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There is a ‘Chinatown’ in Riyadh, but it doesn’t pay taxes

In Riyadh, Jeddah and Bahrain, there’s a Chinatown, or rather a Lahore-town in Jeddah or a Kerala-town in Bahrain

Jamal Khashoggi

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All countries have severe problems with “immigration” and politicians are divided between supporters and opponents. There are different points of view prevalent on the subject of immigration. Intellectuals think it contributes to cultural diversity. Human rights activists look into immigrants’ rights. Historians see it as part and parcel of humanitarian development. Economists are divided as some see it has having negative repercussions on the local job market, reducing employment opportunities for citizens. Meanwhile, however, some economists think immigration can jumpstart a sluggish economy. While a right-wing politician sees it as a threat to the state identity.

We have a similar situation in the Gulf and Saudi Arabia. You will find that all the aforementioned ideas are prevalent, but with major differences. We do not view “foreigners” as immigrants but as expats and there is a huge difference between the two. Therefore, there is no immigration ministry or department but an administration for “passports and residencies.” This, however, does not simplify the problem, rather, it complicates it.

Explained in a New York minute

The case of Chinatown in New York highlights the difference. Chinatown is a world apart from anywhere else in the city - this is why they called it Chinatown. At the entrance, there stands a gate that symbolizes China. The faces, as well as the food, language and music, are Chinese. The names of shops are Chinese too but Its residents pay taxes to the city of New York and elect its mayor. They get rich and buy houses, build factories, expand their businesses, send their children to local schools and then to prominent American universities. They are Americans like the rest of New York’s residents. Therefore, their economy serves the city’s gross national product (GNP) and eventually the country’s GNP.

It’s unfair to demand that expats stop transferring remittances and start using their profit in the national economy when they know that our systems do not grant them the right to attain nationality

Jamal Kashoggi

In Riyadh, Jeddah and Bahrain, there’s a Chinatown, or rather a Lahore-town in Jeddah or a Kerala-town in Bahrain. Similar to New York’s Chinatown, the faces are Indian and so is the food, the clothing, the music, the language and the names of the shops. They are all in the Urdu language or the Malayalam language - which is the language of people from Kerala. But the people in these places do not elect the city Mayor. And don’t pay taxes, just like locals. but unlike them m they don’t send their children to local universities and don’t buy homes there. Most important of all; they transfer their financial profit to their countries of origin. Therefore, they do not contribute to the Saudi or Bahraini GNP. This is the whole point. Here, I need an economic expert to answer this question: Is the economy resulting from their commercial activity - from restaurants, clinics, factories and schools - beneficial to the local economy? I only two types of Saudis or Bahrainis find benefit. The Kafeel , guarantors overlooking an activity and receiving “a commission” or “part of the profit if they are partners” and owner of the property where the foreigner’s house or shop is. After decades of “free” labor in our countries, those expats succeeded in building a network of services for themselves. There are suppliers and distributors in their sub-economy. They have built a whole functioning economy that lives side by side with the national economy, with little overlap between the two.

Even if they somehow benefit the national economy, their enjoyment and the devolution of massive governmental subsidies of fuel, consumer goods and even raw material kills that benefit. Perhaps the presence of this economy is costly for the state.
The situation around the Gulf

Some Gulf countries and cities have arranged their economies as per the guidelines of such sub-economies. For example, Dubai has allowed foreigners to own property and provided a proper atmosphere for foreigners to recycle the money made within its economy. But in Saudi Arabia, and we are a big country with a big population, the country has certain characteristics which have prevented it from espousing a liberating economy; ownership and residency are still restricted. We must therefore develop mechanisms that harmonize with Saudi Arabia’s situation and with its big population.

It’s unfair to demand expats to stop transferring remittances and to start using their profit in the national economy when they know that our systems do not grant them the right to attain nationality, even if they stay in the country for two or three decades. Those who did get the nationality, very few do, were an exception as they attained it via a donation or as an honorary bestowal or due to certain vested interests. Therefore, you cannot blame expats if they transfer their money to their home countries when we do not even allow them to enroll their children in our schools and when we don’t allow them to own a property except after a long process. I won’t say that the solution is to naturalize them. This is a political decision that’s almost impossible to come by. But, if we don’t solve the problem today, then we will confront it in the future after a decade or two. And this issue will then be the biggest challenge for our children as it doesn’t make sense that a foreigner grows up among us, gives birth to one generation after the other, but remains a foreigner. Our Arab world has changed in one year. So what could happen during 50 years? A lot, of course!

The next step?

So, what is the solution? The solution begins with admitting that there’s a defect in the economic structure of the kingdom. If there’s no consensus on that, and if the Saudi person benefiting from this crooked situation continues to defend this economy, then we must resort to economists for solutions. The best thing to do is to develop a complete plan to resolve the situation. Eradicating or naturalizing this economy requires years after it was neglected for decades, during which it grew. Some will suggest imposing taxes on all profit, transactions and imposing fees on certain activities within the economy. But this economy is Saudi and the Saudis don’t pay taxes. It’s an economy that is outside the system of foreign investment, which the general authority of investment organized during the years when its work flourished.

Some may suggest providing solutions for the foreigners from whom Saudis hide their activity. Solutions include facilitating the recycling of profit within the national economy and granting the right of ownership and education at national universities in exchange of fees. But the question is, should they have an open- ended residency in the kingdom, where they stay for generations without the possibility of naturalization? Here, we return to the political and social decision which rejects the idea of naturalization.

The solution I see lies in returning to the “natural economy.” As long as we don’t want to pave the way towards naturalization, what’s natural here is the economy which is only based on the country’s citizens. The solution here is to expand the policy implemented by the Saudi labor ministry in naturalizing jobs so cities shrink, factories which require massive foreign laborers are closed and services’ prices increase and thus tempt citizens to work in them and to make profit from them. It’s a simple solution. Let’s do what the Irish did when they got rich. They did not bring in a million foreigners to serve them but served themselves. This is the solution even if this leads to increasing the cost of services and goods. What matters is that we live alone happily as Saudis who know one another. It’s an economic and not a racial solution.

This article was first published in al-Hayat on Dec. 28, 2013.

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Jamal Khashoggi is a Saudi journalist, columnist, author, and general manager of the upcoming Al Arab News Channel. He previously served as a media aide to Prince Turki al Faisal while he was Saudi Arabia's ambassador to the United States. Khashoggi has written for various daily and weekly Arab newspapers, including Asharq al-Awsat, al-Majalla and al-Hayat, and was editor-in-chief of the Saudi-based al-Watan. He was a foreign correspondent in Afghanistan, Algeria, Kuwait, Sudan, and other Middle Eastern countries. He is also a political commentator for Saudi-based and international news channels.

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.