Economic experts expect flight of expat funds

JEDDAH: Economic experts expect an increase in the number of expatriate remittances in banks abroad due to fears concerning their future in the Kingdom. The forecast comes in the wake of recent raids by Ministry of Labor officials against illegally residing expats and those not working for their sponsors. Remittances by foreign workers from Saudi Arabia were estimated at $ 194 billion from 2000-2010, according to International Monetary Fund’s (IMF) statics issued in 2012. The IMF also projected that expatriates would transfer more than $ 26.67 billion during 2012-2013. Meanwhile, labor officials and police have stepped up the current campaign to drive out illegal workers, as well as those involved in cover-up businesses in different parts of the Kingdom. Farooq Al-Khateeb, a professor at King Abdul Aziz University, said: “It is expected that expatriate’s remittances will increase by 10 percent. The government has to play a big role in controlling the transfer of funds abroad,” adding, “expatriates in the Kingdom have been transferring big amounts of money abroad for some time. The amount of money they transfer needs to be compared to their salaries. It is illogical for foreign workers to be wiring money that amounts to more than their monthly income,” he told Arab News. In 2011, financial experts warned of the possibility of foreign workers withdrawing their funds from Saudi banks due to concerns regarding their future job prospects in the Kingdom under the Nitaqat system. Fearing their inability to continue working in the Kingdom, many of the estimated 8 million expatriates may seek to transfer their savings to their native countries or alternatively, Western banks, in view of the political turbulence in "Arab Spring" countries. Experts estimate that foreign worker deposits in Saudi banks stand at around SR 15 billion. “The recent raids have caused alarm bells to ring among some expatriates about their future prospects in the Kingdom. In addition, adverse rumors have been circulating warning foreign workers of the hardships awaiting them in the Kingdom. These rumors will ultimately have a negative impact on the country’s economy,” Yassin Al-Jefri, an economic analyst, told Arab News. “That is not to mention news of labor authorities raiding offices and commercial enterprises that will also contribute in reducing foreign investment by 58 percent due to the ensuing chaos in the labor market. Many companies have already been affected,” he added.