JEDDAH – As the "collective bill" imposed by the Ministry of Labor and Social Development is threatening 40 percent of small and medium enterprises (SMEs) with extinction, the Shoura Council has decided to discuss the matter with senior government officials.
The Council of Saudi Chambers has arranged a meeting with Labor and Social Development Minister Ali Al-Ghafis and will press for revoking the bill, which forces SMEs to pay a monthly fee of SR400 for every expatriate worker it employed. A firm will receive a SR100 reduction per expatriate if it employed an equal number of Saudis.
Lawyer Khaled Al-Khaibary said some 2,000 owners of SMEs were planning to submit a joint petition to the minister calling for the cancellation of the controversial levy. They are also planning to file a lawsuit against the ministry in the Administrative Court to get the levy revoked.
Meanwhile, a number of businessmen said the new measure would force 30 to 40 percent of SMEs to leave the market as a result of the additional financial burden at a time of recession. It also comes after the imposition of other government taxes on businesses.
Many SMEs have been facing difficulty to pay back loans they had taken to start their projects. The present situation will push entrepreneurs either to close down their firms and face jail sentence for not paying loans taken from banks and other financial institutions.
Muwaffek Jamal, deputy governor of the Authority for SMEs, said his organization was making silent moves to discuss the issue with concerned officials. He did not say whether he had received any promises from officials to revoke the collective bill.
Abdul Rahman Al-Rashid, chairman of the Economic and Energy Committee at the Shoura Council, said the consultative body would discuss the issue in detail considering the problems raised by young businessmen and entrepreneurs.
Al-Rashid said the Labor and Social Development Ministry should have discussed the matter with the representatives of the SMEs before imposing the new fee. “It should have implemented an integrated program in coordination with the Council of Saudi Chambers before announcing the levy,” he said.
Khaled Abalkhail, spokesman for the Labor Ministry, did not respond to Al-Madina Arabic daily’s queries on the issue although he had been repeatedly contacted through phone and WhatsApp.
Thamir Al-Farshouti, chairman of the Young Businessmen Committee at Jeddah Chamber of Commerce and Industry, said the collective bill had dealt a big blow to SMEs, especially those who have just started their businesses after taking bank loans.
Meanwhile, the chambers have called for a meeting with Minister Al-Ghafis on Sunday to discuss the issue. They want the ministry either to cancel the measure or change it. The ministry has warned that firms that fail to pay the levy would not receive its services.
"SMEs represent 99 percent of businesses in the country and they play a significant role in strengthening the national economy. The closure of SMEs will make more Saudis jobless,” Al-Farshouti said while refuting the argument that the new bill would stop cover-up businesses.
Abdullah Falali, chairman of Young Businessmen Committee at Makkah Chamber of Commerce and Industry, said the collective bill had undermined many SMEs. He expected that 30 to 40 percent of SMEs would leave the market shortly as a result of the new fee.
There are three types of SMEs. Firms with one to five employees and earn a revenue of up to SR3 million; firms with 9 to 49 employees making a turnover of SR3 million to SR40 million; and firms with 50 to 249 employees having a turnover of SR40 million to SR200 million.
A group of businessmen and advocates have made a joint move to force the ministry to revoke the levy.
Abdul Aziz Al-Mughtarif, chairman of Abha Chamber, expressed his indignation over the ministry’s surprise decision. He said SMEs represent 90 percent of businesses in the Asir region.
He proposed that the ministry should not impose any fees on skilled foreign workers until it was able to supply adequate numbers of Saudis to replace them, especially in specialized industrial jobs. The ministry should provide financial support to private firms for training Saudis, he added.
“It’s not easy to Saudize jobs in the industrial sector within a day or two. So we should not consider the industrial sector like other sectors while implementing the Saudization program,” he added.
In a related development, Abdul Rahman Al-Atishan, chairman of Asharqia Chamber, sent a letter to Minister of Commerce and Investment Dr. Majed Al-Qassabi, saying the collective bill would incur heavy economic losses to SMEs and push them to closure.