MAJOR concerns have been raised over a proposed draft law to establish an Industrial Development Fund.
The aim is to create a new public institution tasked with promoting industrial investment, supporting Bahraini industrial projects, and encouraging innovation in sectors such as renewable energy, petrochemicals, green hydrogen, pharmaceuticals and microelectronics.
A government memo said its first concern was that the objectives of the proposed fund would overlap that of existing institutions.
These include the Economic Development Board, Tamkeen, the Industry and Commerce Ministry, Bahrain Development Bank, and the Bahrain Investors Centre – all of which already support industrial growth and investment in Bahrain.
Creating a fund with similar responsibilities could lead to duplication of efforts, waste of resources and institutional inefficiencies.
The government emphasised that new laws should complement – not conflict with – existing legal and institutional frameworks.
The second major concern related to funding of the proposed entity. Article (16) of the draft law suggests allocating a portion of profits from Bahrain Mumtalakat Holding Company, the kingdom’s sovereign wealth fund.
The government argues that this contradicts the company’s legal structure, which is designed to operate independently and focus on asset management and investment to generate returns. Forcing Mumtalakat to finance the fund may violate its founding principles, interfere with its operations, and create confusion over legal responsibilities.
Additionally, the proposed fund would require annual allocations from the state budget. This would introduce a new financial burden without clear provisions for sustainability or alignment with national spending priorities in key sectors like health, education and social services.
The third concern is the absence of comprehensive economic, financial and technical studies demonstrating the fund’s viability. Establishment of any new public financial institution must be preceded by in-depth assessments, including impact analysis, risk evaluation, and alignment with Bahrain’s broader economic strategy.
Setting up the fund without due diligence could expose public resources to unnecessary risks and strain the national budget, the government warned.
It added that it was exploring alternative ways to achieve the same objectives using existing structures, as part of a broader strategy to develop the industrial sector.
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