Pakistan remittances at risk

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Pakistan remittances at risk

Pakistan has received around $14 billion remittances this fiscal year from overseas Pakistanis, the highest ever.

By Javed Rana (Dateline Islamabad)

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Published: Mon 29 Jul 2013, 9:40 PM

Last updated: Sat 4 Apr 2015, 9:14 AM

Almost half of these remittances come from the Middle East and the Gulf States. Saudi Arabia tops with over $4.1 billion, which is close to 30 per cent of the total remittances Islamabad has received alone this fiscal year.

Riyadh has drawn much of the manpower for recruitment particularly in private sector from Pakistan, India, Nepal, Sri Lanka, Bangladesh, Philippine, Indonesia, Yemen and Ethiopia. These developing countries particularly Pakistan heavily rely on remittances from the kingdom.

Among as many as nine million foreign workers in Saudi Arabia, an estimated 1.5 million are from Pakistan, the highest among all the expatriates in the kingdom.

During the past three years remittances have gone up by 60 per cent from Saudi Arabia. Partially, the surge has been because of the fact that the number of Pakistani expatriates were on the rise until last year when Pakistan was sending skilled, semiskilled and unskilled people to the kingdom. Saudi embassy in Islamabad by an average was issuing visas to at least 25,000 Pakistanis every month until last year. However, there is a big question mark now if this trend in surge of remittances would continue in coming years after Riyadh introduced sweeping labour reforms in order to contain domestic unemployment reaching to 12 per cent.

Currently Saudi citizens hold hardly one in 10 private sector jobs. Under new labour rules and regulations, Riyadh now wants national and multi-nationals companies in kingdom to prefer Saudi citizens over foreign expatriates in recruitments. Therefore, understandably foreign expatriates in the kingdom are becoming the biggest causality of new labour laws.

The kingdom has started expelling large number of expatriates including Pakistanis who have been illegally working with national and multinational companies. With new labours laws getting in place gradually, Saudi Arabia has localised around 600,000 jobs, which means the space for foreigners in the kingdom is certainly shrinking day by day.

The national and multi-national companies prefer foreigners specially from South Asian states because unlike Saudi citizens, semiskilled expatriates are paid far less salaries and can arbitrarily be hired and fired without much legal bottlenecks.

Nonetheless, it is hard to imagine that the kingdom can meet its all manpower requirements through indigenous means particularly for hard labour and other menial work. Therefore, expatriates would always stay relevant in Saudi Arabia, a 28 million populated country.

An estimated 124,000 foreign workers including Pakistanis have left the kingdom since early April this year when Saudi government gave a three month grace period for illegal employees to either legalise their status or leave the country.

Few months back kingdom launched crackdown on foreign workers for breaching terms of their visa. Tens of thousands of foreign workers including Pakistanis are lining up to exit from Saudi Arabia after Riyadh gave them option to forgive all violations associated with the terms and conditions of their visa if they voluntarily leave the kingdom by July 3 this year.

All we know so far is that Islamabad has requested Saudi Arabia to relax new labour laws. In response, the kingdom has given extension in grace period from July 3 to November 3 this year to foreign workers to help them to seek validation of their overstays and job permits.

The decision is likely to benefits temporarily tens of thousands of Pakistanis who have been illegally staying and switching over their jobs for years out of no option given the tough conditions in the kingdom. But what next once the deadline expires?

The economic policy makers in Pakistan seems not be very concerned about the foreseeable decline in remittances from Saudi Arabia from next year onwards if kingdom do not relax its labour rules and regulations.

At home, the government needs to undertake a crackdown on unscrupulous companies and individuals minting hefty money by luring in unskilled workers for Saudi Arabia without clear guarantees of their jobs in the kingdom.

The government hopefully would be cautious of the fact that any drop-down in remittance from Saudi Arabia means further widening of trade deficit and shrinking of already depleting foreign exchange reserves and more dependence on donor agencies — something the country can no longer afford in a situation when the new government in Islamabad is struggling to bring its ailing economy back on track.

The writer is a Islamabad-based senior print and TV journalist. Views expressed by him are his own and do not reflect the newspaper’s policy. He can be reached at javedjournalist@gmail.com



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