Time to review residency regulations


The new Minister of Labor and Social Development, Ahmed Bin Sulaiman Al-Rajhi, told a gathering of concerned business people that soon they would hear good news about the labor system. The rumor machine gave us extra details. Worker fees would not be increased above SR 400 a month as per regulations introduced in 2017. An expat would no longer pay fees for every member of his family that would increase every year until 2020. Instead, only male children above the age of 18 would have to either change their status to worker or stay under their parent’s sponsorship. They would pay SR 400 monthly fees, either way. This requirement would not include female children.

The expat community breathed a sigh of relief with this news. So did the business community and real estate owners.

Unfortunately, the relief did not last! Days later, the Labor Ministry issued a statement denying all of the above and calling on the public to get true information from official sources only.

Every now and then, regulations are issued without justification and interpretation, making them difficult for us, in the media, to explain. One of those is the 2017 residency system that raises fees for residents and their families every year until 2020. Similar increases were levied on companies to enforce the Saudization of jobs.

As a consequence, a large number of expatriates decided to resign and leave the country or to send their families home and remain on single status. Companies already suffering from low liquidity, reduced purchasing power and a squeezed market, in addition to other economic pressures, have resorted to deep restructuring and the reduction of their workforce - Saudis and non-Saudis. Rents have dramatically declined as shops and apartments have been steadily evacuated.

In defense of these regulations, some calculate that the public treasury would gain billions of dollars in new fees annually. They expect the departure of millions of families to ease pressure on our infrastructure and public services, such as electricity, water and transportation; reduce the consumption of subsidized products; create jobs for citizens and eliminate illegal business ownership by non-Saudis.

In response, critics argue that the fees will not be collected if expatriates choose to send their families home. Instead, we will lose their residency fees. The cost of public services, food and other products and services have increased after the application of the Value Added Tax (VAT), last year. While low-income citizens are compensated, other citizens and all expatriates bear the full cost.

The creation of employment opportunities for citizens is already being achieved by existing “Saudization” laws, as well as by attracting local and foreign investments. As for illegal business ownership, the proposed Permanent Residency (Green Card) for investors and senior employees would eliminate the problem and generate billions of dollars from taxes on their business activities.

We are also trying to reduce remittances and revive the real estate, commercial and recreation markets. How can that be possible if millions of expatriates exit, leaving us with half-empty homes, schools and markets? With the limited investment, trade and property opportunities available to them, expats would have to send most of their income home. Just as important, the presence of a family would provide residents with stability and security, protecting them from temptations.

All the above have been discussed by economists, observers and writers, but I would focus here on an important aspect - the human and social dimension. Some of the guest families have lived among us for decades. They have shared our lives and values, studied in our schools, worked in our institutions and contributed to the development of our nation.

Today, many are being forced to return to their original countries after living here for decades. Some, like Palestinians, Burmese, Yemenis and Afghanis, do not have safe homes to return to. Imagine the bitterness they must feel now and how it may poison the good memories, human relations and beautiful feelings they had for us and the Land of Islam, the Kingdom of humanity, and the refuge of the oppressed.

I hope those regulations are reviewed, updated and developed on the basis of observations, developments and consultation with the Shoura Council, businesses, and specialists in every related field. I trust this will be done in the spirit of teamwork and transparency that we have been accustomed to since the launch of Saudi Vision 2030.

Our Labor Minister has been chosen from the business community. He is well placed to understand the pros and cons of residency regulations. Hopefully, he will revise them to better benefit the Saudi economy, support job and income creation, and maintain good will among our guest workers.

Dr. Khaled M. Batarfi is a Saudi writer based in Jeddah. He can be reached at kbatarfi@gmail.com, Follow him at Twitter:@kbatarfi