Renewal of license tied to certificate of Saudization

In another major move to force private companies to employ Saudis, the Council of Ministers on Monday passed a law making it mandatory for firms seeking renewal of their commercial licenses to present Saudization certificates issued by the Labor Ministry.

“A Saudization certificate … shall be considered one of the main documents for applying for the renewal of licenses, opening or operating a firm, obtaining business visas and issuing commercial registrations for the branch of a firm that has failed to employ the required number of Saudis,” said the Cabinet chaired by Crown Prince Salman, deputy premier and minister of defense.

Labor Minister Adel Fakeih thanked the Cabinet for adopting this decision, saying it would encourage private companies to employ more Saudis. “The decision reflects the government’s desire to end the unemployment problem among the Saudis,” he added.

Fakeih said his ministry would coordinate with the relevant government departments to implement the Cabinet decision and establish electronic links with them to exchange information.
“The ministry is also studying a proposal on gradually increasing the cost of employing foreign workers, especially for companies that violate Saudization regulations, and another proposal to force violating firms to bear the cost of employing Saudis,” Fakeih said.

The Cabinet approved an amendment to the law governing the activities of the Human Resources Development Fund, saying its revenues would include fees received in lieu of services provided by the fund to the private sector to train citizens and replace foreign workers.

Referring to the business visas, the Cabinet said the labor and foreign ministries would set out a mechanism to prevent companies that failed to fulfill Saudization conditions from obtaining such visas. The new law bans small firms having nine or less foreign workers, without any Saudis, from having access to electricity.

“This Cabinet decision will definitely boost Saudization. It will have a big impact on small and medium enterprises run by expatriates,” said Ibrahim Badawood, managing director of ALJ Community Initiatives.
“The decision shows that the government wants the private sector to employ more Saudi workers,” Badawood told Arab News. “It will have an immediate effect on grocery shops that do not employ any Saudis. They will not get electricity if they fail to present Saudization certificates.”

He said the new Cabinet decision is in line with the Commerce and Industry Ministry’s campaign against cover-up (tasattur) businesses run by expatriates with the support of some Saudis.
The total value of cover-up businesses across the Kingdom is estimated at more than SR230 billion. Expatriates dominate about 90 percent of retail and wholesale markets in the country.