Nitaqat restriction on foreigners delaying Saudi construction projects
200,000 private firms have reportedly shut shop in the country impacted by high foreign labour fees to be paid under Nitaqat scheme
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Saudi Arabia’s Nitaqat program has come under fire yet again as local reports suggest up to 200,000 firms have shut shop in the country, and construction projects have suffered substantial delays.
An anonymous source from the Saudi Arabian construction industry told Arab News that “many projects in both the public and private sectors are pending. Various buildings under construction in the Saudi capital look abandoned because workers are nowhere in sight.”
The source continued: “The contractors don’t have enough manpower to continue the projects because many of their workers were sent home during the correction period from April 6 to November 3 last year.
“The price of visas is too costly, in addition to the additional $639 per year for each expat. In fact, some contractors have abandoned their projects,” he added.
Contractors who require 50 visas or more for foreign workers have to procure them at a steep price of $2,132. In March 2014, it was reported that these expenses have sent up to 50% of the country’s small and medium-sized contracting firms out of business.
In June 2014, the country’s Council of Ministers in the country announced compensation for local small and medium-sized enterprises (SMEs) and contracting firms for the expat worker levy of $640, which they have had to pay since November 2012.
A ministerial committee was set up to study the compensation to be paid to firms which signed contracts with the government prior to the commencement date of the levy, November 15, 2012.
At least 200,000 private firms have shut shop for failing to meet the parameters of the Nitaqat program, which is aimed at reducing unemployment rates amongst local Saudis. According to a report by the Labour Ministry, the number of private firms across the country reduced from 2 million before Nitaqat came into effect, to 1.8 million in 2013.
