New residency permit for skilled expats to reduce Saudi shadow economy: expert
The new “Privileged Iqama” residency permit for skilled expatriates will help reduce unregulated financial activities in Saudi Arabia and attract new foreign investors from outside the Kingdom, according to Mazen al-Sudairi, the head of research at Al-Rajhi Capital.
“The idea behind this new residency is to reduce the shadow economy in Saudi Arabia,” al-Sudairi told Al Arabiya English, referring to previously unregulated financial activities between Saudi sponsors and expat business owners.
“I met investors in Europe who did not want to come to Saudi Arabia because they did not like the old sponsorship system,” he said.
The new residency permit will be offered to highly skilled expatriates who will benefit from added advantages including the ability to recruit workers, own property and transport, and enter and exit the Kingdom without a sponsor.
He said the new special residency permit will help encourage foreign investors to willingly partner with Saudi counterparts under a typical proctored business environment.
“Plenty of reforms are currently happening in the GCC. Saudi Arabia approved this license that gives foreigners the capabilities to invest,” al-Sudairi said.
The rights to ownership for foreigners seeking to invest in Saudi Arabia in the past “were not clear because you always needed a Saudi partner,” al-Sudairi said, adding that “through this new residential program, foreign and local investors will be helped so that they work together and discover new opportunities.”
According to al-Sudairi, the new residency permit will target eight to nine percent of Saudi Arabia’s current expatriate workforce with high skills and financial solvency. The financial criteria required to apply for the special residency is still unclear but the financial analyst provided an estimated minimum amount of $200,000 for some countries.
Expatriates who obtain the new residency permit will be “almost be like any Saudi” as they will now have access to public services such as schools and hospitals.
The special residency permit is to be renewed annually at the cost of 14,000 Saudi riyals and will now lift all previous restriction which limited expats from economic growth, according to al-Sudairi.