RIYADH: A royal decree issued Thursday that extends government initiatives designed to support businesses, employees and investors will help the private sector cope with the effects of the COVID-19 crisis and stimulate the economy, according to experts.
The extension applies to a number of measures introduced early in the pandemic that focus on supporting Saudi workers in the private sector, including the SANAD unemployment insurance scheme, a freeze on penalties and fines, and postponing the collection of some fees.
Thamer Al-Saeed, chief investment officer at Mad’a Investment Co., said the second quarter of this year is likely to be the worst quarter most businesses have experienced. The financial liabilities arising from the effects of the coronavirus crisis have put great pressure on finances, he said, but the decree will allow companies to further delay the settlement of debts until life begins to return to normal.
“The government’s decisions will help private sector enterprises stimulate the business cycle, which will mitigate the financial impact on companies,” said Al-Saeed. “For example, (increasing the time for) settlement of liabilities worth SR100,000 ($27,000) from three months to six months will reduce the monthly burden on the company from SR33,000 to SR16,000. Also, postponing customs fees will help companies save this money.”
Khalid Al-Rammah, the chairman of Quality Knowledge Group Holding, said the royal decree is timely and balanced, given that the private sector is considered a key partner for the public sector.
“These orders will (help) the private sector design its plans in line with the global challenges, because they will remove burdens and pressure of costs and expenses from the private sector, allowing it to deal with other sectors based on actual need and demand,” he said.
The royal orders also make it easier for many companies in the private sector to change their business activities in response to the challenges posed by the pandemic, said Al-Rammah.
He urged companies that want to amend their line of business to seize this opportunity.
Labor consultant Nedhal Radhwan said the pandemic has disrupted global economic and business activity, resulting in economic stagnation around the world.
“Many companies in the Kingdom have lost millions of riyals and many people have lost their jobs,” he said. “The government issued these orders to mitigate the impact of the COVID-19 pandemic, allowing businesses to (continue) their activities, and offering them exemptions to reduce their losses and the unemployment rate.”
The royal decree also states that new Saudi employees will be counted immediately in the Nitaqat system, a program set up to increase the numbers of Saudi nationals working in the private sector. It places private firms into six categories, ranging from platinum to red, depending on the percentage of Saudi employees they are required to hire. Previously, the process took longer, resulting in delays to classification.
In addition, the order removed the threat to suspend the activities of businesses that fail to comply with wages laws. It supports Saudi employees, suspends fines and penalties, and delays the collection of customs fees to help the private sector contribute to the stimulation of the economy and put it back on the path to growth and development.
Other initiatives include postponing the payment of value-added tax, accelerating VAT reimbursement, and partial exemption from expired residency/iqama fees for an additional month, which might be renewed for an additional month if required.