THE number of Pakistani workers going to the six-nation Gulf Cooperation Council (GCC) is on the decline, fuelling fears of a consequent fall in remittances from there, particularly at a time when the entire region in general and Saudi Arabia in particular is undergoing dramatic political and economic changes.
Pakistan’s remittances from the GCC — a regional union comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) — started growing rapidly from 2002, partly owing to post-9/11 developments and increased manpower export to that region.
But from 2014, our manpower export to the UAE, the largest market of the Pakistani workforce, has been on the wane. And from 2015, the same has been the case with Saudi Arabia, the second largest market.
Besides, as Saudi Arabia is now reshaping with its fiscal policies and expanding non-oil economy and as the UAE is fast emerging as a global business centre, the dynamics of manpower exports are also changing.
Though Pakistan has not yet experienced any major setback in remittances’ flow from these two countries, some signs of weakening are quite visible now.
If we look at annual remittances from Saudi Arabia, no big change has occurred in the past five years despite the fact that our manpower export to that country has seen a declining trend after 2015.
A major reason is that remittances coming from the more than two million Pakistanis already working in the kingdom and fluctuations in manpower export for one or two years cannot majorly disturb remittances.
However, 2017 is unique because during the first nine months of this year our manpower export to Saudi plunged to less than 25 per cent of what it was in 2016. Such a big decline is bound to affect the inflows from there.
The monthly average of remittances from Saudi Arabia fell to $443m in January-October this year from $484m a year ago. The impact of an even larger decline this year would reflect accordingly in next year’s remittances.
The 2018 remittances from the kingdom may also reflect a fuller impact of the July 2017 levy under which a tax of 100 riyals (Rs2,800) per month was imposed on each unemployed family member of foreigners living in the kingdom.
Many Pakistanis unable to afford this tax have started coming back home, and those who would prefer living there would obviously not be able to send as much foreign exchange as they did before the levy.
Pakistan has sought concession in this tax for its citizens living in Saudi Arabia, but it is difficult to predict whether the Saudi government can grant it.