By IBRAHIM NAFFEE ARAB NEWS
Published: Jul 4, 2011 23:42 Updated: Jul 5, 2011 01:04
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.
Al-Jafri noted that a large number of foreigners with investments in business and commercial sectors have started withdrawing their investments. Their investments in the capital market alone account for between SR4 billion and SR5 billion.
Farouk Al-Khateeb, professor of economics at Jeddah’s King Abdulaziz University, said that transfer of investments by foreigners would not pose any threat to the Kingdom’s economy thanks to the vibrant policies being pursued by the government. He sees no possibility of foreigners withdrawing a bulk of their banking investments.
“There could be a withdrawal of about 15 percent of the volume of investments amounting to SR10 billion to SR15 billion. Also, there is no possibility of any foreigner selling or transferring his investments in mutual funds due to the steep fall in the value of their stocks.” he said.
According to Al-Khateeb, foreigners are now passing through a phase under which they are closely watching the situation and the state of affairs with regard to the implementation of the Nitaqat system. “For them, it is too early to decide on taking their investments out of the Kingdom,” he pointed out.
Mohaib Ali Akbar, an Indian national, said he was not sure whether he could continue for more years in the Kingdom after the implementation of the Nitaqat system.
“I am now seriously thinking of withdrawing my savings from Saudi banks and buying a house or real estate in my native place,” he said.
Mohaib, who works as administrative manager of a foreign-owned company, said that there have been unconfirmed reports and rumors about the fallout of the Nitaqat program. “But one thing is for sure: private companies would be forced to increase the percentage of Saudization and reduce the number of foreigners as the only way to come out of the red category. Hence, many of our colleagues are seriously thinking of sending their families home in preparation of facing the worst scenario,” he said.
Farouk Hamdi, who works with a contracting company in Jeddah, voiced his fear over the risk of his iqama not being renewed in view of the fact that his company is in the red category. “This situation is forcing me to withdraw the money that I have invested in the local bank over 13 years and transfer the funds to my country, Egypt,” he said.
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