Expert warns Nitaqat may trigger flight of expat funds

By IBRAHIM NAFFEE | ARAB NEWS

JEDDAH: A financial expert has warned of the possibility of foreign workers withdrawing their funds from Saudi banks over concerns about future job prospects in the Kingdom under the Nitaqat system.

Fearing their inability to continue working in the Kingdom, many of the estimated 8 million foreign workers may seek to transfer whatever local savings they have to their home countries. Some estimates put the amount of deposits in Saudi banks by foreign workers to be as much as SR15 billion.

Al-Riyadh newspaper reported recently that the volume of investments made by foreigners in the Kingdom’s retail sector alone amounted to SR140 billion. Nearly 80 percent of this vital sector is dominated by expatriates.

Yasin Al-Jafari, a prominent financial expert, told Arab News that most foreign workers are ignorant of the goals of the new Nitaqat program as well as the required percentage of Saudization in each sector. Under Nitaqat, companies are classified by their compliance to quotas of Saudi employees, and can have their ability to recruit or retain foreign workers curtailed for noncompliance.

“Most foreigners think that the required percentage of Saudization in various sectors is a potential threat to them. A majority of expatriates who work with the companies that come under the red category (of noncompliance) are scared. Believing that it is impossible to get their iqamas renewed, they are now transferring their banking investments and savings,” he said.

Indeed, under Nitaqat rules, companies in the red category — meaning they do not have enough Saudi employees — will not be able to renew work visas for their foreign employees following a six-month grace period.

read more http://arabnews.com/saudiarabia/article466761.ece

Categories: Asia, Economics, Saudi Arabia

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