Kuwaiti telecoms company Zain has moved its headquarters to Bahrain amid growing discontent from the Kuwaiti business community with the government’s lack of business reform.

Zain is the Middle East’s leading mobile operator and a flagship Kuwaiti firm which operates across 22 countries covering sub-Saharan Africa and the Middle East.

The Kuwaiti business community is becoming increasingly frustrated with the government’s failure to encourage foreign and private sector investment, to create a capital markets regulator and limit government business entities.

Calls for the government to withdraw from the economy are based on the fact that 93% of the Kuwait labour force is employed in the public sector.

“Britain ran India with 400 employees – in Kuwait we have a population of one million, 190,000 of whom are government employees,” said Zain chief executive Dr Saad Barrak.

Even more concerning is Kuwait’s failure to implement an alternative to its oil-based economy, which may harm its competitive position in the Gulf where the United Arab Emirates, Qatar and Bahrain have all embarked upon economic diversification strategies.

“The problem is that oil is a strategic commodity – yes, it is public wealth, but it needs to be managed by the private sector,” said Dr Barrak.

According to Zain, the Bahraini government, through its economic development board, demonstrated a willingness to work closely with the company to establish its head office in Bahrain.

Help included the facilitation of issuing work permits and visas often required at very short notice given that the company employs more than 100 nationalities as well as financial incentives and preferential treatment in many logistic issues, according to Dr Barrak.

The company considered Dubai and Amsterdam before deciding on Bahrain. Installation of personnel will be completed by end of 2008, as will a new Zain building which is undergoing refurbishment. Several key functions and personnel will remain in Kuwait due to the company’s listing on the Kuwait Stock Exchange as well as legal requirements.

Office and personal accommodation pricing and incentives in Bahrain were attractive compared with Dubai and Amsterdam, according to the company, which said the Bahrain housing market offers employees the opportunity to purchase homes with good growth prospects.