JEDDAH: Lawyers and Saudi economists are in favor of allowing expatriates to own small commercial ventures in the Kingdom.
Saudi laws prohibit expatriates to run their own businesses. The government strictly implements this rule, but expatriates and Saudi citizens have found ways to flout it.
Most expatriates register their enterprises under a Saudi name, a so-called sponsor. In this case, the government cannot find out whether the business is Saudi or non-Saudi. This trick threatens both parties as it increases chances of fraud.
Arab News spoke to a number of expatriate and Saudi victims who lost their monies in such arrangements.
Yassin Youssefi, a Syrian who established a restaurant in Jeddah, lost SR50,000 to the Saudi who registered the restaurant under his name.
"I opened a restaurant in Jeddah at a cost of SR150,000. I registered the restaurant under my close Saudi friend's name, who initially did not want any money for this. After the first day, however, he asked me to pay SR70,000 otherwise he threatened to sell the restaurant within a week," said Youssefi. "His attitude changed when he became the official owner of my restaurant."
According to Youssefi, he was helpless, because he did not have money to pay the Saudi man.
"I couldn't convince him to wait for one month or more. I proposed to share the restaurant profits with him, but he refused. I was forced to sell my wife's jewelry, which was worth SR50,000, to pay him the amount," he said.
The next hurdle for Youssefi was to find another Saudi to be the sponsor. "I asked one of my friends to nominate a Saudi relative who was unemployed and looking for a monthly payment. I found someone, and we agreed on a monthly payment of SR2,000. In addition, he took food from the restaurant daily for free," said Youssefi.
Another victim of such an arrangement was Assad Abu-Laban, a Palestinian running a clothes shop. He lost his shop and stayed jobless for several years.
"I opened a shop in Al-Murjan Mall under the name of my Saudi friend. After my friend died, his sons refused to give me my rights and took away the shop. I lost all my money and remained unemployed for three years," said Abu-Laban.
According to him, he learned a lesson from his experience and decided to rent a taxi to work as a driver. "I will never deal with Saudis again. A taxi is the best way to earn money without fear. I became poor as a cabbie doesn't earn much money. Nevertheless, I am happy, because I feel safe now," said Abu-Laban said.
Saudi national Ali Al-Shehri suffered when he registered a mechanic shop under his name and the shop owner escaped leaving behind loans for him to clear.
"I registered a mechanic shop for my Egyptian friend under my name. He worked in the shop for one and a half years and paid me SR1,500 a month. Recently, I received a call from the rent office informing me that my friend had sold all equipment and instruments and shut down the shop without paying the rent for six months," Al-Shehri said, adding that he was forced to pay arrears, as it was him who had signed all contracts.
Habibullah Turkestani, professor of marketing and business management at King Abdulaziz University, advises the government to allow expats to invest in small projects with periodical fees.
"It would be much better if the government allowed expatriates to invest in small projects. This could be done under certain requirements, such as paying a fee to the Chamber of Commerce," he said.
He added: "Such step would achieve equality between Saudi and expatriate business owners. It might also decrease fraud."
According to Turkestani, the Saudi community has become a "consuming" instead of a "producing" nation. "Saudis prefer to own expatriate businesses for a monthly payment without working."
Turkestani added that 80 percent of ventures in Saudi Arabia are small, but there are no clear data to suggest how many of these are not originally for Saudis.
Abdullah Murad, a Saudi lawyer and member of the lawyers' committee at the Jeddah Chamber of Commerce and Industry, confirmed that many cases involving Saudis and expat victims are in courts. "Such issues are on the rise. In these cases, both the Saudis and expat caretakers of businesses are transferred to the general investigations unit," he said.
The lawyer's committee then investigates the issue. "If the expatriate presents papers that guarantee his ownership, we immediately give him his right. In addition, we punish both of them, because they violated the rules."
Murad encourages the idea of allowing expatriates to own their business ventures with periodical fees to the government.
"This experience has already been implemented in Dubai, and it's very successful," he said.
© Arab News 2011
