Boosting Saudi Arabia’s Economy with Foreign Workers

In considering other ways to diversify their oil-based economy, Saudi Arabia’s government is proposing a new economic reform program based on attracting skilled foreign workers to the country.

Saudi Arabia recently passed a new law in May of 2019 offering two different types of residencies to foreign workers. The first option is a permanent residency, while the second is a program based on annual renewals. Given how recently the law was passed, interested applicants are still waiting for the government to release more information about the details and conditions for these new options.

The new residency laws were created to attract investors and entrepreneurs to the country, in hopes of increasing growth in the private sector. Up until this point, foreign workers in Saudi Arabia had to be sponsored by an employer from Saudi Arabia and were forced to work under the very strict guidelines of the previous laws. This new reform will provide migrant workers with more freedom of movement with their new residency status in Saudi Arabia.

Based on recent changes to migration and residency reform in both Qatar and the United Arab Emirates, it appears Saudi Arabia has jumped on the bandwagon in order to secure new employees and residents to improve the country’s economic profile.

Preliminary findings show that the non-oil sector of Saudi Arabia’s economy is projected to grow by almost 3 per cent in 2019. The impending growth of the private sector is expected to have some effect on the actual realized rates of growth this year.

However, this new residency program does come at a cost. Early estimates have detailed that these programs will cost an applicant upwards of USD $210,000 for a permanent residency or over USD $26,500 for an annual renewable residency program. These rates have been proposed as a way to counteract the necessity for a migrant worker to have an employment sponsor and will also provide the individual with an increase in personal freedoms, including the ability to purchase real estate in Saudi Arabia, travel in and out of the country without additional visas, hire workers for their entrepreneurial ventures and also to provide their extended families and relatives with visitor visas.

These higher rates are also intended to serve as a deterrent/gate against too high a rate of immigration. Saudi Arabia has also created the Special Privilege Iqama Center as an essential facility to receive and make judgments on the applications for residency. The creation of this center is expected to provide assistance to the individuals currently working in immigration to ensure that all applications are handled properly and thoroughly.

With the detailed policies not being released for at least 3 more months, it will be interesting to see if Saudi Arabia is able to increase their private sector growth for this year by 3 per cent as had originally been projected.

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