Population: 688,345 (Approx - July 2005)

Economy Overview:

Bahrain's small size and central location among Persian Gulf countries require it to play a delicate balancing act in foreign affairs among its larger neighbors. Facing declining oil reserves, Bahrain has turned to petroleum processing and refining and has transformed itself into an international banking center. The new amir, installed in 1999, has pushed economic and political reforms and has worked to improve relations with the Shi'a community. In February 2001, Bahraini voters approved a referendum on the National Action Charter - the centerpiece of the amir's political liberalization program. In February 2002, Amir HAMAD bin Isa Al Khalifa proclaimed himself king. In October 2002, Bahrainis elected members of the lower house of Bahrain's reconstituted bicameral legislature, the National Assembly

General Business Practices

1- Bahrain is one of the key business centres of the Middle East and operates on free market principles.
2- The main language is Arabic. English is used widely in business dealings.
3- The currency is Bahraini Dinars (BD). Every 1000 fils is equal to BD 1.
4- Bahraini Dinar is linked to US Dollars. US$ 1 = BD 0.378
5- All contracts are to reflect general business terms between the two parties or more
where the term of contraì¥Á G ¿ u bjbjŽÙŽÙ J ì³ ì³ Þ – ÿÿ ÿÿ ÿÿ ] 6 6 6 6 6 6 6 J J
J J 8 ‚ d in all court proceedings.
8- It is considered professional etiquette to shake hands.


Collections

Background of Industry

Close to 98% of the collection business is traditionally being handled by the lawyers. This is gradually reducing as during the year 1998 and mid 1999 more than four debt collection agencies have been granted approval to operate. Lawyers will continue however, to dominate the market for years to come.
By the end of June, 1999 a total of six debt collection agencies are operating in Bahrain.
Creditors may take their collection cases directly to the court, but as it is time consuming lawyers are appointed.
A national Collection Association does not exist at this point of time.

Licensing Requirements

To open up a collection company, no bonding is required but an official permit must be obtained through Ministry of Commerce. Past experience is one of requirements when applying for commercial registration.
Disclosure of any information relating to debtors is absolutely forbidden

General Procedures

Procedures depend on the individual collection agencies but the most practiced method is raising a letter to the debtor to be followed by second reminder and then followed by telephone calls or a facsimile supported by field visit.
A collection agency normally tries to seek an amicable settlement, otherwise may recommend legal action if an amicable solution is not possible. Lawyers normally write a letter to a debtor giving a period of one week for them to reply, otherwise legal action is taken. Should debtors respond, and an agreement is reached then the case is not pursued in the Courts any further.
If the case is taken by a lawyer for legal action, they will receive in advance 50% of their fees in advance together with Court charges and any other charges such as translation fees.

Charges and Remuneration

Collection agencies normally charge their clients only when they are successful in recovering the debt whereas the lawyer asks for 50% down payment and the creditor has to pay all Court charges and fees in advance. The Court will always state a 7% interest rate, on the total<