Bahrain's trade within the GCC could surge by up to 30 per cent this year following the establishment of the common market on January 1, says a leading economist.

It is likely to benefit Bahrain more than any other of the six member states, says Dr Yousef Mashal, an economist and chief executive of the chemical and petrochemicals company, Mashal Group.

"Bahrain is the financial centre of the GCC and is the only country really ready to work fully with the requirements of the common market, because it has effectively been operating an open economy with its neighbours since the signing of the customs agreement in 2003," he said.

"It is the only country with the full legislation and rules in place that already allow 100 per cent ownership of companies here by any GCC nationals."

Bahrain's position as the only member of the common market currently with a full free trade agreement with the US also put it in a strong position, said Dr Mashal.

He said it would now be easier for businesses, particularly banks and multi-nationals, to work together across the region, rather than competing against themselves in relatively small markets.

Instead of one company representing a motor car company in Saudi while another company represents the manufacturer in Bahrain, there should now be the possibility for one local company to cover the franchise for the entire region.

The same was the case for a wide range of industrial sectors raging from food to medical services. One single company operating a franchise would produce buyer advantage and help reduce prices.

"This is what we should be hoping for," said Dr Mashal. "But this will not come from governments but from the private sector doing business across the region."

The common market will create a single $790 billion economy and this offers huge potential for growth both within the new entity and across the entire Middle East.

"While this may not be on the scale of the European common market it is still very large and it will have the ability to grow very fast if the private sector in all six states work together to create regional companies, " he continued.

"This will be the foundation for the success of the market."

He said there was a need for companies in the region to complement each other rather than compete against each other and this would need to see consolidation across sectors.

"We need a future strategy where we have regional entities rather than national companies competing in the same business with businesses in other states."

Mashal Group is a chemical and petrochemical company producing preventative maintenance chemicals for the oilfield and detergents for the home.

It also has services in the oil and marine industries and has investment in similar types of businesses. - TradeArabia News Service