Saudi Arabia is planning to abolish its controversial sponsorship system, known as kafala, amid economic reforms and frequent allegations of labour exploitation in the Gulf country.

The much-anticipated decision to abolish the system is imminent, English-language daily Saudi Gazette reported recently, citing sources.

The news report says the abolition will give expatriate workers the freedom to secure exit and re-entry visas as well as take up new employment without previous employers' restriction or approval.

International labour rights groups and activists have been blaming the kafala system for limiting migrant workers' job opportunities in the Gulf.

They have long been demanding its complete abolition in the six Gulf countries and in the Arab states of Jordan and Lebanon.

Shariful Hasan, head of Brac Migration Programme, said Saudi Arabia's abolition of the kafala system will benefit Bangladeshi migrant workers greatly because they are subject to exploitation under the present system.

The system limits a migrant worker's movement because it authorises one single person instead of an organisation or company to monitor a foreign worker's daily activities, Shariful said.

"It is a form of modern-day slavery," he added.

Under the current sponsorship system in Saudi Arabia, migrant workers need an employer's approval to enter the country. They also need such approval for residence permit renewal, employment termination, changing their place of employment, and for exit from the country, according to International Labour Organization (ILO).

Taking advantage of the system, errant employers exploit migrant workers by applying various means such as confiscating workers' passports to be "assured" that the migrant worker stays for the duration of their contract and does not "abscond".

Such dependency on employers increase chances of impeding "fair migration", says a whitepaper published by the ILO Regional Office for Arab States in 2017.

The paper cites the benefits of reforming the sponsorship system – particularly the economic benefits and worker protection.

"The possibility of migrant workers moving into better paid employment may act as an incentive for workers to acquire new skills -- benefiting the national economy as a whole by gradually increasing the overall skill level of the migrant workforce," it notes.

"Allowing migrant workers to change employers would contribute to better functioning and more dynamic national labour markets and would help ensure that the skills of migrant workers are better matched with industry and employer needs," the paper also states.

Other Gulf countries have made reforms to the kafala system, to different extents, in recent years.

Of these, Bahrain established the Labour Market Regulatory Authority in 2006 with the responsibility of sponsoring migrant workers, and declared that it would abolish the kafala system in 2009. However, migrant workers still require individual sponsors to enter the country, according to the ILO paper.

Around 20 lakh Bangladeshi workers are currently in Saudi Arabia.

Around 24,000 workers were deported from there last year. Of whom, many women said they were subjected to physical violence, while both men and women said their salaries were not paid regularly and they had to work in unfavourable conditions.

As per Saudi Arabia's current rules, a royal decree has to be issued to bring the abolition of kafala into effect, an official at Bangladesh embassy in Riyadh recently told The Daily Star over phone.

It will be a massive step if the new abolition law is passed, because almost everything regarding foreign labour recruitment in Saudi Arabia is linked to the kafala system, the official said, seeking anonymity.

The kafala system was introduced in the region in the 1950s, after the discovery of oil there. Following that, countries began hiring expatriate workers to speed up development activities.

The Saudi Gazette report says the move by the Kingdom comes in light of a series of economic reforms in the country since the launch of its "Vision 2030".

The reforms envision a plan to reduce the Gulf country's dependency on revenue generated from the oil sector.