Foreign workers stay home to escape Saudi visa crackdown



RIYADH // The streets of Saudi Arabia’s capital were unusually quiet on Monday as many expatriates stayed at home to avoid the start of a government crackdown on illegal foreign workers.

Building sites were deserted, Riyadh’s stuttering rush-hour traffic flowed smoothly and many shops and market stalls were closed in normally busy neighbourhoods that are home to large numbers of Saudi Arabia’s lower-income foreign community.

The government has promised raids on businesses, markets and residential areas to catch expatriates whose visas are invalid because they are not working for the company that sponsored their entry into the kingdom.

“The field security campaign, in coordination with the labour ministry, will take place in all cities, provinces, villages and rural towns,” the interior ministry spokesman Maj Gen Mansour Turki said on Sunday, the final day of a government amnesty to allow foreigners to either get valid documents or leave the country.

In the Riyadh Industrial Zone, where many workers are foreigners, most shops were closed in the morning, according to a witness who said he saw a dozen people scurry for cover when they heard a police siren from a nearby road.

“Nobody has come to buy anything at all today. It’s a very bad situation,” said Abu Safwat, a Syrian who owns a machine parts shop in the area.

The enforcement of visa rules is another effort to end a black market for cheap imported labour, cut the number of foreign workers and free up private-sector jobs for Saudi nationals.

The official Saudi unemployment rate of 12 per cent excludes a large number of citizens who say they are not seeking a job.

Raising private-sector employment in a country where most Saudis are in government jobs, and where businesses employ more foreigners than locals, is a major challenge for the kingdom.

About nine million foreigners, mostly unskilled labourers or domestic workers, live alongside 18 million Saudis. The money they send home is vital for their own nations, such as Yemen, Ethiopia, the Philippines, Indonesia, India, Pakistan and Egypt.

For decades, Saudi authorities ignored irregularities such as foreigners working for firms that had not sponsored their visas or in trades other than those listed on their immigration documents.

That spurred a black market in which foreigners overstayed visas, set up illegal businesses or took low-paid jobs in areas where authorities wanted Saudi workers hired on higher salaries – thwarting implementation of wide-ranging labour reforms that penalise companies for hiring more foreigners than locals.

In March the labour and interior ministries began raiding offices and markets before declaring an amnesty in April to enable foreigners to correct their visas without being fined.

Before the amnesty expired on Monday, the government issued repeated warnings for foreigners to correct their status or face punishments including prison, fines and deportation.

Companies employing expatriates without proper visas will also be fined, as will people or firms that charge expatriates a fee to sponsor their visa.

“We want foreigners to remain in the kingdom lawfully,” said the deputy labour minister Mufrej Al Haqbani in remarks quoted by Arab News, a local English-language daily.

A long queue stretched down the road outside one visa office as Arab and South Asian foreign workers tried to leave without paying fines for overstaying. Some carried personal possessions in hopes of leaving immediately.

A group of 30 Filipino workers who returned home on Monday alleged that they were abused in the process of leaving.

“They treated us like animals,” said Amor Roxas, a 46-year-old domestic helper, alleging that police placed them in crowded cells before they were taken to the airport.

“Our feet were chained,” said Yvonne Montefeo, 32.

In Riyadh, a Sri Lankan woman working as a freelance maid said she and several of her friends had decided to stay at home in case they were caught in government raids.

In the Batha district, home to many low-paid foreigners, some shops were shut and only Saudi employees were working in others. Market stalls had vanished from the normally busy street where vendors hawk fruit, vegetables, clothes and mobile phones.

* Reuters with additional reporting by Agence France-Presse

Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia