Although Bangladesh Bank has fixed the dollar exchange rate at Tk 91.95, the dollars are changing hands in the open market for Tk 95 to Tk 96.
Moreover, the banks are providing Tk 93 to Tk 94 to expatriates for having a greenback.
This discrepancy between the exchange rates of the banking channel and the open market emerged as a major setback for bringing remittances through legal channels.
When the banks pay less than the open market exchange rate, the expatriates turn to illegal means, especially hundi, for sending money home. They receive an extra price of Tk 2/3 for each dollar in the illegal channels.
Against such a backdrop, the biggest challenge for the government is to divert the hundi-bound expatriates to the legal channels while sending their earnings back home.
Experts fear that the prevailing economic crisis would go downhill if the upcoming budget does not contain specific guidelines regarding the issue.
According to the Bureau of Manpower, Employment and Training (BMET), around 0.50 million people departed home and joined overseas jobs this year until May, when the figure was only 0.19 million in the corresponding period a year ago. It implies that the country registered a 158 per cent jump in overseas jobs in the first five months of the year.
On the flip side, the year-on-year remittance inflow went down by $940 million to $8.95 billion from $9.89 billion recorded in the first five months of 2021.
The government, however, is not sitting idle; it is going out of its way to bring all the remittances through legal channels. The Bangladesh Bank has already lifted the obligation to submit income documents to send an amount of more than $5,000. The expatriates also receive a 2.5 per cent incentive while sending money home through the banking channel.
But these efforts are not sufficient to outshine the hundi, claimed an expatriate in Malaysia, Mansur Ahmed.
“Many do not approach the banks apparently to steer clear of the queries made by the bank officials while sending money from abroad. Hundi comes up as an easy solution to them. It has been easier nowadays as the local hundi agents transfer the amount instantly through mobile banking,” he said.
Mansur further said the expatriates even care a little about the incentives provided by the government as they receive the extra amount in a different way due to the high dollar price in the open market.
Economists said the government should go for long-term initiatives to solve these problems, instead of temporary solutions. It needs to build the culture of sending overseas income legally through necessary structural reforms.
Moreover, initiatives, like the 2.5 percent incentive, might not be sustainable in the longer run, though it is working well right now, they said.
Former chief economist of Bangladesh Bank Mustafa K Mujeri told Prothom Alo that the remittance inflow in the banking channel slows down when a big difference appears between the exchange rates of open market and bank.
“This may be one of the reasons behind the recent slowdown in overseas income. However, this issue should not be dealt with so lightly. Without any in-depth research, it would not be fair to say that this is the only reason behind the declining overseas income,” he said.
Mustafa K Mujeri also suggested that the government looks into the prevailing situation and identify the actual problem behind it. Then it would not be tough to divert the illegal remittances to the legal channels.
Apart from that, some different arrangements should be incorporated in the upcoming budget for the expatriates to encourage them in sending money home through the formal channel. In addition to citizen rights, proper respect and assistance should be ensured to them. The government needs to be more sincere in mitigating their sufferings at different stages, including passport renewal and airport handling issues, said the concerned individuals.
Tasneemm Siddiqui, founding chairperson of Refugee Migratory Movements Research Unit (RMMRU), laid emphasis on reducing harassment of expatriates.
“They are being deceived in many ways. To prevent this, the existing initiatives need to be geared up. Besides, the government needs to come up with separate mechanisms to ensure financial and social security of the expatriates. The upcoming budget should contain an initiative to improve living standards of expatriates through inter-ministerial initiatives, not merely by the expatriates’ welfare ministry,” she added.