Innovation system of free economy asserts the prices

and job creation is what that comes with free market economies from most of the
world’s capitalist countries. Hong Kong, which is one of the most capitalist
countries, is rendered to be the world’s freest economy in the world. It’s
almost non-existent tariffs and low government interference are a recipe for
capitalist success. Economists assert that there is no free market in the real
world though. They hold a view that ‘free market’ system is more of a
theoretical concept than practical, as every government put some constraints in
the resource allocation and exchange of goods and services. The way minimum
wages are set by the government is the best example to be quoted here to
justify the government interference in the economic system.

Bahrain is
a country wherein exists a free economic market in which supply and demand are
not regulated by government or if it is, it is regulated with only minor
restrictions, for the welfare of the traders, consumers and the community at

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The Government
of Bahrain has been tactically taking actions to restrict the practices
impeding free market regime in the Kingdom. This practice note shares the
regulations on conducting free market process in the Kingdom of Bahrain.


Key Definitions

Market: In economics,
a free market is an idealized system in which the prices for goods
and services are determined by the open market and consumers, in
which the laws and forces of supply and demand are free from any
intervention by a government, price-setting monopoly, or other authority.

MENA: Middle
Eastern and North African countries

Iceland, Liechtenstein, Norway and Switzerland states


Practical guidance

idealized system of free economy asserts the prices of goods and services to be
set freely by the forces of demand and supply without the policy of government
interference to adjust the demand and supply equilibrium. It strongly
emphasizes the natural market phenomenon of demand and supply to reach their
point of equilibrium. Critics of the free market have argued that, in real
world situations, it has proven to be susceptible to the development of price
fixing monopolies, and thus it necessitates and upkeeps government intervention
into the market configuration. Two prominent Canadian authors also argue that government
at times has to intervene in order to ensure competition in large and important

Kingdom of Bahrain has also taken a place amongst the world’s best
economies. Growing fast and strong, Bahrain is an example of a successful
free market. Other than being rated one of the freest countries in the
world, it is also considered to have a high Human Development Index, a marker
of a successful free economy. 

2015 Index of Economic Freedom has given it a score of 73.4, making the
Kingdom of Bahrain stand at the 18th position of the freest in the world and
the topmost in the MENA region. It also occupies the fourth rank in Asia, after
Hong Kong, Singapore, Mauritius and Taiwan.

The kingdom has a free and
open market which works on a demand and supply system. It has a free market economy, with no restrictions on
capital movements, foreign exchange, foreign trade or foreign investment. The
Kingdom has a leading position in the region as an open, free, transparent and
welcoming environment for investors.

It is a country wherein exists a free economic
market, with only minor restrictions, for the welfare of the traders, consumers
and the community at large.

The Ministry of Industry & Commerce, in
particular as the main organ of Government, is responsible for the registration
and supervision of businesses. It is responsible for a diverse range of
activities which make up the commercial environment in Bahrain.

The Ministry’s aim is to ensure the maintenance of
an open, transparent and market driven commercial environment so as develop
Bahrain’s economic competitiveness, and to encourage inward investment, at the
same time promoting employment for the local population.

The other aspect of Bahrain’s free or open market
is its range of free trade agreements it has accrued. Bahrain has bilateral
trade agreements with over forty countries such as China, France, India and the
UK. It has free trade agreements with Singapore, the EFTA states and 17 Arab
states. Most notably, Bahrain was the first country in the Middle East to forge
a free trade agreement with the United States of America in 2004, which came to
be fully implemented in 2006. 

Bahrain also makes a mark in terms of fiscal freedom.

The individual’s income is completely free of taxation and most businesses are also
exempt from taxation. Within the kingdom, the foreigners are allowed to be
absolute owners of their businesses.

The ‘free and open market’ regulations in Bahrain
also allows Bahraini employers to ingress migrant labor.

The Department of Supply and Price control

Minister of Commerce, Agriculture and Economy and council of ministers, upon
approval, established the department of Supply and Price control. It lays down
the following law to determine prices and control them to maintain a culture of
free market economy in the Kingdom of Bahrain.

The department of supply and price control
implements the general policy of measures that prevent monopoly and oblige
traders to adhere to the specified prices and not to manipulate the prices or
quantities or control of local markets.

Propose the foundations for fair pricing and
the fight against unjustified reasons to raise them within the Kingdom of
Bahrain. The “Price Control Committee” proposes the necessary means
to prevent price manipulation. It considers the complaints received from the
public about the high prices. It functions to control price movements and
studies all that leads to the fight against high prices.

It prohibits the practice of hoarding, i.e.,
working at artificially high prices, or the storage of quantities, or
constraining the sale or collection of the market, all with the intention of
keeping them from trading in the markets or reduce the supply of them to
achieve profit, which is not a natural result of the reality of supply and

It restricts traders and factory owners who trade
or produce goods that are appointed by a decision of the Minister of Commerce,
Agriculture and Economy to refrain from practicing their trade or production
except with the authorization of the Minister of Commerce, Agriculture and

If any public employee of a commercial or
cooperative establishment unlawfully held goods which he has been entrusted to
sell to the public or licensed to sell, conceal or sell to a person or to
persons in excess of their needs, shall be liable to a punishment of an
imprisonment for a specified period (not exceeding six months) and a fine (not
exceeding five hundred dinars).

In case a person refrain from selling an unquoted
or non-profitable commodity or to a purchaser of a commodity at a price higher
than the declared price of this commodity, he shall be liable to imprisonment (for
a period not exceeding three months) and a fine (not exceeding two hundred and
fifty dinars).


The Consumer Protection Law

government of Kingdom of Bahrain has also laid down its policies safeguarding
free market practice in the Consumer Protection Law 35 of 2012 under the
regulations of the Ministry of Industry, Commerce and Tourism. It advocates the
areas of rightful government interference in the market economy to ensure the
well-being of the community at large. 

Protection Directorate in Industry, Commerce and Tourism Ministry announced
that it seized 21 stores that had been proven to store and refrained from
selling cigarettes to the public and took the required legal and administrative
procedures against, and referred their owners to the Public Prosecution.

This action was linked to the context of the
directorate’s legal obligation to prevent monopoly and collusion in accordance
with the Consumer Protection Law 35 of 2012 and in particular concerning competition
and monopoly controls and violations. The aim is to
facilitate the consumer to obtain products at reasonable quality and suitable
price in addition to protecting him from commercial frauds and harmful
monopolistic practices. For this purpose, it shall implement the general policy
concerning the measures ensuring the protection of free competition.

It has been laid down that manipulating the
prices of products being traded by increasing or reducing them without
justification shall be prohibited.

Prohibition of Restricting the free flow of products
to the markets or procuring the total or partial disappearance thereof by
unlawfully concealing or storing or refraining from trading in them.

Artificially creating a sudden abundance of products
resulting in selling them at an unreal price that affects the economies of the
remaining competitors and concealing the available products in the market
either totally or partially from a certain person is prohibited.

The act of concealing the necessary information or
misleading with regard to a certain product is prohibited under the consumer
protection law.

Excluded from such prohibition shall be agreements
that restrict competition designed to result in reduction of costs or
improvement of production or distribution conditions where the benefit to the
consumer is far more than the effects of reduction of free competition subject
to the rules and guidelines laid down in the Implementing Regulation of this

The officers designated by the Minister to ensure the
implementation of the provisions of this Law and the resolutions issued for its
implementation shall have the power to enter the relevant premises.

Officers who are designated by the Minister of Justice
in agreement with the Minister shall have judicial summary powers in respect of
the offences that take place within the ambit of their powers and where they
relate to their job duties. Statements drawn up in respect of such offences
shall be referred to the Public Prosecution by a resolution of the Minister or
anyone authorised by him.

Penalties similar to a prison sentence (for a period
of no more than five years) and a fine (not exceeding five thousand Dinars)
shall be inflicted upon anyone who violates the provision of this law.


Related content


Decree number (18) for
the year 1975 to determine prices and control

No. 35 of 2012 concerning Consumer Protection