Saudi experts expect an end to expat monopoly
Fahd Al-Manaee
Saudi Gazette
MAKKAH – Economists believe that the status rectification process will help end the monopoly of expat workers, who control 90 percent of commercial activities in Saudi Arabia, according to official statistics.
Dr. Hamid Al-Mutairi, of Umm Al-Qura University, said expats controlled a major portion of commercial activities, especially small businesses like grocery stores and cafeterias.
These workers had a well-knit ring, which made the survival of a Saudi investor in the market difficult. They would leave the Saudi investor with no option but to enter into a cover-up business.
Such cover-up businesses tend to be small and require little capital, but they are part of the sinews of the economy in many areas, ranging from mechanics’ shops to plumbing businesses, restaurants and market stalls.
Abdulwahab Abu Dahesh, a prominent Saudi economist, said there was no official data on the size of the illegal business sector but he believed cover-up businesses and other unregulated activities might be worth SR700 billion a year – or about a quarter of recorded gross domestic product.
Many Saudis argue the cover-up firms make the economy inefficient, take commercial opportunities from local citizens and effectively deprive them of jobs. Unemployment among Saudi citizens last year was 12 percent, according to official data.
“Most of the grocery stores and mini-markets we see in Riyadh are formed under cover-up practices. This harms the economy as it employs more than the needed staff,” said Dahesh.
“It also leads to crimes and the emergence of customs and traditions that do not match those of our society.”
Some of the profits of cover-up businesses are sent back to the foreign owners’ home countries – a drain which Saudi Arabia can easily afford at a time of high oil prices, but which will become a burden if oil prices fall sharply. Workers’ remittances abroad, which include some of these flows, rose 3.7 percent to SR107.3 billion last year, central bank data shows.
Under a law issued in 2004 but until now not strictly enforced, Saudis and foreigners involved in cover-up businesses face up to two years in jail, a fine of up to SR1 million or both.
The business is liquidated and the foreign owner is deported after a jail term.
Al-Mutairi expects that the status rectification process of undocumented workers will turn the tables on them.
Abdullah Filali, a specialist in the Young Entrepreneurs Committee in the Makkah Chamber of Commerce and Industry (MCCI), agrees with Al-Mutairi.“The rectification measures will help restore confidence in Saudi nationals to enter the labor market with all confidence,” he said.
Salim Al-Matrafi, a businessman and economic expert in Makkah, said Saudi youths were now entering the market to to take up even small business activities.
If all the cover-up companies reformed themselves to become legal and employed at least one full-time Saudi citizen, that would generate about 350,000 new job opportunities for local people, Labour Minister Adel Fakieh had estimated in an interview with Reuters. – With agencies
