The Saudi Arabian government’s campaign against illegal foreign workers has led to the closure of several “cover-up” shops run by foreign workers in the name of their Saudi sponsors.
Diplomats in the Bangladesh missions in Riyadh and Jeddah said thousands of Bangladeshis would be the worst victims of the drive.
Cover-up business in the Kingdom is estimated at more than $61.33bn, Arab News reported Friday.
Many shops in different parts of the Kingdom, including Jeddah, Riyadh, Dammam, Makkah and Madinah have been found closed with “For Sale” boards hanging on them, as they could not correct the workers’ status.
“About 30% of expats engage in cover-up businesses,” said Abdul Aziz Dayyab, supervisor of Prince Mishaal bin Majed, Chair for Cover-up Business (tasattur) Issues at King Abdulaziz University in Jeddah.
He estimated the total value of tasattur business in the Kingdom at SR237bn or 17% of the gross domestic product.
“Expatriates dominate over 97.5% of retail and wholesale market,” he added.
The labour ministry intends to target the retail market to create 600,000 jobs for citizens.
Economic experts have proposed the setting up of holding companies across the country to handle big markets as part of efforts to counter illegal business.
“The retail market situation has reached a dangerous stage,” one economist said, blaming the weak laws and monitoring regime for creating the mess over the last three decades.
Salim Bajaja of Taif University said the cover-up business would have a negative impact on the economy, adding that it would promote trade fraud and unfair competition.
It would also increase annual foreign transfers of expats, estimated at SR140bn ($37.33bn).
Expat traders have requested that authorities legalise their business by allowing them to conclude agreements with Saudi partners.
“This will boost Saudi business sector and encourage more foreigners to invest in the sector,” said Usman Irumpuzhi, a journalist, adding that some GCC countries allow such trade.
In the UAE, foreigners can create partnerships between themselves without the need to have Emirati sponsors on the condition that they must finance their projects through a minimum of $2.7m capital inflows.