US embassy cable - 05MANAMA1013

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001013 
 
SIPDIS 
 
USTR FOR J. BUNTIN 
COMMERCE FOR 4520/ITA/ONE/HOFFMAN 
 
E.O. 12958: DECL: 07/10/2015 
TAGS: PREL, PGOV, ELAB, ETRD, BTIO, BA 
SUBJECT: NEW EDB CHIEF HIGHLIGHTS AMBITIONS AND GOALS 
 
Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d) 
 
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Summary 
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1. (C) The Ambassador called on newly-appointed Economic 
Development Board (EDB) CEO Shaikh Mohammed Bin Essa Al 
Khalifa July 11 to discuss his plans and vision for the EDB 
following the Royal Decree issued recently to enhance the 
agency's powers in Bahrain's development effort.  Shaikh 
Mohammed spoke enthusiastically of plans to reform the 
economy, promote foreign investment opportunities in specific 
sectors, and improve access to capital and credit.  Noting 
that EDB's new powers also include the appointment of boards 
at key state-owned companies, he said that the recent 
announcement that the Prime Minister had appointed his son as 
Chairman of state oil company BAPCO did not mark an erosion 
of that power: BAPCO, unlike other state-owned companies, 
remained under the PM's authority.  Shaikh Mohammed said that 
the GOB was working hard on FTA implementing legislation, 
expressing confidence that Bahrain would meet its legal 
commitments under the FTA by year's end. 
 
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The "Bahraini Dream" 
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2. (SBU) The Ambassador called on new Economic Development 
Board (EDB) Chief Executive Officer Shaikh Mohammed Bin Essa 
Al Khalifa on July 11 to congratulate him on his recent 
appointment and discuss his plans and vision for the EDB 
following the issuance of Royal Decree 31, which enhanced its 
authority on economic development issues.  Shaikh Mohammed 
told the Ambassador that the EDB is in the process of 
clarifying a new economic vision for Bahrain, the outline for 
which, is to be completed by September.  He said the reform 
program includes measures addressing labor reform, education, 
stimulation of the private sector and an entrepreneurship 
program.  Shaikh Mohammed also said the EDB is aggressively 
promoting foreign investment opportunities in information 
technology and telecommunications, education and training 
services, financial services, healthcare services and 
tourism, and noted that the Ministry of Tourism will be an 
independent agency.  Commenting on the EDB's expanded powers, 
Shaikh Mohammed said that the EDB's functions remained the 
same, but that its new powers followed from the removal of 
three words from its charter - "with Cabinet approval." 
 
3. (SBU) Shaikh Mohammed said that he planned to expand the 
EDB's staff from the current 30 employees to approximately 
100.  He said priority would be given to hiring international 
professionals who could help the EDB address corporate 
governance concerns.  He would also hire talented Bahrainis, 
which he could attract with competitive salaries because EDB 
is outside of the civil service.  "We want to focus on a 
mindset shift for Bahrain - to believe in the Bahraini 
dream," said Shaikh Mohammed.  He said his goal was to 
encourage individuals to take greater entrepreneurial risks, 
and acknowledged that an expansion of the social safety net 
would be an important provision. 
 
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Greater Access to Capital 
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4. (U) Shaikh Mohammed stated that the EDB had identified 
access to capital as an important requirement for business 
growth.  Accordingly, he said the Bahrain Development Bank's 
capitalization would be increased from BD10 to BD50 million 
(roughly USD 132 million).  He added that the lending process 
would be streamlined and enhanced by improved credit-check 
procedures.  (Note: Recent business community survey results 
published by Gulf Daily News revealed that 28 percent of the 
respondents rated access to capital as the top concern for 
improvement.  Other areas rated as top concerns included 
infrastructure - 19 percent, adequacy of laws and regulations 
- 16 percent, access to land - 14 percent, government 
interaction - 13 percent and law enforcement and judicial 
system reform - 10 percent.  End Note.) 
 
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Changes at State Enterprises 
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5. (C) The Ambassador noted that a key new responsibility of 
the EDB was the power to appoint the leadership of 
state-owned companies.  He expressed surprise that just last 
week the press reported that EDB had restructured the board 
of aluminum company Alba, but at the same time the Prime 
Minister announced the reorganization of state company 
BAPCO's board with the Prime Minister's son, Shaikh Salman 
named Chairman.  Shaikh Mohammed said there was no 
inconsistency here.  BAPCO had always been separate and under 
the authority of the Prime Minister and this had not changed. 
 He said EDB would announce the reorganization of several 
other boards shortly, including Gulf Air and communications 
company Batelco. 
 
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FTA-Implementing Legislation Moving Forward 
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6. (SBU) Shaikh Mohammed said that the EDB will play an 
active role in pushing forward implementing legislation on 
the U.S. - Bahrain FTA and that the pace would pick up 
quickly.  He concurred with a recent observation Ministry of 
Cabinet Affairs Director of Agreements and Treaties Dr. 
Jameel Al-Alawi made to Econoff that Bahrain was six months 
away from having the necessary implementing legislation in 
place.  Referring to what little has been achieved on the 
implementing legislation to date, Shaikh Mohammed commented, 
"Bahrain has wasted the last 10 months."  However, he added 
that there was now wide recognition of the need to move 
forward quickly to establish required implementing 
legislation.  He said a large legal staff was being hired to 
help move the necessary legislation forward.  "We still hope 
everything will be in place by the end of the year," he said. 
 
MONROE