Creating the Right Conditions for Competitiveness

Digital EconomyEconomic DevelopmentEntrepreneurshipInvestmentStartup

Bahrain has long been known as a regional pioneer in building and sustaining a robust and future-ready economy. It was the first GCC country to diversify away from oil, granting the private sector a vital role in the Kingdom’s economic growth. Bahrain’s forward-thinking government acts as the enabler of a business-friendly environment in which innovation and ideas can thrive. Bahrain was the fastest-growing country in the GCC in 2017, with non-oil sector contributing 80% of GDP. Financial services and manufacturing accounted for 31% between them.


Moreover, Bahrain was dubbed MENA’s freest economy by Fraser Institute in this year’s report.


Competition – the driving force of growth

To maintain this momentum, we need a robust regulatory framework that keeps pace with the demands of today’s fast-paced global economy. Ensuring competitiveness at home is the surest way to keep competing internationally. That’s why Bahrain has recently introduced a new competition law.

Prepared in true Team Bahrain style by the EDB in partnership with other government bodies as well as with private sector stakeholders, the new competition law aims to boost innovation and efficiency. New rules are now in place to prevent the development of monopolies and the abuse of dominant market positions, and to curb anti-competitive practices. By allowing the disruption of established markets, the competition law will benefit consumers and the economy as a whole.

Compliance with the law will be ensured by the Competition Authority, with the responsibility of maintaining efficient markets and promoting productivity.



Encouraging bold innovation with a new reorganization and bankruptcy law

To ensure Bahrain’s business environment continues to encourage creativity and innovation, the Kingdom has also recently introduced a new bankruptcy law that will offer further protection for stakeholders and boost our entrepreneurs’ appetite for pushing boundaries.

We believe that acceptance of failure is a pre-requisite and foundation for innovation and this is specifically why the new law introduces, for the first time in Bahrain, reorganization procedures. This enables entrepreneurs to not only embrace and learn from their mistakes but provides them with a second chance to restart, thus nurturing innovation and fostering entrepreneurship development.

The bankruptcy law aims to rehabilitate individuals and organisations wherever possible, avoiding liquidation, fast-tracking the process, and improving impartiality and transparency. The value of debtors’ assets will be maximised and treatment of creditors will be consistent with their legal rights.

In an echo of the United States’ Chapter 11 law, the bankruptcy law allows the company management to remain in place during the administration of a case, helping to preserve company’s value as a growing concern.

With this law, Bahrain becomes the first country in the GCC region to embed international insolvency provisions in its bankruptcy law, providing for regulation of cross-border procedures in line with top jurisdictions such as the UK, Japan, the US and Canada.

With special provisions included for the insolvency of SMEs, including a dedicated SME insolvency support committee, the bankruptcy law will offer crucial support for Bahrain’s aspirational business culture. We need our businesses to be bold – to take risks and to venture into new markets. One of the key messages at this year’s inaugural Gateway Gulf investor forum in Manama was that all successful entrepreneurs have learned how to bounce back when a business model wasn’t right first time. A straightforward system for getting back on your feet is one of the cornerstones of a strong innovative economy. That’s what the bankruptcy law will provide.



Building on a thriving ecosystem

These developments build on a firmly established business ecosystem in Bahrain. Businesspeople setting up in the Kingdom enjoy a wealth of funding avenues and other resources that give them the tools they need to start trading fast, and to scale up when the time is right.

Online registration is streamlined through the Sijilat Portal. Virtual registration is also straightforward; there’s no need for a physical address and there is no minimum capital requirement for any company type.

To enable fundraising during the early start-up phase and specifically at the pre-seed stage, Tamkeen has recently launched a “Minimal Viable Product” (MVP) scheme. The MVP scheme provides a development support grant in which start-ups can utilize it towards the development, design and testing of a first product. This allows start-ups to fully realize their product by the creation of a prototype and significantly enhances the credibility of investment pitches with the availability of a realized product.

To broaden the finance options for SMEs and startups, The Central Bank of Bahrain has issued equity-based and financing-based crowdfunding regulations, both conventional and Shari’a compliant. In essence, crowdfunding enables startups to raise capital from a wide pool of investors across the globe, via an online platform. Crowdfunding doesn’t only provide access to capital, it also hedges risk, serves as a marketing tool, gives proof of concept, allows crowdsourcing of brainstorming, and presents the opportunity of pre-selling. Simply, bringing more opportunities across the venture capital spectrum.

And in a major development for financing startups, the $100 million Al Waha venture capital fund of funds was launched in May this year by the Bahrain Development Bank to attract angel investors and fuel Bahrain’s vibrant startup scene.

Also, options for equity capital include the Bahrain Investment Market, which supports companies looking to raise funding for future growth. Strong protection of minority shareholders’ rights strengthens governance and ensures a wider pool of potential investors.



These are just some of the ways in which we are making sure we continue to thrive as a conducive hub for businesses of all sizes to start and scale. With the level playing field provided by the competition legislation, combined with strategic support for new sectors, Bahrain is showing the world a true blueprint for success.

Most of these legislations and measures, from the bankruptcy and competition laws, to the initiatives supporting start-ups throughout their fundraising journey, were introduced this year. Innovation and speed in implementing such important initiatives are the running theme and spirit of the policies adopted by the Government of Bahrain.

We will continue to innovate, make changes and move fast.  By continuing to work in collaboration with the government and private sector, we are confident that we can keep identifying high-potential areas for growth that will drive Bahrain’s future.

Nada Azmi

Senior Manager - Competitiveness Advocacy, Bahrain Economic Development Board

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