Saudi Arabia has introduced a new residency permit for expatriates that allows them to remain in the kingdom without a local sponsor. This move marks Saudi’s first ‘reform’ to the Kafala system in recent times, with several local media outlets erroneously describing the initiative as the “abolishment of Kafala.”

However, the new reforms are primarily catered towards wealthy investors and businessmen with high capital funds to drive real estate demand and promote foreign investment. Other GCC countries have made similar self-sponsorship exceptions with the same motive, but these initiatives do little for the majority of the region's low-income expat workers.

What is the “Privileged Iqama” and who is it for?

The Saudi Shura Council has approved a draft law allowing non-Saudis to self-sponsor their iqama (residency permit).  This ‘Privileged Iqama,’ as officials have referred to it, will allow permit-holders temporary or permanent residence, subject to renewal.

Among other benefits, the holders of the ‘Privileged Iqama’ can obtain residence permits for their families and issue visit visa for relatives, recruit workers, own property, as well enter and exit Saudi Arabia without restrictions (Saudi Arabia remains the only GCC country which requires all migrants to obtain an exit permit from their sponsor in order to leave the country).

The Saudi government has laid out six conditions for migrants to be eligible for the new permit:

1. Must have a valid passport
2. Be no less than 21 years of age
3. Provide credit report
4. Must have a valid iqama, if they are already residing in Saudi  
5. Must have no criminal record
6. Provide a health report and be clear of infectious diseases

As of yet, there are no comprehensive details on the scheme's fees, or the financial standing required to be eligible for the  ‘privileged iqama.’  However, comments from public authorities make it clear that the initiative is aimed at expatriate business owners and investors in the country, in an effort to limit capital outflow from the Kingdom, boost real estate demand, and encourage investments in new economic cities and investment zones such as NEOM or King Abdullah Economic City. The ability for foreign investors to own property is key is to supporting these initiatives. 

Remarking on the 'Privileged Iqama,' Abdullah Al-Rabdi, a member of the Saudi Finance Association Council, said  “when the investor knows that he has a stable residence and the regulations are clear, he does not need to take out his money,” he added.

A not-so-new GCC trend

Similar initiatives have been taken in other GCC countries. In 2018, the UAE began to issue self-sponsored five- and 10-year residency visas to business owners, investors, and property owners, subject to minimum capital conditions.

Bahrain allows for expatriates to self-sponsor through property ownership in certain areas,  or 100% business ownership in certain sectors.  Qatar similarly allows expatriates to obtain residence permits through property ownership in designated areas.  In Oman, certain property owners can self-sponsor property visas but cannot be employed on such visas. 

Mega-real estate projects and economic cities have been central to GCC states’ diversification agenda.  For these economic strategies to materialise, they have had to make exceptions to the restrictive kafala system in order to attract and retain foreigners investors.

“No longer are expatriates simply needed as a source of ‘manpower’, but they are enticed to the region as travellers, consumers and indeed inhabitants of the urban space of the region. They are a source of purchasing power that actively need to be marketed to, attracted and recruited in order to travel through, buy, invest and even live in the region.

“Given the small national population of these countries, it quickly becomes clear that such projects cannot be targeted towards citizens as final users, but they necessarily have to be geared towards expatriates as end users. Otherwise, such projects necessarily will end up being ghost towns.”

^{Omar Al Shehabi, Gulf-based political economist, Migration, Urban Commodification, and the "Right to the City" in the GCC}

Putting a price on mobility

Expatriates who are owners of property and capital within these countries uniquely benefit from the fact that their legal status is now linked to their property or businesses, and no longer to a local sponsor or kafeel. However, this stability remains exclusive to the wealthy expatriates who are able to afford it; for the majority of low-income migrants, this freedom remains a pipe dream.

These policies are part of a modern global pattern of unequal migration politics, where wealthy migrants are able to reside and move freely while the poor face mobility restrictions. Transparency International reports that investment migration, where citizenship and residency rights can be bought, is a multi-billion-euro industry.

Meanwhile, lower-income expatriates in the Gulf experience increasingly more restrictive mobility. In July 2017, Saudi Arabia imposed a gradually increasing levy on expatriates – SR100 (a little less than USD30) a month for each dependent they sponsor, with the levy set to reach SR400 a month in July 2020. Likewise, Bahrain has raised the minimum salary required for expatriates to obtain family visas from BHD250 (USD 660) to BHD 400 (USD1,060). These policies have forced lower-income expatriates to leave and broken up lower-income families.

These regulations also worked against the intent to keep money circulating internally. Many families that would have spent money locally, on housing, school, transportation, and more, are no longer able to sustain themselves in Saudi. They end up sending their family home and remitting a bulk of their salaries.

	Property ownership	Business ownership
UAE1	Full property ownership in some areas 5-year renewable residence permit granted upon investing in property worth  AED 5 million (USD 1.36 million). Other residence permits and conditions specific to individual emirates	100% foreign ownership of business allowed in certain sectors. 10-year resident permit granted upon investing AED 10 million (USD 2.72 Million). 5-year residence permit granted upon investing AED 500,000 (USD 136,00)
Saudi Arabia	Holders of the ‘privileged iqama’ will be allowed to own property. Analysts speculate property ownership will be restricted to economic cities.	100% foreign ownership of business allowed in some sectors.  'Self-sponsored' renewable one-to-two-year residence permit
Qatar2	Full property ownership in designated areas Five-year renewable residency permit for property owners	100% foreign ownership of business allowed in all sectors No explicit mention of residence permit linked to business investments
Kuwait3	Property ownership restricted to Arab expats with permanent residence permits (further restrictions apply)	100% foreign ownership of business allowed in certain sectors, if approved by the Kuwait Direct Investment Promotion Authority (KDIPA) No explicit mention of residence permit linked to business investments
Bahrain4	Full property ownership in designated areas Renewable residence permit for owners of property that costs not less than BHD 50,000 (USD 132,600)	100% Foreign Ownership of business allowed in certain sectors 'Self-sponsored' renewable two to 10-year residence permit upon investing BHD 100,000 (USD 265,200)
Oman	Full property ownership in designated areas Two-year renewable residency permit for property owners	100% Foreign Ownership of business not allowed 'Self-sponsored' renewable two-year residence permit granted to investors

1 The UAE also allows 10-year residence permits for individuals with recognized special talents, though they must have an employment contract.  Retirees may be eligible for a self-sponsored renewable 5-year residence permit, subject to restrictive conditions including minimum property investments, a minimum active income, and bank guarantees.

2 Qatar has also opened avenues to permanent residency for long-term residents of Qatar, subject to a minimum income. 

3 Article 24 of Kuwait's Residence Laws permits self-sponsorship for certain individuals,  but it is not actively implemented according to recent reports.

4 Bahrain's Flexi-Permit scheme permit allows migrants with terminated or expired work-permits to self-sponsor, subject to monthly fees.  Certified retired foreigners may also apply for self-sponsorship, subject to conditions and minimum bank guarantees.

Misleading media coverage

It’s not uncommon for local media to hail an end to the Kafala system whenever new legislation or reforms related to the migration system are introduced.

Since the new Saudi legislation was approved, there has been a flurry of careless headlines and articles describing Saudi’s move as the end of the Kafala system in the Kingdom. Saudi news outlet Alarabiya headlined the news as ‘Privileged Iqama’ completely abolishes the sponsorship system,” while another headline reads: “Replacing the ‘Kafala system’ with the ‘Privileged Iqama’ ... will this end contractual “slavery and servitude” in Saudi Arabia?

Similar headlines appeared when Bahrain introduced the Flexi-Permit system, with local outlets like Al-Arabiya reporting  “Bahrain abolishes sponsorship system for foreign workers” Likewise, when Bahrain implemented a reform allowing migrant workers to change sponsors without their employer’s consent in 2009, many news outlets at the time described the move as the end of Kafala.   As recent as December 2018, inaccurate analyses in leading outlets continue to maintain that "In 2009, Bahrain became the first Gulf country to end this system."

When Qatar reformed some of its labour migration policies in 2015, there were similar instances of misreporting.  Arab News, among many other outlets, claimed “Qatar abolishes ‘kafala’ labour system,”  despite the reforms making little difference to migrants rights and mobility. Such uncritical coverage lacks analyses and obscures the issues at hand.  These erroneous narratives often take root and require rights' advocates to repeatedly unpack the meaning and practice of kafala.

Whether this coverage is the result of a poor understanding of the kafala system or a savvy PR move is unclear. But what is abundantly clear is that self-sponsorship for a select few does not mean the stranglehold of Kafala is loosened for the vast majority of migrant workers in the Gulf.