How many expatriates will leave?

How many expatriates will leave?

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Mahmoud Ahmad

Mahmoud Ahmad

I HAVE received many requests from my expat friends to highlight the issue of the fees to be imposed on expats from the first half of this year. Many are worried how the imposition of the fees would impact them and their stay in the Kingdom. Some argued that it would be difficult to pay the hefty fees with the poor salaries they receive. Others questioned whether their companies would bear the cost or share some of it. The vast majority, however, told me that they are facing uncertain times and are considering leaving the Kingdom as an option when they feel they cannot bear these new fees. Others said that as it would be costly to keep their family with them, they would have to send them back home while living as forced bachelors.

According to news reports published recently, expatriates would have to pay SR100 from next July per dependent per month. In January 2018, companies in which expats outnumber Saudis will have to pay SR400 every month for each expat worker. The companies will have to pay SR300 for each expat worker when the numbers of expats employed by them are equal to the number of nationals in the firm.

The fees will then exponentially increase annually with the monthly fees on expats for each of their dependents rising to SR200. The fees on expats outnumbering the Saudis will be increased to SR600 per month from January 2019 while firms with equal number of expats and nationals will need to pay SR500. The fees on dependents will be hiked to SR300 per dependent per month the next year. At the start of 2020, the fees for expatriates outnumbering Saudis will be increased to SR800 monthly and to SR700 for expatriates who are in equal number to Saudi workers in a company. The monthly fees on the dependents will be raised to SR400 per head from mid 2020.

I am not going to discuss these fees, as it is a decision taken by the country and it should be respected. It is within the government’s right to do what it deems fit and to come up with any law that will fall in the interest of its economy and people.

But the plethora of queries from my expat friends got me thinking. With the imposition of these fees, we have been told, that a windfall awaits from the projected revenues from these fees. In theory the projection makes sound economics, but in reality, following the levying of the fees, will the number of the expatriates remain the same? I would like to ask here is how many of these expat workers will leave the Kingdom? My prediction, which could be right or wrong, is that not many of them will stay or in the worst-case scenario, will send their families back home and soldier on.

In such an event how will the Saudi businesses or industry cope? Will there be a knock-on effect of the reduction of commercial activity on the economy? Will not the consumer feel the pinch of the possible hike in the prices of goods and services? We also need to stress one thing here that the amount of money that was spent on the family when the expats were in the Kingdom would end up being transferred back home, and therefore we will lose a major block of spending power.

If we assume that companies will bear the expenses of the fees, or at least half of it, then the prices of services or products will increase with the consumer ending up paying the difference, for such is the result in countries that resort to heavy taxation. We have seen it when prices of gasoline increased, prices of products and services increased and the hike was passed on to us. If the expat ends up paying the entire amount of the fees on his family, then leaving might be a better choice for him. Let us stop here and think for a moment and try to answer this question candidly. Are we ready to fill the vacuum that would be suddenly caused by the expatriates leaving?

What will happen when many of the skilled workers close down shop and leave? Do we have Saudis ready to replace them? If I needed a plumber, would I find one? If I need an electrician, are there Saudis ready? I am not trying to put anyone down here or accuse my fellow countrymen, I am just being realistic and asking a question that needs to be answered. Do we have enough people to cover the gap in these professions at least? And even if we have, they are sure to charge more as prices always increase when there is scarcity of skilled workers.

Small and medium companies in Saudi Arabia rely the most on expat workers. With these fees, it is expected that many of them will lay off most of their expat employees. One entrepreneur friend of mine said he’s planning to reduce the number of his employees gradually because of these fees and the economic crunch. Such moves are definitely going to hurt the economy. Most of these companies will not feel happy when they see a percentage of their profit cut. For it is the bottom-line that they see foremost, and to secure it they will add on the extras to the end consumers. At the end of the day it would be the citizen who will indirectly be impacted.

Already signs of the expected effect are slowly being seen. The ‘for rent’ signs are coming up in many buildings with some expatriates taking preemptive action by sending their families back home. A huge chunk of money will disappear if many decide to leave the country. We have to understand that these expats are paying Iqama fees to the government, paying phone bills to Saudi companies, paying house rent to a Saudi landlord, buying food from groceries from shops owned by Saudis, depositing their money in Saudi banks. They are getting treatment from Saudi hospitals and teaching their children in private schools owned by Saudis. They are a whole economy that needs to be considered.

The writer can be reached at mahmad@saudigazette.com.sa
Twitter: @anajeddawi_eng

52 COMMENTS

  1. It is a great move by Saudi law to impose fees on the services and facilities for locals and expats to enjoy. “Pay the fees and enjoy”, instead of “Not allowed”.

    • You are right and Tax is not an issue because We pay tax in our home country.
      But you have not read this article carefully.he is discussing the impact on saudi economy.its not so simple pay and enjoy or leave the country.

    • Dear dr.memoona what type of facilities are you mentioning…. Insurance based hospitals are far away from the reach of poor insurance payer…. M living in aseer sabt alaya….
      My insured hospital is in abha or jeddah….
      300 n 450 km away frm me respctvly…
      Tell me then for what i have to pay insurance just to feed the insurance compny?

    • I dont mind paying the fees as long as i be respected as an expat. .majority of the younger generation of saudis think they are way above us and treat expats like something else. .im not saying all, but some or the vast majority. .right now i will pay taxes but here’s the thing i expect equality to each and every one of us. .or i will have to punch someone trying to belittle me. .plus, if you wanna kick out expats go ahead, i would love to see a saudi do my job. .as if they would im a nurse, not just a typical nurse. .and i have not seen 1 saudi do anything spectacular during rough moments in a certain area. .

    • The columnist is writing about the impending exodus of expatriate families due to the new fees (extortion). Some very valid questions have been raised and rightly so, I feel sorry for you because I don’t think you will ever get it…

  2. There are thousands of expatriates that see this country as not their second home, but their first home. What will happen if we were unable to pay these fees.

    The problem with these fees is that they are give zero regard to the income bracket of the payer. 100/200/300/400 riyals per dependent per month might be tiny to some but the vast majority would be unable to bear the costs. You need to keep in mind those who do manage to survive in the short term will have to deal with the heavy inflation these fees will cause in the short term. The cost of school fees, rent, cost of goods would rise drastically as the owners will naturally hike prices. People who would be barely able to make it would be burnt as well.

    We expatriates absolutely respect the countries laws and will continue to be law abiding in any scenario. Though it is time to question where the green card program is. When most of the skilled people with decades of experienced are lost overnight , how exactly would the kingdom transform into a knowledge based economy/diversified economy.

    Concerned authorities need to visit SMEs to see the ground realities first..

  3. Good thoughts from an expert columnist. It is high time the concerned authorities reconsider/review those fees. Let us all wait for a better tomorrow..

  4. Nicely thought written by Mr Mahmoud. I also feel the same and many of my friends are also getting ready to move either their families or to apply for immigration to Western countries.

    The best thing they would have done was to increase the Foreign investment by giving more business opportunities for foreign nationals and Green card thing was an initiative in that way but God knows where it disappeared. It should have launched first and then any fee would have been levied.

    Regards,
    Expat

  5. In West such as Canada and Australia, when you pay fees (taxes), you get followings:

    1- Permanent Residency and after few years Passport & Nationality
    2- Free Medical for whole family
    3- Free child Education
    4- Cash allowances for every child (First introduced by Umer Radi Allah)
    5- Government support in case of unemployment
    6- Start own business without a Canadian Kafeel
    7- Purchase real estate
    8- Never face Canadianization or Australianization while searching for job
    9- Can change job without any hassle of iqama transfer and finding good Canadian Kafeel

  6. The man who changed the lifestyle of whole mankind by Macintosh Computer and Smart Phone, was a son of expat/foreigner/immigrant. His father was Syrian expat and mother was German expat.

    His name was Steve Jobs

  7. Many of expats consider the country as first home. How one can pay the dependents fee while having low income. And most of the companies will start downsizing in order to minimize their expenses and than how the country will meet the demand of market domestically and internationally when there are not enough workers inside the kingdom. And than it will leads towards recession.

  8. Expat or not…every one need to give his share of support to the Gov…if cannot then have to leave. It’s the bare min requirement in current economical situation’s.
    Just look at the Defficit of this year’s budget.
    It’s a petrol dollar war. And in war there are collateral damages.

  9. Assalam-o-Alaikum
    Highly appreciated the writing and strongly agree. A person working on 2-3k per month, who is supposed to pay 1500 monthly house rent for his family, what he left with to pay these extra family taxes?

    On humanitarian grounds the concerned authorities should re-consider this decision.

    We love and respect the country as our own, or even more than that. Love for this holy land is far more greater in our hearts than anything else. Makkah and Madinah are the source of motivation to live thousands of miles away from our loved ones.

    So its requested to please take this decision back as ultimately this will end up with no benefits.

  10. Very well said Sir Mahmoud…

    I hope the highest authorities would read this issue and listen to expatriates plea to recall this expat fees for the economic stability and future growth of the country.

    Thanks…

  11. It’s a lovely column which cover all the four corners. Beautiful lines of this coulmn is “do saudia have the numbers of peoples to replace the expatriate ” like plumber. Labour. Electrician. Driver. Above all sales men.

  12. The writer is not worried about difficulties that Expats will face, Rather his major concer is adverse effects on Saudis. He is right to worry as once Expats are forced to leave, who will replace them? Saudi youngsters can do office based jobs but who will work in markets, shops, at gasoline stations….And if expats send their families back, who will hire the apartnments/houses, how the schools will fulfill their budget? No one will be there to visit private hospitals as Saudis visit MOH hospitals.
    The end result will be disastrous.
    So the writer is not worried for poor expats..

  13. As we know market getting down day by day, after 13 years i plan to send back my family and after few months me too. It’s hard to leave Saudi Arabia but i have no choice now. KSA need investor as i saw in Bahrain and Dubai.
    My best wishes for Saudi Arabia gona miss you.

  14. As usual excellent article written by Mr Mahmoud explaining the critical situation which may face the ordinary people in case many expatriates leave the country due to imposing heavy taxes on the dependents of the expatriates. As the writer has rightly mentioned that in case a citizen need the service of a plumber, from where he can get a Saudi plumber, this article reminded me of an article written by the former Presidents of Jalalddin literally club in which he narrated story happened during the time of King Faisal. He mentioned that few journalists met the king and complained that the foreigners are taking the jobs from Saudis. The king mentioned the example of plumber and said that if anyone of you need a plumber from where he can get a Saudi to do the job. This story happened about fifty years ago and nothing changed in this regard but maybe the problem is more complicated now than at that time. We hope that wisdom will prevail about the importance of expatriates.

  15. I’ve been living my whole life here in saudi. Rather than my home country, it’s a choice and we choose to be here even though my father has a low salary. Knowing that this fees will be implemented saddens me most because we will be forced to leave the holy land we loved.. Is this the future we want? How saddening. I leave everything the Al-mighty 😔.

  16. Don’t worry friends…. Time for each person is fixed by Allah regarding his life and rizq.
    No one can save us or force us to leave but Allah….

  17. Good analysis. I myself and lot of my friends are planning to send their families back home. May be we try to bear these fees this year, but next year it will be strenuous for the people with low pay. Surely this will affect the economy as who will rent the flats… Etc. Already there has been lot of impact on buying and selling vehicles among expatriates these days.. Everybody is cautious and afraid to spend money. We love this holy land and we respect the saudi nationals. We want to serve this country as much as we can. But in these conditions we have started to think. We expats are ready to help this country to get it out from this situation. But we never expected such hefty fees which will affect our survival here and also affect responsibilities we carry on our shoulders from home country.

    We just pray to Almighty Allah that this country with two holy places in the land comes out from this situation soon. Thanks.

  18. I agree with sushmeeta,,saudis are worried about replacement and labour workers not the difficulty an expat can face..but again let me tell you that I lived in saudia for more than 10 years but finally left it due to education crisis and immigrated to canada.To me Saudia is not the land of equality and I was treated there as a slave… Here in Canada, I am getting the same rights as of a Canadian national and my children are getting the best possible education…

  19. Any country has right to put tax. But should charge only one tax. zakat iqama fees labour Visit visa fees. Visa fees. insurance family dependence fees and now monthly fees. All should be totalled and given some discount on total. Also presently Only educated expatriate can bring wife. Even uneducated should be allowed as Allah likes equality. . Aged expatriates more than sixty should go back and enjoy some life in our own country before death rather than burdening any country

  20. The tax should be implimented as per salary income. If someone is getting 50k will pay the same as person who is getting 5k. Not fair.

  21. Very well said need a thorough analysis prior implementing policy win win rule..Bear in mind economy=people, who are these people?Local and expat.

  22. I am not appreciating the article because i am alien, but on the basis of observation, facts and figure, I am not racist either, I have recruited Saudi talent, trained them as well and like to train and teach the son of soil had prime right to have employment. These idea of fees firstly creating unemployment for Saudis it self. Idea is that when so many expat families will leave the country the first affect will be on Saudis those who are running business of real estate and shops , a simple analytical study can be done and the impact. The people all over the world prefer the Saudi Arabia for two main reason for Muslim is two and non-Muslim is one for Muslim The holy mosque and the saving, for non-Muslim is saving , and the most important is the country peaceful . The simple survey and analytical study can be done and the impact of these fees to be revised and studies . The country is symbol of Islam for entire ummah in the world and this is a center of Islam and the jealous are searching a small opportunity behind this country to target. We pray Allah almighty to make peace in this country. As far the issue these fees the impact already begun those families who cannot bear the fees are planning to move and the building and apartment getting vacant with board of FOR RENT these scenarios will create further unemployment in national. Shutting down various microenterprise and entrepreneur will create further unemployment in nationals. The indirect and direct effect of this situation on national. As huge potential of this country can be develop various business and job opportunities can be created through various business despite of killing business opportunities. May Allah make this place peaceful and save this country from all evil.

  23. Good article by Mahmoud.
    If he can read this or inform the authorities, at least introduce a variable system. The expat must pay the required fees as per his income.
    Many expats earn up to 6 digit salaries per month. A few hundreds in taxes will not effect them at all. But an expat earning 4 digits only will be devastated. He cannot maintain his expenses.
    This way, the main purpose of taxation will be satisfied and the expats will also be able to hold on.

  24. I think finally sense has started prevailing and realization of the consequences is clear to many!
    But i would say go ahead and implement and best of luck to you with you visions.

  25. Great article and and comments shared. The reality is expatriates generally are hardworking, if could just put the same amount of effort and time in our home countries we would not only be financially better off we would also be with our families and near and dear ones.
    We have to respect the laws of the country and the decisions the government takes.
    Wisdom will prevail and hopefully the culture of xenophobia will erode.

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