Bahrain embraces a fresh economic direction

Over the past few weeks, authorities in Bahrain had disclosed a new set of economic policies largely designed to make maximum use of scarce resources.

The measures call for enhancing official investments in international markets while reducing holdings in some local firms. Still, another policy stresses on productivity in addressing the job challenge.

Last week, Mumtalakat, a holding company encompassing all state assets in entities outside the hydrocarbons sector, obtained a $500 facility from a syndicate of local banks to invest abroad. Mumtalakat holds government investments in some 38 firms, including full ownership of Gulf Air and Bahrain International Circuit, where the Formula One championship takes place. Other notable holdings entail 77 per cent stake at Aluminum Bahrain (Alba) and 37 per cent ownership of Bahrain Telecommunications Company (Batelco).

To be sure, Mumtalakat is the investment company for Bahrain. The new drive calls for investing abroad along the lines of Abu Dhabi Investment Authority. At the moment, 97 per cent of Mumtalakat's $10 billion assets are based at home.

The planned divestment of Batelco is a welcomed move, as it would possible end any favours towards Batelco at the expense of Zain, the second mobile company operating in the country. Telecommunications Regulating Authority (TRA) is evaluating the possibility of allowing a third mobile operator.

The new founded enthusiasm at Mumtalakat represents a policy shift within Economic Development Board (EDB). EDB controls Mumtalakat. Since the start of 2008, the EDB has assumed sole responsibility for developing and implementing economic policies. Set up in 2005, the royal decree required EDB to coordinate its policies with the prime minister.

Recently, EDB adopted the motto of 'Business Friendly Bahrain'. The message is meant to offer Bahrain as the best place for doing business in the region. To be sure, the claim is supported by some studies. The Heritage Foundation and the Wall Street Journal consider Bahrain as the freest Arab economy by virtue of clinching 20th spot on the 2008 Index of Economic Freedom.

The other notable economic policy shift relates to addressing the job challenge. In a recent interview with CNN, Crown Prince Salman Bin Hamad Al Khalifa stressed on productivity in tackling employment of locals. Jobless rate amongst nationals ranges between 8 and 12 per cent.

The Labour Fund is charged with developing and implementing programmes to make Bahraini nationals the employee of choice in the private sector. The fund includes representatives from the government, private sector and the labour movement.

Last week, the Labour Fund disclosed its own motto through the term (Tamkeen), which is Arabic for empowering. As the name implies, Tamkeen intends to empower locals to be the employee of choice in the private sector. The project focuses on training Bahraini nationals seeking employment in private sector establishments.

The productivity drive is supported by stronger fees levied on foreign workers. Starting from July, the authorities increased fees of foreign employees from $533 to $1,164 for a two-year permit.

The initiative aims at encouraging local businesses to consider employing locals. As of 2007, foreign employees constituted 80 per cent of total employees working the private sector. Still, the private sector created 98 per cent of new job opportunities in 2007.

Ostensibly, Bahrain is set on a new economic course that intends to make the country as business friendly as possible.

- The writer is a member of parliament in Bahrain.