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A New Law for the Digital Economy: Data Protection in Bahrain

Digital EconomyEconomic Development

A strong 21st-century economy must be digital through and through. Across the GCC, change is afoot as economies begin to steer away from purely oil-led growth towards an increasingly entrepreneurial model which fosters innovation. At the inaugural Gateway Gulf Investor Forum in May, which brought together more than 850 delegates from over 40 countries, it was clear that the region as a whole is diversifying and privatising, and in the process – creating the foundations for a thriving digital economy.

Bahrain has a long track record as a regional pioneer in the adoption of innovative technologies and business-friendly regulation to support the development of a digital economy. In 1962, the Kingdom became the first country in the MENA region to install a mainframe computer. The region’s first satellite station followed in 1969.

In 2004, Bahrain led the way in market liberalisation in the GCC by fully deregulating its telecommunications sector. The Middle East’s first smart cards were launched in Bahrain in 2005, followed by the first in the region to roll out 3G and 3.5G mobile broadband services and wireless services, and by 2008, Bahrain had rolled out the region’s first nationwide high-speed 4G LTE network.

These developments have attracted companies across multiple sectors, including tech giants like Amazon Web Services who have set up storage zones in the Kingdom. As privacy concerns around the world keep mounting, so too does the need to regulate the handling of personal data across the private and public sectors.

This year, Bahrain has introduced its first nationwide standalone Personal Data Protection Law.

The Personal Data Protection Law is designed to be a key enabler in the development and future growth of Bahrain’s digital economy. By recognising the importance of data protection, the Law seeks to keep pace with technological advancement by promoting efficient, secure and effective processing of big data.  The Law will govern how personal information is used by individuals and organisations for commercial use.  By ensuring the integrity and confidentiality of personal data, consumer trust in the market will be strengthened allowing for increased data flows across borders which individuals and businesses can capitalise on for growth and trade.

Bahrain’s Personal Data Protection Law is modelled by the 1995 EU Data Protection Directive and provides for all principles enshrined in the 1998 UK Data Protection Act which is widely accepted to be a global code of best practice.

The new law shows investors, businesspeople and consumers that Bahrain continues to take solid steps towards a data-driven economy by adopting robust and transparent regulation to support digital transformation at all levels.

Further examples of that transformation include the Bahraini government’s Cloud First Policy. Cloud First is a strategic move to integrate the cloud into all government agencies, enabling ministries to deliver additional services to users more efficiently while reducing IT system maintenance overhead costs by 30–90%. Startups in particular benefit from Bahrain’s cloud ecosystem, since the ability to scale products at low costs helps disrupt existing markets.

Startups can also benefit from the region’s first onshore regulatory sandbox, launched last year by the Central Bank of Bahrain to enable businesses to test new products and services in a safe-to-fail environment. The regulatory sandbox together with this year’s launch of Bahrain FinTech Bay – the largest dedicated FinTech hub in the MENA region – have made Bahrain’s FinTech scene one of the most vibrant in the Middle East.

These are some of the reasons why the World Economic Forum subsequently ranked Bahrain first in MENA for ICT readiness and individual ICT penetration. At the individual level, WEF also ranked Bahrain 14th globally among 139 economies.

The future prosperity of the GCC depends on countries like Bahrain responding quickly to the waves of digital and technological disruption that are sweeping the world economy. As Bahrain’s digital economy deepens and expands, the Personal Data Protection law will enable the Kingdom to continue to attract high-quality FDI across multiple sectors. In 2017, Bahrain EDB facilitated an investment inflow of $733m – a record level which has already been surpassed this year. Therefore, it is no surprise that MENA’s digital media market is forecasted to triple in size to $4bn by 2022.

The Personal Data Protection Law is proof of Bahrain’s ability to stay right at the heart of the Gulf’s growth potential in the years to come. The conditions for trade, innovation, and disruption could not be better – for Bahrain, the region, and the world at large.

Khalid Al Rumaihi

Chief Executive, Bahrain Economic Development Board