Saudi Arabian Green Card

January 12, 2014

By: Deunia Susan John

Saudi Arabia’s 9 million foreign workers constitute one third of the population and is the second largest source of external remittance in the world after the United States.  The expatriate workers in Saudi Arabia send approximately 20 billion US dollars a year to their home countries.  Out-flow of currency drains the vibrancy of local economy.  Curbing the out flow is indeed a herculean task.

Even though Saudi Arabia has almost one-fifth of the world’s proven oil reserves, is the largest producer and exporter of total petroleum liquids in the world, and maintains the world’s largest oil production capacity, it dreams to transform its economy independent of the oil revenue.

In order to realize the dream, the foreign remittance needs to be reduced through novel ideas.  The money earned by the foreign workers is not currently used to stimulate domestic economic activity.  Basically there is an opportunity cost when expatriate workers fail to spend in local economy.  The options Saudi Arabia is attempting at are Saudization (nationalization) of jobs in private sector through “Nitaqat” program, to replace the foreign employee with skilled Saudi workers which in turn is expected to bring down the number of foreign workers and the external remittance.  However, private firms face issues with finding skilled Saudi job seekers who are willing to work for low salaries and are as productive as the foreign worker being replaced.  The company’s competitiveness is lost when it is obliged to pay higher salary and benefits to the new hires with poor productivity.
A second option in consideration is to impose tax on the expatriate salary and/or to introduce laws to restrict the percentage of the salary to be transferred outside the kingdom.  Taxing foreign employees alone will be seen as discrimination and will invite criticism from all over the world.  Applying a ceiling on salary remittance outside the country may open back doors and lead to illegal transactions, and hence may not bring the expected outcome.
Yet another option being discussed is to bring down the foreign workers to one fifth of the total population by opening trade colleges to offer the required training to Saudi students in a large scale and stop issuing visas to foreign workers in the trades offered in these colleges.  However the transition may bring short term disruption and may jeopardize the competitiveness of the private business.
The unemployment in the country runs at 10% and the government has acted smart by introducing unemployment benefits (about 500 USD/month) to job-worthy citizens for a period of 12 months.  This is said to be causing problems because many educated housewives who do not wish to go for work registered to receive the unemployment benefits.
Voices are being heard from certain influential quarters that the government requires out of the box thinking or paradigm shifts in the way this issue being handled.  They suggest to consider introducing permanent resident status to qualified foreign workers similar to developed countries such as US, Canada, Australia, New Zealand etc. which will entitle them to buy real estate in the kingdom, bring their families and educate their children locally which in turn will bring a big bang boost to the local economy as the permanent residents will have to spend most of their money within the local economy.  Those who are against this idea argue that the foreigners will contaminate the Arabic linguistic purism through their “bad” Arabic accent.  The supporters counter this argument by asking to introduce language tests such as Test of Arabic as a Foreign Language (TOAFL) or International Arabic Language Testing System (IALTS).

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