Jakarta (Indonesia Window) – The Saudi government will abolish the sponsorship system which will be effective starting in the first half of next year.

More than a million expats are expected to benefit from the move, according to Saudi Gazette, citing an online business daily, Maaal.

The Saudi Cabinet took that historic decision on May 14, 2019.

The kingdom government was supposed to announce the abolition of the sponsorship system in the first quarter of 2020, but it was delayed due to the outbreak of the Coronavirus pandemic.

The Ministry of Human Resources and Social Development of Saudi Arabia will make an official announcement regarding this matter in the coming week.

The sponsorship system that has been applied for about seven decades will be replaced by a work contract that regulates the relationship between employers and foreign workers.

The current system, also known as the kafala system, binds workers to their employer or sponsor, who is responsible for the employee's visa and legal status.

The removal of the sponsorship system is part of another initiative looking to improve the quality of life for expats, particularly for housing and entertainment.

The move will be the latest in a series of economic reforms being carried out in line with the Kingdom Vision 2030.

The abolition of the sponsorship system will give expatriate workers the freedom to get exit and re-entry visas, receive a final stamp of an exit passport without sponsorship, and get a job without sponsorship approval.

With the abolition of that system, foreign workers will also have freedom of movement as stipulated in the work contract.

The new system also aims to prevent negative activities such as black markets for runaway workers and iqama (residence permit) offenders, in addition to internationally classified offenses included in human trafficking clauses.

For Saudis, the elimination of the sponsorship system is expected to bring many benefits to the local labor market and support the competitiveness of citizens against foreigners, as well as stop cases of runaway workers (huroob).

The new system will also simultaneously attract foreign workers with extra competence and expertise from various countries.

The final abolition of the sponsorship system comes as the next step after the introduction of Special Privilege Residency Permit (Premium Iqama).

The Premium Iqama provides an opportunity to all those who have ties with the Kingdom, irrespective of their nationality, to obtain a permanent or temporary residency that would grant them many privileges as well as the chance to avail of several services for themselves and their families.

The new law allows expatriates, who are holders of this iqama, to enjoy several privileges hitherto extended only to citizens. These included owning real estate, renting out of properties, educational and health services, and other utilities specified in the Executive Regulations.

Sponsor system

The sponsorship system has been implemented in Saudi Arabia for decades.

It allows some employers used to hire foreigners for low wages and poor working conditions at the expense of Saudi youth.

Under that system, a worker is obligated to work for his sponsor, and they cannot work for another employer unless the sponsorship is transferred through formal channels.

Reporting by Indonesia Window