Bahrain approves rules allowing foreign firms to set up independent subsidiaries

The move is aimed at boosting the kingdom's economy

Kingdom Bahrain, Manama, 25/8/10. Bahrain currency in cash reatail till  Photo by Phil Weymouth
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Bahrain has approved regulation allowing foreign companies to establish independent subsidiaries in the kingdom and do business without a local partner, a move aimed at spurring economic growth.

Bahrain’s Cabinet, chaired by Prime Minister Khalifa bin Salman Al Khalifa, formally endorsed the new rules earlier this week, two years after the country approved 100 per cent business ownership in certain sectors, according to a Gulf Daily News report. The regulations amend provisions of a corporate law issued in 2001.

Industry, Commerce and Tourism Minister Zayed Alzayani presented the regulations at the Cabinet meeting, stressing the importance of the move that could help boost the national economy, according to the report.


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Bahrain’s economy is the smallest among the six-member economic bloc of GCC, a region that accounts for about a third of the world’s proven oil reserves. However, Bahrain, unlike Saudi Arabia, the UAE and Kuwait, lacks the foreign exchange buffers and has struggled to maintain growth momentum in the wake of the three-year oil price slump that began in 2014. Establishing independent subsidiaries in the kingdom will create jobs and help the country diversify away from oil, as the new policy will encourage foreign companies to establish a base there.

Crude prices have strengthened significantly from lows in January 2016, now hovering around $70 per barrel, however, Bahrain is relying on debt markets to plug the budget deficit and maintain spending to fuel its economy.

At the end of June, Bahrain said Kuwait, Saudi Arabia and the UAE will offer new aid to strengthen the country's "fiscal stability". Finance ministers of the three Arabian Gulf states last month reviewed the fiscal balance programme for Bahrain and reiterated their support to address Bahrain’s financing needs.

“In light of their previous announcement to consider all options to support Bahrain and to finalise an integrated programme to enhance Bahrain’s fiscal stability and economic growth, the ministers reaffirmed their countries’ commitment to support the financing needs of a fiscal balance programme with targeted indicators,” they said in a joint statement at the time, released by Saudi Arabia’s Ministry of Information.