What revenue will expat fees actually generate?

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Okaz recently published a financial analysis, prepared by Muhammad Al-Sobhi from Jeddah. The report said that the program of fees on expats and their dependents will bring in SR 133 billion in revenue in three years. This is part of the new programs announced by Saudi Arabia to diversify sources of income and increase job opportunities for Saudi workers.

According to the program, a monthly fee of SR100 is being levied on each expat dependent from July 2017 and this is projected to generate SR1 billion for the government by the end of this year. At the beginning of 2018, fees will be applied to expatriate workers based on their number in private sector firms. If the total number of expatriates in a firm is less than that of the Saudi workforce, then the employer has to pay SR300 per month to the government for each expatriate worker. If the number of expatriates is more than that of Saudis, the firm has to pay SR400 per month to the government for each worker. Moreover, the dependents fee will be increased to SR200 per month from July 2018. All these fees are projected to generate a total of SR24 billion to the state exchequer during the year 2018. The expatriate fee will be increased to SR500 and SR600 respectively while the dependents fee will be tripled to SR300 in 2019, and the total collection of revenues from these increased fees will amounted to SR44 billion.

In the year 2020, the government will impose a fee of SR700 from employers for each expatriate worker if the total number of expatriates in the firm is less than that of the Saudi workforce while the fee for each expatriate worker will be SR800 if the total number of expatriates in the firm is more than that of Saudis. The projected revenue from these increased fees will be around SR65 billion.

The Okaz writer included in his report a quote from the prominent economic expert Nasser Al-Qafari. According to Al-Qafari, the positive impact of the fee levied on expatriate workers and their dependents will not be confined to the general budget or the gross domestic product (GDP) but it will have ramifications on a number of sectors that have witnessed an exorbitant hike in prices such as real estate, cars and consumer products. He noted that there has been a general drop in prices in these vital sectors during the year 2017.

It is unfortunate that neither the writer who prepared the analysis nor the economist who gave his opinion mentioned the possible negative effects of expatriate labor fees and dependents fees.

The projections of collecting revenue amounting to SR133 billion over the coming three years are unrealistic, illogical and impossible. This is because a large number of expatriate workers have already left the Kingdom or are going to leave soon. Many of them sent their dependents home after they found that they were unable to pay the fees imposed on them, especially the dependents fee. They feel that the imposition of the fees on their dependents is unreasonable and unfair and that such fees do not exist in other countries.

Some expats have paid the fees for the first year in the hope that these fees, which they cannot afford, will be abolished in the future. Many of these expatriates, who have large numbers of sons and daughters as their dependents, earn low salaries. Even before the imposition of the dependents fee, they were struggling to make ends meet as they have to spend money on the basic necessities of life, such as food, house rent and the tuition fee of their children, in addition to the fees for the renewal of iqamas (residency permits) and the issuance of exit and re-entry visas. In such a scenario, they cannot afford to pay monthly dependents fee that will reach SR400 for each family member from the second half of 2019.

Finally, we should not forget the benefits of expatriate workers who have contributed immensely to the development and the nation-building process of our country. We need them in many sectors, such as construction, maintenance, health care and others where there are still insufficient numbers of Saudis available.

In the present scenario, there would be no option for expatriates, especially low-income employees, other than sending their family home. Therefore, it will be impossible to collect the revenues predicted by the newspaper writer and the economist referred to at the beginning of this article.

I would like to end with a quote from Sheikh Zayed Bin Sultan Al-Nahyan, founder of the United Arab Emirates. When he was told that around 85 percent of the UAE population was made up of expatriates, Sheikh Zayed said: “The food is the food of God; the wealth is the wealth of God; the bounty is the bounty of God; the creation is the creation of God; the earth is the earth of God. Whoever works and trusts in God, He will bestow him in abundance.”

— Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast Asian affairs. He can be reached at algham@hotmail.com


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