A new National Fund for the care and support of micro, small and medium enterprises (MSMEs) could be established in Bahrain, if MPs have their way.
The government-drafted legislation – based on a proposal by five MPs from the Strategic Thinking Bloc MPs led by Ahmed Al Salloom – is set for debate and a vote during Parliament’s weekly session on Tuesday.
Parliament’s financial and economic affairs committee confirmed that the panel supports the draft in principle, but recommended substantial amendments, including a change to the law’s title and revisions to most of its articles. It said the amendments are necessary to ensure legal alignment, avoid duplication with existing bodies, and strengthen the framework for supporting Bahrain’s enterprise sector.
The bill aims to encourage Bahraini youth to enter the private sector and entrepreneurship, and strengthen the role of SMEs in the national economy.
It details funding sources, governance structure, conditions to benefit from the fund, and obligations of government entities to support its activities.
However, the committee has recommended adding ‘micro-enterprises’ to all references, expanding the fund’s scope to include MSMEs – a move that aligns with international SME classifications.
The government has urged Parliament to reconsider the draft.
The government stressed that many of the draft law’s goals already fall within the mandate of Tamkeen. It argued that creating a new fund with similar functions would be unnecessary and duplicate existing work.
Officials also noted that no supporting studies have been presented to demonstrate the financial feasibility or the economic need for the new fund.
The government also warned that authorising the fund to grant tax or fee exemptions would create new financial liabilities, increase the deficit and public debt, and disrupt the state’s Fiscal Balance Programme.
The Finance and National Economy Ministry also pointed out the need for detailed feasibility studies. It said that positive results have already been achieved through existing initiatives, such as the Liquidity Support Fund and the Financial Services Sector Strategy (2022-2026), which have increased SME access to financing from 4.8pc in 2022 to 10.5pc in 2023.
Tamkeen aligned with the government’s position, and highlighted its existing SME programmes, including grants for machinery, marketing support, digital transformation and financing partnerships with banks.
Around 98pc of its institutional support since inception has benefited micro, small and medium enterprises, Tamkeen added.
The Bahrain Chamber stressed the need to avoid overlap with the BD100 million plus SME Development Fund run jointly with the private sector.
The Bahrain Small and Medium Enterprises Development Society, however, backed the bill, arguing that it would support Bahraini traders, foster youth entrepreneurship, reduce unemployment and limit the dominance of foreign labour in the SME sector.
The Bahrain Small and Medium Enterprises Association supported the proposal, but called for creating a national authority for SME support under the Prime Minister’s Office and a permanent advisory council involving government, private sector, academia, and Parliament.
The bill is scheduled for debate during Tuesday’s weekly Parliament session.
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