Nitaqat: 200,000 firms closed down
More than 200,000 private firms have been closed down in a single year for failing to meet the conditions set within the Nitaqat nationalization program aimed at reducing unemployment among Saudis.
There were around 1.8 million private firms in 2013, compared with almost 2 million firms before the program was put into effect, said a Labor Ministry report.
Badr Almotawa, a Saudi business analyst, said most of these firms left the market because of the government’s campaign against illegal cover-up businesses and residency and labor law violators.
“As many as 36,951 companies remain in red and yellow categories of the Nitaqat, as they failed to employ an adequate number of Saudis,” Almotawa told Arab News.
More than half a million expats work in red and yellow-zoned companies, in which Saudis only account for eight percent of the total workforce.
Similarly, there were more than 17,000 companies classified in the red category of the nationalization scheme, including 16,498 small-sized firms, 786 medium-sized firms, 29 big companies and one gigantic establishment.
Among the 19,637 companies in the yellow category, meanwhile, 16,654 are small-sized enterprises, 2,833 medium-sized, 146 are big firms and four are gigantic companies, the ministry said.
Almotawa urged Saudis, especially the less educated, to make use of the Kingdom’s investment climate and start up small and medium-sized firms.
“Many Saudis are reluctant to do business because of a lack of awareness and experience,” he pointed out. He also urged the Human Resource Development Fund to establish training centers for Saudis.
“Saudi Arabia is the best market for business since there are no taxes,” Almotawa said, urging commercial banks and various public and private agencies to support Saudis to open SMEs and small-scale industries.
“Private firms must give a salary of at least SR6,000 to attract Saudis,” he said.