Freeze extension on expat worker fee urged
Manama, June 17, 2012
Bahrain's businessmen have demanded authorities push back a freeze on fees for foreign workers to the end of the year, claiming they are still recovering from financial downturns caused by last year's unrest.
The BD10 ($26.52) Labour Market Regulatory Authority (LMRA) fee would negatively affect businesses as some were still struggling to stay afloat, they said.
Companies are supposed to pay the monthly levy for each expatriate they employ, but the tax has been waived since last April to offset the financial impact of the unrest on the private sector.
The government initially suspended the fee for six months, but later extended the grace period for up to a year to help revive the economy. However, it will now be reintroduced on July 1.
"The time is not right for this to happen," said Bahrain Chamber of Commerce and Industry (BCCI) contractors committee head Samir Nass.
"On the one hand, contractors in Bahrain are owed millions of dinars by developers even after their properties have been completed and on the other, it is the contractors themselves who have to pay all these fees."
Nass said the construction industry in Bahrain was still going through a rough patch and did not need the added problems that would arise from reinforcing the fees.
"The situation is such that we are grabbing every job we get, just to make ends meet," he stressed.
"There is no profit to be made any more. It will take a while for things to become normal. Until then, the LMRA fee should not be collected anyway."
Nass said the construction sector, which employs thousands of expatriates, should be given sufficient time to recover. He warned that if the levy was reintroduced, many would be unable to pay it.
"They will then end up with several kinds of restrictions and that will cause more problems," he added.
A report compiled by parliament, the Shura Council and the BCCI estimates that Bahrain's economy has lost $800 million since the outbreak of unrest in February last year - $200m through direct losses and $600m through indirect losses.
In March, parliament approved an urgent proposal to extend the suspension of the fee by another two years. However, the decision is yet to be reviewed by the Shura Council and Cabinet, before it could be enforced.
The collected fees are used to fund projects designed to support Bahraini businesses and train the local workforce.
Authorities last month slashed the LMRA fees by 50 per cent for establishments employing less than five workers. More than 41,000 companies will benefit from this. However, it will still be BD10 for firms with more than five expats.
Business owners said this was not enough and the suspension should extend until the end of the year.
"Business is already down, summer is here and this is a traditional time of little or no business," said Bahrain Four-Star Hotel Owners Association chairman Abdulhameed Al Halwachi. "In this situation, the last thing we want is to be burdened with this fee."
Nearly 3,100 expatriates are employed in Bahrain's four-star hotels, said Mr Al Halwachi.
"Most hotels are on a hand-to-mouth existence and are trying very hard only to stay afloat. However, this fee will affect them a lot. But rather than burden us again, the government should think of giving us more incentives."
BCCI board member and small and medium enterprises committee chairman Khalaf Hujair said companies in Bahrain were not ready to resume paying the monthly fee.
He said he had written a request for the suspension to be extended to BCCI chairman Dr Essam Fakhro, who had, in turn, informed His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa of the financial struggles faced by the private sector.
"Where is the business? We should not be asked to pay till we are fully back on track," he said. "We are hoping this fee will not be charged for a while until we get back on track."
Another BCCI board member and its retail and traditional markets committee head Jawad Al Hawaj said the decision has been taken at the wrong time.
"The retail trade depends heavily on expatriates and it is still suffering," he added. "We have suffered from the unrest and are now suffering from the consequences. The fee being reintroduced could spell very bad times for most traders."
Al Hawaj said businesses would be more than happy to continue paying the fee after they gain some sort of financial stability. "We are still not ready and do not mind paying when we are," he added. – TradeArabia News Service