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Kingdom Maintains Saudization Is Not Racist: Repo Rate Stimulus
17 June 2009
JEDDAH: Deputy Labor Minister Abdul Wahid Humaid has refuted accusations that Saudization of jobs is a racist program. “It’s our legitimate right to create employment for our citizens. Countries in the East and West give priority to their citizens in employment,” he said. Humaid said the Saudization program was essential for creating jobs for the country’s unemployed citizens. He said the Kingdom would continue to depend on foreign workers to do many jobs. “Recruitment of foreigners to work in the private sector and for Saudi individuals will continue,” he added. At present there are nearly seven million foreign workers in the Kingdom. The Labor Ministry intends to Saudize more jobs in the hospitality sector. According to sources at the Jeddah Chamber of Commerce and Industry (JCCI), there are at least 30,000 jobs in the sector in Jeddah alone, and foreigners currently hold 99 percent of these jobs. Labor Minister Ghazi Al-Gosaibi spoke yesterday at a restaurant in Jeddah to encourage Saudis to take up more jobs in this vital sector, as part of efforts to reduce the unemployment rate among young Saudi men and women. The minister wore a waiter’s uniform during the event. “We should be ready to take up any jobs in order to have a brighter future,” Al-Gosaibi told the gathering. Khaled Fahd Al-Harithy, chairman of the hospitality committee at the chamber, said a study conducted by his committee showed that 97 percent of Saudis refused to work in hotels and restaurants because of their negative ideas about such jobs. Tarek Abdul Rahman Faqeeh, director general of Tazej restaurants, which has 112 branches inside the Kingdom and 12 foreign countries, disclosed his organization’s plan to train Saudis to take up various jobs in the sector. “More than 215 Saudis currently work in our restaurants,” Faqeeh said, adding that they represented 30 percent of the total number of his employees. Humaid said his ministry still faced many difficulties in Saudizing certain jobs, especially in the private sector. “Our ministry receives several applications daily from Saudis who want to recruit house servants. In many cases, the number of house servants exceeds the number of family members,” he pointed out. SAMA cuts reverse repo rate to stimulate lending The Saudi Arabian Monetary Agency (SAMA) yesterday lowered its reverse repo rate from 50 basis points to 25 basis points to boost credit growth. SAMA left its benchmark repurchase rate unchanged at 2 percent. “This measure was taken to normalize domestic money market conditions against the backdrop of stable macroeconomic activity,” SAMA said in a statement. Cutting the reverse repo rate usually encourages banks to reduce deposits with the central bank and so increases the incentive for commercial lending. Despite recent cuts, bank deposits with SAMA have more than doubled to some SR138 billion by end-April from SR55.4 billion by end-October. “SAMA continues to perform its part to help unlock additional funds onto the economy. It remains to be seen if the banking sector’s willingness to be risk averse by maintaining a conservative lending outlook toward the private sector would prevail given the rate change,” John Sfakianakis, chief economist at SABB, said. For the banks a reverse repo cut means that the economic cost of maintaining money with SAMA is reduced, he added. SAMA’s step, which takes effect immediately, is the latest by the government to stimulate bank lending that has so far come slowly despite earlier economic stimulus efforts. The cut is the second this year by SAMA. In April, it lowered the rate to 50 basis points from 75 basis points. “SAMA’s move will encourage the loan cycle for banks to lend more money to the private sector to enhance economic development,” Faisal Alsayrafi, managing director and CEO of the Jeddah-based Financial Transaction House, said after the central bank’s announcement.
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