Saudi crack down on businesses run by foreigners

Saudi small grocery store

The government of Saudi Arabia is cracking down on illegal “cover-up” businesses which are nominally registered to Saudi Arabian owners but in practice, owned and operated by foreigners.

Under Saudi regulations, foreign-owned businesses face a complex licensing process and are tightly controlled. Over the decades, this system has not satisfied the demand for new businesses in a rapidly growing economy.

Such firms tend to be small and require little capital, but they are part of the sinews of the economy in many areas, ranging from mechanics’ shops to plumbing businesses, restaurants and market stalls.

Many of the roughly 9 million expatriates in the Saudi Arabia, who account for nearly a third of the population, have gone into business themselves. They enter the country on workers’ visas, then set up companies and illegally pay fees to Saudi citizens who act as front men for them.

Abdulwahab Abu Dahesh, a prominent Saudi economist, said there was no official data on the size of the illegal business sector but he believed cover-up businesses and other unregulated activities might be worth 700 billion riyals a year — or about a quarter of recorded gross domestic product.
In the last several months, however, authorities have begun to act against illegal firms as part of a wide crackdown on illicit economic activity by foreigners, which has seen tens of thousands of illegal foreign workers deported so far in 2013.
Many Saudis argue the cover-up firms make the economy inefficient, take commercial opportunities from local citizens and effectively deprive them of jobs, since the firms tend to hire lower-cost foreign workers. Unemployment among Saudi citizens last year was 12 percent, according to official data.

“Most of the grocery stores and mini-markets we see in Riyadh are formed under cover-up practices. This harms the economy as it employs more than the needed staff — instead of employing two or three you employ six or seven,” said Dahesh.
“It also leads to crimes and the emergence of customs and traditions that do not match those of our society.”

Some of the profits of cover-up businesses are sent back to the foreign owners’ home countries — a drain which Saudi Arabia can easily afford at a time of high oil prices, but which will become a burden if oil prices fall sharply. Workers’ remittances abroad, which include some of these flows, rose 3.7 percent to 107.3 billion riyals last year, central bank data shows.
Under a law issued in 2004 but until now not strictly enforced, Saudis and foreigners involved in cover-up businesses face up to two years in jail, a fine of up to 1 million riyals or both. The business is liquidated and the foreign owner is deported after jail term.

However, so far there is no clear sign that the crackdown is hurting the overall economy, and Labor Minister Adel Fakieh told Reuters last month that he was “not worried at all” by that possibility.
If all the cover-up companies reformed themselves to become legal and employed at least one full-time Saudi citizen, that would generate about 350,000 new job opportunities for local people, he estimated.
The alternative is for many of the companies to close down and if they do, that will provide opportunities for Saudi entrepreneurs to set up new businesses, he added.

Abdullah bin Mahfouz, board member at the Jeddah Chamber of Commerce and Industry, a Saudi businessmen’s association, agreed that cover-up companies hurt the economy but suggested that to minimize any dislocation, they be given time to legalize themselves.
One option would be to allow the companies to register as legal foreign-owned enterprises within a certain time, he said. Alternatively, the nominal Saudi

The real cause for the illegitimate businesses is widespread corruption. This is bad for the country and the economy. Some Saudis are creaming these businesses, doing no work themselves, and at the same time it is more difficult for Saudis to start a new business because they can’t work as cheap as the illegal businesses.
It would be good for the country to fix this problem. Hopefully this will end up in foreign businesses being legitimized, and make an end to the illegal sponsor system.


Read more: voa news


Saudi Arabia: The Presence of Public Relations



I became curious about the demographics and number of public relation firms within the Kingdom.  As I started my search, I believe I may have found a story within the story.

To begin with, there are a number of public relations firms located throughout the Kingdom.  The force behind some of these firms may be blurred in that it is difficult to determine if the key officials are Saudis or non-Saudis.

However, what truly surprised me the most in conducting this research is that the Saudi government had engaged a PR firm which was Jewish owned.  Given the limited lack of relations between Israel and Saudi Arabia, I never expected to uncover a Jewish owned firm providing public relation services on behalf of the Kingdom.

Another refreshing surprise was when searching LinkedIn with the key words public relations and Saudi Arabia, in addition to many male profiles, a number of female profiles came up too.  It seems that public relations is a viable and acceptable industry for women in the Kingdom.

Here are some of the numerous hits I received about PR firms in the Kingdom:

Traccs Public Relations with offices in Riyadh, Jeddah and Damman.

Tihama Advertising and Public Relations located in Jeddah.

This site provides a comprehensive list of PR firms in the Kingdom, to include the presence of the US firm, Hill and Knowlton, located in Riyadh.

This site contains even more listings of PR firms located throughout the Kingdom.

Saudi Arabia/Yemen/USA: Yemen from the view of an American

Intro: My name is Katherine Abu Hadal and I am an American who has been married to a Yemeni man for nearly 4 years. We lived in Yemen for three years and now we live in the US, and this is a snippet of what life is like in Yemen from my perspective. I really do love Yemen, and I enjoyed life there very much. However, I also want to give you a well-rounded picture of what the advantages and disadvantages are of living there. You can find more about me at, where I show people how to make Yemeni food in English and Arabic.

yemen 1


Yemen’s beauty derives from its antiquity and the charm and grace of the people. Old Sana’a, Wadi Hadramout, and Jibla are just a few of the ancient cities which seem to be preserved perfectly in time. The odd-sized steps and the tiny doorways in many of these old homes are details which instantly transport one to another place and time. Yemenis recognize the value of the ancient heritage and these old homes are among the most prized and desirable. Sana’a is also known as Shem (Sam) city; Shem is the son of Noah and he supposedly founded the old city. As often happens, architecture mirrors its people, and the Yemeni people reflect a set of traditional and decorated values. Honor and generosity to guests are some of the highest esteemed values.  This generosity extends not only to fellow Yemenis or Arabs, but is often magnified for those deemed as “foreigners,” usually synonymous with “non-arabs.”

I first traveled to Yemen in 2009 as a student studying Arabic. I can’t say exactly why I wanted to travel to Yemen, other than I wanted to travel off the beaten path of the usual westerner travel agenda. Plus I wanted to learn Arabic and Yemen is (or at least it was at the time) supposedly one of the better countries to go to learn Arabic. Not long after I arrived, I met the man who would later become my husband. We would hang out with friends and slowly we got to know each other. It’s not the usual way for relationships to develop in Yemen, but Esam didn’t (and still doesn’t) care much for rules or societal pressures.

After some time, I just knew Esam was the man for me. He had known from the beginning and he was ecstatic that I had finally realized that too. It took a bit of work convincing each of our families, but I am proud and happy to say that my Mom absolutely adores Esam and his family also loves and respects me a lot.

Yemen is most often in the news for the drone strikes and occasional high-profile terrorist incidents. It’s often portrayed as tribal and lawless, not only by the west but also its gulf neighbors. The word tribe carries a different connotation when translated into Arabic, however, and I will attempt to explain to you a little bit about its meaning as I understand it. Tribes (qabail) are organized political structures in Yemen. They exist alongside and at the same time integrated with the official government which is a Republic. People in Yemen often associate tribal lineage with pride and a high social status. Tribes are very powerful because they have the ability to mobilize many people quickly and they also control financial or other resources. They have certain powers and rules outside the scope of the government. Former president Ali Abdullah Saleh exercised much of his power through tribal lines.   yemeni tribes

As far as how tribal power is exercised, it is neither through dictatorship nor coercion. Instead, it is a mutually beneficial relationship which is subject to change by either party. Tribe members have the responsibility to mobilize for a cause when required by the higher-ups. Tribal leaders, or shaykhs, have the responsibility to mediate between disagreements between tribe members as well as to be generous in hosting social events and feeding the less fortunate. Despite a shaykh’s higher social status, they cannot force tribal members into action if what they are requesting seems unreasonable, and Yemenis, like anyone else, maintain their independence. A north Yemeni who spent many years in Al-Jawf described tribal figures’ limitations in this way, “No shaykh can even tell a child what to do.” (North Yemeni as cited in Koehler-Derrick, 2011)

Not every Yemeni has a favorable opinion of tribes. There are those that associate them with the uneducated and oppressive social structures which keep the powerful in power and others down. They are opposed to these structures which favor social ties, bloodlines, and loyalty over formal education and merit-based rule. A Yemeni in Aden, a former British colony, was quoted in 2009 saying,

“Most of what we have is what the British built when they were here. We haven’t gained anything from unification,” says a former colonel in the PDRY army, voicing a common sentiment as he waves his hand towards a row of bleak buildings. “I would rather have had the British here for 400 years than be ruled by Saleh and the Sanhan [President Saleh’s tribe]…Now everyone who has any power is a northerner,” he says. “The young people here have no chance to find decent jobs because they don’t have the tribal connections required to get them.”  (Horton 2009).

Unemployment and economic strife are major problems in Yemen. My husband was from I guess what you might call a middle-class Yemeni family. They were not the richest or the poorest in the neighborhood and they lived comfortably. But middle-class in Yemen also translates to what would be below the poverty level in the US. If we lived in Yemen, there would be no way to really save and get ahead and also be able to travel on that kind of salary. As a foreigner with a degree and who spoke English and Arabic, there are more opportunities for me to find work, but there are still not a lot of jobs which would pay a salary comparable to what I would make in the US.

We know many Yemenis that travel to the gulf countries for work, especially Saudi Arabia. That arrangement has been threatened over the years, however, (the first was after the first gulf war) and now “Saudi Arabia, home to about nine million foreign workers, began the crackdown this year to boost the proportion of Saudi citizens in private sector jobs from the current 10 per cent.” (Gulf news, Yemen does not possess the large oil reserves that its neighbors have. The bleak economic outlook combined with an explosive population growth and other factors such as lack of water has many analysts predicting an impending economic disaster for this country of nearly 25 million.

For all the troubles of Yemen, there are still things about it which makes it an easier county to reside in compared to the other gulf countries. I have traveled to Oman and Dubai and I have observed the hierarchy among the people, with westerners, Indians, Asians, foreign Arabs, and local gulf Arabs each in their own class with different rules which apply to them. Interaction between locals and guest workers is limited and can often be prejudiced. I have also read stories of foreigners married to Saudis who face discrimination and are not able to fit into Saudi society. In Yemen, I never once experienced this feeling as a foreigner. I was always welcomed into people’s homes as one of them. I also know many other foreigners (both arabs and non-arabs) who were also treated as such. To my disbelief, some people even mistook me for Yemeni. (Although I think it was a actually a way of being polite and giving a compliment)

yemen woman driving     Secondly, although Yemen is a conservative Muslim country like Saudi Arabia, it does not have the kind of religious policing which is present in Saudi Arabia. Women are allowed to drive in Yemen and many do. There is a social pressure to dress modestly, but I know many western women that don’t cover their hair or wear an abaya when they go out. Yemen is technically a republic which means that it has elections and is a democracy. Although it doesn’t seem to be a fully functioning democracy quite yet, it is one step ahead of the gulf monarchies in achieving a full democracy. People are not afraid to criticize the government or political leaders and there are several active political movements and parties.

Yemen has a sense of fierce independence and a long history which gives the country a kind of security, despite the signs of impending doom which are knocking at its gate. After all, Sana’a is one of the oldest continuously inhabited cities of the world. If it has made it through the floods of Noah, I suppose it will make it through today’s challenges.

Below is a recipe for Yemeni shakshuka, which is a popular egg and tomato dish in the Middle East and North Africa. In North Africa, it is usually eaten with poached eggs but in Yemen, it usually has scrambled eggs and is made with green chilis so it is spicy. They also eat a similar shaksuka in Saudi and the gulf countries, but I am not sure exactly how it is different. Served with milk tea and malawah bread or Yemeni roti, it makes the prefect breakfast or quick dinner.


5 eggs

3 plum tomatoes, chopped (or uncooked canned tomato sauce)

1 chopped onion

1 green chili (more or less to taste)

½ tsp. hawaij

2 tablespoons oil

Salt to taste (about ¾ tsp.)

Ground black pepper



1.      Heat oil, onions, chilis, and salt in a pan and cook the onions until they are slightly brown.

2.      Add the chopped tomatoes, hawaij and black pepper and cook until the tomatoes are soft, about 5 minutes.

3.      Lightly beat the eggs and add to the tomatoes. Let the mixture cook until half-way set, about 3 minutes, then stir the mixture slightly to ensure even cooking.

4.      Serve with bread and tea!



Horton, Michael. (2009). The Christian Science Monitor.  Why Southern Yemen is pushing for secession.  Retrieved November 9 2011 from


Koehler-Derrick, Gabriel. (2011). A False Foundation? Tribes and Ungoverned Spaces in Yemen. West Point: Combating Terrorism Center



yemeni tribes symbol:

 yemen woman driving:


Saudi Arabia: Saudiazation with so many Foreign Workers



As of 2012 there were more than two million foreign workers throughout the Kingdom.  This figure includes expatriates who are in executive level jobs to domestic workers and laborers.  However, the Kingdom is cracking down rapidly and strongly against foreign workers in the Kingdom in its effort to have many of these positions filled instead by unemployed Saudis.  The present unemployment rate of Saudis is 12.5 percent in spite of many of the Saudis having received higher education or technical training.

Most foreign workers in professional sectors are in the Kingdom because they have a skill or expertise that the Kingdom is unable to fulfill with a Saudi national.  However, Saudi Arabia has recognized they must build up their own indigenous workforce and are positioning Saudis to receive skills and expertise presently unavailable in the Kingdom through foreign scholarships abroad with the intent to ultimately replace many expatriate workers.

In the past six years, Saudi Arabia, under the auspices of King Abdullah, has greatly expanded educational opportunities inside the Kingdom within its medical and educational sectors.  There are now multiple universities where Saudis can receive training and education to become physicians, nurses, technicians and educators in a board spectrum of fields.

Although more challenging to fill due to the type of work, Saudi Arabia is making efforts to have Saudis work in positions as drivers or laborers.  Some Saudi women are taking domestic positions as well but they do remain a very small minority due to cultural resistance.

At the same time, the pool of now illegal and unemployed foreign workers in the Kingdom gets bigger each day.   This is in part to either employers terminating contracts with foreign workers and to a degree, due to some Saudis who sponsored expatriates into the Kingdom as their own money making scheme.  In this case, a Saudi would sponsor some expatriate workers who would find their own jobs, usually as drivers, and would pay the Saudi a fee each month for the sponsorship.  Jawazat (entity which controls the iqama residence permit) has been aggressively cracking down on expatriates who have overstayed after their employment has been terminated in addition to the expatriates who have been operating in the Kingdom as “freelancers.”

American Bedu has seen an increase in emails from expatriates who are employed but remaining in the Kingdom.  These individuals all ask for help in finding another job stating that they are responsible for supporting their family back in their home country and that there are less employment opportunities back in their home countries.

It’s a catch-22 in a sense.  It is understandable that Saudi Arabia wants to be more independent and less reliant on foreign help.  Naturally the Kingdom would like to see the funds of the salaries remain in the Kingdom too, supporting the local economy.  Yet it is also easy to feel sympathy for the expatriate workers who came to the Kingdom seeing an opportunity to rise the standard of living for their family back in their home country.

In closing this post, American Bedu is sharing three videos which all depict the fear expatriates feel when they hear the dreaded announcement, “Jawazat.”  (please note – video three is a spoof and pure humor)



Saudi Arabia: Expatriate Housing Decisions Made by Employer

saudi apt bldg


There seems to be a greater trend now among Saudi Employers in the Education Sector for the desire to have the expatriate employees consolidated.  In the past, expatriate employees were either assigned housing in an apartment or small villa or perhaps received a housing allowance and found their own housing. If expatriates had to share an apartment or villa, they were generally matched on being from the same region.

However, newer schools and universities are now having their own apartment building built next to the facility.  This is certainly convenient for the employer knowing that all employees are close by to the facility but it does not take into consideration cultural aspects or practicalities.

Like most employees, teachers do not want to live near the same place as they are working.  They need that break and separation.  It is important to have neighbors who are not colleagues.

One new school plans for all of its employees to live in the same apartment building – married, single, male, female, Saudi, expatriates, muslim and non-muslim.  In a place like Saudi Arabia where the culture is more restrictive and modest, a hodge podge of nationalities, cultures and religions can easily lead to conflicts.

A single Saudi woman may eagerly want the job as a teacher but could face strong family and tribal reaction if she were to live in the same building as unrelated non-Muslim men.

While in other places Muslims and non-Muslims can live easily side-by-side, the culture and traditions of Saudi Arabia make this more challenging.  At the end of a workday, a non-Muslim western expatriate would likely want to put on shorts and t-shirt, turn on some familiar music and relax without worrying what his/her Muslim colleagues next door might think.

Saudi Arabia is not the place where you intermix colleagues who are single, married, with or without children, or practicing different faiths in the same facility.

Ideally, there should be separate buildings for single men, single women and families or provide these employees with their own housing allowance.  Don’t consolidate them all into one large apartment building as presently proposed.

Nb:  American Bedu is aware of a specific educational facility whose housing plans are as described.  However, the name of the facility can’t be disclosed.


What if Saudi Arabia Blocks Skype and other VOIP Applications?

Communications Monitoring (3)



The Saudi Communications and Technology Commission has proposed that messaging applications such as SKYPE, WhatsApp and Viber be banned in Saudi Arabia because the Kingdom can’t control these applications.  This decision is based primarily on censorship and control.  The Commission has no control on what Saudi’s are saying using these VOIP applications as well as minimal to no control on how Saudis are using social media such as Twitter and Facebook.

In order for these services to remain available in Saudi Arabia, telecommunication and data carriers would have to make modifications in order to specifically allow monitoring.

Saudi’s Minister of Media and Culture, Abdel Aziz Khoga,  told Saudi’s Al-Watan newspaper that the Saudi people “have to take care of what they are writing on Twitter.”  Khoga further stated, “It is getting harder to observe around three million people subscribing to the social network in the kingdom.”

Saudi writer, Turki Al-Hamad, continues to be detained on charges that he insulted Islam on his Twitter account.  In addition, online activist, Raif Badawi, was arrested last June in Jeddah on charges of online apostasy.

While the Saudi government seems to be fearful of the freedom of expression applications such as Twitter, Skype, WhatsApp and Viper offer, these applications have helped facilitate business in the Kingdom.

For example, many Saudi companies and organizations are using Skype for job interviews of applicants who are not in the local area.  Many Saudi students have had interviews with Universities outside of the Kingdom over Skype.  On the personal side, Skype is an application which allows both Saudis and expatriates to keep in touch with their families regardless of location.  It would be a huge disservice for the Saudi government to shut down VOIP applications.  Yet, it then begs the question, should the telecommunication or data organizations modify their own network configurations in order to allow monitoring by the Saudi government?

Saudi Arabia: The Mindset Must Change

late payment



The average salary in Saudi Arabia (paid by a Saudi firm or individual) is 15,099 SAR (equal to US$4031.62).  The median is 11,500 SAR (equal to US$3070.64).    In fact, this link provides an excellent overview not only of salaries in the Kingdom but also salary comparisons based on what type of job is held.  It’s good information.

However, in spite of the salary stated, there remains an unsavory trend in Saudi  Arabia that salaries may be delayed or only a partial salary is received.  This trend is not only among expatriate workers in the Kingdom, but Saudi nationals as well.  Some Saudis have been forced to take a part time job to supplement the delayed or partial salary.  They can’t afford to quit the full time job as it does cover other benefits such as insurance and paid vacation.

Government jobs are not always exempt from the lack of or delay in salary.  When I worked for the Ministry of Information for Saudi Arabian Television my salary was often delayed and then I’d eventually receive four or five months of salary at one time…in cash!  I was a contract employee for the Ministry along with others and this was the typical way we were paid.

Another trend that many expatriate spouses fall for because they wish to find some kind of work in the Kingdom is the “testing of a perspective employees services.”  A company or an individual may express interest to locally hire an expatriate but prior to an official hire, the expatriate will be asked to do a project or provide services “gratis” (free of charge) so that the employer can evaluate their services and work capabilities first.  My advice is don’t fall for this.  You set a bad pattern for yourself as your time and expertise does have value – don’t allow it to be devalued.  Additionally there is less likelihood that the company will ultimate hire you but you’ll get referrals from “friends of the perspective employer” who also want to evaluate your services.

Usually if an expatriate (or Saudi) is working for the Saudi Government as a full employee (and not a contractor or consultant), a government owned-hospital or an entity such as Aramco or Sabic, there should not be worries about payment.  However, schools and even some banks along with other localized companies or individual employers will have a tendency to either not provide a full salary or pay late.


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