From all corners of the earth, capital is pouring into the Kingdom of Saudi Arabia. Seeking to diversify, the oil-rich nation has been bullish on growing its tech industry and establishing itself as the go-to spot for splashy international events and tourism.
At a glitzy conference in March, Amazon announced a $5.3 billion investment in the country for data centers and artificial intelligence technology. The Middle East’s largest hotel construction activity is taking place in the Kingdom.
Furthermore, the Saudi Public Investment Fund is in talks with the PGA Tour and its Sports Fund recently put $100 million into the MMA (mixed martial arts circuit).
“Saudi Arabia has become the Fight Capital of the World,” declared one headline. “Saudi Is the NewChina,” another stated.
Jumping on the bandwagon, international football governing body FIFA has fast-tracked Saudi Arabia’s bid to host the 2034 World Cup. The agreement is expected to be rubberstamped later this month.
While the World Cup announcement, along with its $100 billion fund to invest in artificial intelligence and other technology, may mark the Kingdom’s coronation as the world’s boom town, eager multinationals should proceed with caution.
Unstable Investment
Saudi Arabia’s dismal human rights record, including when it comes to labor rights, make the country a risky and unstable investment and base of operation.
Investment in Saudi Arabia is currently particularly risky. Potential investors find themselves in a context where migrant workers are vulnerable to exploitation, including indicators of forced labor and physical violence, and could be the driving force for further perpetuation of rights violations.
Is modern-day slavery the kind of brand and value reputation that multinationals want to carve out for themselves?
Migrant Workers in Saudi Arabia
In-depth, confidential, one-to-one interviews with dozens of migrant workers conducted by human and labor rights charity Equidem documented significant labor and human rights violations, exposing a pattern of legal exclusion, discrimination, exploitation, and suppression of freedom and association in the Kingdom of Saudi Arabia.
As Rishit, a Bangladeshi cleaning worker employed in the port city of Jeddah, told us: “The management doesn’t entertain complaints against Saudis. Saudis behave inappropriately, but we fear termination if we complain. However, if any migrant misbehaves, the management addresses those issues. We refrain from complaining about Saudis and the higher management out of fear of losing our jobs.”
Interviews with migrant workers from Bangladesh, India, and Nepal revealed 70 percent of them were deceived about the terms and conditions of their employment, 42 percent experienced nationality-based discrimination at work that heightens vulnerability to abuse, and 53 percent paid recruitment fees creating ongoing risks of debt bondage.
These are stark figures for any businesses considering risk mitigation and human rights compliance.
Questionable Investing
Recent examples of questionable investments in nations with egregious human rights records bring to mind many of the world’s best-known fashion retailers implicated with suppliers involved in Uyghur forced labor, with brands pressured to cut ties with suppliers and end all sourcing from China’s Xinjiang region.
Or, in an example of employers pushing for leaderships to live up to brand promises, Google was forced to shut down Dragonfly, its censored search app for China, after employers partnering with rights organizations to stop the project.
Not to mention the decades-long international condemnation, legal suits, and loss of investor confidence as in the case of Shell operations in the Niger Delta, including the execution of environmental activist Ken Saro-Wiwa in 1995 and the ongoing activism of his family against Shell.
Businesses considering or operating in Saudi Arabia must require the country to demonstrate compliance with international labor standards. This includes eradicating forced labor on all worksites, including among contractors, and establishing health standards for employer-provided housing.
Additionally, employers should continually produce proof that wages are paid timely and in full through documentation of transfers, enforcement of transparent salary grades, and a contribution to emergency funds.
These standards are not just the international standard for human rights worldwide, they’re also good business.
Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect the editorial position of The Globe Post.
