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immigration
From Arab Spring to Nitaqat system |
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BUSINESS
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Saudi Arabia workers’ mecca no more A new work policy implemented by Saudi Arabia will impact Indian expatriates, of which there are 2.45 million in the country. Aiming to ensure jobs for its own people, the Saudi government can’t be faulted. India can only hope against large-scale job cuts and use the three-month grace period to help workers legalise their stay. by Ashok Tuteja
A
new work policy implemented by Saudi Arabia will impact Indian expatriates, of which there are 2.45 million in the country. Aiming to ensure jobs for its own people, the Saudi government can’t be faulted. India can only hope against large-scale job cuts and use the three-month grace period to help workers legalise their stay.
Every country has a right to frame and implement its laws in accordance with its own requirements. This is precisely what Saudi Arabia has done by deciding to strictly enforce its Nitaqat policy, or naturalisation programme, to create job opportunities for its own people and deport those who have been working illegally in the kingdom. However, the move has sparked panic and uncertainty among the 2.45 million expatriate Indians working in the kingdom, earning their livelihood as well as precious foreign exchange for the country of their origin. They have got temporary relief with the Saudi authorities deciding to postpone by three months the implementation of the policy. Nitaqat was adopted by the Saudis three years ago to ensure that their rapidly increasing youth population got employment with the private sector in the country. With growing unrest in the country over unemployment among the locals, the Saudi government is now seeking to expand the programme to medium and small-scale enterprises in the country. Under the policy, Saudi nationals have to be employed in a 1:10 ratio in various enterprises operating in the kingdom, which effectively means every 10th worker has to be a local. Less for more Senior Indian officials, however, assert that there is nothing to be paranoid about the Saudi government’s decision to implement the policy to cut down unemployment among the locals in the country. This is what India might have also done if faced with a similar situation, they say. AR Ghanshyam, Joint Secretary (Gulf) in the External Affairs Ministry, even dismisses suggestions that the policy will lead to a large-scale deportation of Indians from the kingdom. A major chunk of the Indian work force in Saudi Arabia is from Kerala, though there are a substantial number of workers from other states like Andhra Pradesh, Tamil Nadu, Karnataka, Punjab and Rajasthan as well. According to conservative estimates, they send remittances to the tune of $27-30 billion to India every year. Give the word The Saudi authorities have conveyed to senior Indian ministers and officials that the policy is part of an ongoing attempt to generate employment for Saudi nationals and streamline the job market. They point out instances in the kingdom where youngsters go to Western nations for pursuing higher studies but do not get proper employment when they return to the country. This leads to frustration among the locals and hatred against the expatriates. Youth issues In many cases, unemployed youths in the kingdom have also become criminals or law breakers. After all, a youth sitting idle can easily be wooed towards the extremist ideology. Also, there is a strong political expediency to this logic. Those backing the Nitaqat policy to the hilt argue that if Saudi Arabia has to emerge as a modern nation, it cannot have a large number of its own people living only on government subsidies while much of the industry and businesses are run by the expatriates from different countries. It is becoming clear that when the policy gets implemented with full force, migrants without proper documents will face the wrath of the Saudi authorities. How many of them will return to India is anybody’s guess. There are a number of Indians who remain stay put in the kingdom on what is termed as “free visa”. The Saudi law clearly states that expatriates should work only under an Arab sponsor that brought them to the kingdom and engage only in the profession mentioned in their documents. However, the Saudi authorities have in recent years detected many cases in which an Indian comes to the kingdom for a specific job but moves on to take up another job to make more money, making his stay in the country illegal. The Indian Embassy and Consulates in Saudi Arabia are, meanwhile, working overtime to create proper awareness among Indian expatriates about the policy. Indian Ambassador Hamid Ali Rao has been regularly meeting top Saudi officials to discuss the issue relating to the welfare of the Indian community. The embassy has also initiated steps to help Indian expatriates effectively use the three-month grace period and legalise their stay or apply for emergency certificates to leave the kingdom. India is also impressing upon the Saudi authorities to ensure that Indian workers do not face large-scale job losses. |
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From Arab Spring to Nitaqat system
THE
Arab Spring which shook West Asia and parts of North Africa by their very foundations has changed the thinking in the region’s capitals. The ruling elites in the countries till now spared by the movement for a regime change seem to have become wiser. They are busy devising the best possible schemes to tackle economic and other problems of their nationals.
Their new strategy is, perhaps, based on the belief that political upheavals, experienced by Tunisia, Libya, Egypt, Yemen and Syria, can be avoided if the government creates a condition for people to lead a reasonably comfortable life. The Nitaqat (naturalisation) system, introduced by Saudi Arabia for private sector jobs, should be viewed against this backdrop. Under the Nitaqat law, every private business establishment employing at least nine persons has to ensure that 10 per cent of its work force is composed of Saudis. The last date for private companies to have their human capital in accordance with the new law was March 27. It was earlier not applicable to business establishments having nine or less employees. That concession is no longer there. Under the Nitaqat system, private companies will be categorised as “excellent”, “green”, “yellow” and “red”. The business concerns falling in the last two categories will find themselves in difficult straits. They will have to increase the number of Saudi nationals on their pay rolls to at least 10 per cent to come out of the dreaded zones. This will mean a large number of expatriates losing their jobs. Since Indians constitute an overwhelming majority of employees in the private sector in Saudi Arabia, they are bound to be hit the hardest. The Saudisation programme of private sector jobs has an interesting angle. As many as 49 per cent of the unemployed persons in Saudi Arabia have never attempted to get a job and an overwhelming majority of them — 82 per cent — are women. If the Saudis want that every citizen who is employable must get a job opportunity, this will mean there is a plan to encourage women to take up employment of their choice. The strategy is that no section of the population should face the problem of unemployment. Experts believe that all kinds of socio-political upheavals have come about in different parts of the world mainly because of an economic crisis. The Saudis obviously do no want to see such an upsetting scenario. It is felt that adequate jobs can be made available only with the help of the private sector. Hence the enactment of the law to force all private companies to set aside at least 10 per cent jobs for Saudi nationals. There is another little known fact that has come to the surface. The opulence seen in the cities is not there in the Saudi villages. However, the people in the rural areas can no longer be left to live the kind of life they have been used to so far. After all, the Ayatollah Khomeini-led revolution against the then Shah of Iran, Aryamehr Raza Shah Pehlvi, was caused by the widespread economic unrest in the villages of one of the region’s richest countries at that time. Whether the new scheme can save Saudi Arabia from the Arab Spring will have to be seen to be believed. |
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BUSINESS
IT was described as a “win-win” for both the Ambani brothers, Mukesh and Anil, as companies in their fold signed the first business agreement for sharing of telecom infrastructure, leaving behind the acrimony of the past few years. The Ambanis split in 2005 on acrimonious terms, leading to the division of the Reliance empire. The next few years saw the brothers involved in several battles, in and out of court. Sources close to the development said the hostility is over and has given way to cooperation in the form of a prudent business transaction. The recent Rs 1,200-crore deal between Jio Infocomm and Reliance Communications — for sharing RCom's 1,20,000-km-long inter-city fibre by Jio Infocomm for its 4G services — is being seen as just a precursor to a long list of business agreements between the two brothers. Spokespersons for both companies declined to comment. Synergy at work The stock market has already given it a thumbs-up, especially with the stock price of RCom soaring in the past few days, and the analyst community is watching things closely as there are expectations of more announcements of agreements in the telecom space in the next few days. Telecom is a business that for now has the maximum synergy for the two brothers to pool their resources. While Mukesh's Reliance Industries has interests in oil and gas, retail, petrochemicals, Anil's companies are in power, media, financial services and infrastructure. The agreement is being seen as beneficial for both groups. While Reliance Jio gets a readymade backbone for its 4G services, which saves it huge costs and time, RCom gets to monetise its network which it would not have used fully. And if one reads the fine print in RCom's recent press statement, then the deal for usage of RCom's inter-city fibre network could just be the beginning of a long line of telecom deals between the two brothers. The deal is the first in a “comprehensive framework of intended business co-operation” between RCom and Reliance Jio, the RCom statement said. Another synergy in the deal is that when the combined RIL started the telecom business and laid the optical fibre network, most of that team is now with Jio Infocomm and is conversant with the road map of the network. “RIL will avoid huge capex as it will get access to readily available telecom infrastructure, while for RCom the deal is likely to add incremental net profit of Rs 4-5/share,” Morgan Stanley said in a research report a few days back. As the deal is reciprocal, RCom will also be able to use Reliance Jio's network, as and when it is built. Sources point out that apart from savings on cost and time, it may be important to pool resources in the intensely competitive telecom sector in India. Asset facet Market watchers are throwing up various permutations on how the larger deal could unfold. For instance, a deal for sharing the tower infrastructure of Reliance Communication may even end up as a stake deal, with RIL investing in Reliance Infratel, RCom's passive infrastructure arm with 50,000 towers in the country. “If this happens, it would help R-Com monetise its tower assets by increasing its tenancy ratio, a research analyst said. The next part of the deal, say sources close to the development, could be for Reliance Jio to use RCom's intra-city fibre, which could net RCom far more than the Rs 1,200 crore size of the optical fibre deal. This is because intra-city fibre is far more expensive and complicated to build, with a plethora of municipal and logistical challenges to be faced. RCom has a fibre penetration of over 72 per cent in 330 cities across India where it currently offers 3G services. Most of these are the same cities where Jio Infocomm plans to launch 4G services to begin with. Another obvious extension of the deal would be the tower business. With over 50,000 towers countrywide, RCom is in a prime place to help Jio Infocomm roll out services quickly, yet saving tremendously on up-front capex costs. The resultant return for Rcom would be long-term recurring revenue. Stocktaking Analysts and market-watchers have also gone positive on the RCom stock ever since the deal was announced. While Morgan Stanley turned bullish on Reliance Communications and upgraded it to 'overweight' from 'equal weight' after company announced the Rs 1,200-crore deal with Reliance Industries' Jio Infocomm, it also raised RCom's FY 2014 earnings estimates by 125 per cent post the deal. “The risk-reward is skewed for the brave-hearted,” the Morgan Stanley report said. Morgan Stanley says that RIL's current deal with Rcom will enable it to mix and choose the infrastructure it needs to build and lease. It will be able to get this infrastructure at probably a fifth the rate of building its own network and save almost four years of execution time. RIL has paid $3 billion for acquiring spectrum to provide 4G services pertaining to data.
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But the problem for any Saudi company is that it will have to give a minimum of 3,000 Riyals (one Riyal is equal to about Rs 14.50). The implementation of the policy is believed to have been deferred since Saudi employers are reluctant to shell out huge amounts to pay to the locals for the same job for which they are paying meagre salaries to Indian and other expatriates. But the fallout of the recent Arab Spring in parts of the volatile region and the role played by the youth in the movement have taught a lesson or two to the Saudi authorities, which appear determined to implement the Nitaqat policy which, many fear, could impact the expatriate population. 
But the Saudi explanation is that the kingdom is faced with an alarming rate of unemployment — 12.2 per cent, according to a study by the Saudi Central Department of Statistics and Information. Their argument is that the number of jobless Saudis will come down considerably if all private companies in the kingdom employ at least one local person against 10 expatriates. A Saudi estimate has it that 3,40,000 firms functioning in the kingdom have no local employee at all.
That is now a thing of the past, and after the thaw since 2010, the Ambanis have come closer and the recent deal between Anil Ambani's Reliance Communications and Mukesh's 4G telecom venture, Reliance Jio Infocomm, marks the beginning of a new era of business cooperation between the brothers.