06 January 2007

Let's all immigrate to Mars

I had this thought after reading the newspapers today. Al-Ayam had this headline on its first page:

اطلاق تملك الأجانب في جميع مناطق العمارات

Great! Now let me give a bit of a background:

In 1999 the King issued the single most disasterous decree in my lifetime: Decree 40 of 1999 (available on www.legalaffairs.gov.bh). Basically, it allowed all GCC citizens to own land in ALL areas of Bahrain. Imagine. All the Saudis (with love) and Kuwaitis and everyone else being allowed to buy land here. For land owners, it was a party of course. Given the size of Bahrain (juice-box) and the purchasing power of Gulfies compared to Bahrainis, land prices went throooooooough the roof. I think it is an established fact now that non-millionaire Bahrainis gave up all hopes of owning a land of their own. Then, in 2003, the PM issues an order to designate areas where foreign ownership is permitted (No. 43 of 2003). This was mostly limited to commercial areas and new developments. Fine. I encourage investment in Bahrain too.

but NOW, as if it hadn't done enough, the government issues a law that allows all foreigners to own in all residential apartment areas. The new order allows foreigners, individuals and companies, to own residential lands and built real estate in low, mid, and high-rise residential building areas (i.e. all pretty much). Nice, huh? Apparently, Bahrainis are just not to be allowed to have a roof over their heads. No land, no house, and no apartment..

Now will anyone join me in heading to Mars?

19 comments:

Dilmun said...

I think the real problem is that we are allowing for the subsidization of services to foreigners, what we should do is charge them with the cost of infrastructure connection (Sewage, Electricity, Water etc...) This way we do not prevent investment, and foriegn ownership and we are in line with all GCC regulations and so forth. But, like in the Labor Reform we make people pay for the cost of creating all these things. I think if this kind of "Charge" I don't want to call it tax cause it is basically the non subsidized cost of connection we can attract foreign investment to build and so forth, and probably reduce the per unit cost of housing. The Government will not have the excuse that it doesn't have enough money for the roads or infrastructure because the investor will be paying for it... this will help eleviate the pressure on the budget (I think) yet create a lot of more NEW planned land ... It sucks to drive my Sh. Khalifa HWY and see all that empty unplanned and unzoned land in Buqowa, Salmabad, and Janabiyah. Its a Development Tax.. it works ... in other countries.

الإمبراطور سنبس said...

Well ..

maybe we will be living in our cars in the next few years !!

Observer said...

Do you think the US Free Trade Treaty has anything to do with this?

LuLu said...

@ Dilmun: I like the development tax idea for foreigners alone, if we can legally do it. It could solve the development & infrastructure problem. But as for prices of land, I don't see it helping. Unless ownership is controlled by law, you'll still have enough demand and purchasing power by Gulfies and foreigners to keep land prices inflated (inflated for us, but for Gulfies it's still cheap compared to land prices in their countries).. unless of course the fee is high enough to offset that advantage which will probably be just too high. I think that's the same issue with labor Mckinsey policy: they will raise the cost by charging a fee, but as far as we know the fee isn't high enough to equalize Bahraini and non Bahraini and therefore I don't get the point (of course if the fee was high enough it would be a whole other disaster)-- btw welcome back to the world of blogs!

@سنبس الامبراطور: hmmm!!

@ Observer: Well.. I tried to ask people who know about these things and from what I understood, trade agreements cover goods (we'll open the market to their products) and services (we'll open the market to their engineering firms, legal firms, etc etc).. I would think that land ownership is irrelevant-- To me it just seems like bad judgement of our government!

Dilmun said...

LuLu... The Labor fee better be high enough .. but there are levers, if its done right it will help the BD150 a month Bahraini A LOT. It will hurt the rich a bit, and we have to change from less to more technology. We'll see how the implementation goes, I have trust in Ali Radhi. About Land, I think we need to put more land on the market, the problem is .. there is a termendous amount of unplanned and unzoned land that needs infrastructure and proper planning. If we plan things right with the proper density it can work out. Personally I'm all for GCC integration whether its starting a business/buying land/traveling with no passports or unified currency, thats why I'm probably a little hard headed about this issue. But your right in the sense that we should have planned better BEFORE allowing anyone to come in...I hate seeing empty land, and people investing in LAND for that reason (SPECULATION) we have to tax everyone including Bahrainis who don't Develop their land.. Basically, Develop, Sell, or pay an annual property tax..

Qassoom said...

!@# ^_^ --> $%@$!^$&^& $$$$$$$$$$$ :-S :-(*! :-D
-------------------

*: Politics, politics, politics! :-P
As if we were in middle ages!!!

error said...

خليجنا واحد
كلنا واحد

its way cheaper to buy a house in ba7rain than kuwait. i can relate!!

it seems your king doesnt give a shit about mid-class ba7rainis

Anonymous said...

It's not only that. Do you know Zayed Town? The land was bought by Sh. Zayed (Allah yr7ma) and the plan was to build the houses for the needy family and give it to them for free. What they did is that they sold him the land and then built small houses, may be 50% smaller than the agreed size to make use of the land and build more houses. Guess what? At the end they gave the houses but not free. The poor families are paying the rent. The excuse they give that they can't do that when other bahraini families in Isa Town and other areas are paying for Eskan houses! I hate this country ... I wish we can immigrate to Mars.

LuLu said...

@ Dilmun I'd have to agree on our problem of doing things like there's never going to be a tomorrow! my fingers are crossed for labor reforms

@ qassoom: Eeeh I'd like to be convinced that we don't

@ error: >>بلادنا حلوة حلوة بس الوطن ماله مثيل

@ anon: Interesting..! I didn't know that about Zayed town. The complaint I hear the most is that it became our mini-Yemen

Anonymous said...

Quick question, how many of you guys or your families own a place in London? I have yet to meet a Bahraini family that doesn't have somewhere on the Edgeware Road!

Look, personally, I would love to buy and restore an old Arab house in Bahrain. That would nbenefit the bahraini culture and heritage. Instead what happens is what we saw last week, beautiful 100 year old houses get demolished and the local council says they were used by drug addicts or lovers or some other such nonsense (so what if they were, they should be restored not demolished).

Bahrain's government and rulers have plenty of money for Bahraini citizens to have housing. The problem is the individuals who own large chunks of land don't want the hoi poloi near them.

So please get real - people investing in Bahrain, settling in Bahrain and helping to grow the economy is a good thing. If you disagree, sell your family's flat in London first and then come back and argue!

Anonymous said...

I think your headline sums up your attitude. It's OK for you to emigrate or move or buy somewhere outside of your country but you can't stand the thought of it being open to "foreigners".

the fact is the majority of the bahraini population are on a low wage -- the question to ask is why is that and who benefits??

LuLu said...

@ Anonymous 1: I guess you are meeting a lot of rich Bahrainis.. which is nice. I'm glad about 1% of my people are able to afford London apartments. Unfortunately, though, you should visit Bahrain, see the the real deal and see the majority of population in poverty. Anyway on your point: I agree Bahrain has corruption. It, however, doesn't change the fact that allowing foreigners to own land has raised land prices beyond our ability. In fact, those "moguls" you talk about are the biggest beneficiaries because they own most lands. Moreover, most Gulf citizens who buy land do it for private purposes or speculation and do NOT invest in the country or develop it etc.. Also, given the size of our island (670 sqkm), the biggest investments in our island are not land-based. We can't attract large industries or anything like that just because our country can't accomodate it physically. Therefore, our only option is to go for services and small industries. In that sense, attracting investment would be through keeping the foreign ownership in investment-designated areas and enhancing its infrastructure. Opening for foreigners to own anywhere they want is just stupid and doesn't add anything. If we were a large country with vast unused lands, fine. But we're NOT.

@ anonymous 2: It's not about opening to foreigners. Our laws and regulations are investor friendly (corruption is just not), and the people of Bahrain are historically the friendliest and most welcoming (we're an island.. we're born like that). I'm one of them, so don't get things mixed up. The issue of residential land ownership has nothing to do with "loving" foreigners or not. The area of the whole country is around 670 KM sq. The population is around 800,000. It is fine to allow foreigners to own in certain areas. But given the size of the country, we can't just open it as a whole. We live in a region where all countries around us are richer and can afford to raise prices to levels we can't compete with. It's a disaster. Any raise in salaries will not make a hoot of a difference.

Anonymous said...

Lulu

I am anon 1 and 2 - just couldn't figure out how to do my name. I have lived in Bahrain for several years, speak Arabic, been visiting the region for 20 years and my family connections here go back to 1790! I workj wirth many companies and governments so am well aware of how this region works.

But protectionsim has one majopr fault - it just keeps the status quo. We all agree on a core set of issues that need to change. Focus on those.

Take labour law reform. Unless there is a change in the work ethic for many people, it is doomed to failure. Unless there is a change in that a high ranking Sunni can trust a low ranking Shi'ite, it is doomed to failure.

You see, the land issue is not the thing to focus on. And even if you do, have you recently had a look at a map of the island -- why are we all compressed into the Northern strip --- there are acres and acres and acres of land available for all sorts of people to occupy and to drive the economy upwards. So what's stopping it?

Johnster

Anonymous said...

...and by the way, you talk about focussing on small industries...GPIC, Bapco, Asry, Gulf Air, BIC, Alba etc etc wouldn't be happy to hear that

Johnster

LuLu said...

Hey Johnster-- I understand your frustrations, but this post is not about investment policy. This post is concerned with residential land prices that according to published figures increased by 100-400% in the past 3 years. Yes, we need to encourage investment but we shouldn't confuse residential land ownership with foreign business ownership (or economic protectionism). In terms of industries, again, yes of course we need ALBA and GPIC and BAPCO, yet look at the physical area of each project and their energy/water consumption. The island with its resources can probably sustain those plus one or two more "mega" projects-that's it. Our viable option therefore is to focus on services and downstream (e.g. downstream aluminum instead of selling ALBA's aluminum unprocessed in bulk). In terms of empty South, sure it's retarded.. and has to change-- but for now who can force the government and royal owners to open it up? Anyway, your comments are v. intelligent but maybe a separate discussion of each would be more appropriate.. (I already feel I've gone all over the place!)

Anonymous said...

Thanks Lulu

I would have thought a better policy is to open up land ownership to everyone EXCEPT other GCC countries

Johnster

moonshallow said...

Why not immigrate! There are already seventeen Bahrainis who have bought land on moon.Yeah...not a joke . I read it in one of the English Dailies. The tax idea by dilmun is good.
Another thing worth mentioning here is that the Minister of Works and Housing had announced major projects this year but it seems they are gathering dust in the corridors of power. There are many things that have come to light in this short period, for instance the Financial report which clearly states that the kingdom is loosing millions of Dinars because of oil industries and BIC. The money invested could have been used to solve the housing situation which is getting worse...... Well that ain't happenin like many things .
Sandy

TariqKhonji said...

"energy/water consumption."

I think all the companies you mention more than make up for the amount of energy they use with their contribution to GDP. In Alba's case specifically I understand their disalination and power plants actually compliment those of the eleectricity and water ministry, meaning that htey actually provide water and electricity to the public in some way, especially during times of shortage.

As for land prices going up, well...you have a point about ordinary Bahrainis not being able to afford it. I'll add to that that it is a major cause of inflation.
But on the other hand it's an easy way for people with a little business sense to make big bucks. And it is the price to pay for a free market which has many other benefits, so its hard to condemn it really.

LuLu said...

Excellent point Tariq about electricity.. but I was actually talking about their consumption of natural gas.. ALBA's production is feasible since the government now provides it w/cheap energy (nat.gas).. In 8 years I understand we will run out. In the absence of agreement to buy Qatari gas at a special price, it will be super expensive in comparision w/regional competition (Saudi is opening a new plant in Jubail to which Aramco will provide energy at supsidized prices).. I hope Bahrain thinks about proper allocation or any scheme to reduce costs of production before it's too late.