What we gain and lose from Saudi Arabia’s expat dependents fees

Dr. Ali Al-Ghamdi

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There has been confusion in the Saudi employment market as well as among expatriates following the recent imposition of a monthly fee on the dependents of expatriates working in the Kingdom. This is because of the fee has been placed on each member of an expatriate’s family, including wife and children, and because most expatriates cannot pay these fees, especially since they will double over the coming years, reaching the equivalent of the half of an expatriate’s salary or perhaps all of it.

Many expatriates have started thinking about what they should do to solve this dilemma, which they are facing for the first time in the Kingdom. This issue has overshadowed all other topics such as the spiraling house rent, the increase in the education fees of their children and other concerns.

Some of them have already taken the bitter decision to leave Saudi Arabia and return to their homeland. Some of these people have spent long years in the Kingdom working hard and sincerely for the development of the nation.

At the same time, others have decided to send their wife and children home and remain here alone. It seems that this is the easier solution but in fact the psychological, social, security and economic effects may be disastrous for the expat as well as for his family and children.

Some columnists have written articles in the Arabic daily newspapers about the positive and negative aspects of dependents fees. Many of them have concluded that they will have a negative impact on the Saudi economy.

Many expatriates have started thinking about what they should do to solve this dilemma, which they are facing for the first time in the Kingdom

Dr. Ali Al-Ghamdi

For example, Ghassan Badakok, a prominent economic writer, wrote an article in Okaz entitled “Expatriate fees: Pros and cons.” He pointed out that the fees are an internationally accepted method adopted by many countries to address the imbalance in their markets and demographic structures. However, he did not mention the name of any country, which imposes fees on dependents. As far as I know, there are no such fees imposed in any other country.

Pros and cons
The columnist also spelled out the merits and demerits of the imposition of dependents fees. He sums up the benefits as follows:
1. A source of income to offset the budget deficit to a certain extent.
2. Saving a portion of the cost of subsidies that benefit expatriates.
3. Replacing departing expatriates with Saudis in the employment market.
4. Rectifying the demographic imbalance as expatriates make up 40 percent of the Saudi population.
5. Reducing cover up (tasattur) business and enhancing security as a result of a reduction in crime.
6. Redirecting support to citizens so as to reduce the demand for public utilities, such as electricity, water and fuel.

The writer also cites the demerits of dependents fees, namely:
1. The revenue from dependents fees will not have added value as it is not an attractive investment.
2. The continued slowdown in the economy will negatively affect the private sector.
3. The decline in the purchasing power of low-income people after increasing costs will lead to a fall in their standard of living.
4. The jobs that will be made available for Saudis are limited because the majority of expatriates are employed in the technical, technological and vocational fields.
5. Some citizens will lose their jobs because of the closure of some firms that cannot afford the dependents fee.
6. The majority of our companies and establishments will face a decline in their profits due to the loss of their income earned from the spending of expatriates.

It is obvious that the demerits of the imposition of dependents fees outweigh the benefits. Similarly, many economists, who have written about the topic, have pointed out that this fee will not bring about the revenues as projected by some experts. This is because a large number of expatriates will leave the Kingdom because they cannot afford the fee.

Economic loss

Those who decide to stay will lead a bachelor’s life. The loss to the economy will be doubled because these expatriates will continue transferring most of their earnings to their families back home and subsequently, the volume of foreign remittances will also be doubled.

On the other hand, the presence of expatriates along with their families would make them more stable, more productive and more satisfied. They would spend the lion’s share of their salaries and other earnings within the Kingdom in order to meet the family’s expenses in terms of food, clothing, education of children, medical treatment, entertainment, and payment of fees for exit and reentry visas and renewal of residency permits (iqamas).

There is also another big loss that writers have not mentioned. As a consequence of the imposition of the fee, the country will incur another irreparable loss in terms of human relations, and the feelings of gratitude on the part of expatriates toward the host country. We must insure that expatriates take away sweet memories of our country and our people. We should not forget the remarkable role played by expatriates in the development that our country has achieved.

Of course, the imposition of dependents fees will force expatriates to leave the country because of their inability to pay. Eventually, this will contribute to the creation of feelings of resentment and bitterness.

Therefore, I earnestly appeal to Crown Prince Muhammad Bin Salman, deputy premier and minister of defense, to reconsider and revoke dependents fees so that we do not lose the love and affection of millions of expatriates who have contributed immensely in the nation-building process.

Let them be ambassadors of our country when they return to their homeland.

This article was first published in the Saudi Gazette on July 27, 2017.

Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast Asian affairs. He can be reached at algham@hotmail.com or via Twitter @DrAliAlghamdi

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