Saudis spent millions abroad, while pilgrims boosted the kingdom’s income

Wednesday, 09 November 2011

The number of Saudi citizens choosing Dubai as a tourist destination increased by 45 percent this year. (File photo)

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By Al Arabiya
Dubai

Fahad bin Juma’a, a Saudi author and economic expert, said that Saudi spending during Eid al-Adha was up by six percent in comparison to the same period last year, totaling 3.33 billion riyals ($89 million).

Salary increases are among the reasons that pushed Saudis to spend more.
Saudi citizens choosing Dubai as a tourist destination increased by 45 percent in comparison to the same period last year, mainly because of the political events unraveling in Syria, Egypt and Lebanon, formerly popular destinations, said bin Juma’a.

Asked if this spending was within the “normal” range, the economist said that income is the determining factor making individuals capable of such travels.
He said that the increased spending on tourism by Saudis did not mean that they got more value out of their travel, citing highly inflated air ticket prices among other expenditures.

“They spent more but got less in comparison to earlier years,” he said.
Dr. Abid al-Abdally, a professor of Islamic economics at Umm al-Qura University in the kingdom, said that the money spent by pilgrims on buying gifts and other memorabilia reached 3.6 billion riyals (approximately $1 billion).

Dr. Abdally said that most pilgrims buy gifts when they visit Saudi Arabia.
“Unfortunately, a big portion of the material [used to manufacture gifts] are imported from outside and are made for Saudi Arabia especially for religious events; this is despite calls to develop the sector locally, which would spur local investment, especially after polls surveying pilgrims suggesting that the pilgrims prefer local manufacturing."

Businessmen seek ministry’s clarity on new zones system

 

RIYADH: Businessmen here are still unclear about the proposed new zones system introduced by Adel Fakieh, Minister of Labor, to be implemented on June 8. The system is an attempt to deal with foreign recruitment and unemployment in the country.
Saad Al-Mogil, Deputy Chairman of the Chamber of Commerce and Industry in Riyadh, said their meeting with Fakieh failed to answer questions they had about the new system.
He said businessmen are eagerly awaiting the application of the new system so that they can see its merits and demerits and determine its practicality.
Al-Mogil called on the ministry to apply the new system in stages. “Unemployment is a big national problem and can only be solved in reconciling the private and government sectors. It should be understood that the unemployment problem is a common national concern.”
He emphasized that businessmen should cooperate fully with the ministry to solve this critical problem. He said businessmen will not hesitate to approach the minister to inform him about difficulties they face with the new system. “The ministry should not be too demanding and companies and establishments should work in good faith to achieve this national goal.”
He hoped that the plan would help increase training for Saudi jobseekers because this will make it easier for them to be employed.
Dr. Fahd Bin Juma, a prominent Saudi economist, was critical of the system, saying it will never serve the Saudi economy or reduce unemployment.
“The system will result in several companies shutting down and pulling out of the market. It will increase inflation and unemployment. Saudis won’t accept jobs like tea boys, plumbers, carpenters and drivers. Therefore, the industrial and government sector should be developed further because most Saudi jobseekers eye these sectors.”
He said small- and medium- sized businesses are weak and their contribution to Gross National Product is not more than 28 percent.
According to reports, the zones or “Nitaqat” system, will see private companies and establishments classified into three colors – green, yellow and red – according to the number of Saudis they employ.
The green companies will be given a number of advantages, including recruitment of manpower from foreign countries and the transfer of employees in the yellow and red categories without their companies’ consent.
The ministry expects the system to completely wipe out black market in visas where foreigners run businesses using Saudis. Companies in the yellow category that do not fulfill Saudization conditions, should correct their status in order to get the iqamas of their workers renewed.
The iqamas of those foreign workers in red category companies will not be renewed at all, irrespective of the years they have spent in the Kingdom.
The new Nitaqat system allows for the renewal of iqamas without any condition for expatriates who work in companies in the green and excellent category. The new measure would not apply to house servants as their iqamas would be renewed automatically.
– Okaz/Saudi Gazette __

Black market economy growing in Saudi Arabia

Published June 28th, 2011 - 08:28 GMT

The Saudi black market represented 18.7% of Saudi GDP between 2002 and 2007

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Economists are requesting the establishment of a regulatory body to evaluate the Saudi Arabian black market economy in order to determine the amount of transactions and the implications the black market has on the activities and practices of the local economy.
In recent years, the Saudi black market has been estimated at 326 billion riyals (US$87 million) and growing.
Professionals argue the black market stems from economic instability in the Kingdom including the development of different economic policies affecting the price index, unemployment rates, unfair competition between citizens and expatriates, a rise in commercial fraud, and monopolies.
One problem is the arrival of new expatriates. Many expatriates practice a phenomenon called "trading trunks". New arrivals bring in trunks of goods on which they do not pay customs duties and sell the goods at very low rates.
Economist Dr. Fahd Bin Juma found that current evidence supports the World Bank's estimate that the Saudi black market will increase in size. He explained that the black market represents 18.7% of GDP between 2002 and 2007, with the percentage rising from 17.5% in 2002 to 20% in 2007, reaching 288.5 billion riyals in 2007.
Dr. Juma noted that the black market distorts the accuracy of economic numbers. 
Source: www.yallafinance.com

The five-year development plans

oor Development Plans Qenan Al-Ghamdi, Al-Watan, qenan@alwatan.com.sa

The economist Dr. Fahd Bin-Juma provided some shocking pieces of information that was published in the Okaz newspaper recently. Bin-Juma wrote, “The five-year development plans that started in 1970 — 36 years ago — were based on wrong expectations and assumptions. These plans did not take into account well-researched planning strategies. In fact, they were not designed according to accurate statistics predicting the challenges facing the Kingdom today.” Bin-Juma supported his statements by referring to the latest World Bank report, which noted that the weakness in Saudi economic planning is due to the absence of accurate statistics. The World Bank report emphasized the necessity of having accurate information upon which effective economic strategies could be built. The economist added, “The Economy and Planning Ministry doesn’t rely on accurate statistical figures. That’s why the last seven five-year development plans were chaotic. It’s only natural considering the circumstances.” However, a source in the Economy and Planning Ministry responded by saying, “The ministry is doing everything possible, but executing the plans is the responsibility of (other) government bodies and the private sector.” And we all know what the “government bodies” would say in response to the implementation of the ministry’s projects. There are always obstacles and justifications, and perhaps the projects were set aside precisely because of a lack of accurate statistics and so they archived them and decided to use alternative plans. Everything is possible. In the absence of information and any viable source of scrutiny, whatever Bin-Juma has mentioned does not make a difference or catch anyone’s attention. Bin-Juma was not addressing a company that had just recently gone bankrupt or a building that was about to collapse, although there are many, but rather he was talking about something greater. The economist was speaking about an entire country whose development plans have been running in the wrong direction for four decades now. I don’t want to allude to an assumption that developed countries around the world run systems in which such crimes never occur. But it should be noted that people in positions of responsibility in the Kingdom, those that are appointed as judges and investigators and those that deliver punishments are actually themselves in need of interrogation, judgment and reform. I felt so much pain writing this and started feeling dizzy, and so decided to put my pen aside thinking that there is no solution. But then I realized that the past is past and no one is able to change that. We’re only concerned with the present and what is happening now. So please stop the eighth five-year development plan. Rather we should revise it and prepare it in a much more systematic and practical way. Fundamentally we should try to save whatever we can. We are undergoing a financial prosperity phase that might never happen again. Our humane, historical and religious responsibilities oblige us to make the best out of our present for our future.