More challenges ahead for India as Kuwait enacts the Expat Bill

  18-Jul-2020 13:41:03

Kuwait IndiaexpatriatesMiddle East

One of the most prosperous city-states of the world, Kuwait enjoys an enviable position in the Middle East. The country’s trade and expat-friendly policies have made it an attractive location for investments and job seekers. Though tiny, it is blessed with oil reserves in abundance, which has only aggrandized the nation’s wealth & prosperity. Prior to the world being hit by the Covid-19 pandemic, Kuwait’s currency, the Kuwaiti Dinar (KWD), had been the strongest in the world.

However, the development and utilization of the country’s abundant oil reserves (estimated to be the sixth-largest in the world) depended on the availability of skilled labor. The nation has always lacked the required manpower to process and manage these resources. And hence, Kuwait has welcomed citizens from all across the world with open arms keeping the visa procedures hassle-free & lenient over the decades.

In addition to the employment opportunities for skilled laborers at the oil exploration rigs & refineries & several other sectors, growing prosperity, led to an increase in demand for unskilled laborers viz. drivers, house-helps, etc. Lucrative pays attracted these migrant employees from countries like India, Egypt, Pakistan, Syria, etc. The norms have been so welcoming that as per a survey conducted in 2019, the expat population in Kuwait stood at approximately 3.3 million. As per Arab times, out of the 4.7 million population of Kuwait, the expats constitute nearly 70% (3.3 million) with the Indians holding a major chunk of about one-third followed by the Egyptians & then the rest.

This demographic imbalance prevalent in the last few years was not seen as a problem until the world was hit by the novel coronavirus. Kuwait prospers & thrives on the sale of oil & petroleum. It accounts for about 40% of its GDP; it constitutes 92% of export revenues. However, as the pandemic resulted in a lockdown of major economies worldwide, the economic activities of almost all nations also came to standstill. From the manufacturing industries to the aviation sector all were forced to suspend operations. With restrictions on movement, vehicular traffic significantly lowered. Consequently, the demand for oil & petroleum hit a rock bottom. In 2019, the highest oil price had been approximately $66 per barrel. Due to a decline in demand, the price dropped below $20 per barrel. Being extraordinarily dependent on the export revenue from oil & petroleum proved disastrous. Poor global demand for its dominant product resulted in an economic slowdown in Kuwait. The disparity between income & expenditure has resulted in a depletion of the General Reserve Fund. As per media reports, the sovereign wealth fund managed by the Kuwait Investment Authority Kuwait is believed to have depleted by one-third, estimated at 1.5 billion KWD!

In the wave of the economic turmoil, the Kuwait Expat Bill was sought to alleviate economic distress. The Bill, passed upon a proposition by the Prime Minister of Kuwait, Sheikh Sabah Al Khalid Al Sabah, suggests dealing with the demographic imbalance by reducing the expat population by 40%. The Bill, green signaled by the legal & legislative committees of Kuwait National Assembly, proposes to restrict the population of the Indian expats to 15% while that of the Egyptian expats to 10% of the total population.

According to the Indian Ministry of External Affairs, the estimated number of Indian expats residing in Kuwait is 1.03 million with Tamilians & Keralites being dominant. The number reported is as high as 1.45 million according to Kuwaiti sources. The Indian Embassy claims that nearly 28,000 Indian expats are employed in the Kuwaiti government offices alone as nurses, engineers, etc. The bill could mean that about 800,000 Indians would lose their jobs!

The Bill has come as a major blow to the Indian Authorities as it brings up more challenges to the MEA, whose resources are already stretched thin due to the pandemic. Apart from having to manage the additional inflow of job seekers, the Indian government stands to lose out on the remittances from Kuwait, which was one of the highest among GCC countries, aggregating to nearly $ 5 billion!

By: Ria Kundnani