|14 May, 2019

Saudi new ‘privileged’ residency law set to draw long-term foreign investment- analysts

The Saudi Cabinet has approved a new visa system allowing investors and skilled expatriates unlimited or one-year visas without the need for a local sponsor

Airport customer service representative holding passport. Image used for illustrative purposes.

Airport customer service representative holding passport. Image used for illustrative purposes.

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The Saudi Cabinet today approved a ‘Privileged Residence System’ that offers special residency permits for investors and skilled expatriates, in a move that is set to attract talent and wealth into the kingdom, according to analysts who spoke to Zawya.

The new scheme enables eligible highly-skilled foreigners and owners of capital funds to obtain residency without the need for a Saudi sponsor or employer, local dailies reported.

The benefits also include the ability to obtain visas for relatives. The ‘privileged’ residency permits include two types of Iqamas: One for an unlimited period of time and another for one-year validity, subject to renewal. The eligible expatriates should provide sufficient financial resources, as well as clear criminal records and sound health reports.

“The key objective (of the new law) will no doubt be to facilitate a greater and sustainable economic prosperity, by enabling key individuals to invest their wealth, talent and resources into Saudi economy – and playing a key role in driving forward a sustained engine of growth,” said Anir Chatterji, a director and leader of PwC Middle East’s immigration and employment arm.

“From an investor’s perspective, it provides expatriates with some degree of comfort for long-term residency status and security in Saudi, if they decide to invest in the country,” he said in emailed comments.

“It will largely be viewed as a positive step as it serves to incentivise further foreign investment into Saudi and a mechanism through which qualifying expatriates can build a business base in it. It all forms part of a wider GCC strategy to continue to incentivise expatriates to stay in the country and participate in business growth for longer,” he added.

According to Murtadha Al-Yousef, the founder and general manager of Saudi Employment, a firm that provides recruitment services for Saudi nationals to the private and public sector, the move will facilitate the creation of a suitable environment for foreign investors to stay and will support the continued inflow of investment to the kingdom.

“It’ll also contribute significantly to job generation and reduce irregular financial transfers abroad and Tasattur cases,” he told Zawya in emailed comments in Arabic. Tasattur refers to a practice where a Saudi national allows foreigners to run a business in their name in return for a share of profits.

“The timing of the announcement of the ‘special residency permit’ is also aligned with the start of work in a number of major projects such as NEOM, Qiddiya, and the Red Sea project among others,” said Al-Yousef, whose firm also offers recruitment services to international companies that wish to start investments in the Kingdom.

“This will be reflected in helping achieve one of the most important objectives of Saudi Vision 2030: reducing the unemployment rate to 7 percent and women's participation in the labour market to 30 percent,” he added.

There has been a greater drive on the part of Gulf countries to provide a residency framework untied to the classic sponsorship regime in order to attract long-term investment and, by extension, sustained economic activity and growth.

“The GCC has historically been viewed as a temporary expatriate posting but over the years, this mindset has changed with long-term stays becoming increasingly more prevalent and customary,” said PwC's Chatterji.

The new Saudi law sits alongside the trend already adopted by the UAE government of providing certain qualified investors, entrepreneurs, scientists, doctors and distinguished students the right to remain in the UAE on a longer-term basis.

“It is unlikely for now that an unlimited residency visa status will be granted (in the UAE), however the changes introduced by the UAE go a long way in providing an alternative longer-term residency framework far removed from the traditional and static sponsorship regime,” Chatterji noted.

The new Saudi residency law offers a 'green card' style benefit in one of its permit types, as it enables the eligible expatriates an unlimited stay in the kingdom.

(Reporting by Nada Al Rifai; Editing by Michael Fahy).

(nada.rifai@refinitiv.com)

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