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Monday, March 4, 2024
MANAMA, Mar 31 2011 (IPS) - Bahrain is considering slashing or putting on hold levies on businesses to help them cope with the deteriorating economy, with losses topping an estimated 500 million dollars since the beginning of unrest here in February.
The protest movement here – which began Feb. 14 with rallies and sit-ins demanding the overthrow of the ruling regime – was inspired by the democratic revolutions in Tunisia and Egypt. But now the political crisis could be turning into an open sectarian conflict between the ruling minority Sunnis and Shiites – who account for 70 percent of the population of 525,000 people. So far at least 24 people have been killed during the government’s violent crackdown on protests.
The Central Bank of Bahrain (CBB) has instructed banks to reschedule loans of companies – especially SMEs – to reduce financial pressure. CBB governor Rasheed Mohammed Al Maraj also reiterated the readiness of the bank to cooperate with all financial institutions in order to ensure the continuity of banking operations for all economic sectors and individuals which will contribute to Bahrain’s economic growth.
The travel and tourism sector has been badly affected as it was counting on thousands of tourists visiting Bahrain during the Formula One races that were called off along with many international conferences planned for the first half of 2011.
According to the Customs Affairs office 11,185 vehicles and 23,637 travellers entered the country in the first day of last year’s Formula One races, and 12,334 vehicles and 35,548 travellers came in the second day, while on the third day 11,999 vehicles and 24,311 travellers, and on the fourth and final day 9,424 vehicles and 19,229 travellers, arrived.
“In such periods we travel agencies generate high incomes as a result of a boom in the sector and the drop wasn’t expected,” he says, highlighting fear of permanent damage to the sector if some regional business offices that are based in Bahrain decide to shift to nearby cities.
Al Kubaisi highlighted that incomes from Saudi tourism have drastically declined. Official statistics reveal that 17 million travellers – 8,046 per day – crossed the King Fahad Causeway linking Bahrain to Saudi Arabia last year.
Self-employed citizens have been badly affected by the continuing unrest in Bahrain – taxi drivers are among this group. Saeed Khadem who has been in the taxi business for the last fifteen years is feeling the crunch and is finding it difficult to meet his family’s daily needs. “It isn’t only me but all my colleagues – as the luckiest one of us will earn 50 dollars a day, which is a small amount and most of it will be gone for fuel,” he said.
Saeed works in Juffair and deals mainly with foreigners, tourists and transit passengers.
The hospitality sector has also been hit, with a drop from 90 percent to 25 percent of rooms booked. Executive manager of Gulf Hotels Group, Aqeel Eaees, said: “Our operations have been generally slow, in which hotels closed some of their rooms and suites and reduced the working hours of restaurants.”
International companies have not escaped. Microsoft reports that revenues will be down by the end of the current financial year – ending in June. Regional client official, Badea Esbaee, told the local press that his company couldn’t upgrade systems for companies in Bahrain. “No company has cancelled deals with us, but many have delayed the upgrading of their scheduled IT systems,” he said.
There are no official figures about financial losses due to unrest in Bahrain, but analysts estimate the amounts to be about 500 million dollars. “All sectors in Bahrain have suffered because of the current situations in the country, even the food sector, mainly because regular visitors from Gulf countries have stopped coming,” businessman Abdulrahman Fakhro said. He also predicted the closing of many companies and firing of local and foreign workers if the situation did not improve.
To save Bahrain’s economy from disaster, Saudi Prince Talal bin Abdulaziz Al Saud announced during a recent visit here, plans to continue investing in Bahrain. He said that his projects would aim to examine further opportunities for additional investment while at the same time supporting the development of banks and companies in Bahrain.
Bahrain was safe from much of the impact of the global financial crisis due to its reserve foreign investment policy. But now the political conflicts are shaking the financial position of the country, as it is the regional hub for many sectors because of its open market policies and flexible legislation.
Minister of Foreign Affairs Shaikh Khalid Al Khalifa during his recent official visit to Turkey announced that currently maintaining security and stability in Bahrain are the regime’s top priority.
(*The story moved 14:47 GMT Mar. 31, 2011 contained an error in the third paragraph.)
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