Bahrain is the latest country in the Gulf region to launch a defence offset policy. Known as the BDF Economic Programme, the new policy aims to support economic development in the Kingdom via the procurements of the Bahrain Defence Force (BDF).
The new policy covers defence procurements valued at more than USD7 million, with a requirement for 60% of the contract value to be discharged by the supplier. Companies that already have an existing offset agreement with the BDF will also be required to fulfil an offset agreement on any supply contracts valued at under USD7 million.
The broad aims of the BDF Economic Programme cover the “development of the Defense & Security industry in the Kingdom of Bahrain,” but will also enable projects in other sectors including: aerospace; communications and information communication technology (ICT); infrastructure; food and water security; and sustainability. Dual-use technologies such as artificial intelligence, robotics, quantum computing, and virtual and augmented reality will also be considered.
Bahrain has launched a defence offset policy, covering procurements over USD7 million. (Getty Images)
Credits for offset projects can be achieved through three methods: investment; contractual engagement; and capability development.
Through the investment routes, supplier companies can invest in a Bahrain-located company, with at least one local partner, or create a partnership with a Bahraini firm. Activities can also include joint ventures, non-equity based co-production agreements, or technology co-development. Contractual engagement projects cover import substitution and facilitated export into the contracted company’s supply chain. Capability development projects will include technology transfers, or internships and job placements for Bahraini nationals.
Investment and contractual engagement programmes are required to be completed within seven years of contract signature, while capability development programmes need to be completed in three years.