A move to increase the Bahrain government's share of revenues generated from fees levied on the private sector has become the first Royal decree to be blocked by both the Shura Council and parliament in Bahrain's 11-year legislative history.

Shura Council members rejected the amendment yesterday following 18 months of negotiations, after MPs rejected it in January last year, said a report in the Gulf Daily News (GDN), our sister publication.

The decree was issued by His Majesty King Hamad during the National Assembly's summer recess in 2011 - increasing the government's share of Labour Market Regulatory Authority (LMRA) fees from 20 to 50 per cent.

To do so the decree reduced Tamkeen's share of the fees from 80 per cent to 50 per cent and the decision has already been implemented.

However, it has prompted opposition from critics who claim the private sector suffered as a result.

Tamkeen uses money generated by the fees, such as a tax on foreign workers, to pay for schemes that support Bahraini companies and provide training for Bahrainis to equip them for the workplace.

The decision by both chambers of the National Assembly to oppose the 2011 decree means it will be referred back to the King for a final judgement.

Shura Council chairman Ali Saleh Al Saleh said Tamkeen needed the money to support small businesses, which would otherwise have closed down due to the political unrest since 2011.

"Small businesses are the pillars of the economy and Tamkeen has been initiated to help them," he said during the chamber's weekly meeting yesterday.

"When it gets affected through a reduction in its budget, then helping them survive becomes difficult."

Council financial and economic committee vice-chairman Sayed Habib Hashim said Tamkeen was unable to fulfil its commitments as a result of the decree, which had affected the labour market.

"Tamkeen has helped a lot of small businesses stay in the market despite the financial crisis and reducing its share of the fees has tied its hands in offering proper help over the past two years," he said.

"The money collected by the LMRA is from businesses and should be directed towards helping the labour market through Tamkeen - not taken by the government to fund its projects.

"Tamkeen's projects, which cost around BD117 million ($307 million), have also suffered because of the 14-month freeze on LMRA fees between 2011 and last year and we should be helping this establishment back on its feet by rejecting this decree and returning things to normal."

Shura Council services committee secretary Abduljalil Al Oinati said Tamkeen had played a vital role in improving the labour market, but its work had suffered.

"We in the council are here to serve the people and have every right to stop decrees that have a wrong direction - even if they are already being implemented," he said.

"After two years we have found through consultation with the Bahrain Chamber of Commerce and Industry that the decree hugely affected Tamkeen's plans, which were drawn up over the long term.

"It is true that there are some faults in Tamkeen's plans, but they could be corrected in line with improvements that would be made when its share is reinstated." - TradeArabia News Service