26th September 2017 will be written in golden words in the history of Saudi Arabia as King Salman issued a Royal decree to allow women to drive in Saudi Arabia that day. It is a very positive step which will bring many social and financial changes in Saudi Arabia.
I really appreciate the step taken by King Salman not in the support of the women but in the support of the Saudi internal business condition. I believe that the reason behind this historic change is financial rather social. It is a very positive step to counter the current financial crisis in Saudi Arabia.
Although the Royal decree has been issued to allow women to drive in Saudi Arabia, Saudi Arabia still has to go a long distance to actually start issuing driving licenses to women. We believe that there are 7 Steps needed to start issuing driving licenses to women in Saudi Arabia.
1-Women Workforce: With the decision to allow women to drive in Saudi Arabia, we are expecting that many more women will be added to the workforce of the country which will reduce dependence upon expatriates and bring competition to the current workforce.
2-Expat Drivers: In Saudi Arabia, most families depend on private drivers to personally help transport their female relatives to school, work and other places. According to the latest statistics, there are nearly 1.4 million expat drivers, mostly from South Asia, who work solely as drivers to Saudi women. Saudis will not have to pay for these drivers which will reduce the burden from their pocket by SR 20.6 billion a year.
3-Reduction in Foreign Remittance: 60% of these drivers will be going back to their homes on a final exit visa. It also means that the foreign remittance from Saudi Arabia will also be reduced. The foreign remittance has been a huge burden on Saudi economy and Saudi government has been trying from a long time to reduce it. SR 14.4 billion cut down is expected in the foreign remittance from Saudi Arabia.
4-Value Added Tax: It will certainly boost the imports of vehicles in Saudi Arabia. Saudi Arabia is going to impose VAT from 1st of Jan 2018. An amount of SR 7.7 billion will be collected by the government in terms of value-added tax.
5-Jobs in the Market: There are many car dealers who have laid of a large workforce amid the financial crisis in Saudi Arabia, they will also be hiring people considering the expected boost up in demand of vehicles. Car leasing companies and banks will also see rebound.
6-Positive Economic Indicators: At this point in time due to the current financial crisis, the spending of the consumers have reduced. Even the people who have money in their bank accounts don’t want to spend it at this time. We believe that this new move will inject cash into the market which is an absolute necessity of the moment.
7-Reducing the burden on the Saudi Government: Currently, the Saudi government has been providing subsidy on water and electricity to every resident of Saudi Arabia. Moreover, domestic workers are also eligible to get free treatment at Saudi hospitals. This move will reduce the government spending by SR 2.5 billion a year.