Bahrain’s Economic Development Board (EDB) Chief Executive Khalid Al Rumaihi said the country wants to become a Middle Eastern home to innovative info-tech entrepreneurs from around the world as if it is “honey that attracts bees.”
“Building an interesting ecosystem for startups, we may be late in the game, but the youth here are no different from the youth in Korea,” Al Rumaihi told The Korea Times at the Four Seasons Hotel in Manama, the capital of the nation. “They have ambitions and dreams and they want to realize them and create their businesses. We want to create a home for them right here in Bahrain.”
Established in 2000, EDB is a public agency in which the country’s crown prince and First Deputy Prime Minister Salman bin Hamad Al Khalifa is standing chairman.
It is mandated to draw investment into the kingdom and supporting various initiatives that help enhance its investment climate. Included in the key accomplishments of EDB are establishing the Gulf region’s first free trade agreement with the United States, bringing about the privatization law and becoming the first Arab country to liberalize its telecommunication industry.
As a former head of J.P. Morgan’s private client group in the Gulf region, Al Rumaihi’s job is to lead the board to open the country’s economy wider than it is, as well as breathing innovations such as information and communication technology ICT and fintech into the economy.
Bahrain allows 100 percent foreign ownership of a company, as well as levying no corporate or other types of taxes, where as other Gulf Cooperation Council (GCC) countries are set to introduce value added taxes beginning next year.
Also, other lending regulations and foreign ownership rules are eased.
“One of the most distinctive factors of Bahrain and what investors like about the country is that we have eased foreign ownership rules. Today, 98 percent of our business activities are either fully or partially opened to foreign ownership and that was significantly improved only in the last 12 months,” he said.
“We don’t create zones for special ownership rules. Our whole country is the zone. And we adapt our laws to make sure that we remove restrictions on ownership to attract investment.”
Such openness allowed the country to be ranked No. 66 in the World Bank’s Doing Business Index, which is the second highest among Middle East countries.
“Recently, the government and EDB are focused on how we simplify the business setup processes,” he said. “And that will further improve our ranking in the World Bank index and, more importantly, make it significantly easier to do businesses here.”
According to him, the Bahraini government has introduced an online business registration system in which firms can get the necessary certificate in a couple of minutes. Also, it reduced the country’s minimum capital requirement for a new business from 20,000 dinars ($53,000) to 50 dinars ($130).
He added that the EDB and the government is preparing for an updated bankruptcy law to allow the restructuring of companies so that it can go into effect in the next six months.
Another pillar that Al Rumaihi focuses on is capitalizing on Bahrain’s well-established ICT infrastructure so that it can consolidate itself as the network hub in Middle East.
As of last year, Bahrain’s broadband penetration stood at 172 percent, a 22 percent increase from a year earlier, according to the country’s Telecommunications Regulatory Authority. The authority also said that there were 2.99 million mobile subscriptions in the country, well above the country’s population of 1.43 million.
In order to make use of such an environment and its traditional strength in financing, the country has been making a series of efforts to transform the country’s economy as a nest for fintech companies for the past several months.
“In June, the Central Bank of Bahrain (CBB) has announced new regulations to create a regulatory sandbox that will allow startups and fintech firms to test and experiment their banking ideas,” Al Rumaihi said.
The regulatory sandbox refers to a set of rules that allows businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers. Currently, the country gives companies nine months to stay in the sandbox and then they “graduate” to the formal rules.
Following the move, Bahrain approved five fintech firms to get into the sandbox, which he said caused “phenomenal” responses in and outside of the region. He noted that the sandbox will help fintech companies innovate.
On Sept. 25, Amazon Web Service announced that it will open data centers in the country by 2019 and have Bahrain as its Middle East foothold for cloud computing services.
Al Rumaihi said that the country will put forth further efforts to allow small businesses and startups to more easily conduct business.
The CEO said he wants more Korean companies to have an enhanced presence in Bahrain, given its strategic location in Middle East and quality infrastructure.
“We are investing $32 billion in our infrastructure, including expansion projects in refinery, aluminum facilities and airport.
There is significant potential for Korean companies to win major contracts around these industries,” he said.
“The other area I think is ICT. We know that ICT firms and gaming companies in Korea have significant strength. And we think that why shouldn’t ICT companies have their headquarters in Bahrain, and why shouldn’t Samsung have some kind of presence to serve this region? We would like to see more of them,” he said adding that he wants to visit Korea next year.