Good news from the Saudi government for all expatriates and residents in the Kingdom
It is certain that the economic and living conditions in Saudi Arabia have changed in recent years, and many expatriate workers have been affected by these changes.
Although Saudi Arabia was a preferred destination for expatriates to work and earn savings, the high costs of accommodation, the imposition of additional fees for companions, and the high cost of living affected life in Riyadh.
Some expatriate workers found themselves living in difficult financial conditions, as prices became high and a large part of their salaries goes to cover those costs. For example, many live on the level of necessities only in living, and transfer the remaining amount to their families in their country of origin. The monthly exchange rate for labor can be around 500 riyals, while the rest of 1,400 riyals is transferred to their family.
And some people find themselves forced to make difficult decisions, such as sending their family members back to their country after the end of their contracts in Saudi Arabia. They may choose to live in shared accommodation with colleagues to save some money before leaving the country.
Certainly, these challenges affect Saudi Arabia’s vision as an ideal destination for work and financial stability. However, many people still see Saudi Arabia as a blessed country and may continue to work there despite the financial challenges they face.
Official data indicates a decrease in remittances from foreigners in Saudi Arabia in recent months. Transfers declined by 34.7 percent in March, compared to the same month of the previous year. The value of transfers amounted to about 9.59 billion riyals, while it was 14.69 billion riyals in the same period in 2022. This number is the lowest in the past 45 months, according to data from the Saudi Central Bank (SAMA).
In the first quarter of 2023, the value of foreigners’ remittances amounted to about 29.87 billion riyals, a decrease of 22.2 percent compared to the same period of the previous year. Transfers in the same period of the year 2022 recorded about 38.41 billion riyals.
In 2022 as a whole, the value of foreigners’ remittances amounted to about 143.2 billion riyals, a decrease of 6.9 percent compared to 2021, as the value of remittances during that period amounted to about 153.9 billion riyals.
These figures indicate a general decline in foreign remittances in Saudi Arabia, and this may be a result of the financial challenges and high costs faced by expatriate workers in the country.
There are several reasons for the decline in expatriate remittances in Saudi Arabia. Among these reasons, the departure of many violators of regulations and governance has a significant impact on the decline in numbers. Muhammad Al-Assaf, Minister of State for Financial Affairs, indicated that during the past decade, more than a trillion riyals were smuggled out of the country, and it would have been better to invest this money in Saudi Arabia.
Official statistics showed an increase in the number of expatriates to Saudi Arabia by more than 17.4 percent in the same period, which indicates that high costs in the region do not discourage expatriates from coming to work in the Gulf country, given the spread of high costs around the world.
According to some economic analysts, some workers resort to using irregular methods to transfer money for several reasons. At the same time, these transfers are regulated according to the rules of the Saudi Arabian Monetary Agency, with the aim of preventing expatriates from exposing their money in banks. Exchange shops require filling in a form that includes the person’s name and residence or passport number, in addition to information showing the monthly income of the transferor. Abdul Hameed Al-Omari, a member of the Saudi Economic Society, notes that foreigners “have found alternative ways out of the local economy, such as using digital currencies, which is a global market that attracts trillions of dollars from all over the world.” Al-Omari stresses the need for an extensive study by the Saudi Central Bank to ascertain the reasons for the decline in these transfers.
On the other hand, Al-Omari notes that it is unlikely that higher prices are the reason for the decline in numbers. For example, inflation in the country ranges from less than 3 percent, which is a much lower level than inflation in countries of that employment.
Members of the Saudi Economic Association believe that the decrease in remittances may bring about positive changes in the economy. Retaining these transfers in the local economy contributes to boosting local investments and increasing domestic consumer demand, both of which promote economic, trade and investment growth.
The change in the concept of the tourism and entertainment industry in Saudi Arabia has affected the way expatriates spend their weekends. They reformulated the culture of recreation and started spending their money in cinemas, parties, local theaters and parks, influencing the philosophy of enjoying life. In the past, Al-Batha markets were the first choice for expatriates to spend their weekly vacations, as the largest communities in Saudi Arabia gathered there. However, their choices have now changed and diversified, and some of them go to cinemas to watch Hindi films, for example.
The ease and development of technology in Saudi Arabia has contributed to the increase in consumerism among young people. For example, Mahmoud Youssef, an Egyptian young man working in Saudi Arabia, says that after signing a new work contract, his outlook on life has changed because of the good monthly income that increases the rate of well-being in his life. However, he points out that the current challenge is the crowding of options available, as you can easily buy anything you want in a matter of moments.
Abdullah Al-Saqabi, a member of the Saudi Economic Association, points out that the field of entertainment and tourism plays a major role in stimulating local economic activity and attracting investments and tourists from abroad. Thus, it contributes to increasing domestic and foreign cash flows in the long term. However, the field of entertainment and tourism cannot be considered the only reason behind the decline in foreign remittances abroad in Saudi Arabia. There are multiple factors affecting this, such as changing oil prices, global economic conditions, government policies, and social and cultural developments. In addition, the volume and direction of foreign remittances for foreign workers in Saudi Arabia were affected by the economic and political stability in the country of origin and the country receiving such remittances, the level of income and the economic and financial situation of foreign workers in Saudi Arabia, the exchange rate of the national currency in the receiving country, the taxes and fees imposed, and government policies related to regulating Expatriate workers and the ease of procedures for foreign remittances for foreign workers.