Owners of recruiting agencies say that those who remitted money last year, are abroad. Another few thousands have now gone overseas too. After the corona outbreak has subsided, the job market is back to normal and there are no arrear wages. That should be an increase in remittances back home, but that is not happening.
The upset in the dollar exchange rate has disrupted everything. The dollar rate in the kerb market is much more attractive than that that in the banks. Also, it costs at least USD 500 to arrange a visa from the Middle East. As there is no legal channel to send money overseas, this payment is made by means of 'hundi'. The more the workers go, the more this money has to be paid. With the increase of workers going overseas, the inflow of dollars has lessened.
Bankers have the same opinion in this regard. They say that after the outbreak of coronavirus, air travel had come to a halt. There was a slump in commercial transactions. As transactions through informal channels had almost fully shut down, the workers had no alternative but to remit their money through banks. That created record remittances. Now travel has opened up and workers are going overseas, but dollars are no longer crossing the borders like before and so reserves are not increasing. The government would provide a 2 per cent cash incentive for remittance. On 1 January this increased to 2.5 per cent, though the ministry for overseas employment had recommended a 4 per cent increase.
Former secretary general of the Bangladesh Association of International Recruiting Agencies (BAIRA), Shamim Ahmed Chowdhury, speaking to Prothom Alo, said remittances haven't decreased, remittance through formal channels has decreased. This can't be resolved simply by offering incentives. The banks do not provide any support to this sector. The banks have no special scheme for the expatriates. The government has no significant investment in such an important sector of the country. A proposal had been made to the government so that USD 500 per worker could be sent overseas through the banks, but this was not approved.
Less profit through banks
In the World Bank's latest report about remittance from various countries around the world, it was said that it costs a worker over Tk 3 to Tk 4 for every Tk 100 taka sent back to the country. The most expatriates are in Saudi Arabia. It costs a worker there Tk 3.41 per every Tk 100 to send money back home. And from UAE, where one of the high remittance comes from, it costs a worker Tk 5.22 per every Tk 100 remitted. From Bahrain it costs Tk 1.30.
Even if the government incentive is added to remittance, one gets a higher price per dollar in the kerb market.
Most of the workers sending money home from overseas, earn around USD 200 to 300 per month, according to sources. If a worker gets Tk 5 more per dollar in the kerb market, no way he will send the money through the banking system. So the exchange rate should not differ more that 2 of 3 taka with the kerb market.
Former chief economist of the World Bank's Dhaka office, Zahid Hossain, sees no relation between the government incentive and increase in remittance. Speaking to Prothom Alo, he said one gets more money from the kerb market. Remittances had gone up because almost all informal channels for remittance had closed with the corona outbreak. Now visa trading, under-invoicing and other illegal transactions have resumed. This has increased 'hundi' too.
Employment may increase
The highest overseas employment from the country had been in 2017. That was the only year that over 1 million workers went overseas. In the first six months of this year, around 600,000 have already gone. If this trend continues, then by the end of this year this figure should cross 1.2 million. Most of these workers are going to countries in the Middle East. In the meantime, there has been news that the labour market in Malaysia is opening up. If this happens, at least 500,000 workers will go to Malaysia.
Secretary of the expatriate welfare and overseas employment ministry, Ahmed Munirus Salehin told Prothom Alo that an effort is being made to identify the reasons behind the decrease in remittance. Alongside this, a strong effort is also being made to increase the remittance flow through legal channels. New expatriate workers take time in remitting money back home. He expressed hope that soon the flow of remittance would increase.
Big slump after four years
According to Bangladesh Bank, till 23 June so far USD 20.47 billion (USD 2,047 crore) remittance has come in. Today, 30 June, this financial year ends. Even if the last week's income is added, this is not likely to exceed USD 21 billion (USD 2100 crore). Last financial year every month over USD 1.5 billion (USD 150 crore) remittance would come in. The highest amount came in July, USD 2.20 billion USD 220 crore. This fiscal the highest was USD 1.73 billion (USD 173 crore). Remittance from the largest labour market, Saudi Arabia, dropped this time. Yet over 65 per cent of the new expatriate workers went to Saudi Arabia. Remittances from Malaysia, UAE, Oman, Kuwait and Qatar also fell.
Bangladesh Bank records show that USD 12.76 billion (USD 1,276 crore) remittance come to the country in the 2016-17 fiscal. This went up to USD 18.20 billion (USD 1,820 crore) in 2019-20.
Experts say that last year's remittances exceeded that of the previous year by USD 6 billion (USD 600 crore). If all illegal channels of bringing in this money from overseas could be stopped, it would have been possible to bring in more remittance than last year.
Founder chair of Refugee and Migratory Movements Research Unit (RMMRU), Tasneem Siddiqui, said that there are three basic reasons for this fall in remittance.
Speaking to Prothom Alo, she said, it takes two years for the impact of the increase and decrease in employment to be felt. And the new expatriate workers going overseas after corona are not getting regular work or wages. The government pays an extra Tk 2.50 per dollar sent through the banking system, but one gets an extra Tk 5 through 'hundi'. The government can increase the incentive.
* This report appeared in the print and online editions Prothom Alo and has been rewritten for the English edition by Ayesha Kabir