Some relief indeed... consumers in Saudi Arabia will not have to factor in higher customs fees on a range of products. Image Credit: Bloomberg

Riyadh: Saudi Arabia has delayed a wide-ranging increase to customs fees, a plan that had been questioned by citizens who worried it would overburden already hard-hit consumers.

"The implementation of any change to fees has not begun," the customs authority wrote on its official Twitter account, without clarifying if or when it would apply the change, which was to have taken effect on June 10. Two people familiar with the matter said it's been postponed until further notice.

The government had planned to raise levies on a 74-page list of imported products, ranging from meat to police cars and building materials. The change would have given a boost to domestic producers and brought in much-needed non-oil revenue for the world's largest crude exporter.

But it also would have hit consumer spending, already falling sharply as the global pandemic and energy market turmoil derail a nascent economic recovery in the kingdom.

"The delay in implementation is likely aimed at not putting further pressure on the economy," said Monica Malik, chief economist at Abu Dhabi Commercial Bank. "It's a fine balance between fiscal reforms and constraining economic activity."

Consumer complaints

The original plan had elicited complaints from some Saudis, who questioned whether it made sense to layer higher customs fees on top of the planned tripling of value-added tax to 15 per cent in July - just as consumers face pay cuts and job losses.

Yet the last-minute postponement made it tough for businesses trying to plan ahead.

A series of "significant fiscal policy adjustments" in the kingdom have increased uncertainty for businesses in the non-oil economy, said Bilal Khan, a senior economist at Standard Chartered Plc in Dubai.