Businesses want expat fee scrapped



JEDDAH: ARAB NEWS

Published — Friday 30 November 2012

Last update 1 December 2012 3:13 pm

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More businesses, including real estate companies and gas station owners, have called on the government to withdraw the SR 2,400 annual fee it has levied on every expatriate in excess of Saudis in private firms.
The Makkah Chamber of Commerce and Industry said the decision would not serve the purpose of employing more Saudis, but would increase prices of commodities by 15 percent and harm the national economy.
“This decision is harmful to the private sector and citizens,” said Maher Jamal, spokesman of Makkah chamber. “It will not serve the purpose of Saudization, but increase cover-up trade practices,” he pointed out.
Jamal said the increase in prices of local industrial products as a result of the decision would force traders to depend more on imports. “This will negatively affect national industries.”
Adnan Shafi, secretary-general of the chamber, said the decision would affect all business sectors in the Kingdom and contribute to the flight of capital from the country. “Inflation could reach uncontrollable levels.”
Shafi said the decision contradicted the government’s policies, as it increases prices of essential commodities and services including foodstuffs and dairy products.
The chamber urged the government to consult the Council of Saudi Chambers before taking such far-reaching decisions.
Meanwhile, a large number of businessmen gathered in front of the Labor Office in Khafji, demanding the decision’s withdrawal.
Hamad Al-Suwaier, chairman of the national real estate committee at the Council of Saudi Chambers, said the new levy would increase building construction costs in the Kingdom, raising the prices of houses.
He said the measure would have a negative impact on the implementation of new housing projects across the Kingdom. “The real estate companies will be forced to increase the prices of housing units to meet these additional expenses,” Al-Suwaier told Al-Jazirah Arabic daily.
“Finally, it is the consumer who will have to bear the cost inflated by the new expat fee,” he pointed out.
He said the decision would negatively affect small and medium enterprises (SMEs), service providers and contractors.
Abdullah Al-Maghlouth, a real estate operator, agreed with Al-Suwaier’s views, saying the ministry imposed the decision without considering its negative implications.
He said the decision would increase prices of building materials by 20 percent. “It will affect industry, agriculture, trade and construction, and in the end the victim will be Saudis.”
Al-Maghlouth said the ministry should have conducted detailed studies on the decision’s impact before executing it. “I am afraid many SMEs will be closed down as a result of this hasty decision,” he added.
However, he pointed out that the decision would encourage small entities to merge together to establish bigger firms to help them bear the additional expenditure.
Al-Maghlouth estimated the total losses to be incurred by Saudi companies as a result of the decision at more than SR 3.5 billion.
He said the contractors would demand more money to implement projects because of an increase in labor cost as well as construction material cost.
“When the contractors calculate the huge expenditure, they would think there is no point in continuing with these projects,” he said, and urged higher authorities to stop implementing the decision.
He said the contractors, like other businesses, have been paying many fees such as SR 500 for residency permit, SR 250 to the Human Resources Development Fund, SR 100 for work permit and SR 600 for social insurance for each employee, in addition to the recruitment fee.
Riyad Malik, chairman of the national committee for gas stations, said 95 percent of workers in the sector are non-Saudis. “It’s impossible to Saudize 50 percent of workers in petrol pumps,” he added. Gas station companies will suffer a loss of SR 48 million as a result of the new decision.

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