The Hindu Business Line : The end of golden dreams

For the thousand-odd expatriate workers in Saudi Arabia, who ruled the gold market for years, the prospects of a flourishing bullion business seem dim, thanks to the recent Saudisation drive.

These days, an eerie silence prevails in Saudi Arabia's famous gold market in the capital Riyadh, Jeddah and elsewhere. With thousands of expatriate workers, who ruled the gold market for years, out of job thanks to the Kingdom's Saudisation drive which means jobs for the locals, prospects of the gold business seem under cloud for the moment. The worst hit are the Indians and the Yemenis, who dominated the scene till the Saudisation drive came into effect on February 21 to ensure at least 25,000 jobs for young Saudis. Apart from its black gold — the precious petroleum resources — Saudi Arabia is also known for its gold markets spread across its key cities from Dammam and Al-Khobar in the East to Jeddah in the West. Exquisitely carved gold jewellery is too tempting especially for Indian women. The widely acclaimed quality and the customer trust is the core of this business.

It is little wonder that the Kingdom's gold market is regarded as one of the largest in West Asia. . It is estimated at $5 billion. The country has about 6,000 retail shops with Jeddah dominating with 1,300 shops. Nearly half of the gold shops in the country were, hitherto, owned by the expatriates through Saudi sponsors who shared part of the profits by simply lending their names! These expatriates, in turn, employed their kith and kin and carried on the trade for years.

Sensing the growing need to provide jobs to the locals, the Government wanted 100 per cent Saudisation in the gold business by 2002 but extended the deadline till 2003. With the authorities refusing any future extension of the deadline, the inspectors' squads have started keeping a tight vigil to ensure that the gold shop owners comply with the directive.

"The business will suffer a temporary setback due to loss of qualified manpower, as there is considerable skill involved in this trade. But this is a good opportunity for Saudis to make their mark," says a Saudi owner in Al-Batha, Riyadh's satellite hub for gold market. The authorities have warned that violators of the law would be fined twice and the shops would be shut in case of third violation.

On the other hand, guilty foreign workers face possible deportation. The law-enforcing agency has made it clear that they will not spare locals who cover up illegal gold businesses of expatriates.

Apart from the skills, Indians and Yemenis are known to accept low wages and hence were in demand in this sector. So long as their status was legal they had an overwhelming presence in the market. Now, that they are compelled to leave the trade they have mastered so well, they have lost their livelihood.

Some Saudis fear for the gold business itself. They believe that new development could see black marketing and illegal flourishing of the gold business. Sensing problems, some owners have relocated their business to nearby Dubai, while some have simply closed down. But authorities dismiss these fears and say the importance of expatriates who did the job in the past is overstretched. The Saudis do possess skills in this area. "The key issue is wages," says an owner.

The Government, on its part, is helping young Saudis in all possible ways. The Jeddah Chamber of Commerce's gold and jewellery committee has even entered into agreement with the World Gold Council to establish the first institution for teaching and training young Saudis as goldsmiths. The institution is to be established in Jeddah.

"The skill is not foreign to us. In the Eastern province of the Kingdom the gold business is managed 100 per cent by Saudis. Here, the tradition of passing the trade from one generation to another has been kept alive. The rest of the country has to simply follow suit, as there is no need to depend on expatriates any more," says a shop owner Mohammad Al-Harthy.

He says quite a few owners Saudised their shops taking advantage of three-year grace period granted by the Government. Meanwhile, with the law coming into force, for thousands of expatriates, Indians in particular, it is the end of their golden dreams.

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