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Filipino Overseas Contract Workers

Filipino Overseas Contract Workers

Here is an interesting article published on Quartz.com on November 27, 2016.  It is written by Therese Reyes and Isabella Steger.  It is about the Overseas Filipinos living in a wide range of countries, working and transferring their remittances back home.  They are, according to Wikipedia, known by a variety of terms with slightly different and sometimes overlapping meanings. The most commonly and officially used phrase is Filipino Overseas Contract Workers, acronym’d as OCWs .  

In the MENA region, the OCWs number was fast approaching a total of 2 million mark prior to the drop in oil price of June 2014.  These are concentrated mainly in the GCC countries with a predominant presence in Saudi Arabia, the UAE and Qatar.  

As a good illustration of the trend, TradeArabia reported back in March 30, 2016 that  OSN, a leading pay-TV network in MENA region, has increased the breadth of content for OSN Pinoy subscribers with the roll out of six new channels taking the overall number of OSN Pinoy channels to 15.

Duterte the hero! Filipinos working abroad say they’re coming home to a better Philippines

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Supporting Duterte from afar. (Therese Reyes)

Hong Kong :  Ever since Rodrigo Duterte became president of the Philippines in May, Ces, a 32-year-old Filipino domestic worker in Hong Kong, said she feels “very happy to go home.”

That’s because Duterte has done something to stamp out one of her biggest fears about flying back to Manila: “bullet planting.” Airport officials would extort huge bribes from travelers, after surreptitiously inserting bullets in their luggage and then detaining them for illegally carrying live ammunition. One Filipino domestic helper on her way back to her job in Hong Kong fell victim to the trap last year.

“I carried my bag like a baby,” Ces, who has worked in Hong Kong for two years after a stint in Kuwait, said of her previous trips home. Last year when she went home she kept pictures of Duterte, then the mayor of Davao City, in her bag so that anyone who opened it would be afraid.

Duterte’s bloody crackdown on drugs and insults of former allies have sparked criticism, but his staunch support of the rights of Filipinos working overseas—known as Overseas Filipino Workers, or OFWs—has won him widespread support from the community. They were key to him clinching the presidential election in May, and, interviews with over a dozen workers in Hong Kong show, remain among his most loyal fans.

They’re also one of the country’s economic engines. Over 10 million Filipinos working abroad send back billions of dollars every year, contributing around 10% of the country’s GDP.

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Despite their hefty contributions to the economy, at great personal and social cost, many OFWs say previous presidents have not taken their plight seriously. Duterte, though, has cracked down on the airport scam, streamlined the red tape involved with working overseas, and is promising the ultimate dream for many—a domestic economy so good they no longer need to leave their families to work again. This will be the last generation of OFWs, he has promised.

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An OFW working in Qatar says goodbye to her family before boarding a flight in Manila, January 12, 2015. (Reuters/Romeo Ranoco)

Previous presidents “only paid lip service to providing assistance and honoring the contributions” of OFWs, said Noel Pangilinan, an adjunct professor at the College of Mount Saint Vincent in New York who teaches Philippine history. Since the Ferdinand Marcos regime adopted the Labor Export Policy in the 1970s, “no Philippine government ever drafted a program to bring them home,” he said, “because they bring in money that props up the economy.”

During his presidential campaign, Duterte warned the staff of Manila’s Ninoy Aquino International Airport about bullet planting. “Everyone linked with bullet planting, kindly consider yourselves retired from government service,” he said. Then, he threatened to force anyone caught practicing the scam to swallow the bullets.

It didn’t come to that. Shortly after his inauguration, the president banned authorities from detaining passengers caught with bullets. This got rid of the fake investigation process, and scammers’ ability to intimidate and extort money from victims afraid of missing their flights or being charged. In Duterte’s first 100 days in office, transportation authorities said, there were zero reports of bullet planting.

Duterte’s Hong Kong fan club

Ces—who does not want to use her real name for fear of being attacked by Duterte’s numerous opponents on social media—belongs to the Hong Kong branch of a Duterte support group with 172 chapters around the world. She, like many others in the group, comes from Duterte’s hometown of Davao City, in the troubled southern part of the Philippines that has been long-neglected by the central government.

At an outdoor patio area of a Starbucks on a recent Sunday, the statutory day off for domestic helpers in Hong Kong, the group gathered to celebrate the birthday of Filipino senator Alan Peter Cayetano, a staunch Duterte ally and running mate. There was a chocolate cake with candles, a round of “Happy Birthday,” and a banner of Duterte and Cayetano hung on a nearby wall. Some wore big Duterte rings on their hands, and had Duterte stickers on their phones.

The women vigorously nodded in agreement at Ces’s bullet-planting fears, nearly all teared up as they discussed the husbands and children they had left behind, and were unanimous in one belief—that Duterte is the man who will give dignity and choice to the millions of OFWs around the world.

They call him Ang Huling Baraha, which in Tagalog means “the last card”—their only hope.

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Duterte’s Hong Kong OFW fans strike a pose during a Sunday meeting. (Therese Reyes)

 “He feels our feelings, he walks in our shoes.” “He feels our feelings, he walks in our shoes,” said 43-year-old Jennifer Daproza, the leader of the Hong Kong chapter, who works in an international school. “My vision is that being an OFW will just be an option in the future,” she said, decked out in clothing printed with Duterte’s face. Daproza’s husband lives in Manila, and was part of a traveling band of musicians with Duterte’s presidential campaign. She hopes to return home for good in five years.

The women are dismissive of any criticism of Duterte, attributing it to misleading or false reports about him in the mainstream Filipino media. Most get their news only from blogs, they said. Some say the killings associated with his drug crackdown were carried out by police out of self-defense. Others believe drug pushers deserve their punishment, and that any collateral deaths are unfortunate.

Duterte’s critics fail to understand that as mayor, he transformed Davao City from a crime-ridden no-man’s land to what some consider the Singapore of the Philippines, his Hong Kong fans say. Ces said one of her brothers is a drug user in Davao City, so she fiercely welcomes Duterte’s tough stance on drugs.

Pro-Duterte meetings like the one in Hong Kong are happening around the world, thanks to the widespread Filipino diaspora. As of 2013, there were over 10 million OFWs, according to the Philippine Overseas Employment Administration (POEA). There are about 173,000 Filipinos working as domestic helpers in 2015 in Hong Kong, and the city isn’t even among the top five destinations.

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In Hong Kong, Filipino domestic helpers earn around HK$4,110 a month ($530), three times the average non-agricultural monthly wage of $171 at home, according to Philippine government data.

The OFWs’ one-stop shop

In some cases, helping Filipinos working abroad has been as simple as streamlining bureaucracy. During a labor rally weeks before the May election, Duterte said that workers shouldn’t have a difficult time processing their application to go overseas, and that all required permits should be available in one building. That resulted in an OFW “one-stop shop” being opened in August in Manila, which had served 137,429 people as of Oct. 21, according to the POEA (pdf). There are plans to open more outside of Manila too.

View image on TwitterView image on Twitter

GOOD NEWS para sa mga OFWs! One-stop shop center pra sa mga overseas Filipino workers binuksan na sa Clark,Pampanga!

Before that, processing an application was a Herculean task that could take months and was extremely costly. Many OFWs come from provinces around the Philippines, and had to find room and board in the capital for the duration of the application process, as well as travel around sprawling, congested Manila to gather their paperwork.

Tin, another member of the Hong Kong group who didn’t want to use her real name, said she waited almost four months to process her papers in Manila before arrived here as a domestic helper. The 33-year-old spent some 100,000 pesos (about $2,000) in the effort. The trip from her factory workplace into the capital took two hours—and she had to make it frequently. The whole process was humiliating, she said tearfully. Still, Hong Kong wages are so much higher than what she can earn at home, that Tin stuck with it. Now she has a nine-year-old daughter in the Philippines who she sees only once every two years.
Duterte also promised throughout his campaign to start a fund of one billion pesos for every region in the Philippines to help micro, small, and medium enterprises, which is especially beneficial for OFWs who want to start their own business upon returning home. The Department of Trade and Industry’s plan for 2017 said it is devoting half of its 4.8 billion peso budget toward the initiative, with plans to promote products manufactured by small businesses in the country.

Duterte has been actively trying to help overseas workers facing difficulties abroad, too. A month-long government mission in August also aimed to help an estimated 11,000 OFWs stranded in Saudi Arabia, after their employers broke contracts as the local economy suffers under low oil prices. The problem is being compounded by Riyadh’s “Saudization” program, which aims to gradually replace foreign workers with locals, said Migrante International, an alliance founded by OFWs.
Duterte himself greeted 128 of those who were able to get back to the Philippines as they arrived at the airport. Mindful that many hadn’t been paid for months, he announced that each would be given 5,000 pesos. “Give me time to fix the economy, and you will have the opportunity to work here,” he told them.

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Philippine President Rodrigo Duterte poses with OFWs upon their arrival in Manila airport, Aug. 31, 2016. The workers were repatriated back to the country from Saudi Arabia. (AP Photo/Bullit Marquez)

Limits to Duterte’s power

While Duterte is building goodwill in the OFW community, some promises are wildly optimistic.
Anjo Dimacali, a representative of Migrante International, said that the impact of the government’s relief program in Saudi Arabia has been limited so far. For example, only 1,392 of the 11,000 or so workers had been repatriated as of early September, and a 500 million peso relief fund is already used up, with many affected workers unable to claim assistance.

While Duterte has the “political will” to help OFWs, “the only solution that will solve the issue of the Saudi OFWs is the [Filipino] government’s complete deviation from its labor export policy,” said Dimacali. The Philippines continues to suffer from poverty and a lack of jobs, which is why many Filipinos still want to work in the Middle East despite the worsening conditions there.

As such, Dimacali said the Saudi mission so far amounts only to a “band-aid solution to a deep wound.”

To heal that wound, the Philippines needs transform from a low-wage, agricultural economy into one that provides enough higher-paying jobs that make it economically viable for people not to leave home. The Philippines’ huge call-center industry is one bright spot, and is closing in on OFWs as the biggest contributor to GDP, but there are worries that Duterte’s ongoing anti-American rhetoric could undermine US investors’ confidence in the sector. Deep-seated corruption and poor infrastructure remain serious impediments to economic development. Duterte has vowed to tackle those problems too.

But some doubt whether the Filipinos working overseas now will see these problems fixed in their lifetime. Alejandro Reyes, an assistant professor at the University of Hong Kong’s politics and public administration department, called Duterte’s promise to create enough comparable jobs at home so OFWs can return a “holy grail idea.” Overseas wages are so much higher that “you’re not going to get to that level of pay in any short-term period” in the Philippines, he said.

Duterte’s Hong Kong fans are convinced, though. In between nightmarish stories about living abroad and inside jokes shared with the other women, Ces, who is single, talked about her dream of settling back in the Philippines by 2018. She’s unwavering in her conviction that Duterte will deliver on his promises, “because he succeeded in Davao.”

In her vision of the future, she is back home in crime-free Davao, and her drug-taking brother, who surrendered himself to the police earlier this year, is rehabilitated. She is running a funeral services business and knows she’ll never have to work overseas again—all made possible by Duterte.

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Net Migration to the UK is at an all-time High

Net Migration to the UK is at an all-time High

The BBC today  reported that net migration to the UK is at an all-time high, reaching 330,000 in the year to March, the Office for National Statistics has said.  The figure – the difference between the number entering the country and those leaving – is more than three times higher than the government’s target. 

McKinsey has produced this article on the topic of migration of people within their own countries and / or from one country onto another for reasons that are very often quite understandable.  As per this article and with reference to McKinsey’s proposed graph sourced through the UN Dept. of Economic and Social Affairs and others, one can see that  with respect to movement of populations, globalisation as it were of people is definitely at work. 

Global migration’s impact and opportunity

By Jonathan Woetzel, Anu Madgavkar, Khaled Rifai, Frank Mattern, Jacques Bughin, James Manyika, Tarek Elmasry, Amadeo Di Lodovico, and Ashwin Hasyagar

Migration has become a flashpoint for debate in many countries. But McKinsey Global Institute research finds that it generates significant economic benefits—and more effective integration of immigrants could increase those benefits.

Migration is a key feature of our increasingly interconnected world. It has also become a flashpoint for debate in many countries, which underscores the importance of understanding the patterns of global migration and the economic impact that is created when people move across the world’s borders. A new report from the McKinsey Global Institute (MGI), People on the move: Global migration’s impact and opportunity, aims to fill this need.

Refugees might be the face of migration in the media, but 90 percent of the world’s 247 million migrants have moved across borders voluntarily, usually for economic reasons. Voluntary migration flows are typically gradual, placing less stress on logistics and on the social fabric of destination countries than refugee flows. Most voluntary migrants are working-age adults, a characteristic that helps raise the share of the population that is economically active in destination countries.

By contrast, the remaining 10 percent are refugees and asylum seekers who have fled to another country to escape conflict and persecution. Roughly half of the world’s 24 million refugees are in the Middle East and North Africa, reflecting the dominant pattern of flight to a neighboring country. But the recent surge of arrivals in Europe has focused the developed world’s attention on this issue. A companion report, Europe’s new refugees: A road map for better integration outcomes, examines the challenges and opportunities confronting individual countries.

While some migrants travel long distances from their origin countries, most migration still involves people moving to neighboring countries or to countries in the same part of the world (exhibit). About half of all migrants globally have moved from developing to developed countries—indeed, this is the fastest-growing type of movement. Almost two-thirds of the world’s migrants reside in developed countries, where they often fill key occupational shortages. From 2000 to 2014, immigrants contributed 40 to 80 percent of labor-force growth in major destination countries.

Exhibit

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Moving more labor to higher-productivity settings boosts global GDP. Migrants of all skill levels contribute to this effect, whether through innovation and entrepreneurship or through freeing up natives for higher-value work. In fact, migrants make up just 3.4 percent of the world’s population, but MGI’s research finds that they contribute nearly 10 percent of global GDP. They contributed roughly $6.7 trillion to global GDP in 2015—some $3 trillion more than they would have produced in their origin countries. Developed nations realize more than 90 percent of this effect.

An executive summary of this study can be downloaded here.

We would recommend the reading a UK Government Office for Sciences study and publication.

IMF warns against Tax on Expats Remittances

IMF warns against Tax on Expats Remittances

At a time when the GCC countries are preparing to impose value added tax (VAT) whilst for some of the member countries are exploring other form of taxation to raise revenues.  But the IMF warns against Tax on Expats remittances.  This measure according to the IMF in a report may prompt multinational employees to leave the GCC countries altogether. 

Expatriate manpower in fact makes up 90% of the labour force in the GCC and already Kuwait had proposed imposing a tax of 5% on remittances of expatriates to their homeland but nevertheless the IMF elaborating commented:

“This will lead to serious brain drain if the local talents do not possess the same skills as their expatriate counterparts,” the IMF said before adding that taxing the income of foreign workers in the GCC will perhaps help the region boost its revenues, but it would also reduce the attractiveness of the Gulf in skilled expats.

In any case, “Most of expatriate workers in the GCC have relatively low incomes and remittances tax would be highly regressive as high-income and low-income workers would be taxed at the same rate,” the report pinpointing said that the tax could be difficult to administer as it might result in a parallel remittance transfer out of the banking system such as “To avoid being taxed, remitters would resort to unofficial channels of money transfers (cash transfers through friends, relatives or simply carrying money themselves),” the report warned and that international experiences showed that taxes on remittances have been rare and short-lived. 

GulfNews published on November 29, 2016  this article written by Cleofe Maceda, Senior Web Reporter.

IMF cautions vs Tax on Expat Remittances, Personal Incomes

Plans are deemed ‘regressive’ and can lower attractiveness of GCC as expat destination

Dubai: The International Monetary Fund (IMF) has cautioned against plans to impose taxes on remittances and incomes of expatriates in the UAE and the rest of the Gulf Cooperation Council (GCC) region.

A policy paper published recently by the global organisation said that imposing extra charges on money transfers in the Gulf would be “highly regressive,” given that the majority of expatriates have relatively low income.

It will encourage expatriates to resort to unofficial channels, to send money back to their home countries and pose “reputational risks” for GCC states.

Besides, even if a 5 per cent tax is implemented in all GCC countries, the biggest aggregate revenue – estimated to be around $4.2 billion or 0.3 per cent of the region’s gross domestic product (GDP) in 2015 – would not be enough to solve the budgetary deficits.

The GCC region is one of the biggest employers of expatriates in the world, and consequently, a large source of remittances, which hit more than $80 billion in 2015. As of 2014, five out of six GCC states had about 11.8 million foreign workers on their payroll, with over 90 per cent working in the private sector.

With oil revenues on decline, Gulf states have been looking for ways to raise funds. The GCC governments have recently agreed to implement value-added tax (VAT) which will come into effect in 2018.

There are no specific proposals on the collection of remittance tax yet, but the Gulf states have already been warned of the negative implications of such a move.

“The imposition of a remittance tax could raise production cost if it leads to higher pre-tax wages and production costs. This would lower competitiveness of the private sector, ” the IMF paper noted.

It would also be “inefficient and difficult” to administer as it would result in a migration of remittances out of the banking system and encourage “financial disintermediation.”

“This would result in deadweight losses as remittances are highly cost-elastic. To avoid being taxed, remitters would resort to unofficial channels or monetary transfers (cash transfers through friends, relatives or simply carrying money themselves).”

Personal income tax

Some GCC countries are also considering the idea of imposing taxes on personal incomes of foreigners. Given that the combined earnings of expatriates are significant, about 52 per cent of the GDP in the UAE and 7 per cent of the GDP in Saudi Arabia, the revenue from personal income tax could be substantial.

However, the IMF warned that the move could lower the region’s attractiveness as an expatriate destination and breach double tax agreements.

“This may be more of a concern in the case of higher-skilled workers who are likely to have more employment options. This could lead to a skills-shortage if nationals with similar skills are not available.”

Middle East 1 in 20 displaced people from their homes

Middle East 1 in 20 displaced people from their homes

As highlighted in this WEF latest article written by Emma Luxton, Formative Content, on human displacements in the world, most are from the north-east end of the MENA region.  This is due principally to a certain lack of good governance that is coupled to and / or consequent to the prevailing historically defined under-development of the majority of the nation states of the region.  The title of the WEF quotes 1 in 100 but adds later on in the article that in the Middle East 1 in 20 displaced people from their homes is the current picture. 

One objection, though, could be the huge numbers of expatriate workers displaced from their original homes in south Asia, the Philippines, Nepal, etc. and number up to 90% in some of the GCC countries are also displaced for this time obvious economic reasons.  Would not they count as displaced as well?  Meantime [. . .]

Nearly 1 in 100 people worldwide have been driven away from their homes

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Syrian citizens account for one in five of the world’s displaced people.

 

There are more than 65 million people displaced from their homes, a record high since World War II.

This amounts to 0.8% of the global population, or to put it another way, roughly the population of France; or of Canada, Australia and New Zealand combined.

Image: UNHCR

Image: UNHCR

The UNHCR, the UN’s refugee agency, has been collecting data on displaced people since 1951, and in recent years it has seen numbers increase drastically. In 2015 alone, 5.8 million people were displaced.

Conflict, persecution and human rights violations have driven people from their homes in search of safety. The UNHCR Global Trends report looked at the figures for 2015 and found that 24 people were forced to leave their homes every minute.

Image: Pew Research Center

Image: Pew Research Center

The UNHCR’s definition of a displaced person includes those who still live in their country of origin (internally displaced people), as well as those who have fled across borders (refugees and asylum seekers).

The Middle East is hosting many of the world’s displaced people, both the internally displaced as well as refugees and asylum seekers.

In fact, as this chart from the Pew Research Center shows, more than one in 20 people in the region are displaced. Many of them have fled the Syrian conflict, which has been a major contributor to the steep rise in people driven away from their homes.

Image: Pew Research Center

Image: Pew Research Center

Since the war began in 2011, almost 5 million refugees have made their way to another country in search of safety, and 6.6 million are now internally displaced within Syria.

Syrian citizens account for one in five of the world’s displaced people.

Countries with the most internally displaced people include Colombia (6.9 million), Syria (6.6 million) and Iraq (4.7 million).

Lebanon hosts the largest number of refugees in relation to the size of its population, with 183 refugees per 1,000 citizens.

Overall, Turkey is providing sanctuary to the largest number of refugees – 2.5 million people took refuge there in 2015.

Pakistan has more than 1.5 million Afghan refugees who have fled the conflict in Afghanistan, and who make up more than half of the displaced population living in the country.

Children are often those most at risk, and the UNHCR estimates that they made up over half of the world’s refugees in 2015.

Many were separated from parents and family, or travelled to a different country alone.

Speaking earlier this year, UN Secretary-General Ban Ki Moon warned: “We are facing the biggest refugee and displacement crisis of our time. Above all, this is not just a crisis of numbers; it is also a crisis of solidarity.”

Nativists Created Our Immigration Problems-They Can’t Fix Them

Nativists Created Our Immigration Problems-They Can’t Fix Them

We republish this beautiful article written by David Bier and published by Cato Institute on November 14th, 2016  It is about the hot issue of immigration of the US and titled Nativists Created Our Immigration Problems-They Can’t Fix Them. The Cato Institute is an American think tank headquartered in Washington, D.C. It was founded in 1977: Wikipedia.

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p style=”text-align: justify;”>Why this subject in MENA-Forum today, you might ask.  The answer would be simple and the current prevailing conjecture in the MENA could explain it very easily for without lengthily elaborating on the MENA some populations of oil-exporting and importing countries alike would most probably be currently going through a thin patch of dry not so green fields.  In view of the near to be confirmed trends, this is not likely in the close by future to diminish nor to be  reversed.  

This article is available to members of MENA-Forum only.

UAE / India Economic Forum

UAE / India Economic Forum

A second edition of the UAE / India Economic Forum will take place in Dubai in October.  It is aimed at increasing bilateral trade between the two countries.  An article on the subject is published by Arabian Business on September 2, 2016.  Arabian Business that is close to the subject, has published early this year, the List of the 50 Richest Indians in the GCC in 2016  and 100 most powerful Indians in the GCC.  Also and as reported by The Times of India, Indian expatriates were hit hard as Gulf economies slip on free fall in crude oil prices, the situation has not improved and to a large extent, should remain the same for the foreseeable future in the GCC whereas, it is getting notoriously known that India’s economy seems to be ‘flowering’.   What would the outcome of such a gathering be?

UAE, India to hold second summit to drive bilateral trade

Building on the success of the event’s first edition last year, Consulate General of India in association with UMS Conferences have announced that the second edition will take place on October 19-20 at Madinat Jumeirah.

It will provide a vital platform for business leaders and government authorities to discuss key opportunities for diversifying and deepening the economic partnership between the two countries, a statement said.

India is considered to be the UAE’s primary trade partner, accounting for about 9.8 percent of its total non-oil trade.

Bilateral trade between the UAE and India has grown significantly from $180 million in the 1970s to around $60 billion per annum, and is predicted to reach $100 billion by 2020.

Aimed at addressing the policy framework and guidelines needed to attract investors, sovereign wealth funds, large corporates and industries, the forum will include an investors roundtable, government panel on bilateral trade and a start-up zone.

Jamal Al Jarwan, secretary general of UAE International Investors Council (UAEIIC), said: “Economic ties between the UAE and India go back hundreds of years and we are proud of the two countries’ sustained efforts to strengthen this relationship further. As an initiative founded on the success of the two countries continued commitment to boost mutual bilateral ties, the UAE India Economic Forum provides UAEIIC members with a constructive platform to discuss challenges and opportunities concerning their investments in India.”

Ravi Raman, member of the organising committee, added: “We are enthused and encouraged by the tremendous support that the second edition of the forum is receiving. The UAE and India are stepping into the future with a renewed strategy for mutual business growth and we are looking forward to contributing to this partnership with an even bigger and impactful event with a range of speaker sessions, panel discussions and participation of government entities and well-entrenched business houses.”

The 2015 event attracted more than 300 delegates from the C suite as well as Ministry and Government officials in addition to business owners from UAE and India.

In May, five Indian-owned businesses in the UAE committed more than AED13.44 billion ($3.65 billion) towards infrastructure and industrial development initiatives in the north Indian state of Uttar Pradesh.

The milestone development was announced at the Uttar Pradesh Investment Forum and comes as UP Chief Minister Akhilesh Yadav’s government launched a programme to attract investments from across the globe, especially from the Middle East.

Remittances of the Maghreb migrants

Remittances of the Maghreb migrants

Every summer of each year, droves of North African emigrant populations established in Europe pours on the ports and airports of the countries of the Maghreb.  All year round however, Remittances of the Maghreb migrants could represent a non negligible plus for the local economies. 

Le Matin DZ published on 30 August 2016 this article written by Sherif Ali.  It i s fair to remember that at a time where migrants / refugees fleeing their desperate situation by moving north, here is an account of the reverse movement.  

This article is available to members of MENA-Forum only.

Professional Expats exiting Qatar

Professional Expats exiting Qatar

With the price of oil dropping, 2 years ago, restrictive budgeting generally was expected to end up with large numbers of professional expats exiting Qatar in a hurry.  The ensuing despair of knowing that oil price course would most probably not budge up is biting into many businesses in Qatar, company CEOs have told Reuters.

Qatar’s population recently blown to around 2.5 million people, with mostly Asian workers, is going through traumatic layoffs starting with the cream of salaried professionals.  Companies have been laying off thousands of well-paid expatriates of mainly non-technical background; the World Cup 2022 helping to maintain as it were, the momentum of construction pace steady.  

A down to earth article written by Tom Finn and published by Reuters on July 18, 2016 is well worth reading if only by intellectual curiosity.

How an   “Exodus of professional workers is reshaping Qatar” . . .

Five years ago Samer Habib left the United Arab Emirates and moved to Qatar where he opened a restaurant that turned a profit serving Lebanese salads and sandwiches to expats.

In June, the business folded.

The European lawyers and Indian clerks who for years frequented Habib’s restaurant have been leaving the country in recent months, he said, many laid off in sweeping cuts to public and private companies hastened by a fall in energy prices.

“Customers keep coming to me and saying: ‘Samer, this is my last sandwich’,” he said. “They say it’s been a tough year.” Like other Gulf states heavily dependent on energy sales, Qatar – the world’s top liquefied natural gas exporter – has sought to cushion the impact of lower oil prices on its finances by raising utility bills and slashing spending.

Many of the foreign workers who make up the bulk of the 2.5 million-strong population have been affected. Companies in Qatar that rely on government contracts are feeling the pinch and are freezing salaries and terminating contracts of expatriate engineers, lawyers and consultants from countries including Britain, France, the United States and India.

This trend risks increasingly polarising the country between wealthy Qataris at the top and Asian blue-collar workers at the bottom. Businesses that rely on the custom of professional foreign workers with their tax-free salaries and disposable income, including restaurants like Habib’s, private schools, car dealerships and shopping malls, could struggle to survive.

In 2015 state-run Qatar Petroleum let more than 1,000 foreign workers go as part of restructuring, according to the energy minister. Al-Jazeera, the pan-Arab satellite news network owned by Qatar, closed its American channel in April and has laid off 500 staff, most of them in Doha. Vodafone’s Qatar subsidiary said in May it would cut about 10 percent of its workforce.

FACEBOOK GROUP

It is unclear exactly how many of Qatar’s 1.6 million foreign workers are departing, and the country’s population is still growing due to an influx of Asian workers building highways and stadiums for the 2022 soccer World Cup. But industry sources, including three company CEOs, told Reuters that job cuts were widespread and tens of thousands of white-collar workers had been laid off in the last two years.

A Facebook group set up in March for departing expatriates in Qatar selling cars and second-hand furniture has over 50,000 members and is updated hourly. The small country is astonishingly wealthy – one of the richest in the world per capita – but faces a $12.8 billion budget deficit this year, its first in over a decade. The government in December halved its forecasts for economic growth and last month said it expects to run a deficit for at least three years as low natural gas and oil prices strain revenues.

The layoffs could further weigh on the economy. Hotels, malls and private schools – projects conceived when oil prices were high and Qatar’s winning of the 2022 World Cup was driving infrastructure and population growth – now compete for the custom of a dwindling middle class of professionals.

Mohammed al-Emadi, a real estate tycoon who has developed a $1 billion luxury shopping centre in Doha that will open in September, said the mall’s cafés and fashion boutiques will have no trouble drawing customers. But he concedes were it not for the project’s eye-catching design – a marble structure modelled on a 19th century Italian galleria with shops tailored to super-rich Qataris, whose jobs have survived the austerity – his business might be in trouble.

“Ten to 12 malls are currently being built in Qatar and soon they will open,” Emadi said, adding that some mall owners were having to drop rent prices to attract tenants. “This is not a good sign. In the current economy … the market can’t handle any more malls.”

Two other malls are set to open later this year – the Doha Festival City and the Mall of Qatar, a building equivalent in size to 50 football pitches with over 500 stores. Both projects have delayed their opening dates. Hotel owners, too, have concerns about an oversupply with government spending cuts affecting business tourism and leading to a 19 percent decline in hotel room prices in dollar terms this year, according to Ernst and Young.

Qatari politicians dismiss as scaremongering the notion of a capital flight. They say new facilities, including Doha’s Hamad International Airport, US university campuses, and world-class swimming pools and stadiums, will continue to lure residents and visitors to the country, regardless of oil prices.

BUILDING WILL DRIVE DEMAND

We are thinking long term, beyond 2022 (World Cup), and looking at areas of growth like regional tourism from the Gulf. Of course there is still room for malls and hotels … these things are encouraging people to visit and work here,” said a Qatari government official.

Some businesses, though, spy an opportunity in the exodus of workers. Second-hand car dealers in Doha run a lucrative trade buying used sports cars from foreigners departing in a hurry, which are then shipped and sold in Asian markets. Bentleys, Porsche GTs, SL63 Mercedes … pretty much every day we see one brought in,” said a Western businessman who has run a car dealership in the city for over a decade.

 

 

The effects of Saudisation on universities

The effects of Saudisation on universities

Al Arabiya of September 5th, 2013 informed that despite Saudi Arabia’s launch of initiatives to ensure better employment rates among its nationals, there is still a deficiency in the country’s labour market which affects its “competitiveness” in the global arena, as per the latest World Economic Forum report shows.  More recently , University World News ( Issue No: 419) published this piece by Manail Anis Ahmed  about the effects of saudisation on universities.

“Saudi Arabia’s policy of replacing foreign workers with its own citizens is known as Saudisation. Until very recently, the oil-rich Saudi kingdom has depended heavily on expatriates to fill jobs. Currently, however, the country is faced with a burgeoning young population that needs to find gainful employment. Unprecedented numbers of young Saudis are also returning to the country after benefiting from the King Abdullah Scholarship Program overseas.

The Saudi state has been working hard to absorb these qualified citizens into the workforce. As with all economic sectors, this has had an obvious effect on the substantial higher education industry in the country.

The Saudi Ministry of Labour has in recent years worked quickly to ensure the implementation of new Saudisation laws within higher education and both public and private universities have been quick to comply.

Workforce localisation at such a rapid pace has been unprecedented in this country – however, academia, for various reasons, has been ill prepared to deal with such a sudden paradigm shift.

How university business has been affected

Whereas teaching and research faculty in Saudi universities continue to be a more or less even mix of Saudi and foreign citizens, administrative positions have overwhelmingly been Saudised.

Until recently, the vast majority of university administrators – the departmental administrative assistants, curriculum developers, research centre directors, international engagement managers, quality assurance personnel and so on – have overwhelmingly been foreign citizens.

These have been the people tasked with establishing, developing, running and maintaining, as well as growing, academic departments and administrative units within universities.

In contrast, it has been easier for the human resource divisions of universities to justify the recruitment and retention of non-Saudi teaching faculty as Saudi applicants with the required terminal degrees and higher-level teaching and research credentials have been somewhat more difficult to find. Therefore, as opposed to teaching positions, university administrative positions have been relatively more quickly Saudised.

This has had an immediate effect on university business. For the most part, inevitably, things have slowed down. This is as much a result of Saudi professional culture as of the lack of previous institutional exposure and relevant professional training received by Saudi administrators. The leadership in Saudi universities must be given credit for having moved quickly and earnestly to meet this challenge.

Administrators have been provided with the best available professional development opportunities. Consultants – predominantly from Western, English-speaking countries – have been called in to provide training and development for Saudi professional staff. In addition, many Saudi staff members have been sent to prestigious venues abroad for multiple weeks of residential and immersive training.

However, on the flip side, this has added to the administrative, bureaucratic and financial burden of universities.

Read more at the above mentioned website  address .

 

Walk Free Foundation

Walk Free Foundation

Slavery in the world ?  Today ?  Where ?

According to a new and yet another report on the subject, this one by the Walk Free Foundation (WFF), slavery is still not only existent but prevalent in certain countries.  Qatar was ranked 5th in the world for slavery prevalence of modern day slavery.   The country has reformed its “Kafala” system in 2015 but has yet to put it into practice.   The reform of the so-calling foreign workers sponsoring into the country including regulation governing entry and exit form the country and changing jobs, migrant workers in the country were still dependent on their sponsors.

The construction sector, consisting of local and / or international employers alike, is notoriously known for all sorts of reasons to be as it were the greatest users of this type of manpower.   This was generally found to be one of the most dominant forms of slavery, reflecting the demand of cheap labour to build infrastructure related to the 2022 FIFA World Cup and the country’s National Vision 2030.

The new law should allow migrant workers to change employers and be tied into residency through only their employment statuses.   It is also argued that there was “widespread reluctance” to extend this law to cover the rights of domestic workers.

The WFF recommended that Qatar’s government create an independent reform commission to review labour rights, establish a minimum wage, include domestic workers under labour reforms and properly monitor the non-payment of wages.  Here is the introduction/preface of this report.

The countries with the highest estimated prevalence of modern slavery by the proportion of their population are North Korea, Uzbekistan, Cambodia, India, and Qatar. In North Korea, there is pervasive evidence that government-sanctioned forced labour occurs in an extensive system of prison labour camps while North Korean women are subjected to forced marriage and commercial sexual exploitation in China and other neighbouring states. In Uzbekistan, the government continues to subject its citizens to forced labour in the annual cotton harvest.

Those countries with the highest absolute numbers of people in modern slavery are India, China, Pakistan, Bangladesh, and Uzbekistan. Several of these countries provide the low-cost labour that produces consumer goods for markets in Western Europe, Japan, North America and Australia.

The countries with the lowest estimated prevalence of modern slavery by the proportion of their population are Luxembourg, Ireland, Norway, Denmark, Switzerland, Austria, Sweden and Belgium, the United States and Canada, and Australia and New Zealand. These countries generally have more economic wealth, score higher on government response, have low levels of conflict, and are politically stable with a willingness to combat modern slavery.

In summary, Qatar, according to this report that gives it a slavery prevalence rate of 1.36%, stood only behind North Korea (4.37%), Uzbekistan (3.97%), Cambodia (1.65%) and India (1.40%) in the Global Slavery Index 2016 by the Walk Free Foundation and in the MENA region, Qatar was followed by Iraq, Yemen, Syria and Yemen, which had estimated slavery prevalence rates of 1.13% each.

Read more at the above mentioned link.

 

GCC’s Expatriates Remittances Tax

GCC’s Expatriates Remittances Tax

Representatives to discuss tax on expat remittances . . .

Arab News 2016  reported that the Consultative (Shoura) Council of Saudi Arabia was expected to have a discussion last Sunday on a proposed tax on expatriate remittances.  The proposal from the Council’s finance committee had been drafted by a member of the committee, according to the above mentioned local media.  This comes in the wake of discussion in all GCC’s Expatriates Remittances Tax.

According to a Gulf Research Centre report released earlier this year, GCC countries are critical sources of global remittances, transferring billions of Dollars to mostly Asian countries.

The GCC countries were about 23% of the world’s $400 billion remittances in 2013 coming from the GCC region, representing nearly $90 billion, making Saudi Arabia the leading remitter not only in the GCC but also in the world.

This comes in the wake of discussions held in all GCC countries on this issue with some GCC countries are actively considering some taxation on expatriates remittances.

A GCC-wide VAT could be in place soon after the 6 countries have adopted a draft framework.  In the meantime, the UAE has already announced a 5% VAT as of 2018 with other GCC countries following shortly.

In the wake of the global oil price fall, all GCC countries are experiencing a decline in state revenues that they are trying to mitigate through finding other sources of income.

This week, Saudi Arabia unveiled its ‘Vision 2030’ plan that includes exploring new revenue streams with a view to breaking its dependency on hydrocarbon semi-annuity type of economy.  It is planning to adopt the path-breaking ‘Green Card’ but only in 5 years’ time.

Other topics that are being debated in Saudi Arabia include the annual performance reports of a number of government agencies.  Also under discussion will be other topics that include topics on water, agriculture, and environment particularly concerning the new water and power tariff.

The council’s health committee’s report on regulations concerning pharmaceutical facilities, private health facilities, and health care professions were on the agenda with a particular look at those reports to be scrutinized as included in the Human Resources Development Fund submitted by the committee on management and human resources; the report of the committee on transportation, telecommunications, and information technology on the General Authority for Civil, and the committee on economy and energy report on the Ministry of Petroleum and Minerals.  We shall report on the outcome as soon as it is available.

 

 

From Riches to Rags in the GCC and back  .

From Riches to Rags in the GCC and back .

Life of an expat worker in the GCC.

For most people, the year 2008 evokes memories of global economic collapse.

Personally, that was the zenith year of my career and I directly attribute it to being recruited to work in the Middle East.  Nothing could have prepared me for witnessing the prolific amount of construction activity, real estate development, conspicuous wealth…as well as the horrible, abject poverty.

Arriving for the first time in Abu Dhabi, the 24-hour flight from Houston, Texas landed in the early morning.  My company provided a personal escort to navigate me through the airport, Customs Department, and out to my awaiting private driver.  The chauffeured car was a luxurious new 700 Series BMW and not a “crazed taxi driver from Abu Dhabi” as I had envisioned from the 70’s American TV show, Taxi. 

The velvety black night sky was lit up only by street lights and few buildings.  When we drove past the Grand Mosque, it magnificently dominated the view.

Abu Dhabi MosqueThis gloriously awe-inspiring structure took 20 years to build as the shrine and accolade to the late and most beloved Sheikh Zayed.  Within my stay in the United Arab Emirates, I would see all the grandest architecture/construction wonders of the country including the two largest shopping malls and the tallest building in the world.  As a professional interior architect, discovering these buildings first-hand was a rewarding endeavor.  I knew that I had finally found and lived in “the promised land of milk and honey.”

By the time of my last trip to UAE in 2014, I had a turn of fortunes and a first-hand experience of living in poverty and how discrimination impacted the lives of other people.

Going from a $5,000 per month luxury hotel stay to staying in a an expat workers flop house with 20 roommates (of Indian, African and Philippines descent), I flew out of Dubai financial broke, traumatized and forever enlightened.

These housing accommodations are not apartments for rent, or rooms for rent, instead they are a single, twin-sized mattress or top/bottom of a bunk bed for rent, sharing one and a half bathroom, one kitchen and one small dining table…and no common living room nor closets, wardrobes or dressers.

Typically, they are one or two bedroom apartments that are converted to high-density living quarters for the many minority laborers.

Privacy between the beds was arranged using hung  linen sheets.  Many married couples shared a single bed and there were eight adults in one room where I stayed.

Eventually our landlord provided thin metal space partitioning dividers that were approximately 7’ high.  These enclosed tightly around each bed leaving approximately 18” space in front of one side of the bed as our personal, circulation space.  Having the enclosure with a sliding door was a relative upgrade and a very much welcomed improvement…for which the monthly rental amount was doubled.

The outside open patio was a makeshift closet to hang all clothes…not just the wet ones.  The smells of cooking rice and fried fish and shrimp constantly permeated the air as the residents worked all hours of day and night, coming back at different times and start with a cooked meal before hitting the pillow and sleep off the rest of the day or night.  The kitchen sink and counters were usually filled with pots full of preparations of exotic ethnic foods.

Expat workers rightsRegardless of their countries of origin, everyone living in our home was fluent in English and eager to speak and share their experiences and food with one another.

It was an absolute squalor by European and American standards but it was no doubt a common way of life for the expatriate working class of  the Philippines, India, Pakistan, Nepal and Africa who migrate to the rich lands of the Middle East in search of employment and a better standard of living.

How much did all this cost?  600 AED or $163.36 in USD per month .

The sight and sounds of the low-flying jets that flew over my apartment…every few minutes…kept me hopeful that one day maybe, I would, after falling from riches to rags, be able to go back to my usual riches.