BAHRAIN’S existing legal, strategic and regulatory frameworks already achieve the objectives cited in a proposed draft law aimed at encouraging qualitative investments, to promote advanced industrial projects and create high-value jobs for citizens.
In a memorandum to Parliament, the government said that in recent years the kingdom had launched sector-specific strategies in key industries, including digital finance, logistics, manufacturing and communications.
The Cabinet stated that many of the incentives and privileges proposed in the draft law already exist under the current legislation. These include 100 per cent foreign ownership, industrial land rent exemptions, investor residency permits, and the ability to repatriate profits freely.
The government warned that codifying these benefits in a single law could create regulatory rigidity and institutional duplication, noting that agencies such as the Bahrain Investors Centre already provide streamlined services to investors.
The memo also warned that unconditional tax and customs exemptions included in the draft law may violate Bahrain’s commitments under GCC agreements and international tax governance standards.
The government further cautioned that such exemptions could undermine public revenue, potentially jeopardising fiscal sustainability.
In addition, the law lacked clear criteria linking investment incentives to tangible economic benefits, such as job creation or technology transfer. The government called for a performance-based model that ties incentives to measurable outcomes, aligning with modern international practices.
The Cabinet warned that a unified investment incentives law may not serve Bahrain’s long-term interests, restricting the state’s flexibility in tailoring sector-specific or strategic incentives. Instead, it advocated for continuing to manage investment attraction through a combination of targeted legislation, bilateral agreements and evolving regulatory tools.
“The government hopes Parliament will reconsider the draft law in light of these observations,” said the memorandum.
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