Will expat dependents fees be postponed?


In an interview with Al-Arabiya TV Channel, which was published by Okaz newspaper, Finance Minister Muhammad Al-Jadaan stressed that government senior specialists and economic experts have agreed that it was possible to extend the period of some reforms by up to 3, 4 or 5 years, if needed, whether such reforms are related to energy prices or something else. The government will announce the types of reforms whose period will be extended.

Al-Jadaan also said that instead of implementing 50 to 100 percent of the reforms within a certain period of time, it was possible to postpone the implementation for up to a year or two years, especially in light of the Kingdom’s borrowing capacity.

It is not important to achieve fiscal balance by 2019 or 2020 as much as it is important to achieve medium-term development and growth, he said. The Kingdom possesses strong credit capacity that has enabled it to lower borrowing rates. Moreover, it has sufficient reserve to support the economy and the riyal as a currency. The Ministry of Finance takes these factors into consideration and works to handle any case that might arise; therefore, the aforementioned extension decision would not have a strong impact on the budget as the extra expenditure would be covered by the amounts generated from the rationalized government spending.

Al-Jadaan revealed that the government would allocate SR 20 billion to stimulate the private sector up to 2020, noting that SR 15 billion has been allocated to housing to date along with SR 25 billion to the Industrial Development Fund.

To reconsider a decision previously issued is one of the traits of any successful leader who cares about the greater interest of the general public. Therefore, the Finance Minister’s statements indicating the possibility of postponing the achievement of some objectives by two or three years was a sound and wise decision, which better serves the public interest. The minister clearly emphasized that the Kingdom enjoys strong credential capacity and possesses reserves that support the economy and development objectives. That is why the ministry has approved large amounts as stimulants for private sector, housing and industrial development. This shows clearly that the ministry realizes that the national economy is in need of stimulants so that it does not suffer from stagnation.

Some reports in the media had claimed that the Ministry of Finance had suspended the regulation requiring expatriates to pay a yearly fee for each of their dependents. Expatriate workers were happy when this “news” came out; however, the minister quickly denied such claims and stated that the fees had not been suspended.

I am sure that the minister is fully aware of the negative consequences resulting from imposing fees on the dependents of expatriates. Many expatriate workers sent their family members home and moved to smaller places or shared rooms with compatriots in order to pay less money for rent. This has resulted in a surplus of unoccupied apartments. Many buildings now have “For Rent” signs and this can be seen everywhere.

Many expatriate workers who left the Kingdom for good could not afford the dependents’ fees either because their monthly pay was low or they had several dependents. Some expatriate workers decided to stay in the Kingdom for this year as they can afford the SR100 fee for each dependent. But what about next year? The fee will increase to SR200 in the second year, SR300 in the third, and SR400 in the fourth for each dependent. In fact, many expatriate workers will have to send their family home because of these fees.

Economically speaking, the fees will have a negative impact on the real estate sector. An expatriate worker living with his family in the Kingdom usually spent between 70 to 80 percent of his income inside the Kingdom and transferred the remaining amount to his homeland. Now, the opposite will happen; he will transfer most of his money home and spend a little in the Kingdom. The productivity level of an expatriate worker will also be affected because he lives away from his family.

Perhaps the economic experts who advised the minister to extend the period of some reforms had plans to reconsider the fees on the dependents of expatriate workers, which do not exist in any other country. Perhaps they realized the negative impact of such fees on expatriate workers and the national economy. We should not overlook the psychological and humane aspects here as many expatriate workers have a lot of children but their pay is low and barely gets them by.

— Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast Asian affairs. He can be reached at algham@hotmail.com