Bahrain, considered to be one of the countries following an open-market philosophy, is becoming a healthy business option for the industrialists from various parts of the world. The country is currently keen on activating every mechanism for the growth of industry, including using the option of Foreign Trade Agreements (FTA), according to a report prepared by the US Department of State and the US Department of Commerce on Bahrain's investment climate.
According to the report published by the US departments in the month of April 2007, Bahrain requires that the pharmaceutical products be imported directly from a manufacturer with a research department. Products should be licensed in at least two other Gulf Cooperation Countries (GCC), one of which must be Saudi Arabia.
Drugs and medicines can be imported only by a drug store or pharmacy licensed by the Ministry of Industry and Commerce (MOIC) after getting approval from the country's Ministry of Health. The country is also taking steps to ban the import of 127 chemicals and foodstuffs containing cyclamates. In response to the threat of Avian Influenza, it has restricted the importation of live birds and has established an Avian Flu Committee to oversee the importation of poultry. The country currently imports poultry meat only from those countries certified free of Avian Influenza by the World Health Organization.
Bahrain has made its export-import policies to enhance the foreign trade and export business. The country phased out subsidies for export industries, but permits duty-free importation of raw materials for export products and of equipment and machinery for newly established export industries. All industries in Bahrain, including foreign-owned firms, benefit from government-subsidised utilities.
The Bahrain government has signed an agreement with United States of America (USA) in the year 2006, US-Bahrain Free Trade Agreement (FTA) and US-Bahrain Bilateral Investment Treaty (BIT). The country has also reached bilateral investment protection agreements with Algeria, Turkey, China, Egypt, Jordan, Malaysia, Morocco, Syria, Philippines and the UK. The business relation, along with a set of investment friendly policies enable the country to move fast in financial and industrial segments. The country pursues an industry friendly approach in its regulatory, banking and finance and labor sector.
In order to ensure the transparency of regulatory system, the country has carried out programmes to increase coordination between government ministries and reduce the red tap in bureaucratic procedures. In an attempt to streamline licensing and approval procedures, the Ministry of Commerce opened the Bahrain Investors Center (BIC) in October 2004 for both local and foreign companies seeking to register in Bahrain.
This high-tech, customer-friendly and easy to find facility is part of a larger effort by the government to attract firms to use Bahrain as their 'Gateway to the Gulf' by setting up regional operations in the country. The BIC is designed as a one-stop shop, providing all commercial licensing and registration services. It houses representatives from all relevant ministries and private sector representatives from the telecommunication, legal, banking, and consulting industries.
Officials from the Ministry note that the BIC can process and issue 80 per cent of commercial registration applications within 24 hours and 10 per cent of commercial registrations within five working days. The remaining 10 per cent, mostly those having to do with health, environment, power and or other essential services, are processed separately according to sector specific regulations and licenses are issued on a case-by-case basis.
The government is actively seeking Bahraini and foreign private investments in large infrastructure projects. Previously, most such activity (other than hotels) was funded by development agencies from other Gulf countries (particularly Kuwait, UAE, and Saudi Arabia). Foreign-owned companies are eligible for partial financing from the state-owned Bahraini Development Bank (BDB), if they meet certain criteria such as providing training and employment to a significant number of Bahrainis. The BDB's capitalization was increased year after year, as part of the government's efforts to increase funding for new businesses and investments, and offering 'fast-track' loans to Bahraini entrepreneurs.
The companies investing in Bahrain should also take certain aspects into consideration as a King rules the country. Entrenched local business interests with government influence can cause problems for potential competitors, says the US report. Interpretation and application of the law sometimes varies by ministry, and may be dependent on the stature and connections of an investor's local partner, if one exists.
The performance requirements for a firm, which plans to invest in Bahrain and the incentives, allowed by the government in this segment is another area where the government of the country has its focus on. Foreign and Bahraini-owned companies must meet the same requirements and comply with the same environmental, safety, health, and other labor requirements. Industries must be set up in officially identified industrial areas. An Environmental Impact Statement (EIS) must be filed by all manufacturing facilities. The country permits 100 percent foreign-ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without local sponsors.
In order to protect Intellectual property rights, Bahrain has to enforce world-class protection of intellectual property rights (IPR) and has signed the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property in 1996. The country has also joined the Patent Cooperation Treaty, Madrid Agreement, WIPO Copyright Treaty, WIPO Performances and Phonograms Treaty, the Rome Convention, the International Convention for the Protection of New Varieties of Plants and the Patent Law Treaty. The government also passed the WIPO-compliant laws regarding trade secrets, copyright and related rights, designs of integrated circuits, geographic indicators, individual drawings and designs, patents and utility models, plant varieties and trademarks.
There are no technology transfer requirements that force firms to share or divulge technology through compulsory licensing to a domestic partner. The firms are also not forced to commit to undertake research and development activities in Bahrain.
The Bahrain labor force is estimated at more than 320,000, in which nearly two-thirds of labors are expatriates. Laws creating the Labor Market Regulatory Authority (LMRA) and the Labor Fund were passed and implemented in 2006. The Labor Minister chairs the LMRA, while the Minister of State for Foreign Affairs chairs the Labor Fund. Labor market reforms established a phased fee to be paid to the government by employers of foreign workers with a view toward equalizing the business costs of hiring expatriate versus national personnel. The LMRA is expected to be fully operational by mid-2007.
Bahrain has economic and commercial cooperation agreements with Australia, Bangladesh, Pakistan, Italy, China, Egypt, France, Greece, India, Iraq, Jordan, Morocco, the Netherlands, Russia, Singapore, South Korea, Syria, Tunisia, Turkey and the UK. Bahrain has air transportation tax agreements with China, France, Greece, Singapore, Switzerland, Turkey, UK, U.S. and Yemen, and two transportation agreements with Syria. Bahrain has concluded double taxation agreements with Egypt, France, India, Turkey, Jordan, Malaysia, Morocco, Pakistan, the Philippines, Thailand, and Tunisia.