KSA agrees $3.1 bn boost for private sector

Companies with a staff of 50% or more Saudi employees eligible for reimbursement or waiver of expat fees

Saudi Arabia has approved a scheme to reimburse some of the companies that struggled to pay steadily increasing fees for expatriate work permits in 2017 and 2018 and waive the fee hikes for some that weren’t able to pay, the labor minister said.

The government has allocated SR11.5 billion ($3.1 billion) for reimbursements under the decision.

“This initiative will support private sector companies, help them overcome the obstacles and achieve their goals and encourage them to expand employment of Saudi citizens,” Labour Minister Ahmed bin Suleiman Al-Rajhi tweeted on Friday.

Only companies that had a higher or equal number of Saudi employees versus expats will be eligible for the reimbursement or waiver of fees, according to the decree. Companies with fewer Saudis than expats will benefit from the initiative only after they hire more locals, it said.

In its fiscal balance program announced in 2016 and implemented in 2017, Saudi Arabia said it would gradually increase the fees for hir- ing expatriates and obtaining visas for their dependents to encourage companies to hire more Saudi nationals.

It also changed the system of payment from an annual work permit renewal to a one-time lump sum payment at the beginning of the year accounting for each foreign worker employed by the company — a so-called collective invoice.

The annual fee hikes, rising gradually to 2020, were seen as crucial to Riyadh’s plan to create more jobs and cut the unemployment rate.

“The decision will have a huge positive impact on the Saudi economy and especially the manpowerintensive construction sector, which was the worst hit by the collective invoice,” Osama Al-Afaliq, head of the Saudi Contractors Association, told Reuters.