Bahrain woos foreign nationals
Bahrain is keen to gain an edge over other Gulf nations, especially the UAE and Qatar, by making the kingdom uniquely receptive to expatriates, writes Dr Jasim Husain Ali

Bahrain is increasingly becoming attractive for foreign nationals. On August 12, the Bahraini cabinet allowed foreign nationals the right to live in Bahrain for two years under self-sponsorship visa. What’s more, the visa can be renewed indefinite number of times.

The special permit will be granted to expatriates who meet any one of the three options: having worked for at least 15 years in any Gulf Cooperation Council (GCC) country whether in public or private sector; owning property in Bahrain worth at least BD50,000 (about US$132,275); or, investing a minimum of BD100,000 in the country. Investment choices include in commercial, industrial, educational, training, tourist or financial services.

Bahrain is keen to gain an edge over other Gulf nations, especially the UAE and Qatar, by making the kingdom uniquely receptive to expatriates. It is argued that the law would help bring in more wealth into Bahrain and hence give a fillip to the country’s economy, including creating jobs for locals. Unemployment is a key economic challenge facing Bahrain and as such, the policy is designed to kill two birds with one stone – expanding Bahrain’s gross domestic product (GDP) and providing more employment opportunities for locals.

Economic benefits
Undoubtedly, Bahrain’s new liberal policy stands out in the GCC. While in the kingdom, foreign nationals would spend money through either renting or owning property. Also, they would endure living expenses on foodstuff, electricity, water and telecommunications. This is what the economists call, the multiplier effect of money. On an average, every single dinar (about $2.65) creates four additional dinars in the economy through multiplier effect. So Bahrain’s economy stands to gain substantially from foreign nationals coming to the country via the new policy.

Of all the economic sectors, the construction sector is expected to be the main beneficiary. The expatriates have to either own or rent a property. Undoubtedly, growth of the construction sector has a positive spillover onto other sections of the economy.
 

Two-year limit
It seems the logic behind limiting the visa to two years is meant to ensure that foreign nationals, who obtained the residency for owning property, remain owners. Under the law, expatriates are not allowed to trade in property or to accept job offers. As such, those who violate the requirements would not have their residency permits renewed. It is against this backdrop that proponents contend that locals should not suffer from the law.

To be sure, Bahrain is not targeting expatriates currently working in GCC states. These people maybe better off going to their home countries for retirement or other purposes. It is assumed many of these people could not afford living expenses in Bahrain. Like elsewhere in the GCC, living expenses have been on the rise in Bahrain over the last few years. In fact, owning a property is increasingly becoming difficult for locals and many Bahrainis seek government-assisted housing units.

Conversely, authorities are seeking to woo well-to-do expatriates who would like to live in Bahrain for what the country offers – a unique quality of life. Bahrain is small in area (about 700 square kilometres) but offers all amenities of modern-day life. Also, while most locals tend to be conservative, the authorities have embraced liberal economic policies. No wonder, many Saudi nationals tend to visit Bahrain during the local weekend to enjoy the country’s open and more tolerant environment.

Negative aspects
The policy though has its sceptics who fear that there will be additional inflationary pressures through increased spending and demand on housing by foreign nationals. Currently, inflation is at about 5 per cent per annum. Bahrain imports most of its needs and hence is a price taker. Over the last few months, it witnessed shortage of red meat. It was blamed on declining supply from Australia, caused by relatively long drought Down Under.

Also, opponents stress that foreign nationals, like locals, stand to be benefit from subsidised goods and services such as electricity, water and petrol prices. Petrol is sold in Bahrain at 100 fils ($0.26) per litre, which is considerably below prevailing prices in many parts of the world, notably European countries such as France and Britain. In fact, the parliament has started discussing proposals to limit subsidised products by the government to needy people. One such proposal is to provide petrol coupons to locals who are finding it difficult to meet their needs.

On a more convincing note, opponents argue the law could only worsen population density problem in Bahrain. Bahrain already has the highest population density for any country in the region with more than 1,000 people per sq. km. Only a handful of other nations, notably Singapore and the Maldives, outnumber Bahrain in population density.

No date was set for implementation of the decree that proved controversial from the onset. Not surprisingly, several members of parliament have called on the authorities to present the new policy before the legislative body for deliberations and eventual voting. These MPs, including me, argue that the parliament should have a say in the matter since it represents a new policy. Likewise, civil societies have demanded the opportunity to discuss implications of the policy prior to its implementation. Once implemented, Bahrain needs to review implications of the law on a regular basis and make necessary amendments when and if required.

Bahrain is cognisant of the importance of globalization. Their early adoption of such a policy sends a welcoming message to citizens of all nations.

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