The emergence of the Covid-19 pandemic in 2020 was bad news for economies all over the world. Businesses had to bear the brunt of unprecedented lockdowns, which forced most people into the insides of their homes for an extended period. Unfortunately, the Bahrain business industry wasn’t spared either.
The decline in oil prices and loss of tourists are some of the factors that led to a decline in the country’s economy. Eventually, the government in Bahrain came up with several schemes to limit the damage. A sizable fiscal stimulus package was one of them.
The economic stimulus exempted businesses and individuals from paying municipal fees for three months, starting 2020. In addition, paying utility bills on behalf of employees and businesses was another highlight of the stimulus package.
Last year, Bahrain Center for Strategic, International, and Energy Studies (Derasat) and United Nations Development Program (UNDP) did a project to analyze the pandemic’s socioeconomic implications carefully. If you plan on starting a business in Bahrain, the following information can come to your aid.
- The businesses welcomed exemption of necessary fees in Bahrain. Both businesses and individuals gained immunity against having to pay municipal fees. Businesses also gained some relief against having to pay industrial land rental fees.
Tourism-related industries were also exempted from paying tourism levies for three months, starting April 2020.
- The Fiscal Stimulus package introduced by the government was a blessing for the private sector. As per the stimulus, companies affected due to the pandemic were exempted from paying substantial government fees such as municipality fees, tourism fees, etc.
In 2021, the Ministerial Committee for Financial and Economic Affairs and Fiscal Balance had decided to extend the stimulus package for three more months, starting January 1, 2021.
- The enormous stimulus packages amounted to a whopping $11.4 billion. The Bahrain Business industry also benefited from the introduction of brand new loan facilities.
The Central Bank of Bahrain’s increased its loan to $9.8 bn. This particular scheme guaranteed the postponement of debt instalments and extension of extra credit.
Tamkeen, a semi-autonomous government body that confers loans and other assistance to businesses, introduced vital changes to its programme. The stimulus package also led the way for the revamping of debts introduced by Tamkeen.
- The government also introduced provisions for the payment of employees’ salary for three months from April 2020. These payments amounted to a colossal total of $570 million.
- Small and Medium-Sized Enterprises (SMEs) were on the receiving end of acute losses. However, some sectors made a breakthrough. The government’s schemes also brought some much-needed relief to the SMEs.
Since most people started working remotely, it resulted in increased productivity. It is good news for SMEs who can cut down on long-term costs.
- The shift to remote working has been bumpy across the business industry. Also, remote work saw the introduction of new cyber-security threats. The Central Bank of Bahrain (CBB), however, is working towards improving cyber-security measures.
Furthermore, remote working introduced a fair share of advantages and disadvantages for marginalized groups.
- The economic implications of the pandemic have been severe so far. However, the extended lockdown period and the newly introduced stimulus packages have paved the way for exploring innovative business models.
It can significantly benefit people looking for company registration in Bahrain.
Business during Covid-19: The Way Forward
The findings of the Derasat and UNDP’s collective efforts and the newly introduced government schemes point towards the pros and cons of starting a business in Bahrain during the time of a global pandemic.
As compared to other countries, Bahrain’s response to the pandemic was relatively better. The World Health Organization also commended the country’s efforts towards reducing the impact of the pandemic.
Similarly, Bahrain’s economic response has also borne good results. For example, when the loss of tourists and reduced oil prices led to a second-quarter decline in GDP equivalent to roughly 9%, the government introduced brand-new policies worth $11.4 billion.
Exemptions from paying municipal fees and paying utility bills on behalf of private-sector employees were critical highlights of Bahrain’s response to the pandemic. However, the pandemic still rages on, and policymakers must reconsider and restructure certain things.
There is a need for effective digitalization of all work processes. The private sector should also pay more attention to cyber-security. Lastly, green growth strategies also demand the attention of policymakers in the time of a global crisis.
Did you know that Bahrain confers multiple benefits to new entrepreneurs hoping to kickstart businesses in the country? If you want to know more about business setup in Bahrain, get in touch with us today!