.
eOpportunities in Bahrain
During the study conducted in 2009, participants from different commerce and industry
backgrounds were asked to highlight the current usage, gap and future requirements
of technology in the Kingdom of Bahrain. These gaps became the starting point for the
eOpportunities in the handbook.
Responses within each category (Community, social and personal and personal,
construction, education, health and community work, real estate and rental, restaurant
and hotel) were further analyzed with lead inputs (market adaptability, demand from
market, gaps and global trends) to develop the eOpportunities.
The chart below explains gradual evolution of eOpportunities in the handbook. First area
in the chart illustrates the consolidated response for each business areas (payroll,
recruitment, order tracking, processing, e-Exchange, procurement, inventory, sales,
accounts and finance), second area in the chart highlights the breakup of the responses
and the third area lists the related eOpportunities in the handbook.
It is evident that baring few exceptions, a large number of eOpportunities were identified
in the business areas with high response percentage. eOpportunities were envisioned in
areas of business where greater usage, better adaptability and larger gaps were found.
Areas of Business aided/enabled by IT (Current & Future)
CR Categories
Related eOpportunities
Responses in percentage %
72
Payroll
11
Recruitment
72
Order Tracking
Order Processing
78
50
eExchange/Market place
56
Managing Procurement
Managing Inventory
67
72
Managing Sales
Accounts and Finance
Legend
94
0
25
50
75
A
B
C
D
E
F
Avg.
92
78
68
56
66
72
72
10
14
10
9
8
7
11
21
82
82
72
76
66
58
72
6,9,20
66
77
76
76
71
76
76
5,8,11,12,16,23,24,25
55
48
44
59
49
50
50
2,3,4,6,13,17,18,20
62
72
52
54
50
51
56
6,13
82
94
65
58
30
70
67
6
95
65
61
69
62
78
72
1,7,9,10,11,12,13,16,22
92
96
91
99
95
99
94
15
14
100
•
Name of Category
•
Name of eOpportunities
•
Name of eOpportunities
A
Community, Social and Personal Services
4
Online Insurance Search Portal
15
Online Accounting as a Service
B
Construction
5
Online Food Ordering
16
Online Auction Portal
C
Education
6
Online Logistics Marketplace
17
Interior Designing Portal
D
Health and Community Work
7
Online Doctors Booking
18
Online Sports Portal
E
Real Estate and Rental
8
Payment Gateway for Schools
19
Online Library
F
Restaurants and Hotels
9
Online Learning Management Portal
20
SME - Community Portal
10
Online Arabic Translation
21
Online Recruitment and Internship Portal
•
Name of eOpportinity
11
Online Pet Care Advisory
22
Real Estate Comparison Portal
1
Online Diet and Fitness Advisory
12
Online Travel Booking
23
Car rental Portal
2
Online Pre-Paid recharfe Portal
13
Online Portal for Construction
24
Payment Gateway Portal
3
Online Loan Comparison Portal
14
Online Payroll as a Service
25
Certified Service Providers
13
The following section will describe a number of emerging electronic opportunities in the field of
eCommerce and its applications as a result of a detailed field study conducted in 2009 by the
Directorate of eCommerce & IT. The eOpportunities were classified according to approved activity
sectors set by the Commercial Registration (CR) Directorate at the Ministry of Industry and
Commerce, which include: commercial activities, industrial of the previous sectors, fall a number
were classified.
Sector
Community, social and personal services
Banking, Financial services & Insurances
Restaurants and hotels
Health and Community work
Education
Education
Construction
Education
Real-estate and rental
Name of the opportunity
Online diet and fitness advisory
Online pre-paid recharge portal for mobile
phones
Online loan comparison portal
Online insurance search portal
Online food ordering
Online logistics market place
Online doctors booking
Payment gateway for schools
Online learning management portal
Online Arabic translation
Online pet care advisory
Online travel booking
Online portal for construction
Online payroll as a service
Online accounting as a service
Online auction portal
Interior designing - portal
Online sports portal
Online library
SME - Community - portal
Online recruitment and internship assistance
portal
Real-estate comparison portal
Car rental portal
Payment gateway portal
Certified service providers
The tables that illustrate the investment opportunities in Bahrain have been classified according
to the scope of coverage so that investment opportunities turn into local opportunities that can be
executed in the Kingdom of Bahrain or that the investment opportunities are regional or global and
can be commenced from Bahrain and introduced to the rest of the world.
Regional opportunity
14
Local opportunity
Global opportunity
Healthcare
Online diet and fitness advisory
Overview
This business helps customers attain their
fitness goals through its expert ‹diet and
fitness’ advisory. The website aims to attract
fitness enthusiasts from all over the Middle
East.
Type of eOpportunity
This is a B2C opportunity. The revenue model
will be of hybrid type (content and commerce
based).
Market potential
The awareness and related health risks of
obesity is rising steadily in the Gulf countries,
with a higher prevalence among women
than men. Studies in the region show that
overweight and obese numbers are growing
rapidly. Bahrain has a large number of diabetic
patients, which highlights low fitness level.
Health goals can be attained by appropriate
diet and fitness plan; however, one diet or
fitness program does not fit all; every person
has different needs when it comes to choosing
a healthy, effective diet or fitness plan.
Currently, Bahrain and the region lacks
quality content-based websites to cater to
customized fitness requirements.
This opportunity will attract fitness
enthusiasts, dietitians, physical
training experts and health clubs
to help each other in achieving their
fitness goals.
Market positioning - Regional
This opportunity is targeted to draw visitors
across the region.
Application
The website can provide users with diet and
fitness information, products for sale, online
personalized fitness training and diet coaching
and offer online fitness evaluations and a
combination of any or all of these products
and services, designed by dietitians and
trainers. The entire content will be delivered
in a bilingual mode. Diet and fitness plans will
be customized as per local food habits, culture
and lifestyle. The online community will motivate
member through challenges. Membership will
be the main revenue stream for the website
apart from advertisements from local health
clubs and related fitness
products.
Capital requirements
High - Please refer to the estimation sheet at
the beginning of this section for further details.
Authorities’ approval
1. Ministry of Municipalities and Agriculture
2. Pharmacy & Drug Control Directorate at
the Ministry of Health
Existing activities in the CR department
1.
2.
3.
4.
Browsing of worldwide web (Internet)
Health club
Health and food safety consultancy office
Selling healthy food (suspended at the
moment by the Ministry of Health)
Requirements specific to this activity
1. Ability to work on full time basis
2. Masters degree
3. General requirements to open a CR
(see chapter Three: Setting up eCommercebased Business in Bahrain)
15
Telecommunication
Online pre-paid recharge portal for mobile phones
Overview
An online prepaid recharging portal which
allows users to recharge their prepaid mobile
phone from the comfort of their home or
office 24X7. This opportunity reduces many
levels in the prepaid voucher supply chain and
bridges the gap between subscriber and the
operators by offering a user friendly service
for pre-paid and post- paid utility bill payment.
This is a B2C1 opportunity, the revenue model
will be commerce based - selling online.
Market potential
The dynamic mobile phones market of the
Middle East has very high penetration rates
and, surprisingly, maintains such high growth
rates as competition continues to increase.
There are more than 100 million subscribers
in the region and 50+ mobile operators. The
market has high growth predictions for the
next five years. Bahrain itself has a mobile
subscriber base of over a million.
Users across the region not only
use regular top-ons but also make
calls using calling cards, which
again extends the scope of this
opportunity.
1- B2C : Business to Customer (For details
see eCommerce Chapter)
This opportunity is targeted at the Bahrain
market. However, it has the potential to
capture regional market space.
Application
To recharge the pre-paid, customer will go
to the recharge page and select the mobile
16
operator, enter mobile number, amount for
recharge and confirm payment by logging
into the payment gateway and, depending on
the recharge option, the user’s phone will be
recharged instantly.
It would become the easiest way to recharge
a prepaid card online by using credit card or
debit card, online bank transfers and Internet
cards. The mobile recharge facility will be
available 24Hr / 365 days. Strategic tie ups
with service providers is the most significant
success factor for this venture.
Primary revenue model of this opportunity will
be Internet-based commerce - selling online.
Medium - Please refer to the estimation sheet
at the beginning of this section for further
details.
1. Browsing of worldwide web (Internet)
2. Import, export of magnetic and smart card
1. General requirements to open a CR (see
chapter Three: Setting up eCommerce
based Business in Bahrain)
BFSI
Online loan comparison portal
Overview
This website aims to provide information
on various types of loans to loan seekers. It
offers detailed personalized comparison on
loan rates, and offers information that assists
customers in obtaining loans. This website
helps loan applicants to make instant and
intelligent choices.
Market potential
Bahrain’s financial market is well matured
when it comes to corporate banking; consumer
banking however, is still in a catching-up mode.
There is a strong requirement of a highly
interactive, engaging, useful and resultoriented consumer experience in the personal
finance
segment.
Total number of banks in Bahrain:
400+
Number of consumer banks in
Bahrain: 80+
customization. Proprietary based - Banks
can own the automated loan workflow and
incorporate the same in their websites.
The loan portal makes it easy to compare the
costs of various offers, so banks offer their
lowest interest rates on the portal as they are
competing with each other in order to win the
customer’s business.
chapter Three: Setting up eCommercebased Business in Bahrain)
Market positioning - Local
This opportunity is positioned for local market
(Bahrain).
Application
There are three possible models in which this
opportunity could work. They are:
Content/Transaction based - Independent
portal helping loan seekers by allowing free
search, and comparisons for rates from
multiple banks. Revenue will come mainly
from advertisement from the potential loan
providers. The loan search engine can also
offer service to apply for loan.
Subscription based - Opportunity as a workflow
portal which automates the loan information
collection process. Banks can become the
workflow services with some degree of
17
BFSI
Online insurance portal
Overview
An online insurance search engine allows
users to compare rates of different insurance
options. The online portal is dedicated for
personal and corporate insurance.
This is a B2C Internet-based opportunity, with
revenue stream backed up by advertisement
and subscription charges (for insurers).
Market potential
The insurance sector in the Middle East
currently makes up 1% of worldwide
premiums. According to Standard & Poor,
if the world average insurance premium of
US$550 per capita were achieved in the
Middle East, then the market has a potential
size of US$20 billion, which currently makes
up 1% of worldwide premiums.
The insurance industry in Bahrain has been
growing steadily and strongly in recent
years, demonstrating a double digit growth,
mirroring the expansion of Bahrain’s financial
sector. Bahrain is home to more than 165
insurance firms. Bahrain’s gross domestic
insurance premium figures stand at US$308
million (figure 2006), an increase of 22% from
2005’s figure. The insurance industry posted
a strong increase of 24.5% in employment in
2008.
18
Application
The website will be an online insurance search
and comparison engine to compare quotes
in a single view, which allows consumers to
quickly choose the insurer offering the best
value for money.
Instead of calling around or visiting individual
websites for quote comparisons, insurance
seekers would complete a single questionnaire
and instantly get back a quote from multiple
insurance companies. This business can work
on many revenue models.
One-subscription based, where insurance
companies subscribe to be part of the list
and another where the insurer pays only on
a completed transaction. There could be a
third model also where the insurer pays no
listing fees and revenue is generated via online
advertisement. In all the above cases, the
customer or the insurance seeker gets listed
for free.
details.
Bahrain is also the regional hub for
insurance industry in the Gulf and
wider global markets and is home to
the Arab Insurance Group (ARIG),
which is the representative body for
the insurance industry in the Gulf.
2. Local branches for Insurance companies
(operating)
3. Insurance and Reinsurance companies
4. Insurance brokers
This opportunity is targeted to attract
insurance seekers across the region.
chapter Three: Setting up eCommercebased Business in Bahrain).
Food & Beverage
Online food ordering
Overview
An online food guide provides interactive
(general and personalized) food menus to its
customers, allowing them to place orders with
local restaurants and catering companies.
This is a B2C opportunity.
Market potential
Bahrain is a culturally vibrant city reputed for
its vibrant restaurant scene catering to the
diverse wishes of its citizenry. The Internet
has significantly altered buying patterns of the
discerning consumer. While eCommerce has
been around for over a decade, closing the
gap between food and the Internet has taken
a longer duration.
There is an opportunity to augment
successful eCommerce business
models into the F&B industry. The
population of Bahrain exceeds
700,000 (2009 Est.) indicating
high potential for the opportunity.
This opportunity is positioned to cater to the
local market.
Application
The website will offer its customer an online
buying experience similar to that of consumer
goods. Customers would be allowed to keep
account on the website in order to make
frequent ordering convenient. A customer
can search for a restaurant or cuisine,
choose from available items or restaurants,
and choose the delivery mechanism.
Payments can be by credit card or cash, with
the restaurant returning a percentage to the
online food company. There are many revenue
models on which this business can operate.
Some of them are:
Restaurant owned (Proprietary) The preexisting delivery infrastructure of the
restaurants will extend their services over
the web. Autonomous (Subscription based)
Autonomous online food ordering companies
offer services to restaurant owners and end
customers
2. Tourism Affairs at the Ministry of Culture &
Information 3. General Directorate of Traffic
2. First class restaurants
3. Fast food restaurants
4. Other restaurants
5. Restaurants for tourists’ services
19
Logistics
Online logistics market place
Overview
This portal will be a neutral, industry supported,
regional electronic logistics exchange which
has the capability to exploit the potential
of such a collaborative network across
industries and achieve transport optimization
at a regional level industry.
This business is an industry support B2B
business opportunity which takes advantage
of collaborative efforts in business.
Market potential
Electronic Logistics Marketplace (ELM) is
an emerging business model, increasingly
being recognized for its potential to address
the issue of poor vehicle utilization and allied
logistics.
Bahrain is the favored gateway to the region
with easy access to the large economies of
Kuwait, Saudi Arabia and Iran. Bahrain’s
logistics industry is set to flourish in the
coming years as cargo volume in the Gulf
increases. TEU traffic volume is predicted to
increase from 2 million in 2007 to 5 million by
2015 (Source - Oxford Business Group, 2008
Report). Bahrain is also investing US$2.9
billion to upgrade its logistics infrastructure,
including a new bridge to Qatar.
This translates to tremendous
growth in logistics business with
more regional and international
players setting up operations in
Bahrain. Such growth will require
a technology supported platform
which unifies industry to answer
the low vehicle utilization issue.
This opportunity is targeted to attract
insurance seekers across the region.
20
Application
ELM will be a logistics market platform
where logistics service providers like 3PLs,
intermediaries, transport operators, freight
forwarders
interact electronically and directly. Services
will be bought and sold as commodities akin
to an electronic stock exchange. Businesses
need to pay a subscription fee to be part of the
marketplace.
High-Please refer to the estimation sheet at
the beginning of this section for further details..
2. General Directorate of Traffic
2. Passenger’s transport
3. Goods transport
Healthcare
Online doctors booking
Overview
Online appointment improves efficiency and
productivity in healthcare through patient
appointment scheduling. It allows patients to
search, select and schedule an appointment
with an appropriate doctor. This compliments
the doctor’s practice with a tangible increase
in their patient’s overall satisfaction.
Online appointment is a B2C opportunity and
works on multiple revenue models.
Market potential
Demand for healthcare is growing rapidly
due to a combination of factors including
population growth, an ageing population, and
a higher prevalence of chronic diseases.
According to a Ministry of Health, Bahrain
study published in 2008, these three factors
alone will cause healthcare expenditure to
increase by around 500% over the next 20
years to reach BHD1.15 million in 2025.
Private healthcare is likely to see considerable
growth over the coming years. The artificial
‘health island’ known as Dilmunia, off the north
coast of Bahrain should become a focal point
for the growing private healthcare industry
in the country and provide a major draw for
health tourists
from overseas.
An online appointment scheduler
can help hospitals and clinics to
optimize doctor hours and reduce
revenue losses.
This opportunity is primarily focused on the
local market.
Application
Online appointment scheduler bridges the gap
between the doctor and the patient with the
scheduler interaction starting even before the
visit. Patients can search, select and schedule
an appointment with a doctor and they will be
dually informed on the same through email or
SMS. Private clinics in particular get benefited
from maintenance free, automated and 24/7
available office.
This business can work on multiple revenue
models.
Proprietary
where
hospitals/clinics
incorporate this feature on their current
websites - primary target is large organizations.
Subscription based - where hospitals/clinics
subscribe for the service from autonomous
portals, targeting smaller clinics primarily.
Advertisement - Free for hospitals and clinics
for listing and the main revenue comes
through advertisements.
Patients in all the models will be allowed to use
the website for free.
details.
1. Licensure & Registration office at the
Ministry of Health.
2. Clinic
21
Education
Payment gateway for schools
Overview
Online fee payment is convenient for
parents, smart for schools, gives parents
what they want and schools what they need.
It allows parents to make quick and easy
online payments to their children’s school
accounts.
Online fee payment is a B2C type eOpportunity.
Market potential
Students at hundreds of educational
institutions across Europe are already using
online bill paying to receive and pay their tuition
bills—avoiding the hassle of receiving paper
bills and paying by mail, while also saving their
schools hundreds of thousands of dollars a
year in paper, postage and administrative
costs. Bahrain already has numerous
universities with lot of international students.
By using this service, parents can avoid
hassles of cash remittance and transfer. This
concept is new in the Kingdom as well as in the
region. Entrepreneurs can take first-moversadvantage of this gap and extend it to other
countries in the region as well.
This translates to tremendous
growth in logistics business with
more regional and international
players setting up operations in
Bahrain. Such growth will require
a technology supported platform
which unifies industry to answer
the low vehicle utilization issue.
This opportunity is targeted to serve schools
and other learning institutions in the Kingdom.
22
Application
This online opportunity allows parents to pay
their children school and university fees online
using credit card or debit card, online bank
transfers and Internet cards. The acquiring
bank deposits the total of the approved funds
into the school’s nominated account.
There can be two modes of operation for this
business; namely - Proprietary where schools
own the online payment infrastructure and
Subscription based - where school pays
subscription fee to use the service. There
could also be a third possibility where parents
pay a certain percentage of the transaction
amount toward service charges.
details.
None
None
chapter Three: Setting
up eCommercebased Business in Bahrain).
Education
Online learning management portal
Overview
Online learning management portal helps
schools, colleges and training institutes to
manage training and educational records. It is
an online software established for distributing
courses over the Internet incorporating
features of online collaboration and content
management.
Online learning management system is a
SAAS* - based opportunity which is targeted
at schools and other organizations of higher
and sepcialized learning.
Market potential
In 2009, worldwide LMSs represented an
$860 million market. Bahrain and the entire
region have only a minuscule share in this
scheme.
An estimated $36 billion of university
construction projects are under way in the
Middle East and North Africa. The region’s
governments are allocating large proportions
of their budgets to ensure the region has
a hi-tech infrastructure to house the next
generation of students. This creates a big gap
and offers great market potential.
Bahrain is served by more than 200
primary and secondary schools
including 30 private schools that
offer curricula from the UK, US,
France, Japan, Pakistan and India.
There are several universities which
offer broad study option for local
and international students.
Application
Educational institutions will use LMS to
automate record-keeping, student self-service,
self-registration, training workflow, computerbased training, read and understand, on-line
assessment, management, training resource
management. Service providers can extend
these services to the large-, small- and mediumscale learning organizations on subscription
or pay per transaction basis.
1. Private Education Directorate at the Ministry
of Education
2. Private Education institutes
3. Private institutes (Institute, school, education
center)
This opportunity aims to improve learning
management processes across the region.
23
General
Online Arabic translation
Overview
Online Arabic translation provides complete
Arabic to English and English to Arabic
translation service. This opportunity aims to
cater translation and localization requirements
of the Kingdom and the region.
This opportunity is a B2C and B2B Internet
opportunity which targets customers seeking
authorized translation for English to Arabic
and vice versa.
Market potential
Globally, translation is a more than 10 billion
US dollar industry. According to a study, 87%
of translation buyers outsource most or all
of its jobs while Arabic is the official language
in more than 25 countries. As business
grows, these regions dependency on correct
documentation will rapidly increase. The official
language of Bahrain is Arabic; therefore, the
translation of official documents to English in
Bahrain becomes a necessity for business.
Arabic is spoken by more than 280
million people as a first language,
mostly in the Middle East and North
Africa, and by 250 million as a
second language.
Market positioning - International
This opportunity is positioned for
international market.
the
Application
In the initial stages, online translation can offer
a complete Arabic translation service, turning
a wide range of documents from English into
Arabic and from Arabic into English. Other
popular languages can be added on demand
basis at later stages.
24
Users can upload the document to be
translated on the secured website and make
payments through credit card, Internet card
or debit card. Specialized translation can be
provided as a value-added service; for instance,
specialized translator having expertise in a
major business area like finance, advertising,
law, technology or medicine.
2. Tourism Affairs at the Ministry of Culture &
Information
2. Translation House
1. Bachelor’s degree.
Social
Online pet care advisory
Overview
Online pet care advisory is an online portal
for pet care that allows the user to view their
pet’s vaccination reminders and medications
online and can also request appointments
online with the local veterinarians.
Online pet care advisory is B2C online
opportunity to cater to the pet owner
community in Bahrain and the region.
Market potential
The worldwide market for pet food and pet
supplies has grown at about 3% annually since
1998 from about 44 billion to $65 billion.
Globally, pet care market exceeds 200 million
US dollars. The market for pet health care in
the Middle East and Africa has increased at a
compound annual growth rate of 7.6%
between 2003 and 2008.
details.
1. Livestock Directorate at the Ministry of
Municipalities and Agriculture
2. Ministry of Health
2. Veterinary Services
The external parasite treatments
category led the pet health care
market in the Middle East and
Africa, accounting for a share of
40.5% of the total pet care market
This opportunity is positioned for the local
market.
Application
The portal will allow users to maintain health
records and vaccination reminders of their pet
at a cost. The portal will provide free dietary
information for pets. This will allow owners to
fix appointments with the vets. The portal will
also allow pet owners to develop a community
of pet owners in Bahrain through blogs and
forums.
25
Travel & Tourism
Online travel booking
Overview
An online travel portal primarily focused on the
Middle East gives its users the convenience of
comparing travel prices. This portal contains
everything that one needs to know about going
on a trip to any destination in the Middle East.
This opportunity is a B2C category opportunity.
This could work on different models.
Market potential
Tourism has become a popular global leisure
activity. In 2008, there were over 922 million
international tourist arrivals, with a growth of
1.9% as compared to 2007. International
tourism receipts grew to US$944 billion in
2008, corresponding to an increase in real
terms of 1.8%. The entire Middle East is going
through rapid transformation with massive
developmental initiatives underway. The GCC
countries are turning more and more to the
travel and tourism industry to decrease their
dependency on oil revenue. According to a
recent study by World Tourism Organization,
governments in the region are taking active
efforts to tap tourism’s potential.
These initiatives have the potential to stimulate
healthy public-private sectors increasingly
working in partnership.
Another research highlights that travel and
tourism in the region is expected to post
economic activity (total demand) of US$280
billion by 2016. For the Middle East, travel and
tourism activity is expected to grow by 4.4%
per annum in real terms between 2007 and
2016. By 2016, the travel industry is expected
to create a total of 6,141,000 jobs, 10.6% of
total employment or 1 in every 10 jobs.
26
Application
Internet-based B2C travel distribution portal
supported by new technologies to provide best
customer service together with unmatched
convenience. This would facilitate travelers to
book tours, hotels, flights etc 24X7.
Services can include hotel booking, air booking,
itinerary planning and tailor made holiday and
car rental. Travel portals could operate on the
following three models.
Proprietary: These websites are owned by the
organizations. This enables customers to buy
airline tickets and hotel booking directly from
the airlines and hotels.
Aggregators: Aggregators are travel search
engines which provide fares of multiple airlines,
hotels and tours, and redirect the visitors
to airlines websites for booking. In return,
aggregators usually receive commissions on
each booking.
Online Travel Agencies: Bigger travel agencies
operating in the traditional model also take
their services online. Customers can book
tickets, hotels and tours. These sites focus on
some specific sectors or set of airlines and
get into strategic partnerships with them.
The portal’s primary target will be the end
customer; however, it may add additional
revenue lines by serving the businesses.
2. Press & Publications office at the Ministry of
Culture & information
These statistics only indicates to
exponential growth in demand of
tourism-based services.
2. Online hotel & car booking services
3. Tourist services office (reservation services)
This opportunity seeks to cater to international
as well as regional travelers.
Construction
Online portal for construction
Overview
An online portal dedicated to the construction
industry primarily targeting to become a
platform for interaction and collaborative
efforts to aid the construction industry.
This is a community based B2B portal, which
aims to attract visitors from the construction
industry.
Market potential
Most global economies have been hit hard
by the financial meltdown. However, Bahrain
studied the pace of growth it had from the
severe effect. Currently, the construction
activity is entering a new cycle where
infrastructure is keeping the sector engaged.
Huge projects like Bahrain Qatar causeway,
Dulmunia, Bahrain Bay and expansion of
airport are warming the marketplace.
Another key growth area will be housing,
with the country’s affordable housing market
estimated to be worth some $4 billion.
studies will be available to provide detailed
information of a product or a particular
service. Revenue will be generated primarily
through advertisements.
details.
2. Building contracts
1. High school certificate
2. A bank account not less than BD 10,000
Presently, the industry requires
collaborative efforts to put the
business on track. An online portal
can serve this purpose.
This portal seeks to cater to the construction
industry in the Kingdom.
Application
The online portal showcases the Construction
& Building Services industry.
Visitors will be able to choose the segment
of the industry they are interested in and the
product group to check out options available
for specification. Product news and case
27
General
Online payroll as a service
Overview
Online payroll management aims to improve
the efficiency and reduce processing cost
per employee in the payroll process. It allows
organizations to effectively manage the payroll
with the use of technology.
This is a SAAS-based opportunity and primarily
aims at small- and medium-sized businesses.
Market potential
Larger businesses can afford to maintain big
payroll departments but for small businesses,
an in-house payroll department translates into
bigger costs. For small - and mediumsize organizations, automating the payroll
operations for effective savings makes
financial sense. This could save them all the
time which their employees are devoting
to payroll-related activities. The emerging
standard in the global payroll marketplace is a
SAAS-based platform, which is the payroll hub
holding all the employee pay data and pay
history. These platforms can encompass any
country and does not have the capital outlay of
an ERP to implement. As a SAAS model, there
are no large internal costs for maintenance
and also it leaves no footprint on the client’s IT
infrastructure.
Bahrain has the potential to become
a hub of such companies due to its
highly skilled talent pool and low
cost of operation.
This opportunity has potential to cater for
global market.
28
Application
Payroll as a service intends to enhance
productivity and accuracy and reduce the cost
of operation.
Payroll outsourcing services for SME’s can
free up a small company to allow them to
concentrate on the things they do best.
Application can be hosted in a centralized
location and access for it can be given as webbased services.
None
None
General
Online accounting as a service
Overview
Online accounting service offers companies
a full spectrum of accounting and financial
outsourcing services, which help these
organizations to increase productivity and
profitability.
This is a SAAS-based opportunity and primarily
aims at small- and medium-sized businesses.
Market potential
Accounting is one of the most basic activities
in business. Business of all sizes account
transactions for gauge performance of
business.
Bigger organizations however perform this
through sophisticated systems, smaller
organization do not have access to such high
end technology.
Accounting as service provides
high value added cost effective
accounting services which get
delivered through web. This allows
client organization to focus on core
competencies.
Revenue will purely come from the members
who subscribe to the service. This agreement
can be on transaction basis or on periodic
basis.
1. Company Affairs at the Ministry of Industry
& Commerce 2. Ministry of Municipalities
and Agriculture
2. Accounting & Bookkeeping Services
This opportunity has potential to cater for
global market.
Application
Online accounting websites help companies to
succeed by providing executives with financial
clarity. To achieve this, a reliable financial
system is installed in the backend and
supported by a web-based front end to deliver
timely, accurate and relevant information.
29
General
Online auction portal
Overview
Online auction portal aims to bridge the gap
between the buyer and seller, through Internet.
This is B2C opportunity where the end users
at either ends of the values chain and the
portal act as a facilitator enabling commerce
on the web.
Market potential
A globally reputed payment association has
reported that there is a steady increase
in the number of retailers responding to
a growing consumer preference to shop
online. Increasing numbers of retailers are
responding to a growing consumer demand
to shop online. US$20 million worth of sales
were made online in the GCC, in the first
quarter of 2005, representing an increase
of approximately 600% over the same period
in 2004. Retailers and other organizations
in all the GCC countries experienced similar
increases in online sales. Saudi Arabia, Kuwait,
Qatar, and Bahrain have also experienced
as much as a fifteen fold growth in the
number of transactions. The rising number
of transactions is indicative of the growing
comfort levels of credit card holders in relation
to online payments.
Various governmental departments across
the GCC are adopting electronic systems to
automate their operations. However, there
still exists a considerable gap in terms of
a common platform that offers its users a
constant, safe and easy place to conduct
business.
Bahrain has the potential to become
a hub of such companies due to its
highly skilled talent pool and low
cost of operation.
30
Market positioning - Local/Regional
This opportunity can be initiated for local
market, but has potential to harness the
regional market.
Application
Online auction portal aims to become an
effective channel where thousands of buyers
and sellers in the Kingdom and later in the
region can meet on a regular basis to sell
products, over a trusted platform that offers
both local payment options and integrated
delivery mechanisms.
This opportunity can be started as an online
auction site and quickly evolved to a fully
integrated ecommerce site with standard
price options and online stores.
2. Auction on second hand cars
3. Manage and operate public auction
4. Public auction to sell and buy precious
matter - gold and estate
Construction
Interior design - portal
Overview
Interior design portal provides a free,
interactive channel for interior design
solutions with web-based visualization tools,
knowledge and resources.
This is a community-based opportunity
targeting the home interiors market.
Market potential
The construction market in GCC is witnessing
an unprecedented boom, which has been ongoing since 2002. Financial meltdown has
affected the speed of growth but the sector is
on a recovery path towards sustained growth.
Several projects have already been
completed and residents who look
to shift into these properties will be
spending a considerable amount on
interior decoration. Other projects
like, Dulmunia and Bahrain Bay
have the potential to become the
powerhouses of activities relative
to interior design industries.
Revenue model of the website will be
advertisement based, with related companies
advertising on the portal and visitors using its
services for free.
the beginning of this section for further details
2. Contracting of interior designs for offices
and homes
Market positioning - Local/Regional
This opportunity is targeted to cater to the
local market, however having the potential to
cater to the regional market.
Application
The goal of this portal is to help visitors
explore design and decorative ideas, online.
The portal will provide interactive design tools
allowing users to plan the design layout and
see the preview. This portal will also provide
basic information on design styles, principles
and elements, painting and color theory, room
elements and design examples.
31
Social
Online sports portal
Overview
This dedicated portal on sports and related
activities in the Kingdom seeks to connect,
energize and enrich everyone from all walks of
life, through the various aspects of sports like
playing, watching, cheering or volunteering.
This is a community-based opportunity which
seeks to attract, generate sports-related
initiatives.
Market potential
Sports management in the Middle East is
booming, indicating high potential for the
same in the market.
A report from a reputed industry
journal mentioned strongest growth
for sports management in Europe,
Middle East and Africa
market.
Application
This portal aims to become the face
of organized sporting in the Kingdom,
empowering residents, schools, colleges,
sports clubs and organizations by offering a
single platform for sports and training.
Online sports portal will facilitate sports
activities among residents of Bahrain. The
portal will offer a plethora of sports events
and engagements for the everyday sporting
individual and for those who wish to be updated
on the local sporting front.
The portal will have an event calendar for
updates, insightful news on the local and
international sports scene, directory of
sports clubs and other training organizations,
32
information about membership and sports
activity locator.
As this website is community driven, the
members will not be charged to use the
content or services. Revenue will solely come
from the sponsors and advertisers.
2. General Organization for Youth & Sports
3. General Directorate of Criminal Investigation
at the Ministry of Interior
2. Men’s gymnasium
3. Ladies’ gymnasium. Sports training
Education
Online library
Overview
Online library seeks to improve sharing of
knowledge among learning institutes. The
electronic library provides links to educational
research, list of books and other study
material available in schools, universities and
other institutes of learning.
targeted at students and researchers.
Market potential
Education is among the key focus areas in
the Kingdom’s Vision 2030. The Kingdom of
Bahrain seeks to become a knowledge- driven
economy of the future; education being the
primary means to achieve that.
There are 200+ schools in Bahrain
and numerous institutes of higher
learning. Each one might not be
backed by a resourceful library. This
gap translates into a huge market
opportunity.
As this opportunity is community-based,
there will be nominal or no fees for libraries
to participate. Members of the libraries will be
allowed to use the website for free. The primary
source of revenue will be advertisement from
the companies targeting student audience.
details.
2. Press & Publications office at the Ministry of
Culture & Information
2. Library
This opportunity is an eInitiative, focused on
catering to the Kingdom’s requirements.
Application
This portal allows member libraries to maintain
a database of the books (basic information like
title of the book, name of the author and brief
about the content) available in their respective
libraries. Student members can log on and
search for the required information material.
The search engine will list out the library in
which the particular information material is
available.
33
Shared
SME - Community - Portal
Overview
SME community portal aims to become a onestop information portal for small and medium
enterprises (SMEs). It provides information
on all aspects of SME development, including
financing, advisory services, training programs,
business and networking opportunities as well
as other SME developmental programs and
initiatives supported by the Government and
private sector.
targeted at small- and medium- sized
business. It provides services to individuals,
entrepreneurs and companies in the areas of
technology financing and government
grants.
Market potential
Small- and medium-sized enterprises
contribute toward sustainable growth of a
country. Some advanced economies have
succeeded only because SMEs form a
fundamental part of the economy, comprising
over 98% of total establishments and
contributing to over 65% of employment
as well as over 50% of the gross domestic
product. Governments across the region have
realized that developing a group of diverse and
competitive small and medium enterprises
(SMEs) is a central theme toward achieving
sustainable economic growth. SMEs are
crucial to the economic growth process and
play an important role in the country’s overall
production network. SMEs need professional
advisers to help with business expansions,
restructuring and new ventures. This
opportunity taps the gap between the initiatives
and the benefit realization in the SME.
There are more than 40,000
registered SMEs in the Kingdom.
Most of them have high potentials
to play a significant role in the
economy.
34
market.
Application
This portal aims to attract visitors from smalland medium-scale enterprises in the Kingdom
and becomes a community driven incubator.
It seeks to provide a platform for individuals,
organization, government initiatives and
businesses to help SMEs to get to the next
level. This portal will become a think tank to
formulate collaborative strategies for better
coordination and efficient implementation
of SME development initiatives. Financial
Advisory to enhance access to financing
across all economic sectors can be provided
as an extended service. The portal will also
provide financial tools like Loan Amortization
Calculator, Loan Comparison Calculator, Cash
Flow Calculator, Break Even Calculator and
Profit Margin Calculator. This opportunity
is community-based. Members will not be
charged to use the website and its resources;
however, in case of special or customized
financial advisory the SME may be charged.
The primary source of revenue will be
advertisements
from
the
companies
targeting the SME, for business and SMEs as
themselves.
None
None
General
Online recruitment and internship assistance portal
Overview
An online recruitment, internship service
provides assistance for companies to post
internships or job opportunities and hire
student/ fresher for internship offering
partime and fulltime job opportunities. This
website aims to help students and fresh
graduates become better professionals.
This is a B2B- and B2C-based eCommerce
opportunity. The primary focus is to tap the
unorganized internship and recruitment
market for locals in Bahrain.
Market potential
There is an enhanced demand for skills in the
existing sectors due to localization policies.
To comply with the localization requirements,
companies operating in Bahrain need to
maintain a certain percentage of Bahraini
nationals.
Presently, the demand for a highly
skilled talent pool is an all time high
and will witness a manifold increase
in future. This portal bridges the
gap between supply and demand by
strengthening the supply side.
market. This portal is targeted to attract the
local graduates in Bahrain. This opportunity is
positioned for local market but has potential
to expand in the regional market.
Application
The website provides students with
an opportunity to gain valuable and
comprehensive hands on experience of
working in a professional organization.
The portal will not charge students for any
service; however, participating companies
will be charged nominal fees on successful
recruitment. Companies and organizations
having internship or full time job requirement
can post the details. Applicants can apply
for these positions through their account.
Organizations, communities, government and
individuals get benefited by having a focused
database of skilled locals.
details.
2. Institute of Public Administration (BIPA)
2. Training and Consultancy co-ordination
Office
3. Centers & Institutes for Administrative &
Commercial Training 4. Centers & Institutes
for Vocational & Technical Training
35
Real estate
Real estate comparison portal
Overview
Portal for real estate is an online commercial
and residential premium real estate website,
connecting property owners and brokers to
tenants and investors.
Online portal for real estate is a hybrid
opportunity (B2B and B2C).
Market potential
Bahrain is one of the greatest potential
property markets in the Middle East. A
report by a leading business research group
concludes that the Bahrain economy had
remained in generally good shape during 2009,
recording a small contraction compared to
its Gulf neighbors and is expected to bounce
back fairly strongly in 2010 on the back
of government infrastructure expenditure
across a broad range of sectors. Over the
past few years, rapid population growth, rising
tourism level and a strong financial services
sector served to drive the real estate market
to new heights. Bahrain has fared better
and rebounded faster than its neighbors in
the region, posting strong performances for
residential rents and commercial office rates.
Real estate developments in Bahrain have
created a surge of investor and consumer
interest in the Kingdom. Buyers from across
the world are showing interest in Bahrain.
Residential demand is expected to be more
buoyant, with the government announcing
plans for 43,000 new homes by 2014.
36
Application
Online real estate search portal will allow
users to compare rates of different estate
properties available in the Kingdom for sale,
buy or rental.
Through effective search options, one can
browse properties anywhere in the Kingdom.
Property developers can find building and
constructions requirements required in
Bahrain along with approval for land in freehold
and normal areas in Bahrain. This portal has
potential to become a guide for new businesses
in construction segment, as the portal will
contain information on approval required from
municipality and other government authorities.
With a regularly updated online database
on construction companies, authorities and
developers, one can keep track of all the real
estate development activities in the Kingdom.
This portal is aimed to bridge the gap between
demand and supply of properties in the
Kingdom together with promotion of allied
property businesses.
details.
2. Courts Directorate at the Ministry of Justice
and Islamic Affairs
20+ major real estate projects are
currently under development.
2. Land and estate agents. Agents for leasing
houses, flats and offices 3. Buying and selling
properties for the establishment
This eOpportunity can be started to cater the
Kingdom’s requirements but has potential to
become a regional opportunity.
Car rental
Car rental portal
Overview
Car rental portal aims to tap the unorganized
market of small- and medium-sized car rental
companies.
Online car rental portal is a hybrid opportunity
(B2B and B2C).
Market potential
Bahrain has grown out to be a very attractive
tourism center in the entire gulf area. Bahrain
tourism has become very popular among the
travelers for a number of reasons. Visitors
seek car rental as it turns out to be the
cheapest and most convenient way to be
around the city. Big car rental companies
are already catering their customers though
web-based platforms; however, there are
numerous smalland medium-sized unorganized car companies
in the Kingdom which want to offer online
booking facility but fail to do in the absence
of economy of scale. This portal aims to
aggregate such demand and translate into a
profitable business model.
Bahrain is one of the most popular
tourist destinations in the Middle
East with over two million tourists
a year.
companies. This would enable customers to
rent a car on 24x7, without physically being
there. In return, portal hosting company can
receive commissions on each booking. The
portal’s primary target will be the car rental
companies and the end customer; however,
it may add additional revenue lines by serving
the businesses.
details.
2. General Directorate for traffic at the Ministry
of Interior
2. Car rental
This eOpportunity is to cater visitors, residents
and citizens of the Kingdom.
Application
This portal will play a role of aggregator. This
portal will be search engine for rental cars
which provide fares of multiple car rental
37
Payment gateway
Payment gateway portal
Overview
The eOpportunity aims to provide service
to authorize payments for eCommercebased businesses, retailers and government
authorities.
This is an enabler side eOpportunity.
Market potential
A globally reputed payment association has
reported that there is a steady increase in the
number of retailers responding to a growing
consumer preference to shop online. There
was a US$20 million worth of sale made
online in the GCC, in the first quarter of 2005,
representing an increase of approximately
600% over the same period in 2004.
Retailers and other organizations in all the
GCC countries experienced similar increases
in online sales. Saudi Arabia, Kuwait, Qatar, and
Bahrain have experienced as much as a fifteen
fold growth in the number of transactions.
The rising number of transactions is indicative
of the growing comfort levels of credit card
holders in relation to online payments. Various
governmental departments across the GCC
are adopting electronic systems to automate
their operations. This only translates into huge
potential demand for payment gateway which
authenticates and executes the payment
transaction.
Travel and gaming have emerged
as the region’s top two eCommerce
segments.
This eOpportunity is positioned to cater the
local and regional marketplace.
38
Application
A payment gateway facilitates the transfer of
information between a payment portal (such
as a website or mobile phone) and the
processor or acquiring bank. When a
customer orders a product from a payment
gateway enabled merchant, the payment
gateway performs a variety of tasks to process
the transaction in order to transaction.
Details about the capital requirements will be
discussed in the next version.
None
None
Certificate
Certified service providers
Overview
Certificate service provider or CSP builds trust
in the digital economy. It helps in securing
eCommerce and communications over
intranets, extranets and the Web.
This is an enabler side eOpportunity.
Market potential
The region posted the world’s highest Internet
usage growth for the 2000-2009 period at
1,648.2% and is home to more than 60 million
Internet users and over 80 million mobile
phone users, making it a huge market for
online and mobile commercial transactions.
The region has a tech-savvy middle income
group who are already patronizing eCommerce
as a more convenient transaction method.
However, there are several obstacles to
the smooth growth of this sector as well,
trust between the customer and the service
provider is one of major ones.
The security of online business is essential
for the flow and growth of such an energetic
sector. Hence, accreditation has become
a necessity. CSP secures the electronic
transactions by certifying the authenticity of
the related services.
of confidence with their clients. It associates
the identity of a web server with a public key.
It makes safe the exchanges between the
server and his clients when a secure session
(SSL - Secure Sockets Layer) is set up, for
example, for an on-line purchase or payment
on a website.
Details about the capital requirements will be
discussed in the next version.
1. Directorate
of
Wireless
Licensing,
Frequency & Monitoring (DWlFM)
2. Telecommunications Regulatory Authority
(TRA) 3. Ministry of Municipalities and
Agriculture
2. Internet Service Provider
eCcommerce transactions in the
Middle East are expected to grow
beyond 15% in 2010.
This oppurtunity is to cater the local market.
Application
The server certificate authenticates and
ensures the security of the sites, thereby
enabling customers to establish a relationship
39
40
Chapter 2
Business Process Outsourcing (BPO) is a broad term referring to outsourcing in various fields. A BPO
differentiates itself from conventional business practices by either putting in new technology or applying
existing technology in a new way to improve a process.
As BPO supporting eCommerce activities is an emerging business opportunity in the region, capital
requirements to start up any such venture was not calculated as well as the application areas. Information
in the coming issues of the handbook will be more complete and accurate to make BPO a lucrative business
opportunity for the potential investors.
BPO is the delegation of one or more IT-intensive business processes to an external provider that in turn
owns, administers and manages the selected process based on defined and measurable performance
criteria. BPO is one of the fastest growing segments of the Information Technology Enabled Services (ITES)
industry.
The Bahrain Information and Communication Technology (ICT) market is expected to grow at a high
rate owing to an increased demand for IT products and services from both public and private sectors.
The growing need for robust IT solutions is also being driven by massive eGovernment and eCommerce
initiatives, that are aimed at achieving proactive and sustained economic diversification. Bahrain offers low
entrance costs and its fertile market is laden with rich opportunities. The Kingdom’s ratified Free Trade
Agreement with the United States of America facilitates a seamless exchange of technology expertise. The
possibilities for long-term opportunities in outsourcing for Bahrain in niche areas of software development
are rich.
Bahrain’s eGovernment strategy aims to have over 90% of key services available online. For business, this
includes business and office registration, work permits, banking services, environmental compliance and
the eTendering of government contracts.
Why to open a BPO in Bahrain
•
Factorcostadvantage(Lowcostofoperation)
Factor
cost advantage (Low cost of operation)
•
Superiorcompetency(Accesstoworldclasstechnologyinfrastructure)
Superior
competency (Access to world class technology infrastructure)
•
Talentpool(AvailabilityoflowwageArabicspeakingskilled,educatedworkforce)
Talent
pool (Availability of low wage Arabic speaking skilled, educated workforce)
•
Closeproximitytoregion’seconomicepicenters(IntheArabianGulf)
Close
proximity to region’s economic epicenters (In the Arabian Gulf )
41
Different types of services which can be outsourced to a BPO based in Bahrain
Customer support services - Arabic/Non Arabic
Overview
Customer service offerings create a virtual
customer service center to manage customer
concerns and queries through multiple
channels including voice, e-mail and chat on a
24/7 and 365 days basis.
Examples
Customers calling to check on their order
status, information on products and services,
account status, reservation status etc.
Technical support services Arabic/Non Arabic
Overview
Examples
Technical support offerings include round-theclock technical support and problem resolution
for OEM (Original Equipment Manufacture)
customers and computer hardware, software,
peripherals and Internet infrastructure
manufacturing companies. These include
installation, product support, up and running
support, troubleshooting and usage support.
Customers calling to resolve a problem with
their home PC, customers calling to understand
how to dial up to their ISP, customers with their
software or hardware issues.
Telemarketing services - Arabic/Non Arabic
Overview
Telesales and telemarketing outsourcing
services target interaction with potential
customers for prospecting either for
generating interest in products and services,
or to up-sell/promote and cross sell to an
existing customer base or to complete the
sales process online.
42
Examples
Outbound calling to retail households to sell
leisure holidays, outbound calling to existing
customers to sell a new rate card for a mobile
service provider or outbound calling to sell
credit or debit cards etc.
Employee IT helpdesk services - Arabic/Non Arabic
Overview
Employee IT helpdesk services provide technical
problem resolution and support for corporate
employees.
Examples
System problem resolutions related to desktop,
notebooks, OS (Operating System), connectivity
etc., office productivity tools support including
browsers and mail, new service requests, IT
operational issues, product usage queries,
routing specific requests to designated
contacts, remote diagnostics etc.
Insurance processing
Overview
Examples
Insurance processing services provide
specialized solutions to the insurance sector
and support critical business processes
applicable to the industry right from new
business acquisition to policy maintenance to
claims processing.
New business/promotion, Inbound/outbound
sales, Initial setup, Case management,
Underwriting, Risk assessment, Policy issuance
etc. Policy maintenance/management: Record
changes like name, beneficiary, nominee,
Address; Collateral verification, Surrender
audits accounts receivable, Accounting, Claim
overpayment, Customer care service via
voice/email etc.
Data entry services/data processing services - Arabic / Non Arabic
Overview
Data entry from high accuracy and fast turn
around time (TAT). Data entry from Image file
in any format of business transaction.
Examples
Data entry like sales/purchase/payroll. Data
entry of E-Books/Data entry: Yellow pages/
White pages keying.
• Data entry and compilation from websites
• Data capture/Collection Business card
data entry into various formats
• Data entry from hardcopy/Printed Material
into text or required format
• Data Entry into software program and
application receipt and bill data entry
Catalogue data entry.
• Data entry for mailing list/Mailing label.
• Manuscripting typing into Word Taped
transcription into Word.Copy, paste,
editing, sorting, indexing data into required
format etc.
43
Data conversion services
Overview
Conversion of data across various databases on
different platforms Data conversion via input/
output for various media Data conversion for
databases, word processors, spreadsheets,
and many other standard and custom-made
software packages as per requirement
Examples
Conversion from text to Word to HTML and
Acrobat Convert raw data into required MS
Office formats Text to PDF and PDF to Word/
Text/Doc Data Compilation in PDF from
several sources. Conversion from Page Maker
to PDF format E-Book conversion etc
Scanning, OCR with editing and indexing services
Overview
Examples
High speed image-scanning and data capture Scan & OCR paper book in to CD ADOBE PDF
services High speed large volume scanning conversion services Conversion from paper or
OCR data from scanned page/image
e-file to various formats
Book keeping and accounting services
Overview
Full processing cycle, registering receipt,
maintaining payable records, bill registration of
supplier, reconciliation
Examples
General ledger, Accounts receivables and
Accounts payable, Financial statements, Bank
reconciliation Assets/Equipment ledgers etc.
Form processing services
Overview
Examples
Processing forms through validation of entries. Insurance claim form
Medical form/medical billing
Online form processing
Payroll processing etc
44
45
46
Chapter 3
Setting up eCommercebased Business in Bahrain
It would have required a mammoth individual effort to set up an Internet-based business
in the past, including the burden of developing and maintaining the entire technology infrastructure. Things have changed for the better today, one can practically come with an
eCommerce-based website in less than 24 hours. Cheap hosting services, custom built
web templates, plug and play eCommerce utilities and seamless application integration
have made the Internet and entrepreneur’s dream come true. eCommerce has matured
very fast, and in the present day basics are taken care of and the ability to deliver services
based on sound business and marketing strategies has become the key for successful
businesses.
The Ministry of Industry and Commerce is a truly pioneering government in providing
services to the public and business. In this regard, it was one of the first ministries to
go online, providing a variety of eServices on its portal. For example, the application for
Commercial Registration (CR) is made easy through the official gateway of the Ministry
(www.moic.gov.bh). See page number 34.
In the following section, details on registration for companies and proprietary business
are highlighted. Here, we have mentioned a number of promising business opportunities
in the field to the investor to consider. Investors can enquire about all services regarding
the registration of companies and proprietary businesses or any other query they have
by contacting the Ministry of Industry and Commerce through its different locations in
the island to receive the full picture as seen on the contact page.
Bahrain, being among the friendliest countries in the region, to work in, is a magnet
enough for the intending entrepreneur offering the best value for money, lowest taxes
and operating costs for businesses which operate from Bahrain. Bahrain also offers the
highest quality of life for employees and their families. The following are the incentives in
operating from Bahrain:
47
•
•
•
•
•
•
•
•
•
Nocorporateorpersonalincometaxes
Competitivefactorcosts(Utilities,realestate,transport)
Costefficient,trainedandbilingualhumancapital
Unrestrictedcapital,profitsordividends
Morethan65bilateralagreementsontradeinvestmentandavoidance
of double taxation
100%foreignownershipofbusinessassetsandrealestate
Bahrain’srapidlyexpandingeconomyattractsahigherproportionofforeign
investment than any other gulf states
Sustainedlowrateofinflationofapproximately2%ayear
One-stop’facilityforallinformationandapplicantprocessingneedsofthe
investors
Bahrain with its business friendly regulation is becoming a breeding ground of start ups
and new entrants. Companies operating in Bahrain can take advantage of low cost of
operation, easy availability of technical pool, strategic geographic location and relaxed tax
regulations.
MOIC is one of the prominent ministries in the Kingdom of Bahrain that provides eServices to investors and businesses. It was one of the first ministries that provided its services
electronically; for instance, the CR (Commercial Registration) renewal is now available
online in additional to several other eServices through the gateway of the Ministry of Industry and Commerce on www.moic.gov.bh.
48
A quick step-by-step guide to establish eCommerce-based business in
Bahrian
Start transacting
Operate Market, Maintain
Issuance of commercial registration
Issua
Activ
Activity licensing and approval
Appli
Application for commercial registration (CR)
Selec
Selection of name of the business
Sele
Selection of legal structure
Inv
nve
Investor
to select legal structure
Selection of eCommerce activity
Investor to choose ecommerce activity, type, model,
Invest
Opportunity
(Refer section 1, 2, 3 in Handbook
Opp
O
ppor
nline business idea
Online
Figure 1 - Step-by-step guide to setting up eCommerce -based business in Bahrain.
1
Selection of eCommerce activity
The Kingdom of Bahrain welcomes and promotes investment in most business sectors
without restriction. Certain business activities
however are prohibited due to their adverse
economic, social or environmental impact.
Foreign investment and 100% foreign ownership is also permitted in general, with a limited
number of business activities that are reserved
by law for Bahraini and/or GCC citizens and
companies only. All the eCommerce-related activities are registered under the Activity number
(525101): ePromotion for Products & Services. Investors can start business related to
eCommerce as a new one or choose from the
list in table 1.
2
Selection of legal structure
The investor must select a legal structure for
the proposed business entity. The Kingdom of
Bahrain’s Commercial Companies Law sets
forth rules and regulations governing the permitted legal structures for companies and individual establishments. In some instances, to
select a legal structure, the investor must seek
other entities or government organizations in
Bahrain. For example, an investor seeking to
open an online business related to media must
get approval from the Ministry of Culture & Information. For all listed eOpportunities in the
handbook, required approvals are mentioned in
the table.
The following are the two most popular legal
structures for eCommerce and IT services:
49
Company
A company which is fully owned by a single or
many natural or corporate person. The proprietor of the capital of the company shall be liable
only to the extent of the capital allocated for the
company. There could be the following types
within the company category:
•
•
•
•
Partnershipcompany
Singlepersoncompany
Foreigncompanybranch
Holdingcompany
Sole proprietorship
Only Bahraini citizens and citizens of Gulf Cooperation Council (GCC) countries [must be
resident in Bahrain] may register an individual
establishment in the Kingdom of Bahrain. An
individual establishment is a non-incorporated
entity and is owned by one individual only. The
owner is liable for all debts and liabilities of the
business to the extent of their personal assets.
3
Selection of the business/domain
name
The most basic requirement for selection of a
company name is its uniqueness; the selected
name shall not be registered with the Ministry
of Industry & Commerce. Consider the following
while selecting the name:
• Name of the business interest should be
unique
• NameoftheeCommercewebsiteshouldnot
be associated with any other registered business in Bahrain or elsewhere
• ItshouldnotbeinMOIC’sdatabase
Please refer to the special requirements in
the eCommerce section. Investors are free to
choose any domain name for the business as
far as it complies with the Kingdom’s legal and
commercial regulations. However, the Directorate strongly recommends selection of . (dot)
bh domain.
50
4
Application for commercial registration
An investor may apply for two types of commercial registration: company commercial
registration, which is applicable to all company
structures; and individual commercial registration applicable to individual establishment (sole
proprietorships).
Commercial registration applications can be
made at the Bahrain Investor’s Center [for
companies] and at the Ministry of Industry &
Commerce ‘s Commercial Registration Directorates [for individuals].
Required document - Individual commercial
entity
• Registration
• Individualregistrationapplicationform
• Commercial name registration application
form
• CopyofCPRcardorcopyofidentitycard(for
foreign investors)
• Copyofpassport(GCCandforeigninvestors)
• Proofthatapplicantisnotemployed
• A no objection certificate signed and
stamped by the applicant’s employer (for
employed applicants)
Required documents - Company commercial
entity
• Registration(BahrainisandGCC)
• Companyregistrationsingleapplicationform
• CopyofCPR(copyofpassportforGCCcitizens)
• Draft of Memorandum of Association (for
single person company)
• Iftheapplicantisanaturalpersonemployed
in the private sector, no objection letter is
only required if the person is to hold a management or directorship post
• Copy of commercial agency, distribution
agreement or franchise agreement, if the
objectives of the company are relating to
such agreements
• A license agreement for exploiting a trademark, if the activities of the company or commercial name thereof are relating to such
agreements:
• Copyofcompany’scommercialregistration
• BoardofDirectorsresolutiontojoinaspartner
• Most recent audited financial statement if
the company is at least one year old (NonGCC foreign citizens)
• Theapplicantmusthavethefulltimetoconduct the eCommerce activity and his age
should be more than 18 years
5
Activity licensing and approval
A commercial registration issued by the Ministry of Industry & Commerce is sufficient to
start most of the eCommerce-based business
activities in Bahrain. Some business activities,
however, require a license or approval by one or
Company registration single application form
more government authorities prior to obtaining
• Copyofpassportwithvisapages
commercial registration. In case eCommerce
• CopyofCPRcard(forresidents)
is enabling an existing (registered and licensed)
• Power of attorney for registration agent, if business, then no further license is required to
register the business, but if the eCommerceapplicable
• One reference from either a licensed inter- based business falls under one of the listed
national bank (inside or outside of Bahrain), categories in the Ministry of Industry and Comauditing firm or law firm must be based in merce license required list, then the business
needs to go through licensing procedures, for
Bahrain)
example, a business related to healthcare in
• Draft of Memorandum of Associations CV
which an investor must seek approval from the
and copies of qualifications (for manageMinistry of Health and other related authorities.
ment and professional consultancy)
An eCommerce approval sheet is available at
• Copy of commercial agency, distribution the Directorate of eCommerce and IT. Investors
agreement or franchise agreement, if the need to provide the business concept, domain
objectives of the company are related to name, payment gateway and their education
such agreements
details which will help to setup the eCommerceRequirement for eCommerce activity
based business. The Directorate processes the
In case there is a new activity to be added, co document in 1 to 3 working days and provides
pany or proprietor need to apply at MOIC with its recommendation on it. On approval, the commercial registration is processed.
the following documents:
• CopyofpassportorCPR
• 30 BD for issuing new register or adding
new activity
• Qualifications and certificates related to
eCommerce & IT or Marketing
• ThesuggestedwebsiteforconductingeCommerce activities
• The suggested party to provide payment
gateway solution
• Thesuggestedpartytoprovidedeliveryservices (if any)
• The suggested address for the customer
service shop
6
Issuance of commercial registration
(CR)
Commercial Registration (CR) is issued by the
Ministry of Industry & Commerce. All new commercial registrations require publication in an
official gazette. A letter of request supplied by
the ministry is the only required document at
this stage. A fee of 30 BD is the charge per
page. Notarization is carried out at the Ministry
of Justice’s Public Notary at the Bahrain Investors’
51
Center (BIC). All legal structure documentation
should be issued in Arabic or in Arabic and English. Three copies are required for this purpose.
For more information please contact the
Directorate of Press and Publications
at the Ministry of Culture & Information:
Tel +973 17 871 786, Fax: +973 17 681 493,
www.moci.gov.bh
eServices provided by MOIC
The Ministry of Industry & Commerce offers a
variety of online services, including: online renewal of commercial registration, general inquiries regarding registration procedure and
requirements, business enquiry reports, application follow-up, submit complaints and follow
up related to Consumer Protection along with
updated daily prices for commodities. To use
the eServices, please visit the eServices section
on the Ministry of Industry & Commerce’s website at:
www.moic.gov.bh/MoIC/En/Main/
eServices/
BIC - Bahrain Investor’s Center
The BIC (Bahrain Investor’s Center) offers a
unique Fast Track Service (FTS) for premium
investment projects in six clusters namely information and communication technology, tourism, financial services, and manufacturing.
The fast track registration program ensures a
seven day commercial registration procedure.
In order to qualify for FTS, a minimum capital
of BD 1,000,000 is required for manufacturing
projects and BD 250,000 for other projects.
The BIC also operates a call center that handles
queries about commercial registration and all
services provided at the BIC. The following are
the services offered by BIC • Financingoption
• Banking
• LegalStructure
• Telecommunicationassistance
52
eCertification
The eCommerce & Information Technology Directorate has initiated a project to implement
a certification system for Bahraini eCommerce
websites, that will help the Ministry of Industry
and Commerce regulate the eCommerce activities in the Kingdom of Bahrain, as well as to
encourage citizens to deal with Bahraini eCommerce websites and thus spread the awareness of eCommerce in the society. This project
has been initiated with the following objectives:
• TopromoteandsupporttheeCommerceinfrastructure in the Kingdom
• Toprovideanenvironmentoftrustbetween
businesses using electronic commerce
• Implementation of certification system to
regulate eCommerce activities
Financing options
A wide range of credit and commercial loan
arrangements are available to local and
international investors through the various
Islamic and conventional banks and financial
institutions in Bahrain. Financing is also
available through the Bahrain Development
Bank and Bahrain Stock Exchange. There are
numerous banks in BIC which provide credit
and financing information for businesses.
• eCommerce-relatedservices
• SupplyofpaymentandFinancialservicesystem to commercial banks
• UsageandbenefitoftheInternetfacility
• eCommerceservices
• Internetserviceprovider
• ePromotionforproductsandservices
• Websitemanagement
• Certificateserviceprovider
• e-Marketplace
Import, export and sale of computer software
and hardware that are related to payment
services and credit card services.
Table 1: List of eCommerce business.
Investors can reach the call center between 7:30 and 18:00 from
Saturday to Thursday on +973 17 562 222 or
[email protected]
Ministry of Industry and Commerce
Address - Diplomatic Area, Manama, Kingdom of Bahrain
PO Box - 5479
Telephone - +973 17574909
Website - www.moic.gov.bh
The Directorate of eCommerce and IT
Address - Diplomatic Area, Manama, Kingdom of Bahrain
PO Box - 5479
Telephone - +973 17574806
Bahrain Investment Center
Address - Seef Mall - Gate Number - 6, Manama, Kingdom of Bahrain
PO Box - 5479
Telephone - +973 17562222
Email - [email protected]
53
54
Chapter 4
Risks and Challenges
Privacy and protection of information
eCommerce requires exchange of important and confidential information. Present technologies
like encryption algorithm takes care of these issues and enables eCommerce-based businesses
to operate seamlessly. However, policies on privacy and protection of information should be discussed in length in the service agreement and terms of use with the customers.
Reliability of trading partners
Most web-based businesses do not possess back end infrastructure. They rely on their partners
in forming a collaborative network. In this case, performance of business is related to the performance of the partner.
Physical threats
Threats posed to the IT infrastructure by the physical environs for example, fire or flood, could lead
to a loss of information. All financial institutes in Bahrain have to mandatorily have a BCP/DRP
program. Today, communication technology makes such initiatives cheaper than ever. Today, webbased businesses can benefit from the cost effective communication technology initiatives.
Fraud and Misrepresentation
The Internet enables smaller businesses to have capabilities of that of large corporations. Owing
to an ever increasing number of cases of online fraud today, potential customers are well aware of
consequences and hence are apprehensive of online transaction they do not trust from any other
site. Web-based businesses should be encouraged to join best practices organization or a privacy
certification program such as WebTrust etc.
Security
eCommerce sites are one of the favorite haunt of hackers worldwide hence eCommerce-based
businesses should gear up to face this risk. All ecommerce sites are the target of multiple attacks. Hackers exploit errors in software application design, technical implementation or systems
operation. The main purpose of hackers is to get customer information and credit card data,
redirect payments, and obtain products free of charge or at a lower price. These attacks and its
impact cannot be eliminated, but can be reduced to a harmless figure. Regular update of firewall
and other security applications can help toward eCommerce-based businesses toward a secured
operation. Websites also need to go through attack and penetration testing on a periodic basis.
55
Data threats
Threats posed to software, files, databases, etc by viruses,
Trojans and so forth.
Information breach
Information breach is the risk to corporate information and intellectual property from internal
staff and trading partners. It is difficult to control sensitive information handled by third parties
or contract workers. Few organizations have systems in place to ensure common standards in
vetting staff and provide security mechanisms between trading partners.
International operations
Setting up an international business or cross-border Web is a complex endeavor. Different tax
structures, currency conversions, coordination and tracking of physical goods become a nightmare.
However, there are plug and play application available that specifically addresses these issues.
Standards and frameworks like ISO/IEC 27001 provide fundamentals to develop and implement
an effective risk strategy for eCommerce systems.
Initiatives by Government of Bahrain
Electronic transaction law
This law consists of 27 articles, covering the formation stage, validity of electronic contracts,
protected electronic records and signature, authentication, certificates, certification services,
retention of records, acknowledgment of receipt, responsibility of the network intermediaries,
inspection authorities, penalties, public authority for electronic certification, electronic commercial
certification, crime and penalties and other provisions.
56
57
58
Chapter 5
Case Studies
Success stories from the Kingdom of Bahrain
Bahrain eGovernment program
The Internet and related electronic information and communication technologies (ICTs
) are being used increasingly by developed economies to enhance the delivery of public
services and citizens’ engagements with the government. The adoption and implementation
of appropriate eGovernment policies and practices in Bahrain is making a significant
contribution in fulfilling the vision of the Government of Bahrain to be the eGovernment
leader committed to provide all government services that are integrated, best-in-class
and available to all through their channels of choice, helping Bahrain transform as the
finest country in GCC to visit, live, work and do business.
Bahrain’s eGovernment strategy aims to have over 90% of key services available online.
For business, this includes business and office registration, work permits, banking
services, environmental compliance and the eTendering for government contracts.
The concept of eGovernment is long-established in Bahrain with a number of government
services available on the Internet. For example, residents can pay utility bills, traffic fines
and visitors can apply for tourist visas online. The government aims to have more than
150 services related to key “lifecycle events” for both residents and businesses available
online in the near future. Bahrain has climbed 29 places from 42nd in 2008 in the
survey, which considers eGovernment development in the context of the overall economic
and social development of a country. According to Shaikh Mohammed bin Essa Al Khalifa,
Chief Executive of the Bahrain Economic Development Board (EDB), the ranking further
demonstrates Bahrain’s commitment to achieving the ambitions of the country’s National
Economic Strategy and Vision 2030; both designed to encourage further private sector
growth, support further diversification of the economy and ultimately elevate national
living standards by creating greater opportunities for Bahrainis.
Hotels in Bahrain
IT as emergence of the Internet altered the structure of the tourism industry as it
dramatically changed best operational and strategic practices. Recent survey has
highlighed that contribution of online bookings in the total bookings have significantly
increased. By this, hotels avoid commissions paid to third party websites and the agents.
Internet also influenced booking decisions by online research and planning. All the major
hotels in the Kingdom offer online reservations to enable customers to review, cancel,
or modify reservations online regardless of the origin of the reservation. Internet and
related technology has increased the ability of hotels in Bahrain to provide great guest
experiences. By understanding current Internet marketing trends in hospitality, hoteliers
in the Kingdom enhanced their web presence and utilized the Internet as the most cost
effective and up-to-date sales and marketing channel.
59
Bahrain Air
Bahrain Air is the second flag carrier of the
Kingdom of Bahrain, and its main base is
Bahrain International Airport. The low- cost
airline currently flies to 16 destinations in
the Middle East, Africa and India. Bahrain
Air is one of the leading budget carrier in the
region. Bahrain Air maintains its lower fares by
reducing the air ticket distribution supply chain
between the airline and the customer. Bahrain
Air pioneered the concept of eTicketing in the
region and its schedules, fares, and availability
of tickets online are published on their website.
It also operates a multi- lingual call center for
customer assistance. Facility for booking its
tickets are also provided at its call center and
airport counter. Bahrain Air encourages use of
the Internet for booking tickets that allows them
to evade the middle-men and travel agents.
Agency commission was a big drain for airlines
as 10 -15% of the ticket cost is given back to
the agents as commission. Airlines paid 3-25%
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commissions to travel agents who sell their
tickets, in addition to spending a huge amount
of money and resources on selling and issuing
tickets of their own. To reduce distribution costs,
airlines like Bahrain Air turned to eCommerce
with Internet-based distribution channels to limit
the number of their sales offices and to reduce
their dependency on Computer Reservation
Systems (CRS) and sales agents.
Riding on the success, Bahrain Air has a high
growth plan. Bahrain Air carried some 750,000
passengers during 2009. It plans to grow the
number of its passengers to one million by the
end of 2010 by adding new destinations and
targets break-even during 2011.
Global
Malta
The Republic of Malta is a Southern European
country and consists of an archipelago
situated centrally in the Mediterranean. Malta
covers just over 300 km² in land area with a
population close to half a million, making it one
of Europe’s smallest and one of Europe’s most
densely populated countries. Until 1800, Malta
depended on cotton, tobacco and its shipyards
for exports. After the British arrived, they
came to depend on the dockyard for support
of the Royal Navy. The military base benefited
craftsmen and all those who served the military.
In 1869, the opening of the Suez Canal gave
Malta’s economy a great boost, as there was
a massive increase in the shipping which
entered the port. Ships stopping at Malta’s
docks for refueling helped the Entrepot trade,
which brought additional benefits to the island.
However, toward the end of the 19th centurys
the economy began declining, and by the
1940s Malta’s economy was in serious crisis.
One factor was the longer range of newer
merchant ships that required less frequent
refueling stops. Malta’s only major resource
is limestone, it produces only about 20% of its
food needs, has limited freshwater supplies
and has no domestic energy sources. Malta
answered the challenge brought by technology
with technology. The government of Malta took
several reform initiatives. One of those was
promotion of information and technology-based
businesses in the country. Malta’s economic
policy encourages information technology
operations, and the territory has invested
heavily in state-of-the- art telecommunications.
There are already a number of Internet Service
Providers in Malta, with clear interest being
shown in offshore ecommerce development.
The Islands’ geographical location (European
time-zone); good telecommunications links;
sophisticated business infrastructure; and the
low cost, English speaking, highly educated
work force are all factors which attract sales,
marketing and administrative departments of
European retail operations. The Government of
Malta is committed to establishing eGovernment
services to ensure the transformation of Malta
into a highly advanced information economy and
information society. eGovernment is to result
in a virtual service provision in such a way that
the particular services related to a transaction
are simultaneously triggered once the episode
relating to that service is activated by a user
thereby attaining a veritable ‘no stop service’.
The Malta Communications Authority announced
in March 2002, that it intends to act as a
catalyst for ecommerce rather than a regulator
in the initial period of development. Although
eCommerce-together with telecommunications
and the country’s postal service -is one of the
statutory areas under the
competence of the MCA, the Authority has
revealed that during the developmental stages
of the sector, its job will principally be to bring
together the main players, provide advice and
assistance, and explain the implications of new
legislation as and when it is implemented.
‘Given the current embryonic stage of
development of this type of activity in Malta,
we see ourselves acting more as a catalyst
in this sector, rather than as a traditional
regulator,’ said Celia Falzon, Project Manager
for eCommerce.
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She added that: ‘We will be disseminating
information, offering guidance and also help with
regard to the legal implications of dealing and
trading with foreign customers or merchants.
We will also work to keep the public informed of
their own rights when it comes to transacting
electronically’.
Efforts of Malta government produced some
fruitful results.
In February, 2004, the latest e-Europe Progress
Report revealed that Malta is significantly
ahead of most EU accession countries in
terms of Internet access and utilization of
eCommerce. According to the report, 49% of
Maltese homes are connected to the Internet.
The island was also ranked second place
behind Slovenia in terms of personal computer
ownership, with 58% PC ownership. The study
also found that Malta has 70 secure Internet
servers per million inhabitants, far higher than
EU15 average of 48. On the business front, the
study found that 73% of Maltese firms had a
website, also the highest proportion among the
accession states. Of these, 20% had received
orders online, while a third of the participants
reported that ecommerce generated over 1%
of their revenues.
As a major offshore jurisdiction with many tens
of thousands of offshore enterprises already
installed, including many trading companies, it
was only a matter of time before Malta becomes
a center of ecommerce activity.
In August 2007, the Malta Communications
Authority (MCA) granted rights of use of
radio frequencies to 3G Telecommunications
Limited, for the establishment and operation of
a third generation (3G) mobile communications
network. This was completed in the case of
Vodafone and Go Mobile in August 2005. In
January 2008, Maltese telecoms provider GO,
has announced a multi-million euro investment
in a second submarine cable linking Malta
to Italy so that it can offer further resiliency
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for its existing international links by having a
more diverse route. The new submarine cable
will cater projected demands for broadband
services which will be increasing in the coming
future, especially with projects such as Smart
City.
In practical terms with submarine, Malta now
possesses world class connectivity, which
in turn allows us to provide services to the
most demanding clients for eCommerce. In
September 2008, the European Commission
confirmed Malta’s high ICT ranking, recognizing
it again as “well advanced in information
society, with indicators significantly above
the EU average.” In its 2010 mid-term review
(Preparing Europe’s Digital Future) the
European Commission recognized Malta as
Europe’s undisputed leader with regard to the
indicator of basic public services for enterprises
being fully available online.
eGovernance
Maltese basic public services available online for
Maltese citizens are at 92%, the second best
ranking in Europe compared with the European
average of 51%, the Maltese authorities further
revealed. The rapidity of the increase in these
services was also noted by the Commission,
which observed that in 2004, only 33% of
Maltese public services to citizens were
available online.
Broadband penetration in Maltese households
as a percentage of households with an Internet
connection exceeds the European average,
showing a greater take-up of Broadband among
Maltese Internet users. Maltese businesses
are the fourth best connected in Europe to
broadband and Malta’s population is the fifth
most covered by DSL coverage in the EU.
Malta’s businesses use technology more than
the average of their competitors in Europe,
and the jurisdiction well exceeds European
averages in integrating eBusiness in internal
processes and in the use of ERP and analytical
CRM systems. The ratio of Maltese employees
with ICT skills is the fifth largest in Europe, and
the ratio of ICT specialists in Malta is also ahead
of European average.
SmartCity
In September 2007, the Prime Minister of Malta,
Lawrence Gonzi unveiled the masterplan for
SmartCity Malta, a new self- sustained industry
township for knowledge-based companies to
be developed in collaboration with Dubai-based
Dubai Internet City. With this attempt, Malta
seeks to build a knowledge-based industry
cluster, primarily serving the ICT and media
sectors. It plans to provide over 100,000
square meters of intelligent office space and
will provide a substantial boost to Malta’s
construction, hospitality, maritime, services
and retail sectors. SmartCity Malta is expected
by 2014 to be making an annual contribution
of US$725 million to Malta’s GDP making
SmartCity the single greatest new contributor
to Malta’s economy ever to have been secured
through foreign direct investment. SmartCity
Malta is projected to generate 4% growth in
the Maltese job market and will create 7000
jobs over an eight-year period apart from the
several hundred jobs created in the economy
as a multiplier effect of the project. The project
is the largest job-creator under one roof in
Malta’s history.
Ground zero for eCommerce
Malta observed natural bonding of the Internet
and offshore stems from the fact that both, of
their nature, manage to avoid tax. It focused on
businesses which can operate on the Internet
and can migrate to offshore jurisdictions.
To cater the same, Government of Malta
provided a structured and clear cut guideline
detailing incorporation, legal and taxation policy in
reference to US and EU norms. The Government
also published regulatory framework on
onshore and offshore eCommerce transactions
including recent legislative developments. The
Government along with private consortium
provided tools, solutions and facilities needed
by companies to relocating eCommerce
or eBusiness operations in an offshore
jurisdiction. Government of Malta through
its telecommunication policies made ISP and
hosting services cheap and efficient to aid offshore eCommerce companies. Certification and
security services were launched through publicprivate partnership program to supporting
eCommerce and eBusiness services with
certification and security facilities from an
offshore jurisdiction.
In December 2007, a consortium of Malta’s
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leading eBusiness organizations was created
to help companies establishing a business
presence in the jurisdiction. The consortium,
known
as
eBusinessMalta.com,
was
launched in late 2007. It constituted leading
eBusiness organizations, namely company
and fiduciary services providers, hosting
and co-location facilities provider, ePayment
solution provider and a recruitment agency/
portal. eBusinessMalta.com was formed with
the primary objective to support web-based
business to operate from the country. Since
inception, it has helped several organizations
in setting up and incorporation processes,
licensing of eBusiness operations, regulatory
consultancy and international trade advisory
along with its standard relocation services.
By locating websites in Malta to carry
out functions previously based in high-tax
jurisdictions, such as sales and marketing,
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treasury management, supply of financial
services, and most of all, the supply of digital
goods such as music, video, training, software
etc., and businesses took advantage of low
rates of taxation for increasingly substantial
parts of their operation. As a major offshore
jurisdiction with many tens of thousands of
offshore enterprises already installed, including
many trading companies, it was only a matter
of time before Malta becomes a center of
eCommerce activity. Over the past years,
Malta has successfully established itself as a
serious, reputable and well-regulated European
jurisdiction providing the ideal environment for
the setting up of eBusiness & ICT companies
with particular emphasis on professional and
financial services, digital communications and
Internet technology businesses. Today, ICT is
the third largest contributor to its GDP and with
the fourth largest employment ratio in the EU.
Singapore
Singapore, officially the Republic of Singapore,
is an island city- state off the southern tip of the
Malay Peninsula. At 710.2 km2, Singapore is a
microstate and the smallest nation in Southeast
Asia.
Given the country’s sound financial sector and
reputation as a safe haven, Singapore is set to
become a regional hub for eCommerce. The
government drew up a ten-year master plan,
Information and Communication Technology
21 (ICT21), in 2000 to position Singapore in
the new electronic world as a global capital of
information and communication technology by
2010.
Singapore’s IT industry and financial institutions
have worked in partnership with the government
to develop infrastructure service such as trust
and security systems, directory services, onlinepayment systems and other intermediary
eCommerce services. The Singapore Telecom
Internet Exchange (STIX) provides Internet
access to more than 35 Internet service
providers (ISPs) in more than 35 countries in
Asia and the Pacific Rim. Singapore now has
more than 35 ISPs and more than 90 resellers.
The government established the Infocomm
Development Authority (IDA) in 1999 as a
merger of the National Computer Board and
the Telecommunications Authority of Singapore.
The IDA was meant to develop, promote
and regulate information communications
(infocomm) in Singapore. Recent increased
competition in the mobile-communications
market has raised an already high level of
penetration for these services in Singapore.
The Economic Development Board is thus
working with a number of multinational
companies—including Capgemini, Nokia and
Sun Microsystems—to develop technology and
services for mobile-phone web access and
eCommerce.
The Infocomm Development Authority and the
Singapore infocomm Technology Federation
(SiTF) established the Singapore Solutions
Center (SSC) in Shanghai in February 2004.
The SSC serves as a one-stop center for
Chinese companies and agencies that wish to
find out more about the technologies, products
and services offered by Singaporean infocomm
companies. It also helps to identify partnership
opportunities for companies of both countries to
work together to deploy innovative information
technology solutions to meet the growing
technological needs of the Chinese market.
As part of its efforts to spearhead new
technologies, the Economic Development Board
Investment in July 2000 set up mCommerce
Ventures. This mobile-commerce fund focuses
on mobile portals, personal information
management, and messaging, bandwidth
optimization and other emerging businesses
in the wireless space. Strategic corporate
partners in this fund include the following: Infosys
Technologies, a leading IT solutions company in
India; Siemens Venture Capital (Germany), an
umbrella organization for all Siemens venture
activities; Global-Times-Ventures Holding, a
German venture-capital fund managed by
T-Telematik Venture Holding; the corporate
venture-capital arm of Deutsche Telekom;
Creative Technology (Singapore), a leading
provider of personal digital entertainment
solutions; Keppel Telecommunications and
Transportation, a leading telecoms and
eBusiness group headquartered in Singapore;
and Infocomm Investments, the investment
arm of the Infocomm Development Authority
of Singapore. Because of the success of the
first fund, Mobile Commerce Ventures II was
incorporated in February 2003, with an initial
capital of S$20 million.
Singapore’s copyright laws comply with the
major intellectual property rights standards,
such as the Bern Convention and the World
Trade Organization’s Trade-Related Aspects
65
of Intellectual Property Rights Agreement. An
amendment to the Copyright Act was passed
in 1999 to extend protection of intellectual
property for copyright owners in the digital
environment, to include areas such as digitally
encoded text and graphics, multimedia
productions, and compilations of material from
different media (like sound recordings,
photographs, and film clips).
Consumer protection
Online customers with product or service
complaints can contact the Consumers
Association of Singapore (CASE), a non-profit
membership organization that promotes fair
and ethical trade practices. It also provides
mediation services in case of a dispute. To
enhance the shopping experience of
consumers and establish public confidence in
eCommerce, the National Internet Advisory
Committee drew up an eCommerce Consumer
Protection Code in 1998. The code is intended
to protect personal information of eCommerce
consumers. The eCommerce Consumer
Protection Code was adopted in 1999 by the
CaseTrust, which is a joint project operated
by CASE, the Retail Promotion Center and
CommerceNet Singapore. CaseTrust is
an accreditation scheme to promote good
business practices among store-based and webbased retailers. Retailers that meet the criteria
stipulated in the CaseTrust code of practice
will be given a logo to display at their shop front
or website. CommerceNet Singapore (CNSG),
set up in 1998, is a not-for- profit industry
association for local companies that engage in
eCommerce; its aim is to make eCommerce
easy, trusted and ubiquitous. CNSG is part of
a global consortium of business partners in 22
countries. CNSG has been the driver for its Global
Reliability Program, which is led by a special
purpose vehicle known as CommerceTrust.
CommerceTrust was formed to accelerate the
development and promotion of trust in both the
physical and Internet business environment by
providing a benchmarking framework for trust
standards. Singapore has a three-pronged
66
approach to Internet content regulation: (1) a
light-touch class licence scheme that provides
minimum standards to safeguard values and
promote healthy growth; (2) encouragement
of industry self-regulation; and (3) an active
public-education program to promote parental
supervision. Content owners that publish their
content on the Internet are automatically
licensed under the Singapore Broadcasting
Authority’s Class Licence Scheme. Under
the scheme, local Internet service providers
(ISPs) and content providers must comply with
an Internet Code of Practice. The ISPs must
register with the Singapore Broadcasting
Authority, but content providers do not need
to unless their web pages are set up primarily
to promote political or religious causes. Steps
are being taken to encourage industry selfregulation. Singapore does not regulate
personal communications, such as e-mail or
Internet relay chat, personal websites and
corporate Internet use by employees or for
business transactions.
The Electronic Transactions Act (ETA) came
into force in July 1998. It provides a legal
foundation for electronic transactions and gives
predictability and certainty to the electronic
formation of contracts. The ETA allows for
electronic signatures and contracts to be used
in courts of law. The government imposes tax on
incomes and profits of all businesses in Singapore.
The profit earned through eCommerce from
tangible goods through an overseas branch of
a company based in Singapore is not taxable
if it is not remitted back to Singapore. For
intangible goods for a Singaporean company
that sets up a website in a foreign country,
the profits earned are taxable in Singapore.
The vision of Singapore government has come
true, now it boasts most IT-literate and Internetsavvy population in the region. According to the
2006 Annual Survey of Infocomm Usage in
Households and by Individuals of the Infocomm
Development Authority, 74% of homes in public
housing and 92% of the homes in private
housing had computer access at home. The
Economist Intelligence Unit estimates that
per 100 persons, 50 used the Internet in
2006. The household- broadband penetration
rate in Singapore was 54.2% in March 2006
(compared with 45% in March 2005), and the
mobile phone penetration rate was 100.8%.
B2B electronic procurement and marketplace
technology players: Ariba, CommerceOne and
FreeMarkets. The presence of these players
will encourage more B2B exchanges to set up
operations and will develop Singapore into a
virtual marketplace where buyers and sellers
transact and communicate over the Internet.
GE Plastics and Eastman Chemical Company,
both of the US, chose Singapore long back
as their Asia-Pacific hub for eCommerce.
Singapore also became home to three leading
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68
Chapter 6
eCommerce
Commerce is the exchange of products and services between businesses, groups, and individuals
and is one of the most fundamental activities of any business. eCommerce primarily focuses on the
use of information and Internet infrastructure to enable external activities and relationships of the
business with individuals, groups, and other businesses.
Electronic commerce, commonly known as ecommerce or eCommerce, consists of buying and
selling of products or services over electronic systems, such as the Internet and other computer
networks. It is the utilization of information and communication technologies (ICT ) in support of all
the activities of business.
Popularly eCommerce is considered to be the sales aspect of business, but starts from the supply
end of business chain, supplier-business interaction. It also consists of the exchange of data to
facilitate the financing and payment aspects of business transactions.
eCommerce methods enable companies to link their internal and external data
processing systems more efficiently and flexibly, to work more closely with suppliers and partners,
and to better satisfy the needs and expectations of their customers.
The amount of trade conducted electronically has grown extraordinarily with widespread Internet
usage.
Types of eCommerce
eCommerce has grown at lightning speed in a relatively short period of time leading to many
business variations. The majority of eCommerce-based business opportunities fall into one of the
five categories.
5 Government to Business
4 Consumer to Business is a
businessmodel in which consumers (individuals) offer products and
services to companies and the
companies pay them
is the online interaction
between government and
the commercial business
G
5
B
2 Business to Business is where two
businesses pass information electronically to each other. They could also use
trade portal for this purpose
B
4
1
1 Business to Consumer involves
consumer accessing the system of
the supplier to purchase product or
service from the supplier directly
C
3
C
3 Consumer to Consumer involves
the electronically-facilitated
transactions between
consumers through some
third party
Figure 13 - Entities in eCommerce transacting with each other.
69
Business models in Internet-based business
eCommerce cannot be imagined without revenue. There are four major business models based
on the target revenue generation and one hybrid which is formed from more than one of the
mentioned models.
Presence based
Commerce based
• These websites offer information. Target users or visitors use the website to
know about the business.
• Thesimplestwebsitebusinessmodelis
based on making sales and profits.
• Thesewebsitesofferinformation.
These websites do not sell anything, but
support sales process by generating
sales leads or making/influencing the
viewer’s buying decision easier.
• Generally these websites present the
equivalent of sales literature on the
Web.
• A commerce website sells/auction/
reverse auction products, takes orders,
charges credit cards, and ships goods.
• Onlinecontentlikereportsandsoftware
are delivered at the time of transaction.
• Primarybenefititscustomersgetisthe
ease of use, comparisions and selection.
• Relatively inexpensive to go online with
and offer considerable benefits.
Hybrid model
Combination of
target user benefits
Content based
Community based
• Thecontentsitesworksexactlylikenational television works, free content is
provided to its users which is sponsored
or paid by the advertisers.
• Thisinternetbusinessmodelworkslike
a notice board.
• Revenue:Throughadvertisement
• Users visitors are not charged for any
service. The basic benefit to create
sense of community which builds traffic
and loyalty on the web.
• Community sites are often started by
special interest groups, fan clubs, and
government organizations. These are
mostly sponsored by business who want
to leverage on the common interest of
the users and visitor.
Figure 3 - Standard eCommerce models
70
eCommerce value chain
The value chain (comprising of the traditional supply chain management functions, planning,
procurement, and inventory management, coupled with the customer-facing functions, typically
referred to as customer relationship management) has integration and performance demands
that exceed the requirements seen in traditional businesses.
2
Merchant’s
Server
5
1
6
Payment
Gateway
3
4
Components of value chain are
tightly integrated to provide an
organization the ability to quickly
and efficiently sell, manufacture,
and deliver products or services.
Consumer
Bank
7
Actual Delivery of goods,
services and content
Figure 4 - eCommerce as flow of information, funds, goods and services
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72
Chapter 7
About Bahrain
Bahrain
Bahrain is an archipelago, consisting of approximately 36 islands located in the heart of the Arabian
Gulf, lying 32 kilometers (20 miles) off the eastern coast of Saudi Arabia and 29 kilometers (18
miles) north of Qatar. The total area of the country is approximately 700 km2 or 270 miles2.
Bahrain is an Arabic word meaning two seas. The island has a desert climate with summer
temperatures rising to above 47°C. During winter, the temperature drops to 10 -15° C with
occasional rainfall. The summer is hot and humid and lasts from late April to end September. Until
the great depression of the 1930s, trade and pearl industry dominated the Bahrain economy. In
1932 Bahrain was the first country in the Arabian Gulf to discover oil. Since then, it has used its
oil revenues to build up an infrastructure well ahead of its neighbouring Gulf states. It has the fifth
highest income per capita in the Middle East, the highest life expectancy in the Gulf and
a European rate of literacy. Oil resources are, however, limited by comparison to other Gulf states
and, since the mid 1970s, the government has sought to encourage new investment to diversify
the economic base. In this regard, Bahrain has been relatively successful at developing trade,
industry, and financial markets. Certain alternative industries, such as aluminum, have proved to
be extremely successful. In addition, Bahrain is recognized as a major banking and financial center
in the region, with a particular emphasis on investment and Islamic banking activities.
The new democratic reforms are the first of their kind in the Gulf, granting Bahrain’s citizens, men,
and women alike, the freedom of speech, expression, and religion as well as the right to vote and
the right to a free trial. The government recognizes the need to broaden the country’s economic
base and welcomes foreign investment considered to be economically beneficial. Investment in
sectors which are export oriented and do not compete directly with established local enterprises
are particularly encouraged. Industries with heavy requirements for land, water or energy or which
are environmentally unfriendly are not encouraged. The Kingdom of Bahrain permits 100% foreign
ownership of businesses in certain sectors.
Most firms establishing themselves in Bahrain are required to have 51% Bahraini equity, although
this does not apply to foreign investors offering essential technical know-how or required foreign
capital, to industrial projects, to firms set up for regional distribution services or representation or
to activities otherwise exempted.
Bahrain Time Difference: GMT +3
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1. People
Total population: Population of Bahrain (July 2006 estimate) is 742,645. (source: CIO)
Population growth: 1.45% (2006 estimate, Source CIO).
Official languages: The official language is Arabic. English is very widely spoken and is the principal
language of commerce.
2. Government
Bahrain has a bicameral legislature with a lower house, the Chamber of Deputies,
elected by universal suffrage and the upper house, the Shura Council, appointed by
the King. Each house has 40 members. The inaugural elections were held in 2002,
with parliamentarians serving four-year terms. A second round of elections was held in
November 2006.
Memberships: Bahrain is a member of the UN, Arab League, Gulf Cooperation Council and the
Organization of the Islamic Conference.
3. Economic Indicators
A growing economy
In mid 2006, the United Nations Economic and Social Commission for Western Asia found that
Bahrain was the fastest growing economy in the Arab world. Bahrain also has the freest economy
in the Middle East according to the 2006 Index of Economic Freedom published by the Heritage
Foundation and the Wall Street Journal, and is the twenty-fifth freest overall in the world. Bahrain
is home to numerous multinational firms with business in the Arabian Gulf.
5.9%
9.3
12.4%
Real GDP Growth Rate (2005)
GDP in USD - Bahrain
Trade Surplus of GDP
6.91%
12k
5.87%
Exports in USD - Billion
Per Capital GDP in USD
Import in USD - Billion
There are no exchange controls on the movement of funds. Bahrain’s currency is the Bahraini
dinar, which is pegged to the US dollar. The US dollar is accepted in most major outlets.
74
4. Taxation and levies
No wealth, capital or inheritance tax.
5. Education
The education system in the Kingdom of Bahrain meets the needs of a competitive economy.
Numerous international educational institutions and schools have established links to Bahrain.
There is a choice of Bahraini, American, Bangladeshi, British, Filipino, Indian, Lebanese and
Pakistani curricula in private schools. As a result of educational reforms, a wide range of private
sector universities have opened in the Kingdom, alongside the University of Bahrain.
6. Employment
Labour force: 380,000 (2007 est.)
7. Transport and communications
Bahrain has an excellent road network with causeway connections to Muharraq and Sitra islands
and to Saudi Arabia. A road link is also planned between Bahrain and Qatar - construction is due to
begin by the end of 2007. Bahrain International Airport in Muharraq is one of the busiest airports
in the Middle East with a wide range of connections to the rest of the region. It is used by many
major international airlines. Manama is the headquarters of Gulf Air, owned by the Government of
Bahrain through the state holding company, Mumtalakat.
8. Local media
There are numerous daily newspapers, two of which are in English. Bahrain Television transmits
local and international news, current affairs, documentaries, educational program, as well as
entertainment series and films. Bahrain TV also runs Channel 55, which broadcasts in English.
Satellite television is widely available. There is an English language radio station as well as a range
of Arabic and Indian stations. The BBC World Service is broadcast on 101 FM.
9. Utilities costs
The overall cost of living in Bahrain is much lower than in most European countries and utilities
such as electricity, water and gas are subsidized by the government.
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ICT in Bahrain
eGovernment
Bahrain’s eGovernment strategy aims to have over 90% of key services available online. For business,
this includes business and office registration, work permits, banking services, environmental
compliance and the eTendering of government contracts. The concept of e-government is longestablished in Bahrain with a number of government services available on the Internet. For
example, residents can pay utility bills, traffic fines and visitors can apply for tourist visas online.
The government aims to have more than 150 services related to key “lifecycle events” for both
residents and businesses available online in the near future.
Telecommunications Regulatory Authority (TRA)
To facilitate competition and fair pricing, Bahrain unbundled its local loop and dismantled Batelco’s
monopoly in 2002. Since 2003, the TRA has issued 140 licenses across 12 segments since and
eight other companies have been issued licenses for national fixed-line services. The TRA follows
the European model.
Global Information Technology Report
Bahrain’s regional leadership in Information Technology (IT ) has been acknowledged by the World
Economic Forum and INSEAD in the organizations’ Global Information Technology Report 20072008. Bahrain is ranked 45th in global information and communications technology readiness
index ahead of Jordan 47, Saudi Arabia 48 and Oman 53.
Bahrain was the first country in the Middle East to:
Install a computer (1978)
Completely digitize its national and international phone switches (1992)
Hold an online referendum (2001)
Introduce 3G and 3.5G high-speed download services
Introduce Smartcards (2005)
Fully deregulate and liberalize its telecommunications market (2004)
To go nationwide with WiMax wireless networks (2007)
eGovernment initiative in Bahrain wins UN award (2009)
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77
78
Chapter 8
Final Click
Building an eCommerce-based business that delivers value to its customers and profit
through the communications capabilities of Internet is an extremely complicated task.
The challenge for today’s eOrganizations is to turn the vision and the market opportunity
into a viable business. Designing a marketing strategy and business plans to develop a
business solution is the most critical factor in the success of business. Individuals and
companies which effectively draft, develop, and deploy eCommerce-based solutions
may need to formulate and adopt a more comprehensive business plan. Today,
Internet technologies play an important role in the success of organizations hence
it becomes more evident for organizations to prepare a comprehensive planning
framework. These structured planning approaches enable the organizations in today’s
competitive world to chalk out success stories and redefine the fundamental.
Good luck
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Appendix
eCommerce glossary
ADSL:
Asymmetric Digital Subscriber Line, a
technology that allows high speed use of the
Internet down normal telephone wire; however,
it works satisfactorily only within relatively short
distances from an exchange.
B2B (Business to Business):
A business model for business on the Internet.
It means eCommerce transaction between two
business organizations.
B2C (Business to Consumer):
A business model for business on the Internet.
It means eCommerce transactions between
business and end-users.
Bandwidth:
Put simply, this is the rate at which information
that can travel along a given communications
link, for instance down the medium (twisted
copper pair, cable, wireless frequency etc) used
to connect to the Internet. See Mbps, Gbps,
Tbps.
Broadband:
A generic name for methods of delivering
electronic data which are fast enough (have
enough bandwidth/have large enough pipes) to
be used to deliver motion-picture quality images.
Cable can deliver broadband; telephone lines
cannot (at present).
Billing address:
The address to which a customer’s credit card
billing statement is mailed. It is used to help
verify that the customer is the actual owner of
the credit card he/she is using.
or transaction on the Internet is what it says
it is; certification is supplied by Trusted Third
Parties or Certification Authorities who use
advanced security features to ensure that
data accompanied by a certificate cannot be
tampered with.
CIF:
Catalogue Interchange Format.
Co-location:
Placing a virtual server, dedicated to one client
(one customer-base), on the same server as is
used by the ISP or Internet host who is providing
that client with Internet access.
Cybercash:
Electronic money, provided in a secure way by
a bank to a customer, which can then be used
electronically to buy products or services.
Electronic products, or digital products:
Any product or service that can be delivered
electronically, specifically over the Internet. For
example, computer software can be downloaded
from server to client; or legal advice can be
given in the form of e-mails and electronic files.
eShop:
A company’s retail presence on the Internet,
including its catalogue, selling tools and payment
processing tools.
Front-end:
Those parts of a commercial operation that
face and deal with the customer.
Gbps:
Gigabytes per second (one billion bytes per
second) - a measure of bandwidth, i.e., the
capacity of a connection.
Certification:
Authentication that a signature or document
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GUI:
Graphical User Interface. This is the name for
the screens that people will see when browsing
a website.
Host: An Internet Service Provider (ISP - see
below) who also offers hosting of Internet
domains. Many do, but not all.
IP: Intellectual property.
IP: Internet protocol. The standardized format
used to send packets of information on the
Internet.
ISDN: Integrated Services Digital Network. An
ISDN line will give you a much faster connection
to the Internet; it may come to be replaced by
ADSL technology.
ISP: Internet service provider. A company which
offers connection to the Internet to its clients;
it may or may not offer more complex service.
Offshore:
In the context of eCommerce, offshore means
that a site is situated on a server that is
physically located in an IOFC. Online
Marketplaces:
Web-based trading exchanges for buyers and
sellers to meet and conduct business.
Payment gateway:
A computer system that acts as a mediator
between a merchant account and online
storefront. Payment gateway is used in
authentication of credit card information and
real-time charging from a credit card.
82
advertisement, the most popular one being
Google Adwords.
Mbps:
Mega bits per second (one million bytes per
second). A measure of bandwidth i.e., the
volume of bits of data that can be transferred
per second over a given link
Open: As in ‘open standards’; software which
has general applicability on the Internet and can
be used in any application, as opposed to:
Proprietary: Software tied to a particular
provider, and not necessarily compatible with
any other particular piece of software.
PSN: Public switched network - the existing
telecommunications system in a country which
routes calls between users.
Resellers: Much Internet software and many
services are provided by resellers who buy or
license programs or packages from originators
and sell them on.
RIP: Regulation of Investigatory Powers Act; a
contentious piece of UK legislation which can
be used to compel ISPs to provide decoded
copies of encrypted communications to the
Government and which may restrict the growth
of the UK eCommerce.
Server: The computer that will host a web site,
usually on the premises of an ISP or Web Host;
it ‘serves’ visitors to the site with pages on
request.
Pipes:
The channels (wires, transmission links, cables,
etc that connect two parts of a network).
Server farm: Sometimes called Internet hotel - a
facility which houses eCommerce or eBusiness
servers belonging to users in a controlled
environment and acts as a communications
hub for them.
PPC (Pay-per-click):
Online advertising in which payment is based
on each time a customer clicks on your link/
Secure server: A server that is equipped to
handle sensitive details such as credit card
information; thus it must have the ability to send
and receive encrypted information through the
SSL and/or SET protocols.
Shopping cart /trolley:
A part of the software in an electronic shop that
allows customers to pick up goods as if they
were on a shelf and take them all together to
the check-out.
Search engine optimization: It is the act of
getting listed in search engines for free. It is PR
for the search engine world.
There are things that you can and should be
doing to improve your listings with search
engines, in the same way that there are things
you can and should be doing that can improve
the coverage you receive for free from television,
radio, and TV.
SSL /SET:
Secure Socket Layer and Secure Electronic
Transaction, respectively. These two protocols
allow encryption between browser and server,
facilitating secure transfer of sensitive data.
Tbps:
Terabytes per second (One thousand billion
bytes per second) - a measure of bandwidth, i.e.,
the volume of data that can be transmitted over
a given connection.
Telco:
Telecommunications Company. The companies
that supplied basic telecommunications
services; very often, the national Terabyte:
Another level of data volume, 1,000 times
greater than gigabyte, which is in turn 1,000
times greater than a megabyte (one million
bytes), which is in turn 1,000 times greater
than a kilobyte (one thousand bytes).
VAT:
Value added tax. A tax that applies throughout
the value- chain in the EU and some other
jurisdictions, whereas sales tax jurisdictions
(e.g., the US) apply tax only at the final stage
when a consumer buys a product.
Withholding tax:
Most countries levy a tax on various types of
payment leaving their jurisdiction, including
interest, royalties, license payments, and
dividends. These payments are ‘withheld’,
hence, ‘withholding taxes’.
XML:
Extensible markup language: XML is an
extended form of HTML allowing extra features
to be integrated to web pages.
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