At the World Economic Forum in Davos, Bahrain’s Minister of Finance and National Economy, Sheikh Salman bin Khalifa Al-Khalifa, highlighted the kingdom’s unique position as the only country in the world with a “Data Embassy” law, a key component of its strategy to thrive in the AI-driven global economy. The Ministry of Finance and National Economy has been instrumental in creating a forward-thinking regulatory and digital infrastructure to attract top entrepreneurs and foreign investment.
A Global First in Data Sovereignty
Enacted in 2018, Bahrain’s Data Embassy law is a groundbreaking framework that allows foreign nations and institutions to establish data centers within Bahrain while ensuring their data remains under the jurisdiction of their home country. This means that data stored in Bahrain by a foreign entity, such as a German company, is still subject to German law and can only be accessed through a court order from Germany.
“Bahrain has led the world in regulation,” Sheikh Al-Khalifa stated. “We are, and continue to be, the only country in the world with a data sovereignty law. This is groundbreaking stuff. You need laws and regulations that are ahead, and a regulatory environment where it’s easy to do business.”
Building a Founder-Friendly Ecosystem
Beyond data governance, Bahrain has focused on creating a supportive environment for entrepreneurship. A critical step was the introduction of a new Bankruptcy Law in 2018, which decriminalized business failure. This reform was a significant shift from previous laws where entrepreneurs could face personal liability and even imprisonment if their company failed.
“We had to work a lot with the Ministry of Industry and Commerce to decriminalize failure,” he explained. “The Bankruptcy Law was a very important step in fostering a culture of entrepreneurship.”
Investing in Digital and Human Capital
To support its ambitions, Bahrain has invested heavily in physical infrastructure, including the SeaMeWe-6 submarine cable. This project connects Singapore to Marseille via the Middle East, positioning Bahrain as a key node on the “global data highway” and providing the high-speed connectivity required for AI-driven industries.
The government’s strategy also emphasizes human capital, shifting focus from producing job seekers to fostering a new generation of job creators. Initiatives like startup weekends and monthly pitching competitions are organized to connect entrepreneurs with vital funding and build a robust startup culture from the ground up.
“It is important that when you are graduating college students, you are really ensuring that entrepreneurship is there early,” Al-Khalifa said. “Whether that business fails or succeeds matters less.”
About Bahrain’s Pro-Innovation Initiatives
Bahrain’s economic strategy is heavily focused on creating a globally competitive and attractive environment for technology and innovation. Through a series of legislative and infrastructure projects, the Kingdom aims to establish itself as a leading hub for data, AI, and entrepreneurship in the MENA region. Key policies include the world’s first Data Embassy law, a progressive Bankruptcy Law, and significant investments in digital infrastructure to support the future economy.
Source: MEA TechWatch
