Construction projects hit by Nitaqat

Construction projects hit by Nitaqat
Updated 12 May 2013

Construction projects hit by Nitaqat

Construction projects hit by Nitaqat

Businessmen here say that the Nitaqat program is raising construction costs and causing a hike in wages of up to 15 percent. In addition, many projects have had to stop operations.
With the uncertainty over the legal status of foreign construction workers, many companies have also not submitted bids for new work. This has caused further problems for the industry, particularly for small companies, say developers.
Many company owners are afraid that their workers may be arrested and deported. Abdullah Alwan, CEO of SMT Properties, said: "The problem lies with the sudden manner in which the decision was introduced, not with the decision itself."
He urged the government to provide incentives for the construction industry because of the difficulty of finding Saudi construction workers. He said several projects have ground to a halt. On a positive note, he said the situation was likely to return to normal in "two to three years," and that many runaway workers had returned to their sponsors.
Bander Al-Twaim, a private company owner, said several projects had stopped completely because property developers had been employing workers not under their sponsorship. This has caused huge losses and a rise in costs for developers, particularly those who were close to finishing their projects.
He said there has been a 15 percent rise in wages. "It is very difficult to find a company offering construction work these days," he added.
Al-Twaim said the government is serious about reforming the country's labor market because no industry has been spared from having to comply with the Nitaqat program.
Abdulaziz Al-Shaiyqi, a contractor, said this was a "temporary crisis" and that the sector would bounce back.