Small- and medium-sized businesses are economically more significant contributors to Bahrain's national economy than all the large manufacturing companies combined.

That was the message from Industry and Commerce Minister Dr Hassan Fakhro at the opening session of the Family Business Retreat Conference at the Ritz Carlton Bahrain Hotel and Spa yesterday.

More than 100 representatives of leading regional family businesses and financiers attended the first day of the event which examined the way forward for family businesses in the region.

Dr Fakhro stressed the vital role played by family businesses and their major contributions to the kingdom's economic development march, hailing it as a major force in the fruitful partnership between the private sector and the government in carrying out valuable economic and trade projects.

'Family businesses are essential in ensuring the success of the Economic Vision 2030,' he said.

'This testifies to the significant position enjoyed by these businesses and reflects the crucial role they play in activating the national economy.

'Family businesses are a pillar of economic growth in the Middle East region,' he added.

He said that in Bahrain, family businesses made up some 90 per cent of all firms and family-run businesses made up more than 85 per cent of all companies in the Organisation for Economic Co-operation and Development countries.

'It is a fact that the recent global economic recession has impacted on many companies across the world but we in Bahrain are fortunate to have largely escaped the worst of these times,' he said.

'The majority of our family businesses, if they venture out of Bahrain, tend to keep their business in neighbouring Gulf states, so they have remained less prone to the contagion of the financial crisis than multinationals who operate globally.

'Nevertheless, our family businesses have the same survival issues as others around the world with the most pressing issue being succession and dealing with the dynamics of a small domestic market in a global environment.

'There are those that advocate that small is beautiful while others advocate growth as a survival tactic,' he said.

'Good governance is so important to my view in the long-term success of companies, be they large or small,' he added.

'Governance means different things to different people and is applied in different ways to different circumstances.

'No matter what these differences, there are common and over-arching principles, and whilst the global movement on corporate governance has really been directed at public-listed companies, the principles have equal importance to family businesses.

'Good governance can help steer family businesses through difficult periods and through succession and make them more effective,' he added.

Family businesses need to develop a corporate governance constitution according to Bahrain family Business Association and conference chairman Khalid Kanoo.

'We need to develop a road map of how we operate and where we are going,' he said.

'Two or three years ago family businesses did not really understand corporate governance but now we need this to develop the business.'

He said that while regional family businesses did not suffer badly from the global financial crisis they were not immune.

'Everybody suffered a bit but nobody collapsed because we were able to contain the damage and were not leveraged in the way that public companies were. But we had to be frugal to weather the storm,' he added.

He said he felt the conference had been a major success in bringing together families and experts to look to the future for what continued to be the driving force for the regional economy.-TradeArabia News Service