Legal expats involved in cover-up operations remitted SR 635.7 billion to their countries between 1992 and 2002, causing a 10-percent dent in the Kingdom’s GDP, an academician said on Sunday.
In his work paper presented at the first session of the third Jeddah Commercial Forum, Prof. Abdul Aziz Diyab noted that recruitment of expatriate workers also denies employment opportunities of the local population, particularly among women.
“The number of illegal workers during the decade between 2000 and 2009 grew at an average annual rate of 1.2 million, which accounted for 27 percent of documented workers,” he said.
Diyab is a professor of the Prince Mishaal bin Majed Chair for Cover-Up Businesses and a faculty member of the Department of Economics at the King Abdulaziz University.
He said the earnings of illegal workers was estimated at SR 4 billion in 2009.
He put the number of expatriate workers at 9 million, accounting for roughly 50 percent of the Saudi population a few years ago.
Diyab said 30 percent of documented expatriate workers have been involved in cover-up businesses. He also noted that expatriate workers monopolized the wholesale and retail businesses of clothes and textiles by 97.5 percent.
Diyab stressed the need to study the cover-up business as a component of a hidden economy and that it has been expanding as the country’s economy continues to grow.
Warning about the dangers posed by the practice, he said it nullified the value of any study or data on the country’s economy, has led to a rise in market prices, increased the level of unemployment and caused a rise in rental costs, besides flooding local markets with imitation and cheap goods.
His suggestions to counter the issue include increasing the level of economic growth, launching consumer cooperatives, simplifying bureaucratic hurdles in the commercial sector, regulating and checking the growth of unplanned neighborhoods where many illegal business activities have flourished.
Prince Mishaal bin Majed launched the forum on behalf of Makkah Gov. Prince Khaled Al-Faisal.
The three-day forum is organized by the JCCI in association with the Ministry of Commerce and Industry.
The Rector of the College of Economy and Management, Ayman Fadel, defined the cover-up operations in light of Saudi commercial regulations, which banned any non-Saudi, with the exception of GCC citizens, undertaking a business investment or operation not permitted for him.
JCCI member Abdullah Mahfouz recommended a grace period for the operators of illegal businesses to rectify their illegal pursuits.
Expats in cover-up businesses caused 10% dent in Saudi GDP
