Saudi Arabia offers incentives to plug financial drain

Saudi Arabia offers incentives to plug financial drain
4 min read
12 May, 2016
Saudi Arabia's proposal for a green card for expatriates was designed to stop billions of dollars leaving the country, but the plan offers some stability for foreign workers.
Saudi Arabia's foreign workforce is as high as 9 million [AFP]

Petrodollars have pulled Saudis out of economic drudgery and into a more comfortable existence. For many expatriates, life in the kingdom is still one of toil and hardship.

In 2014, Saudi Arabia's eight million expatriates sent $36 billion in remittances out of the country, the second highest figure in the world.

This amounted to five percent of the kingdom's GDP, and even if it is a much lower rate that other Gulf countries (Oman is fourth in the world with over 12 percent of its GDP sent overseas) it is still becoming a cause for concern.

Continued low oil prices mean Saudi Arabia is forecasted to post another huge budget deficit in 2016, amounting to 13 percent of its GDP.

Given the gloomy economic situation - and an expensive war in Yemen to boot - this is money that many Saudis feel would be better staying inside the country.

Green card

Crown Prince Mohammed bin Salman's proposal to introduce a green card system for foreigners in 2021 could be one way of cutting remittances.

The plan would see an end to the kafala system, so foreigners would no longer need a Saudi sponsor to work in the kingdom.

Expatriates with green cards could also get permanent residency in Saudi Arabia, the right to buy property, set up businesses without local owners, and access to free public healthcare.

Although designed to close the tap on money leaving the country, the green card proposal has also seen a xenophobic backlash in the kingdom.

So disturbed by these plans, some Saudis (a minority we are assured) have taken to social media to voice their criticism.

Many are uneasy about the idea of foreigners being granted some of the same privileges as locals. Some fear it could dilute local customs and traditions, while others are concerned that more expatriates will take jobs from young Saudis.

"The 'black' card is against our identity, and the sons of the land will lose their rights," said one Saudi Twitter user, Jude al-Hasam.

"After you solve the problems of the people - unemployment, homes and the poor - you can make it. But now the foreigners only deserve the red card," said Yaarab bin Masalam.

"It's a big issue with the media, but not so much with people because there are a lot of Saudis who get benefits from this situation when expats work for them," said The New Arab's Saudi correspondent Bader al-Rashed.

"But there are no public figures that support the campaign. This is not an issue for them. It has been a big campaign on the Twitter, and I don't understand who launched the campaign but most people seem to be against it."

Anti-expat laws

Unlike many other Gulf countries, Saudis make up the majority of the population - between two-thirds and three-quarters - which means anti-expatriate sentiments do not run as high as other neighbouring countries, Rashed said.

Kuwait has unveiled a string of laws targeting expatriates, hiking utility charges for them, while locals' bills are still subsidised.

The kingdom has proposed taxes on expatriate remittances, as has Oman showing that many Gulf states are attempting to pass on the costs of low oil prices onto foreign workers.

Some see this as a deliberate ploy by Gulf countries to force expatriates out and reduce their foreign workforces.

It makes the Saudi green card seem sensible in contrast, giving foreigners the rights to start their own businesses, buy a house, and start a life without fear of being arbitrarily kicked out of the country.

Tens of thousands of construction workers at Saudi Arabia's Binladin company were recently sacked and issued with exit visas, even though many had not been paid for months. A riot ensued and caused global outrage at the treatment of the labourers.

Days later, Riyadh lifted a ban on the Saudi company from bidding for public construction projects, after one of its cranes crashed into a crowd in Mecca last year killing 107 people.

The timing was seen as an added insult to the vulnerable foreign workers who had lost their jobs and homes at the stroke of a pen, even though the labour minister promised they would be paid their overdue salaries.

It highlighted the fact that like the tribal Gulf societies, there are many stratum among expatriates too. Some will be given green cards and red carpet treatment, while others will be booted out of the country.