The Kingdom of Bahrain continues to work hand-in-hand with businesses, startups, and regulators to identify opportunities that will ease the doing of business; be it for large foreign companies or local Bahrain-based startups. As a result, the Kingdom launched several policies and initiatives that help develop the business and startup ecosystem.
We spoke with Nada Azmi, Senior Manager of Competitiveness Advocacy at the Bahrain Economic Development Board (EDB), to learn more about the regulatory reforms and initiatives offered by Bahrain to startups and SMEs.
According to Nada Azmi, “Bahrain has been introducing targeted strategic initiatives to leverage the Kingdom’s strengths and capabilities into new activities within sectors that can capitalize on regional and global growth trends. The Kingdom is also continuing to build on its track record of excellence.”
It’s no surprise that the Kingdom of Bahrain takes the lead in the GCC region in economic reforms! 81.6% of Bahrain’s real GDP comes from the non-oil sectors with Bahrain taking the lead as the fastest non-oil sector growth in the MENA in 2017.
Nada described Bahrain’s competitive advantage as being “An agile, nimble and quick moving country.” Bahrain’s small size and ease of access to key decision-makers mean that companies can raise concerns directly with the people that can immediately set changes into motion. AWS chose Bahrain because of the ‘private sector approach to business’ of the government“ she added.
So what initiatives and reforms did Bahrain introduce to help startups thrive, accelerate and tap into the GCC’s fast-growing market?
- FinTech Sandbox –The Central Bank of Bahrain (CBB) introduced the regulatory Sandbox to allow FinTech-based startups from every part of the world to access and experiment their inventive concepts in Bahrain’s soil with lesser restrictions and lower risks. Nada told us, “The FinTech sandbox was introduced to enable FinTech companies to develop and test innovative products in a safe environment Region’s first onshore sandbox promote effective competition, encourage financial inclusion, improve customer experience and embrace new FinTech innovations.
- Bahrain FinTech Bay -The Bahrain Fintech Bay is the leading FinTech Hub in the Middle East, located in the Arcapita Building, Bahrain. Bahrain FinTech Bay provides a physical hub to incubate insightful, scalable and impactful FinTech initiatives through innovation labs, acceleration programs, curated activities, educational opportunities and collaborative platforms. CEO of Bahrain FinTech Bay Khalid Saad said, “BFB will act as a focal point for FinTech activity in Bahrain. BFB is not just a physical space, but rather a complete ecosystem. Startups that are part of BFB, whether local, regional or international will be plugged into the ecosystem from day one. Additionally, they will get support to expand into other markets either via BFB’s partners or FinTech Consortium’s network.”
- Minimum Capital Requirement – Bahrain abolished the minimum capital requirements for all types of companies and startups which resulted in lower costs and made it easier to establish and operate your startup in Bahrain.
- Sijilat Portal – The traditional Commercial Registration (CR) process has been accelerated with the website Sijilat, which not only allows you to check on and apply for your CR online but also access the database of activities available and registered enterprise names. In other words, you get to map out who’s doing what in Bahrain, with the names of the businesses and activities.
- Virtual CR’s (Sijili) – Sijili is a unique Virtual CR Commercial Registration (CR) system that takes away the hurdles from aspiring Bahraini entrepreneurs looking to start their own business. Introduced by the Ministry of Industry, Commerce & Tourism (MoICT), the ‘Sijili’ system helps startup owners to choose and engage in 39 approved commercial activities without a physical address.
- Debt & Equity-Based Crowdfunding – The Central Bank of Bahrain (CBB) allows the participation in both conventional and Shari’a-compliant funding, giving your startup an alternative funding source! Bahrain is the 1st and only GCC country to issue a standalone “Shari’a-compliant Crowdfunding Directives.” In fact, one of Bahrain’s startups, The Stories Studio founded by Saba Saleem, is running a crowdfunding campaign on Indiegogo for the development of a video game for social impact titled ‘Musa’, learn more about it here.
- Al Waha Capital Fund (Fund of Funds) – We’ve all heard startup owners venting on the lack of funding available! We’re pretty sure you are or was at some stage. Luckily for you, the Bahrain Development Bank(BDB) has declared a US$100 million venture capital “fund of funds” to support startups in Bahrain and across the region. Announced at the Gateway Gulf Forum, held under the patronage of His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince, Deputy Supreme Commander and Chairman of the Bahrain Economic Development Board (EDB). The ‘Al Waha fund of funds’ will invest in venture capital companies in Bahrain, offering access to additional capital to support startups in Bahrain and the Middle East, while also aiming to attract foreign VCs in Bahrain.
- Bahrain Investment Market (BIM) – Can’t compete with the big players at Bahrain Bourse? What if we told you that there an exclusive bourse just for entrepreneurs to list their startups and SMEs in Bahrain! The BIM is an equity market for startups in Bahrain and the MENA region. The BIM supports startups and SMEs who are looking to raise capital to fund their future growth. The BIM model and framework aims to financially support businesses as well as enhance their management practices fit for international standards.
Shaikh Khalifa bin Ibrahim Al Khalifa, CEO of the Bahrain Bourse, told Startup MGZN, “At the current stage, the Bourse is focused on communicating the Bahrain Investment Market’s unique and added-value benefits to the target segments. We have already received strong interest following our official launch last March, and we look forward to helping as many businesses as possible to fund their future growth and contribute to the private sector’s development.”
“The Bahrain Investment Market targets fast-growing companies, ones interested in gaining better market value rather than exiting. The capital should be funded by the market, and possibly banks—but right now; they don’t have the support needed. If an entrepreneur goes to a bank and defaults just once, they’re pretty much done, because banks will request foreclosure.” he added.
Areije Al Shakar, Senior Vice President, Head of Development Services at Bahrain Development Bank(BDB) and Fund Manager for the Al Waha FoF told StartUp Bahrain, “The VC Fund of Funds will provide a positive impact to the ecosystem. With public funds being deployed into VCs who are the experts in funding startups will only lead to reap positive benefits for the overall ecosystem and help startups expand regionally and internationally. It will also build up VC capabilities in Bahrain bridging between markets and having portfolio companies expand into Bahrain and vice versa.”
- Personal Data Protection Law – Running a tech startup, you will most likely deal with all sort of different personal data and information. So what better way to regulate people’s information? Well, Bahrain has just introduced the Personal Data Privacy and Protection Law. The law aims to provide further certainty to companies and individuals on handling ‘Personal Data’ through digital publishing. Put into simpler terms, the law will control how personal information is used by organizations, startups, businesses or the government. Check out how you can leverage your startup with the new Personal Data Protection Law here.
According to H.E, Khalid Al Rumaihi, CEO of the Bahrain Economic Development Board (EDB), in an interview with Arabian Business, “This; a regulatory framework for the digital and technology industry is a key part of our strategy for attracting technology companies and customers to Bahrain.”
- Cloud First Policy – Being the first in the region, Bahrain’s Cloud First Policy was a strategic move to integrate the cloud through all government agencies, enabling ministries to deliver more services to users, offering up to 30% – 90% reduced IT systems maintenance overhead costs. At the Amazon Web Services Summit in September 2017, Mohamed Al AlQaed, the CEO of Bahrain’s Information and eGovernment Authority (iGA), declared the official launch of the ”Cloud First” policy, allowing migrating systems to cloud while following the best practices and preserving the iGA’s high-security standards.
“In all the reform efforts, the focus was on improving the life of Bahraini citizens. With the private sector becoming the engine and driver of economic growth while the government is a thought partner and an enabler of the private sector.” Nada added.