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Friday | 17 January 2025 | Epaper

Government incentive earns buoyant remittance inflow

Published : Sunday, 12 January, 2020 at 12:00 AM  Count : 607
Md Zillur Rahaman
Md Zillur Rahaman

Md Zillur Rahaman

Remittance is the life blood of our national economy. Remittance has become an important aspect for the developing countries like Bangladesh for socio-economic progress. It is the second-highest source of foreign currency earnings for Bangladesh, following the ready-made garments industry. However, in terms of net earnings, remittance can be considered the highest, since a large portion of RMG earnings need to be spent on raw materials.

An encouraging report was recently unveiled by the Bangladesh Bank (BB) that the inflow of remittances grew by near about 18 per cent in the year 2019 as the government has announced a 2.0 per cent incentive on remittance receipts. The flow of inward remittances rose to US$18.42 billion during the year 2019 from $15.53 billion in the same period of the previous year in 2018. The remittance inflow was estimated at $1.69 billion in December 2019, upturn by nearly $132 million from that of the previous month.

In November 2019, the amount stood at $1.55 billion which was $1.18 billion in November 2018. The expatriates sent the highest monthly record of remittance in May 2019 by sending over $1.75 billion ahead of the Eid-ul-Fitr, in July 2019 $1.59 billion and October 2019 $1.64 billion. With the newly buoyant remittance inflow, the foreign currency reserves of Bangladesh reached $32.57 billion on December 31, 2019.

Meanwhile, taka depreciated by Tk 1.0 against dollar in the inter-bank forex market from January 02 to December 30. Greenback was quoted at Tk 84.90 each on December 30 against Tk 83.90 on January 02. The central report also stated that strengthening supervision and monitoring by the central bank to check illegal 'hundi' transaction had contributed to the increased flow of remittances.

Agent banking outlets of various banks have also given a momentum to receive the remittance inflow positively in the distance remote areas.
Bangladesh received $12.77 billion in remittance in FY '17 and $14.93 billion in FY '16. The BB expect that the upward trend of inward remittance flow will continue in the current fiscal year as the government has announced 2.0 per cent incentive for remittance receipts with effect from July 1, 2019. The government has already allocated Tk 30.60 billion as incentives in the budget for this fiscal year to encourage expatriate workers to send their money through legal channels and definitely it has boosted up the remittance inflow in the recent times.

It is true that most of the banks are now trying their level best to increase the flow of inward remittances from different parts of the world through establishing drawing arrangements with overseas companies and these banks are trying desperately to increase the flow of inward remittances to meet their own import payment.

Most of the banks are now offering better exchange rate to encourage remitters to send their money home using the banking channel and currently, 29 exchange houses are operating across the globe, setting up more than 1200 drawing arrangements abroad, to expedite the remittance inflow in our country. Some of the banks are providing additional 1.0 per cent incentive to the remittance beneficiary of their own arrangement and it definitely encourages the expatriate remitters more attractively.

Remittances mainly came from Middle Eastern countries such as the United Arab Emirates, Saudi Arabia, and Kuwait. Besides, USA, Malaysia, Singapore and others European countries are source of remittance. But regrettably some important destinations like the United Arab Emirates, Malaysia and Bahrain have remained closed for Bangladeshi workers for long.

The migrant workers who stayed abroad put hard labour to earn foreign currency and the government is encouraging them to send more and more remittance through formal channel but it is a matter of fact that the foreign mission are not sincere enough to the remitters in abroad. When they come back to Bangladesh, they have explained their bitter experience to their near ones.

The government has introduced a mandatory insurance coverage--for all Bangladeshis expatriates who are working abroad--enacted from December 19, 2019. And for this, the Ministry concerned has recently issued a gazette notification. The workers will be offered two insurance products to choose for a two-year term i.e. the Policy One will be of Tk 200,000 with a premium of Tk 990 and the Policy Two of Tk 500,000 with a premium of Tk 2,475. The ministry has introduced such insurance for the protection of migrant workers with benefits in cases of their death or disability and no doubt it is a bold step by the government.

In Bangladesh, remittance is one of the most important economic variables in recent times as it has an impact on economic growth, it helps in promoting balance of payments, increasing foreign exchange reserves, enhancing national savings and increasing velocity of money. For about two decades remittance has been contributing around 35 per cent of export earnings.

Moreover, it is greater than foreign aid and thus helps in lessening dependence on foreign aid remittance gets momentum in recent time in Bangladesh and is the second largest sector of foreign currency earnings after the garment; sector. If cost of imported raw materials is deducted from the foreign currency earning of the garments sector, then it becomes the largest sector of foreign currency earnings.

Remittance inflow is increasing day by day but at a lower rate than the increase in emigration from Bangladesh due to the increasing share of unskilled or semi-skilled labours than the professionals in international migration. The share of remittance in GNI (Gross National Income) is increasing day by day. Remittance affects almost all the macro-economic indicators of a country positively. It also has a great contribution in Gross Domestic Product (GDP) of the country and the contribution of remittance inflow of our GDP (near about 12 per cent) is increasing significantly. The remittance is also being used for many purposes of nation building.

More than 12 million Bangladeshis went abroad since 1976, the official data said and if they can remit their hard-earned money through formal channels, then the economy will be greatly benefitted a lot of in future. Developing the skills of migrant workers should also be one of our main goals, because right now, most workers being sent abroad from Bangladesh are largely unskilled and untrained.

Lack of adequate skills make the migrant workers work in low-paying wages. There is vast scope for upgrading their skills before they leave for employment abroad which will benefit both the workers and the country through higher income and remittance. One way is to help migrant workers and prospective migrant workers access information, and making the whole process easier, safer, and free of harassment from unscrupulous middlemen to that end, and then migrant portal would be a worthy initiative.

Many reasons are responsible for upward remittance inflow like exchange house rate, various measures to curb informal system 'hundi', workers' job status, and economic conditions of employing countries, etc. Our government should monitor the causes of remittance inflow regularly and should take pragmatic steps to continue the buoyant remittance inflow in the coming days.

The writer is banker & freelance contributor


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