Bahrain MPs propose minimum BD100,000 capital requirement for foreign businesses
In an upcoming critical vote, Bahraini lawmakers are deliberating on a proposal that could significantly alter the playing field for foreign investors in the Kingdom. The initiative, championed by MPs Mamdouh Al Saleh, Mohammed Al Ahmed, Ahmed Qarata, Jalal Hassan, and Mahdi Al Shuwaikh, is aimed at instituting a BD100,000 minimum capital requirement for foreign companies desiring to establish their operations in Bahrain.
This proposal seeks to amend Article 345 of Decree Law No. 21 of 2001, which pertains to the Commercial Companies Law. The discussion and subsequent voting on this critical issue are scheduled for Tuesday’s parliamentary session, setting the stage for an anticipated debate among members of the parliament.
The proponents of the proposal believe it is a vital step towards protecting the national economy and enhancing the competitive stance of Bahraini investors. They argue that the current lack of a minimum capital requirement for foreign enterprises has negatively impacted the Bahraini economy, especially harming the small and medium-sized enterprise (SME) sector.
Fierce opposition
However, this proposed amendment is facing strong opposition. The Ministry of Industry and Commerce has expressed concerns about the detrimental effects it might have on the Kingdom’s financial services sector, foreign capital firms, and the broader spectrum of financial activities. The Ministry further asserts that this move contradicts the government’s strategic objectives aimed at attracting foreign investments and promoting economic reforms.
On the other hand, prominent business organizations such as the Bahrain Chamber of Commerce and Industry (BCCI) and the Bahrain Businessmen Association (BBA) stand in support of the proposal. They argue that enforcing a minimum capital requirement is essential to mitigate the adverse impacts on Bahraini SMEs and to create a more balanced investment environment. The BCCI highlights how the lack of a ceiling on foreign ownership of commercial registrations has negatively influenced the pillars of Bahrain’s vision focusing on fostering fairness, competitiveness, and sustainability.
BCCI points out the emergence of an unhealthy parallel market which has been detrimental to the interests of Bahraini SME owners. BBA amplifies the call for addressing the negatives arising from the absence of a minimum capital requirement for foreign entities, emphasizing the need for measures to protect local businesses.
Despite this support, the proposal is bracing for a challenging passage. The Parliament’s Financial and Economic Affairs Committee has recommended rejecting the proposal, arguing it clashes with Bahrain’s Economic Vision 2030. The Committee fears the proposed capital requirement could stifle economic growth and deter foreign investment, thereby sending a negative message to potential international investors. This opposition comes at a pivotal time when Bahrain’s economy is seeking to attract more foreign direct investment to fuel its growth.
As the debate looms, the outcome of the proposed BD100,000 minimum capital requirement for foreign businesses remains uncertain. What is clear, though, is the high stakes involved in either bolstering Bahrain’s economy or potentially hindering its attractiveness as a destination for international investors.
