$1.5-billion OFW remittances may be lost due to Saudi Arabia's Nitaqat program

By Paolo Romero, The Philippine Star

Posted at Aug 01 2011 07:00 AM | Updated as of Aug 01 2011 07:06 PM

MANILA, Philippines - Some $1.5 billion worth of annual remittances from overseas Filipino workers (OFWs) in Saudi Arabia could be lost because of the kingdom’s Nitaqat program, which requires more than 300,000 firms there to increase their hiring of locals, and lessen their employment of foreigners, an administration lawmaker said yesterday.

“There’s no question Nitaqat is a potential threat to the job security of some Filipinos in Saudi Arabia, particularly those whose skills can be readily replaced by locals there,” LPGMA party-list Rep. Arnel Ty said yesterday.

“For example, once Nitaqat becomes effective, Saudi citizens must comprise at least 10% of the labor forces of all construction companies, and a minimum of 70% of the staff headcount of all financial firms there,” he said.

Migrant workers’ groups have warned that up to 150,000 OFWs in Saudi Arabia could possibly be displaced by Nitaqat.

Citing Bangko Sentral ng Pilipinas statistics, Ty said remittances from Saudi Arabia amounted to $1.544 billion in 2010, or around 8.2% of the cumulative $18.763 billion in cash sent home by all OFWs from around the world.

From January to May this year, remittances from Saudi Arabia amounted to $616.19 million, up less than 1% from $611.03 million in the same five-month period in 2010.

“Saudi Arabia is one of only three countries in the world where more than $1 billion worth of annual remittances from OFWs come from. The two others are the United States and Canada,” he said.

OFWs in the US and Canada wired home $7.862 billion and $2.022 billion, respectively in 2010.

He said remittances from Saudi Arabia accounted for 52% of the $2.964 billion in cash received by the Philippines from all OFWs based in the Middle East in 2010.

The other large sources of remittances from the Middle East in 2010 were: the United Arab Emirates ($775.24 million); Qatar ($246.81 million); Bahrain ($157.23 million); Kuwait ($106.48 million); Israel ($57.28 million); and Oman ($55.76 million).

Under Nitaqat, Saudi Arabian firms not currently employing enough locals would not be able to renew the work visas of their foreign personnel.

Recruiters in Manila earlier said Saudi Arabia’s Ministry of Labor had deferred the Nitaqat’s implementation from August this year to March 2012, to allow employers there more time to comply with the mandate to enlarge their number of local staff.

Meanwhile, Ty said some P50 million has been set aside in the proposed 2012 Philippine national budget to support the reintegration of returning OFWs through livelihood and jobs programs.

This is on top of government’s P2-billion reintegration fund, recently launched in partnership with the Land Bank of the Philippines and the Development Bank of the Philippines, to provide returning OFWs sustainable business opportunities, he said.