Saudi Arabia's 'Nitaqat' law may restrict remittances to Pakistan: Report

KARACHI: Prime Minister Nawaz Sharif may face a major economic challenge when more than 50,000 illegal Pakistani workers in Saudi Arabia, the largest source of remittances for Pakistan, would be deported after the July 3 amnesty deadline set by the Gulf Kingdom expires.


The large scale deportation is looming ahead despite the strong ties between Sharif and the Saudi royal family in the wake of new Saudi labour law called ' Nitaqat' that makes it mandatory for local companies to hire one Saudi national for every 10 migrant workers.

As a result, a number of people from foreign countries who were working without valid work permits and runaways have come under the scanner.

Once the three-month grace period for such workers to leave the country ends on July 3, all expatriates found in Saudi Arabia without valid papers will be jailed and heavily penalised.

After the July 3 deadline, illegal workers staying in the kingdom will face up to two years of imprisonment and fine of up to 100,000 riyals (Rs 2.7 million).

Foreign Office spokesman has said that its embassy in Riyadh is helping Pakistanis to legalise their status.

Despite this, thousands of workers seem to be trying to leave Saudi because there are many hurdles in the process.

However, the government has so far not sent a delegation to handle the situation.

Remittances from foreign workers are important to the economies of countries such as the Philippines, Sri Lanka, Bangladesh, India and Pakistan.

Saudi Arabia is the largest source of remittances for Pakistan, though most of the Pakistani workers there are associated with low-paid jobs.

Remittances sent home by overseas Pakistanis touched $ 12.8 billion in 11 months (July-May 2012-13) of the current fiscal year and the figure is likely to cross $ 15 billion by year-end, the Express Tribune reported.

However, the situation in Saudi Arabia may serve as a stumbling block. In the 11-month period, remittances from Saudi Arabia stood at $ 3.8 billion, accounting for 29 per cent of the total, the paper said.

Monthly data shows that in March remittances from the kingdom stood at $ 352 million, which increased to $ 392 million in April but due to the new labour policy they fell to $ 380 million in May. This drop of $ 12 million caused the decline in overall remittances in May, when they fell $ 23 million as compared to April, it said.

It is projected that remittances from Pakistani workers in Saudi Arabia have plummeted about $ 30-50 million in June, it added.