Government urges MPs to review proposed state-backed SME fund amid legal concerns

TDT | Manama

Email : editor@newsofbahrain.com

The government has urged MPs to reconsider a bill proposing the creation of a state-backed fund for micro, small, and medium enterprises (SMEs).

It warned that the initiative overlaps with Tamkeen’s existing role.

Authorities also cautioned that the fund could place additional pressure on the budget and the Fiscal Balance Programme as Parliament debates the draft on Tuesday.

The Financial and Economic Affairs Committee has continued to back the bill in principle after rewriting much of its text.

Title

Changes included adding micro businesses to the scope, updating the draft’s title, and inserting a new article consolidating the fund’s powers in a single section.

The committee also tightened key definitions and clarified the conditions for who can benefit from the fund, ensuring a more precise and structured framework for implementation.

Under the committee’s version, the fund would be set up as a public body with its own legal personality and financial and administrative independence, overseen by a minister named by decree.

Support

It would aim to support the Bahraini private sector by backing citizen-led projects in industrial, craft-based, knowledge-based and technological fields.

The government argues that many of the fund’s aims and tools are already covered by the Labour Fund under Law 57 of 2006, which supports Bahraini enterprises through grants, business support and loan schemes with local banks.

They also say the draft lacks the economic and financial studies needed to test the case for a new fund and measure its likely cost.

Concerns

The government has raised legal concerns too, saying clauses on discounts and exemptions from government fees and services cut across existing rules, while proposed funding sources and incentives touch laws on state land, customs, industrial zones and municipal charges.

The amended draft would allow the fund to support feasibility studies, training and business support, and offer help through soft loans, guarantees and other incentives.

Its income would come from state budget allocations, land offered by private owners for long-term use and investment, transfers from Tamkeen, allocations from the Future Generations Reserve, grants and donations, and returns on its own investments, with the bill stating that the fund’s assets would be treated as public money for the purposes of the Penal Code.

View

Tamkeen has backed the government’s view, saying micro, small and medium enterprises already make up the bulk of its institutional support.

The Bahrain Chamber of Commerce and Industry has also warned against overlap with other support vehicles, while associations representing smaller firms support the bill, saying a dedicated fund would widen opportunities for entrepreneurship and help local businesses grow.

MPs will weigh these competing views when the draft comes to a vote. If it passes in its amended form, it will move to the Shura Council.