The Saudi government's decision to bear the cost of fees for expatriate workers on behalf of industrial institutions is set to have impact on over 700,000 expats working in the manufacturing and mining sectors, said experts.

According to the Saudi General Authority for Statistics for the H1, there are 644,590 non-Saudi workers employed in the manufacturing sector, and 68,312 in mining and quarrying sector.

On Tuesday, soon after a cabinet meeting, the Saudi government had announced that it will pay the  
five-year mandatory fees for expatriates working in the industrial sector starting from October 1.  The move is aimed at stimulating the sector and lower the operating costs.

Since January 2018, businesses have been required to pay fees for foreign workers they employ, part of the government’s strategy to raise non-oil revenue and encourage companies to hire Saudis, reported Bloomberg.

It was applied last year on firms hiring expat workers with SR300 ($80) fee set for each work permit. This was to gradually double to SR600 ($160) this year and SR800 in 2020.

Many businesses, accustomed to cheaper foreign labour, have struggled to adapt to the fees, which were imposed at the same time as subsidy cuts and a value-added tax, it stated.

The levies contributed to an exodus of foreign labourers, hitting the economy without making much of a dent in Saudi unemployment, it added.

According to industry experts, this landmark decision will contribute to stimulating investments in the sector, diversifying the economy besides finding urgent solutions to economic problems and reducing dependence on oil.

This move will, no doubt, give a competitive advantage to Saudi Arabia among its peers in the industrial and manufacturing sectors in the Middle East, they added.-TradeArabia News Service