'Red-zone' firms face massive crackdown

August 21, 2014

Jeddah, Aug 21: Saudi authorities are getting ready to launch a massive campaign next month against more than 17,000 firms that are in the "red zone" of the Nitaqat nationalization scheme for not employing a single Saudi, Labor Ministry sources said.

Saudi authorities“There are 17,314 red-zone firms in different parts of the Kingdom that employ 241,530 foreign workers,” one source said, adding that labor officials would allow these workers to transfer their services to companies in the green and platinum zones for having a more than sufficient Saudi-to-expat ratio.

“Labor officials will ask the owners of these firms to show evidence that suggests that they did not allow their workers to look for jobs in the market because workers would not have valid resident permits,” the source said.

Ibrahim Badawood, managing director of ALJ Community Services, emphasized the importance of the ongoing joint campaign waged by Interior and Labor Ministry officials, saying it was primarily aimed at cleansing the country’s labor market.

“The campaign is not at all targeted against foreign workers,” Badawood told Arab News.

He said companies that improve their Saudi-to-expat ratio would be given more visas to bring experienced and skilled foreign workers.

He, however, stressed that companies in red and yellow categories must employ more Saudi nationals if they want to stay in business.

“This is the only solution,” he said.

Badawood said he believed that Interior and Labor ministries would continue their campaign against residency and labor rule violators.

“Some people think the campaign will die down after sometime, but I believe that the campaign will continue until illegals are driven out,” he added.

He said the campaign would not have any negative impact on business in the long run.

“Of course, it will affect business temporarily, but stronger companies employing a greater number of Saudis will eventually contribute to strengthening the market.”

Capt. Abdul Aziz Al-Harbi, Eastern Province police spokesman, said nearly 82,000 illegal workers have been arrested in the region during this Hijrah year.

“More than 700 illegal expats have been arrested over the past 24 hours across the region,” he pointed out.

He said Al-Ahsa police carried out an intense security campaign late Monday night, adding that the campaign continued until Tuesday morning.

“Police and labor officials targeted foreign workers in the Al-Maraz, Al-Kout and Al-Mazrouiyah districts, in addition to majors streets in the city center, and arrested 185 violators,” Al-Harbi said.

He said police arrested 5,523 violators in the region during the past three weeks, adding that they have been transferred to special detention centers. About 5,625 violators have been arrested in the industrial city of Jubail, he said.

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News Network
May 19,2020

Abu Dhabi: The United Arab Emirates today reported 873 new coronavirus cases, pushing the total number of COVID-19 infections in the country to 25,063.

Three more people have died from the virus, bringing the total death toll to 227, the ministry revealed, adding that a total of 1,214 COVID-19 patients have made full recovery, which takes the overall number of patients recovered to 10,791.

The latest coronavirus patients, all of whom are in a stable condition and receiving the necessary care, were identified after conducting more than 38,000 additional COVID-19 tests among UAE citizens and residents over the past few days, the ministry said.

It expressed its sincere condolences to the families of the deceased and wished a speedy recovery to all patients, calling on the public to cooperate with health authorities and comply with all precautionary measures, particularly social distancing protocols, to ensure the safety and protection of the public.

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News Network
April 12,2020

Apr 12: Parents in Abu Dhabi affected by the Covid-19 situation can seek help from the authorities in paying off their children's school fees, it was announced on Sunday.

The Abu Dhabi Media Office took to Twitter to announce the reprieve. The Authority for Social Contribution - Ma'an and Abu Dhabi Department of Education and Knowledge (Adek) "will support parents with children attending private schools in #AbuDhabi who are affected by the current economic challenges, by paying school fees or providing devices for distance learning".

The move is part of the 'Together We Are Good' programme which aims to support residents impacted by the Covid-19 coronavirus crisis in the country.

"Parents can call the toll-free helpline on 800-3088 or register their request at http://togetherwearegood.ae. The closing date for fee assistance applications is 23rd April 2020," the media office tweeted.

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News Network
May 11,2020

May 11: Saudi Arabia will triple its value-added tax rate and suspend a cost of living allowance for state workers, it said on Monday, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.

Historic oil output cuts agreed by Riyadh and other major producers have given only limited support to prices after they sank on oversupply caused by a war for petroleum market share between the kingdom and its fellow oil titan Russia.

Saudi Arabia, the world's largest oil exporter, is also being hit hard by measures to fight the new coronavirus, which are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

"The cost of living allowance will be suspended as of June 1, and the value added tax will be increased to 15% from 5% as of July 1," Finance Minister Mohammed al-Jadaan said in a statement reported by the state news agency. "These measures are painful but necessary to maintain financial and economic stability over the medium to long term...and to overcome the unprecedented coronavirus crisis with the least damage possible."

The austerity measures come after the kingdom posted a $9 billion budget deficit in the first quarter.

The minister said non-oil revenues were affected by the suspension and decline in economic activity, while spending had risen due to unplanned strains on the healthcare sector and the initiatives taken to support the economy.

"All these challenges have cut state revenues, pressured public finances to a level that is hard to deal with going forward without affecting the overall economy in the medium to long term, which requires more spending cuts and measures to support non-oil revenues stability," he added.

The government has cancelled and put on hold some operating and capital expenditures for some government agencies, and cut allocations for some reform initiatives and projects worth a total 100 billion riyals ($26.6 billion), the statement said.

Central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while oil revenues in the first three months of the year fell 24% from a year earlier to $34 billion, pulling total revenues down 22%.

"The reforms are positive from a fiscal side as greater adjustment is essential. However, the tripling of VAT is unlikely to help that much in 2020 revenue wise with the expected fall in consumption," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

She said she kept unchanged her deficit forecast of 16.3% of GDP for this year, which already factors in a greater than previously announced spending cut.

About 1.5 million Saudis are employed in the government sector, according to official figures released in December.

In 2018, Saudi Arabia's King Salman ordered a monthly payment of 1,000 riyals ($267) to every state employee to compensate them for the rising living costs after the government hiked domestic gas prices and introduced value-added tax.

DIFFICULT TIMES

A committee has been formed to study all financial benefits paid to public sector employees and contractors, and will submit recommendations within 30 days, the statement said.

In late 2015, when oil prices fell from record highs, the kingdom slashed lavish bonuses, overtime payments and other benefits once considered routine perks in the public sector.

In a country without elections and with political legitimacy resting partly on distribution of oil revenue, the ability of citizens to adapt to such reforms is crucial for stability.

"Tripling the VAT will test the limits of the balance between revenues and consumption as the economy dives into a deep recession. The move will impact consumption and could also lower the expected revenues," said John Sfakianakis, a Gulf expert at the University of Cambridge.

"These are pro-austerity and pro-revenue moves rather than pro-growth ones," he said.

Hasnain Malik, head of equity strategy at Tellimer, said the VAT rise could bring about $24-$26.5 billion in additional non-oil fiscal revenue. The rise would hit consumer spending further but was a needed step towards fiscal sustainability, he said.

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