Creating a balanced entrepreneurial ecosystem, one which supports the growth of new and innovative businesses in Bahrain, has been a major focus of the Bahrain EDB in recent years.
During this transformative period spearheaded by private sector growth, we have seen a series of reforms that have made it easier to establish and develop a company, from reductions in the minimum capital requirements for startups, to the launch and successful close of the $100m Al Waha Venture Capital Fund of Funds. The Al Waha Fund will be vital to amplifying the importance of the role played by angel investors in the Kingdom, empowering dedicated entrepreneurs as they work to realize their bold ideas, while helping emerging sectors such as FinTech make their mark on the Bahraini economy.
We understand that as technology and opportunities evolve, we need to evolve with them. That’s why we’re excited that Bahrain has recently announced a number of new laws which promise to enhance Bahrain’s thriving ecosystem even further.
These legislative changes, expected to be implemented by the end of the year, will have far-reaching implications for the Kingdom’s economy, as they open up exciting new opportunities to an immensely talented, entrepreneurial population, in areas with vast but previously untapped potential.
Bahrain will be taking a crucial step forward for entrepreneurs looking to tap into the GCC’s maturing digital economy, as the Kingdom is set to become the first country in the region to introduce a nationwide data protection law. The law promotes the efficient and secure processing of big data for commercial use, and provides guidelines for data transfer across borders. This will help ensure a sustainable future for the digital economy, safeguarding consumers while allowing entrepreneurs to realise the opportunities created by this new economy.
The new data law comes on the back of a wave of new developments which have strengthened Bahrain’s burgeoning digital economy. Last year, the Central Bank of Bahrain launched the region’s first nationwide regulatory sandbox, allowing tech startups to test innovative products without being obstructed by restrictive regulations, before introducing their ideas to the wider market. Six FinTech businesses are currently making use of the sandbox, fine-tuning their products before delivering their transformative innovations to the market.
The Central Bank also released the region’s first and only regulations covering conventional and Shari’a-compliant financing-based crowdfunding, making it possible for small- and medium-sized businesses in Kingdom to raise funds through crowdfunding, in yet another demonstration of why Bahrain continues to be a leading regional pioneer in the financial services sector.
The digitisation process is giving businesses and government organizations a valuable helping hand. Introducing streamlined and near-instant commercial registration via the recently launched Sijilat Portal has resulted in a 250% increase in registrations. Within government, the Cloud First policy is creating huge savings on IT spending across the board, and the introduction of the region’s first AWS Data Center to Bahrain is projected to reduce 5 year operation costs by 51%. It therefore comes as no surprise that the UN recently ranked Bahrain 1st in the MENA region for e-government development.
But the most important innovations always require a willingness to delve into new territory, so how can we best encourage such a culture? This is where the Kingdom’s new bankruptcy law comes into play. As with the United States’ Chapter 11 Law, the Bankruptcy Law allows a company’s management to remain in place and to continue business operations during the administration process, and includes special provisions for the insolvency of small and medium enterprises.
The law is designed to enhance the ability of businesses to experiment and innovate as well as to improve the outcomes of the bankruptcy process for all parties – a major boost to the vital contribution of startups to the economy.
Bahrain is also set to implement a new competition law, which introduces new rules to prevent the development of monopolies and anti-competitive practices, making it easier for new businesses to disrupt existing markets.
Bahrain has a long history as an open economy and we see competition as something to be embraced, not hindered. This has even been the case when it comes to government-owned entities; for example, we opened up the telecommunication sector to competition in 2002. That landmark move created challenges for the existing government monopoly, forcing it to adapt and innovate, but boosted the sector’s performance more broadly, creating jobs and reducing costs for businesses and consumers.
As we saw at the inaugural Gateway Gulf investor forum in Manama in May 2018, the future lies in fast-moving, agile economies driven by the private sector. The new competition law will help Bahrain maintain its competitive edge in the region as its economy continues to grow and evolve.
Finally, a new health insurance law has been introduced to create an integrated health system for Bahrain, which includes a sustainable financing model designed to attract investment. The new system adds to a raft of reforms geared towards looking after Bahrain’s talented and productive workforce, including the development programmes and initiatives for vocational training run by Tamkeen, the government agency established to provide training for private sector jobs. Programmes like this have allowed thousands of Bahrainis to develop new professional skills, increasing the pool of talent available to employers.
These new laws – combined with the recent initiatives that have helped boost the startup ecosystem in Bahrain – promise to create exciting opportunities for Bahrain’s motivated entrepreneurs, as well as for the far-sighted investors backing them.
Of course, we know our work is not finished here. We are continuing to develop further initiatives, and will engage closely with startups and the wider ecosystem as we do so. The GCC is rife with opportunity, and by working in collaboration with the government and private sector, we are confident that we can keep identifying high-potential areas for growth that will inspire and drive not only Bahrain’s future, but the rest of the region’s as well.