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Saudi landlords go to court after several expats ‘shut shop’ and leave

The shops were leased by Saudi nationals and illegally run by expatriates on a profit sharing basis, according to reports

by Staff writer

January 21, 2019

The owners of many commercial buildings in Madinah have filed lawsuits against Saudi citizens who have refused to pay shop rents after expatriates running the stores left the country, local media reported.

The expats were running the stores under “tasattur” arrangements – under which Saudis rented the stores from the landlords in return for roughly 10 per cent of the profits.

The practice is illegal in the kingdom and officials have intensified inspections across the country.

Sources told the Arabic daily Makkah that 50 lawsuits were filed in courts against Saudi nationals who have not paid store rents. The lawsuits also sought payments for stocks that the expatriates took away without paying the suppliers.

The expatriates operating the shops reportedly abandoned the businesses after the ministry of Commerce and Investment warned that those caught violating the rules will face strict penalties including two years in prison, a fine of not less than SAR1m and deportation, Saudi Gazette reported.

Saudi Arabia has been cracking down heavily on illegal workers and residents and has been detaining people for residential, labour and border security regulations since November 2017.

According to the latest update – which recorded data until Thursday, January 3, more than 2.3 million people have been arrested in the kingdom since the start of the campaign.

Among the 2,376,215 people arrested, over 1.8 million violated residency regulations, 364,636 flouted labour laws and 165,327 were caught for border violations.

Read: Saudi arrests over 2.3 million in continuing crackdown on illegal workers, residents

The crackdown is taking place amid a wider exodus of legal foreign workers, which comes amidst increasing fees on expats as well as a strict Saudisation policy in the retail and wholesale sector.

Since November 2012, the kingdom has charged SAR200 ($53) a month for each foreign worker at private sector companies where the number of expatriates exceeds Saudis.

This fee increased to SAR300-400 ($80-$107) per foreign worker in 2018 and will rise to SAR700-800 ($187-$213) by 2020.

More recently, the country has imposed job restrictions in 12 retail roles as part of which those facilities will have to ensure that at least 70 per cent of their staff are Saudi nationals.

The restriction applies to automobile and motorbike showrooms and shops selling items including ready-made clothing for men and children, home and office furniture, household goods and utensils, electrical and electronic appliances, watches, glasses, medical devices and equipment, construction materials, auto spare parts, confectionery and ‘carpets of all kinds’.