Saudi to Cut Reliance on Foreign Workers, Including OFWs: Media

January 5, 2016 5:24 PM

MANILA – Saudi Arabia, where more than 1 million Filipinos live and work, plans to reduce its reliance on migrant workers by recruiting only highly technical workers and monitoring investments closely, Arab News said in its website.

The announcement, made by Finance Minister Ibrahim Al-Assaf, was made amid the continuing drop in the prices of oil, the main source of income for Saudi, due to overproduction.

“The Kingdom will now be more selective in hiring foreign workers,” said Al-Assaf, giving highlights of the annual budget announced by Custodian of the Two Holy Mosques King Salman in Riyadh on December 28.

Al-Assaf said the plan is “quite logical” as the Kingdom has made substantial progress in training and absorbing qualified Saudi professionals and workers in different sectors.

The Middle East country, which is home for over 10 million foreign workers, has been planning to do this for the past decade in a program called Saudization. Other migrant workers in the Kingdom are from India, Pakistan, Indonesia, Sri Lanka, Bangladesh, and some African countries. More than 125,000 American and Western white-collar workers also live and work in Saudi.

Al-Assaf vowed to facilitate implementation and completion all “projects in the pipeline like Riyadh Metro and other mega transport projects.”

He said the government plans several measures to meet the financial shortfall due to falling oil prices, which have dropped about 35 percent in 2015.

Managing financial shortfall

Separately, the Saudi Ministry of Finance announced several measures to cope with the shortfall. Among them the possibility of collecting income taxes from foreigners.

In a statement, the ministry said it will review current levels of fees and fines, introduce new fees, and apply value-added tax (VAT), and impose sin taxes on tobacco, soft drinks, and other harmful products. So while imposing income taxes is still not on the drawing board, the general idea of collecting taxes is moving forward in the Kingdom.

The finance ministry also plans to establish a unit responsible for public debt management, in order to improve the Kingdom’s ability to borrow both domestically and internationally, according to the statement.

The Kingdom also plans to review subsidies, including “revision of energy, water, and electricity prices gradually over the next five years, in order to achieve efficiency in energy use, conserve natural resources, and stop waste and irrational use.”

These financial reforms are aimed to offset the losses, even as Saudi raised its military spending in 2015 by $5.3 billion due to the Kingdom’s participation in Yemen, said Economy and Planning Minister Adel Fakeih.

In 2015, Saudi posted a record budget deficit of $98 billion. It exported about seven million barrels of oil a day and those revenues make up around 90 percent of the government’s fiscal revenues, and about 40 percent of the country’s overall gross domestic product.

Recently, Prince Abdulaziz bin Salman, vice-minister of petroleum and mineral resources, said that “around $200 billion of investments in energy have been canceled this year, with energy companies planning to cut another three to eight percent from their investments next year.”

In a report published recently, the prince said: “This is the first time since the mid-1980s that the oil and gas industry will have cut investment in two consecutive years.”

The 2016 Saudi budget plan allocated SR213 billion to the military and security services, the largest single allocation comprising over 25 percent of the total budget. It also raised domestic power, water, and fuel prices, and trimmed government spending for 2016.

Iran-Saudi tension

Apart from the falling oil prices, tension between Saudi Arabia and Iran is rising, and Filipinos in the region are “apprehensive but vigilant,” said Migrante-Middle East.

The other day, Saudi Arabia cut its diplomatic ties with Iran after Saudi’s execution of one of its influential Shiite clerics who were critical to the Sunni Royal family.

Bahrain followed Saudi and other Gulf Cooperation Countries are expected to follow Saudi’s steps.

“Sentiments of most OFWs in the Kingdom: apprehensive but vigilant due to the perceived volatile political rift between the Saudi government and Iran,” said Riyadh-based John Leonard Monterona, coordinator of Migrante-Middle East.

Monterona observed that so far there have been no huge demonstrations inside the Kingdom that will undermine its internal peace and order situation.

He advised Filipinos in the Kingdom to shun activities that could be perceived as terroristic amid Arab News report of last week’s arrest of 44 terror suspects, four of whom are Filipinos.

He said the Philippine government should keep an eye on the Saudi-Iran rift and consider readying its evacuation and emergency plans to secure the safety of Filipinos in the region.



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