The decision, announced last month, will affect shops selling watches, eyewear, medical equipment and devices, electrical and electronic appliances, auto parts, building materials, carpets, cars and motorcycles, home and office furniture, children’s clothing and men’s accessories, home kitchenware, confectioneries and pastries.
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The Saudi section (titled ‘consumer respite buys time for reforms’) of BofAML’s weekly emerging markets report by Middle East and North Africa economist Jean-Michel Saliba indicated there were 304,865 expat sales workers in the kingdom out of 2.055 million working in trade.
“This may suggest that there are tens of thousands of expatriate jobs that stand to be nationalised by September 2018,” the bank said highlighting there was no specific breakdown of affected workers.
At the same time companies may need to hire an additional 250,000 Saudi nationals to maintain compliance levels following the introduction of the balanced Nitaqat Saudisation scheme in mid-December.
However, these and other Saudisation efforts including the barring of foreigners from car rental offices and gold and jewellery stores are not expected to lead to an exodus of foreign workers or declining economic consumption.
The report indicated the new higher-paid Saudi workforce in these roles would increase costs and reduce margins for companies but could eventually support consumption.
This is because lower-paid expat workers save and remit most of their earnings where as their replacements would spend their wages inside the kingdom.
Foreign remittances out of Saudi Arabia dropped 6.74 per cent last year to $37.7bn, according to local reports.
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