The Shura Council Passes a Draft Law for Ratification of the GCC Monetary Union Agreement and a Draft Law on GCC Citizens’ Engaging in Retail and Wholesale Trade In the Kingdom of Bahrain

Qudaybiah: Shura Council

In its first extraordinary session held this Wednesday morning, chaired by His Excellency Mr. Ali Saleh Al-Saleh, Speaker of the Council, the Shura Council approved ratification of the GCC Monetary Union Agreement and the Basic Law of the Monetary Council of the Member States, attached to Legislative No.54 for the year 2009.

The Council opened its session by reading a statement which applauded the high royal grant involving addition of amounts to the additional appropriation in the State budget for the two fiscal years 2009 – 2010. In the statement, the Council expressed its appreciation of the generous initiative of His Majesty King Hamad bin Isa Al-Khalifa, for giving his high orders for adding an amount of 18 million dinars to the additional appropriations of the State’s budget for the two fiscal years 2009 – 2010 in support of retirees and an amount of 5 million dinars for renovation of homes. The Council confirmed that this grant came to corroborate the Kingdom’s follow up on the aspirations and hopes of the citizens and his keen desire to alleviate the cost of living off their shoulders and that this grant came as part of the successive steps taken by His Majesty the King to upgrade the citizens’ standards of living and honorable life and to extend the welfare umbrella to cover all social classes which need such care.

The Shura Council renewed in its statement (the loyalty and allegiance to the beloved King, confirming that it will continue its work to promote the laws which touch the citizens’ lives and contribute to improving their standards of living in line with the high directives and in consistency with the lofty objectives of the His Majesty’s national product which will achieve more achievements and advantages to this beloved country and its honorable citizens.

Then, the Council moved on to discuss the report of the Financial and Economic Committee on a draft law for ratification of the GCC Monetary Union Agreement and the Basic Law of the Monetary Council of the Member States, attached to decree No.54 for the year 2009. The Rapporteur of the Committee, Mr. Mohammed Hassan Baqer, read the final recommendation which concluded approval of the draft law in principle.

The Committee Rapporteur Member Mohammed Hassan Baqer, explained that the monetary union agreement, which was referred to the Council on a rush basis, is considered one of the most important agreements generated by the GCC Economic Agreement. He stated that the GCC citizens look with optimism to transformation of this agreement into a tangible reality. The rapporteur added that Bahrain’s economy is considered limited, well balanced and has not been exposed to major economic shocks. He pointed out that Bahrain’s ratification of the agreement will boost its economic and developmental positions since it will enter within the tenth global economic system and will enhance the stability of the Kingdom’s financial position, coupled with the control of the monetary variations with the other GCC States. He asserted that Bahrain will harvest the fruits of this ratification as it will be reflected in the purchasing power and intertrade between the GCC States. He considered Bahrain the biggest winner in this monetary union, in addition to the international position that the GCC States, including Bahrain, will enjoy. The Gulf currency will be covered by a gold standard to warrant and protect its strength and the monetary council will be free to determine the extent of pegging the currency to the dollar or any other currency as may be determined by the interest, strength and global nature of this currency.
Within this context, Their Excellencies the Members raised several inquiries about pegging the new GCC currency to a basket of currencies or a single currency, in addition to the legal procedures that must be taken for the Kingdom’s ascription to this system. His Excellency Mr. Rashid Al-Miraj, Governor of the Central Bank, that the mission of the Gulf Central Bank will be drawing up the monetary policy while the central banks in each state will be continue separately and will have a watchdog role in monitoring the banks and commercial entities.

The Central Bank Governor drew attention to the fact that the cost of migrating from the status quo to the monetary union will be through the direct cost which will be paid by the central banks as contribution to the operational cost of the prospective central bank and that this is a recognized arrangement in all similar organizations. He confirmed that the central banks will not assume burdens as a result of this procedure.

About determination of the percentage of deficit, His Excellency the Governor indicated that the Kingdom is averaging the same level provided for in the agreement and consequently, joining the agreement would enhance the reassurance of sustained performance which will ensure the financial stability associated with the member states in the region of the unified currency.
On his part, His Excellency the Speaker of the Council, Mr. Ali Saleh Al-Saleh, inquired about the economic discrepancies between the states which are expected to join the unified currency. He pointed out that reaching this stage would require great efforts to eliminate the variations between the countries. He inquired about the policies which will be applied in this regard and about the possibility of providing support to the weaker economies in this system prior to actual implementation.

His Excellency the Governor responded to the inquiry of the Speaker by confirming that the member states have come a long way in the area of approximating the economies of the member states. The delay which preceded the launch date of the currency primarily targeted giving the opportunity for creation of the amenable environment for its launch after determination of the criteria. It is evident all of the agreement signatory states are committed to these standards which do not pose any thread or danger to their financial and economic conditions. He also indicated that the development discrepancies are still in need of further auditing and procedures.

After deliberation of the draft law, the Council decided to approve the draft law and underscored the importance of this agreement on account of its positive scores on the national economy, subject to the condition that the final approval of the draft law be taken prior to the end of the session.

Then, the Council moved on to discuss the report of the Financial and Economic Affairs Committee on a draft law regarding the GCC Citizens engaging in retail and wholesale trade in the Kingdom of Bahrain, attached to royal decree No.57 for the year 2008. The Committee Rapporteur, Her Excellency Dr. Aysha Salim Mubarak read the recommendations of the committee which approved the draft law.

Her Excellency Dr. Aysha stated that the committee concluded, based on its review of the draft law that it aims at approving the amended rules for GCC citizens’ engagement in the retail and wholesale commercial activity, in addition to the streamlining of the practice. The draft law consists, besides the preamble, of six articles, where the first article provides a definition of the retail and wholesale trade, the second article sets forth the rules for the GCC states’ citizen to engage in the retail trade in the Kingdom of Bahrain and the third article determines the rules for the GCC states’ citizens to engage in the wholesale trade in the Kingdom. The fourth article rules for sustained application of these rules for five years as of the date of approval by the Supreme Council, and thereafter shall be re-evaluated for possible development and improvement. The fifth article provides for revocation of the rules applicable to the retail trade stipulated by Legislative Decree No.6 for the year 1987 and for wholesale trade stipulated in Legislative Decree No.19 for the year 1989 as amended by Legislative Decree No.26 for the year 1998.

The Committee rapporteur added that and since the Kingdom of Bahrain has endorsed, under Legislative Decree No.7 for the year 2003, the GCC unified economic agreement signed in the Sultanate of Oman on 31 December 2001, which provides in article 3 for the treatment of the GCC natural and legal citizens in any member state the same treatment extended to the citizens of that state without any discrimination in all economic fields, including trade and investment, it is therefore imperative to support any decision that would contribute to the stimulation of economic integration and achieves the principle of similar treatment in the GCC States. Also, this agreement came in response to the aspirations and hopes of the GCC citizens to achieve the GCC citizenship, including equality in treatment in movement, residence, work, investment and attaining economic integration stage. For all these facts, it is the committee’s opinion that it is important to approve the draft law.

Then, Their Excellencies the Members discusses some remarks on the articles of the law and the Council reached an agreement to approve the recommendations of the committee on the draft law and the voting was made by name calling on a rush basis and a final decision was taken thereon in the same session.

Before the end of the session, the final opinion was taken by voting by name and the draft law was approved for ratification of the GCC Monetary Union Agreement and the Basic Law of the Member States Monetary Council, attached to decree No.54 for the year 2009.