Saudi Arabia’s new visa regime comes into effect

Saudi Arabia’s increase in visa fees for travellers is expected to earn the country millions of riyals from pilgrims without dampening tourism figures, say travel industry experts.

The country’s new visa regime, which comes into effect on Sunday, does not affect pilgrims for Haj or Umrah travelling to the country for the first time.

But, as part of its effort to diversify non-oil income, subsequent religious visits and business travel will cost 2,000 Saudi riyals (Dh1,957) for a single-entry visa.

Religious tourists were previously exempt from all visa fees.

For all other travellers, entry visas will also cost more. For example, a multiple-entry visa now costs 3,000 Saudi riyals for six months, 5,000 Saudi riyals for a year and 8,000 Saudi riyals for two years. This compares with the 515 Saudi riyal multiple-entry visa previously charged to travellers from the UAE. The new visa regime was announced in August.

The new visa regime could bring in millions of riyals from the religious travellers alone.

“The recent visa fee hikes announced by Saudi Arabia will substantially increase the cost of travel to the kingdom for both pilgrims and other types of tourists such as business visitors and those visiting friends and relatives,” said Rashid Aboobacker, the associate director at TRI Consulting, a consultancy in Dubai, on Saturday.

Mr Aboobacker said the new fee structure will not dent religious tourism as first-time Haj and Umrah visitors are still exempt from charges.

“For most of the repeating Haj and Umrah pilgrims, particularly from within the region, a hike in visa fees may not be a major deterrent,” he said. “The substantial hike in the cost of entry visas may have a negative impact on business and [those visiting friends and relatives] as both companies and individual sponsors might now try to contain costs by limiting the number of trips and avoiding non-essential trips.”

Saudi Arabia received 1.32 million overseas Haj pilgrims, out of 1.86 million Haj pilgrims this year, according to the General Authority for Statistics in Saudi Arabia last month. Last year, Saudi Arabia received 18 million international visitors, down from 18.25 million in 2014, according to the United Nations’ World Tourism Organisation.

Travel agents agree that new visa charges will not affect religious tourism. “The price of a visa will never deter a traveller, especially religious travel, since if pilgrims have to do it, they do it,” said Saleem Mogral, the general manager of Dubai-based Al Majid Travel and Tourism, a unit of Juma Al Majid Group of companies. “We have not yet seen a drop in business travel to Saudi Arabia.”

The new visa regulations come as Saudi Arabia’s revenues have been hit by the low oil price.

Saudi banks continue to face liquidity pressures due to deposit outflows, a consequence of lower oil prices, according to credit rating agency Moody’s. Along with Fitch, it has downgraded ratings for Saudi Arabia.

Last week, the country’s central bank, the Saudi Arabian Monetary Agency, said it will make about 20 billion Saudi riyals of time deposits in Saudi banks. Since the beginning of the year, the government has deposited 12bn Saudi riyals.

“Government deposits as of July were down 4.4 per cent from a year earlier because funds were needed to help finance its large fiscal deficit, which we estimate at around 12 per cent for 2016,” Moody’s said in a report on Thursday. “Private-sector deposits also declined and were down 2.6 per cent year on year as of July, adversely affected by government spending cuts and weakening economic growth.”