RIYADH: SHARIF M. TAHA
Published — Wednesday 6 November 2013
Last update 10 November 2013 3:20 am
Outbound remittances of expatriates are poised to fall by more than 20 percent in the wake of crackdowns on illegal workers being jointly carried out by the Ministries of Labor and Interior, bankers and economists told local media.
The remittances will come down to SR95 billion in the next few years compared to more than SR120 billion in past years, banker Fadl Abu Ainain said.
He said the downtrend in the volume of money transfer is linked to two conditions.
First, the Ministry of Labor does not make new (foreign) recruits to compensate the deported foreign work force, and second, there should be strict control on enterprises involved in coverup businesses in different parts of the Kingdom, which is part of the “hidden” economy.
He said nearly 35 percent of small and medium enterprises (SMEs) were closed in the aftermath of the correction campaign, as most coverup business cases fall within this sector. Fortunately, this will allow national cadres to work in the closed businesses and keep funds in the country, he said.
The banker called for stricter measures and penalties against illegals without any exceptions adding that price hikes and increased labor wages will be for a limited period.
Abdulrahman Al-Qahtani, an investor in SME projects, said a limited segment of this sector stopped working weeks ago, but reopened with new workers under owners’ sponsorships.
He ruled out any price hikes due to the stoppage of some of those businesses as their number is still surpassing demand in certain services such as laundries, barbershops, eateries and bakeries.
The expat remittances generated from such businesses were high because most of them were run by coverup laborers who made no less than SR30,000 per month, he said.
Former Shoura Council member and head of Economic Studies Center, Abdulaziz Al-Daghestani, said the correction campaigns would have positive results in the long-term though there was some confusion in certain business.
He stressed the importance of strict abidance by laws during the post-correction period.