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How to start a business in Bahrain
How to start a business in Bahrain
An endeavor to start a business anywhere in the world should be based on extensive regional knowledge, grounded in research of a particular industry, and backed by adequate capital. Understanding a region’s history provides indications for the selection of a market sector to conduct commercial activities to the greatest effect. Knowing that the Kingdom of Bahrain was formerly one of the pioneering Arab states heavily invested in the exploration and extraction of crude oil precludes foreign competition from entering these industries in addition to oil refining and other related operations such as the distribution of refined oil products. Since oil yields in the region have been declining, the kingdom has placed its sights on the realms of manufacturing, finance, and tourism. These aspirations led to a high-income nation that is now one of two global hubs for Islamic banking and a destination for nearly 12 million tourists in 2015. As a result of Bahrain’s protections for local businesses, the fields of finance and transportation are heavily regulated and may represent difficult sectors for new entrants to enter.
While the Kingdom of Bahrain’s government is eager to attract foreign investment to bolster their burgeoning economy, market entry is regulated in terms of both English common law and Islamic (Shari’a) law in efforts made to maintain the commercial reputation of their society. Foreign investors or representatives of commercial entities seeking to incorporate in the kingdom should conduct all activities with the strictest adherence to legislature, as is required in any other high-income nation, in addition to being familiar the nuances of the Arab language and culture. Interactions with a range of municipality and ministry representatives can be expected to occur during the process of incorporation, and an investor or proprietor lacking local representation and a familiarity with the local language may require a translator. Although one can expect the English language to be spoken in interactions with private entities such as prominent banks, law offices, or consulting firms, interactions with government bodies can be expected to occur in Arabic, as any legal documents would be drafted in Arabic by default. Bahrain’s Ministry of Industry, Commerce and Tourism mandates representation by a local Bahraini sponsor if any commercial activities occurring in the kingdom involve interactions with third parties, but it is a good idea to have one even if a particular sector of interest is not regulated to that extent. A prominent Bahraini citizen serving as sponsor can be an invaluable asset not just in the capacity of a translator, but as a negotiator as well.
A decent rule for any enterprise venturing into unfamiliar territory is to have a guide – a guide knowledgeable in the region and industry may be useful in navigating any economic and legal hurdles that arise. One of the kingdom’s most prominent guides tasked with the purpose of attracting foreign investment is the Bahrain Economic Development Board. A commercial foray into Bahrain should begin with consultation of the Economic Development Board and its international representatives, from whom proprietors and investors can glean a greater understanding of the climate in a particular sector and any possible barriers to entry. The Bahrain Chamber of Commerce and Industry (BCCI) also serves as an introductory platform for prospective investors or businesses seeking market entry and gaining their support may be invaluable in navigating regulations. In addition to government or quasi-commercial entities like the Economic Development Board and the local Chamber of Commerce, one can also benefit from consultation with commercial firm such as S & F CONSULTING FIRM LIMITED – two examples of tax and audit consultants that have published research on the prospect of doing business in Bahrain.
The range of research conventionally to be undertaken by a prospective company should include a study of current market conditions, competitors, and forecasts. A viable business plan can garner local support from the municipality where a company intends to operate and facilitate the process of commercial registration with the kingdom’s Ministry of Industry, Commerce and Tourism. Once a business has gained traction in the form of a viable plan, and accumulates enough support that market entry becomes a genuine concern, legal representation should be sought to bolster the incorporation of a commercial entity within the kingdom, advice on any licensing requirements, and to protect the founder’s interests. Legal advice can be acquired from a consulting firm or a law firm specializing in a particular sector, and the assistance of a legal representative serves to help determine if any legislative barriers to entry exist, what licenses should be sought, or if a registration agent is required.
In addition to knowing what one is about to get into, the world of commerce generally obliges new entrants to be able to fund their own activities, but without the benefit of personal wealth to start a commercial enterprise, aspiring proprietors should at least have a solid plan to attract the necessary financial backing to operate. The ministry enforces minimum capital requirements from BD 20,000 for companies seeking to register with limited liabilities to BD 250,000 for shareholding companies, however unlimited liability partnerships, sole proprietorship, or internet-based companies are exempt.