Businesses have welcomed a six-month suspension of monthly labour fees, which they said was a first step towards the full revival of Bahrain's economy.

Authorities were instructed on Wednesday to take necessary legal and administrative procedures to freeze the BD10 ($26.5) fee on every expatriate employed in Bahrain, starting this month.

It followed the directives of His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa and His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Deputy Supreme Commander.

Owners of small and medium enterprises (SMEs) have been protesting against the fees since they were imposed in 2008. They maintained that the fees were unfair and would result in many businesses closing down.

Traders pay the monthly tax on every foreign worker they employ. The fees are collected by the Labour Market Regulatory Authority (LMRA) and used by Tamkeen to train Bahrainis for the workplace, create jobs and support local businesses.

'This is a very welcome gesture and we fully appreciate it,' said businessman Nader Allawy, who has been spearheading a campaign to have the fee scrapped.

'The country's economy has been badly damaged because of this and many small and big businesses had been adversely affected. The situation has worsened in the last six weeks and we are now in a situation from where it will be difficult for us to get out.'

Allawy, who claims he was forced to get rid of a dozen of employees and manages his business alone, said more was required to get them back on track.

'There should be another look at all other levies, the visa fees and expenses that we have had to pay over the years,' he said. 'Now is the time to reform the entire system so that we are given a push to get back to where we were,' he added.

Allawy said the LMRA fee, when it is re-imposed, should be a percentage of the employee's salary and not a flat rate.

'When it is a uniform rate, the smaller businesses suffer. If it is a percentage of the salary, it will be helpful to everybody,' he said.

The government should help businesses by looking at repayment of loans as well as rents, said Allawy.

'While I have suffered a lot personally, I am better off than most because I still have at least one business running,' he said. 'That is not the case with many others who have nothing left,' he stated.

Nass Corporation vice-chairman Samir Nass said the suspension of the levy was a welcome step. 'However, this is just the beginning since the sector needs a lot more help to get out of the present situation,' he said.

Nass said there should be a fresh look at introducing well-co-ordinated training programmes that are controlled by national certification and suspension or scrapping of other levies.

'This should be done across all sectors since everyone is affected,' he said. 'We need to work together to get over this extraordinary situation.'

Nass, who is also Bahrain Chamber of Commerce and Industry (BCCI) contractors' committee chairman, said the construction sector had started to get back on track in the last two weeks. 'All projects are continuing and are on schedule,' he said.

BCCI retail and traditional markets committee head Jawad Al Hawaj said the BD10 levy being suspended was the first in a series of steps that should be taken to help all businesses.

'We are very happy with this development, but would appeal to the government to take many more measures,' he said.

Al Hawaj said that the government should immediately look at either scrapping or suspending the other levies to support sectors across Bahrain.

He said that the BCCI had lost more than 80 per cent of business in the weeks starting February 14, but the situation started to show signs of recovery.

'We are still suffering considerably, but at least there are people back on the streets and business is picking up,' said Al Hawaj.

'The security situation has also improved a lot and people have started buying more other than just essential things,' he added.-TradeArabia News Service