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Expat remittances on hold as Saudi corruption crackdown bites
| Published: | 1 Aug at 6 PM |
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Expat professionals as well as Saudi businesses are now holding back on money transfers overseas.
Due to a government crackdown on corruption earlier in the year, any attempt to send more than $30,000 outside the emirate is now being blocked by the government. According to local banks, many expats and their families are now afraid to send money home in case the government is monitoring their activities. The crackdown resulted in some 300 top business owners and wealthy investors being detained for weeks in Riyadh’s luxury Ritz-Carlton hotel until they agreed to hand over large sums in cash and assets, with the purge said to have benefited the Saudi state by some £100 billion.
One local wealth manager told the media on condition of anonymity that the raid is a huge-scale, well-targeted means of achieving state-based capital control. He told of one instance where a government official at a local bank questioned a family member of a well-connected business owner when he tried to transfer $30,000 to an overseas destination. The resulting climate of unease comes as ruler Mohammed bin Salman is attempting to put reforms in place for the entire Saudi economy as well as creating over a million jobs in the private sector for Saudi citizens. At present, the official unemployment rate is the highest in living memory at 12.9 per cent of the population, with the unofficial total reported to be much higher.
Largely as a result of the crown prince’s policies, a massive expat worker exodus is under way, with 800,000 leaving over the past 18 months. In spite of the new policies, 80 per cent of all private sector jobs are held by expatriates. Given the continuing slump in oil prices, weaker investor and business confidence, rising unemployment and uncertainty as to future changes as yet unannounced, observers are now becoming unsure as to whether the ruler can bring in his ambitious reforms on schedule.
Due to a government crackdown on corruption earlier in the year, any attempt to send more than $30,000 outside the emirate is now being blocked by the government. According to local banks, many expats and their families are now afraid to send money home in case the government is monitoring their activities. The crackdown resulted in some 300 top business owners and wealthy investors being detained for weeks in Riyadh’s luxury Ritz-Carlton hotel until they agreed to hand over large sums in cash and assets, with the purge said to have benefited the Saudi state by some £100 billion.
One local wealth manager told the media on condition of anonymity that the raid is a huge-scale, well-targeted means of achieving state-based capital control. He told of one instance where a government official at a local bank questioned a family member of a well-connected business owner when he tried to transfer $30,000 to an overseas destination. The resulting climate of unease comes as ruler Mohammed bin Salman is attempting to put reforms in place for the entire Saudi economy as well as creating over a million jobs in the private sector for Saudi citizens. At present, the official unemployment rate is the highest in living memory at 12.9 per cent of the population, with the unofficial total reported to be much higher.
Largely as a result of the crown prince’s policies, a massive expat worker exodus is under way, with 800,000 leaving over the past 18 months. In spite of the new policies, 80 per cent of all private sector jobs are held by expatriates. Given the continuing slump in oil prices, weaker investor and business confidence, rising unemployment and uncertainty as to future changes as yet unannounced, observers are now becoming unsure as to whether the ruler can bring in his ambitious reforms on schedule.
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