The Kingdom of Saudi Arabia has been going through the worst financial crisis in its history. The oil prices have touched the lowest in last many decades and Saudi Arabia is heavily reliant on oil exports has been paying its cost. The current year’s budget deficit is expected to be very high. The Saudi Government has been taking steps to reduce its reliance on oil exports and generate other sources of income for the government under the leadership of King Salman. In my humble opinion, the following needs to be done, to generate more funds to counter the present crunch. The government has already taken many steps to strengthen the economy in the long and short run. Recommended: 5 Measures taken by King Salman to counter current Financial Crisis
1-Reduce government and Royal family expenses: Saudi Government has already taken an action against the salaries of the ministers and government employees of Saudi Arabia. In the end of September, King Salman issued a Royal Decree to cut down the salaries. Recommended: King Salman cuts down salaries of all Govt. employees up to 20%
2-Concentrate on exports of products that are being produced in KSA, other than oil: This is an area where Saudi Arabia needs to work on. Saudi Arabia has been exporting dates to all around the world. Moreover, the government is already focusing on the industrial production. Saudi Arabia’s cement production is way more than its demand; they can export it to generate revenue.
3-Income tax to be implemented on all, Saudis and expats, on an equal level: Well, Saudi Arabia must impose Income Tax to all its residents if not today, tomorrow. Saudis and expatriates have been enjoying benefits of living in Saudi Arabia without paying anything as income tax from a long time. There are some rumors in the market about imposing a tax on incomes which have been addressed in this link. Recommended: What is the reality behind the new rules of MOL? 10% tax on SR 3,000 and above
4-Let expatriates own businesses and hire Saudis: Increasing rate of unemployment is one of the major problems Saudi Arabia is facing nowadays. The businesses owned by Saudis and multinational companies cannot accommodate all the unemployed population. Now it is the time to allow expatriates to own business in Saudi Arabia which will ultimately prove to be beneficial to Saudis and Saudi Arabia. As soon as an expatriate registers a business, Nitaqat will apply to him and he must hire some Saudis to meet Nitaqat requirement. The current system of SAGIA is very complicated. Recommended: Procedure to Apply for SAGIA License in Saudi Arabia
5-Impose Duties on Import of Luxury Items: Currently, the customs duties paid on import of luxury items is almost nothing compared to other countries. The Kingdom can increase its revenue by imposing more custom duties on the import of luxury cars and other brands which only rich people can afford.
6-Reduce Foreign Remittance from Saudi Arabia: Another big challenge being faced by the government is to tackle the issue of heavy outflow of the foreign currency from the country. On average, expatriates living in Saudi Arabia remit around $55 billion every year. To get out of the current financial problems, Saudi Arabia must consider the ways to reduce foreign remittance from the country. Recommended: How to Reduce Foreign Remittances from Saudi Arabia?
7-Allow expatriates to own properties in Saudi Arabia: Not all the expatriates living in Saudi Arabia are poor. I know many expatriates who have millions of riyals and they want to live here for the rest of their lives. If Saudi Arabia starts allowing expatriates to own a property in Saudi Arabia and issue them a visa for the time they continue to own this property, I think it will bring a lot of investment to Saudi Arabia. They can set up a minimum limit to invest like UAE as SR 1 million.