Foreign assets? Saudi Arabia introduces golden visas for expats

For the first time, the scheme will allow visa holders the freedom to buy property, create businesses without Saudi sponsors, change jobs without contacting sponsors, exit the country without permission, and sponsor family member visas - a huge change to more restrictive visa regimes that have dominated in the past.

At present, over 10 million live and work in the Kingdom under the existing system, which requires visa holders to obtain permission from sponsors to leave the country and to change jobs, and, perhaps most notably, prohibits them from buying property or starting businesses without local partners.

The UAE made a similar announcement and last month repatriated 2,500 people through a new golden visa scheme. The system, approved by the cabinet in May 2019, grants 10-year residency for five types of expatriates: Investors, entrepreneurs, chief executives, scientists and 'outstanding' students, with no restriction on age.

The advent of these new policies in the Gulf specifically signals a change in thinking about foreigners

Under the same scheme, executives with monthly salaries of at least $8,100 can apply for the visa but must have at least a Bachelor's degree or five years' work experience, as well as an employment contract. This new visa, like the one in Saudi Arabia, is meant to "facilitate business and create an attractive and encouraging investment environment."

Such long-term residency visa schemes, often called 'golden visas,' are becoming a popular means for Gulf countries to spur foreign investment in real estate and business, since ambitious diversification plans have not yielded results as quickly as was hoped.

When Mohammed bin Salman first mentioned the idea in 2016, he estimated that it could generate revenue of $10 billion yearly by 2020; it is thought that foreign-created business could also hire nationals and ease Saudi Arabia's unemployment.

While other Gulf states have not yet introduced exactly the same measures, Qatari Emir Tamim bin Hamad al-Thani issued a decree that would grant five-year residency to investors.

The previous September, the Emir had signed a decree allowing 100 expatriates each year to receive permanent residency and thus granting them commercial rights. Oman is also said to be mulling a new visa scheme, and Bahrain announced in June 2018 its intention to introduce a similar self-sponsorship visa scheme for 10-year residency.

Importantly, though, the Gulf states are by no means the only countries using visas as a means of garnering investment.

Similar programmes exist in 60 countries worldwide, including Latvia, Montenegro, Panama, Thailand, and the UK, whereby visas or even citizenship can be procured through a flat fee or large donation.

Montenegro's golden visa programme, launched in October 2019, is projected to raise some $1 billion within three years.

International bodies like the European Union and Transparency International, however, have flagged issues with a lack of transparency for these visas, which make corruption and criminal activity easier to conceal.

These schemes have also created a new enterprise in itself. For instance, the Citizenship by Investment Property Fair and Conference is just one business that helps to advise high net worth individuals, developers, real estate agents, and businesses as to where to apply for golden visas, some of which have a 90 percent success rate, to enable international investment.

The advent of these new policies in the Gulf specifically signals a change in thinking about foreigners, who have sometimes, particularly since the advent of austerity measures post-2014, been deemed as taking more than they give back to these societies.

Golden visa programmes, however, show that expatriates are increasingly being seen as assets, able to contribute to economies of these states which are not diversifying as quickly as they may have been expected to.

Importing investment is not necessarily a long-term strategy, nor is it particularly sustainable

Certainly, inviting foreigners to apply for longer term visas is a far cry from Kuwaiti MP Safa al-Hashem's proposal to charge foreigners for the air they breathe and demonstrates a willingness and even hope for expatriates to become invested in the Gulf states where they comprise a large portion of the population.

While encouraging foreign investment is certainly important to diversification in the oil-rich states of the Arabian Peninsula, importing investment is not necessarily a long-term strategy, nor is it particularly sustainable.

Fostering local entrepreneurship and investment would be more sustainable, as well as more aligned with the goals of nationalisation set out in Vision 2030. These new residency visa schemes, while helpful in changing the rhetoric and to an extent thought about expatriates in the Gulf, is not likely to meaningfully speed up diversification.