Expatriate income, or remittances, could be a key solution to the country's dollar crisis. However, ten specific issues require attention first. Industry stakeholders note that despite the increase in remittance flows through legitimate channels, not all expatriate income is being transferred via banks.
Reports indicate that expatriates currently receive Tk 121 for every dollar in the banking channel, while the open market rate is Tk 122. Due to strict measures by the central bank, the hundi networks are struggling to operate. Since the official and hundi rates are now close, expatriates feel more comfortable sending money through banking channels. If the hundi system is shut down, annual remittances, currently at $25 billion, could potentially rise to $50 billion.
The Parliamentary Standing Committee on the Ministry of Expatriates' Welfare and Employment had previously recommended steps to increase awareness about sending remittances through legal channels. It identified ten obstacles that need addressing to curb the influence of hundi traders and boost remittance flows to banks. These obstacles include differences in exchange rates between legal and illegal channels, lack of valid documentation for expatriate workers, the absence of branches of Bangladeshi commercial banks abroad or insufficient branches, and a shortage of Bangladeshi money exchange institutions or exchange points. High remittance fees, the influence of hundi traders, the lack of bank accounts for expatriates' close relatives, obstacles in sending remittances not aligned with income, and the inability to send unauthorised income through legal channels are also major concerns. Additionally, a general lack of awareness regarding legitimate remittance channels persists.
Economists stress the need for every effort to ensure expatriate income is transferred through legal means. Bangladesh's missions abroad should become more proactive, and assistance from the World Bank could also be sought. Action should be taken against certain commercial banks or their officials involved in promoting hundi activities. Dollar supply to the market should be increased through swift repatriation of export earnings, and exchange rate stability should be maintained.
Former Chief Economist of the Dhaka office of the World Bank, Zahid Hossain, commented, "If the illegal hundi system is stopped, remittances will increase significantly. However, strict action must be taken."
He also emphasised the need to address under- and over-invoicing, which are common means of money laundering. "In addition to increasing expatriate income through the export of skilled labour, those currently abroad must be brought into the legal system, and their hardships resolved," he added.
Last year, Bangladesh Bank uncovered a new destination for money laundering. A vast network of 2,500 Bangladeshi citizens has established a base in Portugal, where they often obtain citizenship to facilitate safe money transfers. The situation in Dubai is even more severe, with the city serving as a major route for money laundering.
One of the main sources of foreign exchange is the collection of remittances through manpower exports. Remittances currently play a crucial role in maintaining foreign exchange reserves. After a long period of decline, the inflow of expatriate income has improved. As a result, economists suggest taking steps to gradually increase expatriate income, with a particular focus on skilled manpower exports.
Banking sector insiders indicate that if at least 90% of the money sent by expatriates is channelled legally, there will be a significant surge in remittance flows. This, in turn, would lead to a positive shift in the foreign exchange market and reserves.
Experts estimate that a significant amount of remittances-at least $25 billion annually-is being smuggled through hundi and other channels. At least half of the remittances sent by expatriates are being diverted. However, there is no official government statement or record confirming this.
According to data from the central bank, remittances sent through banking channels in January this year amounted to $211 million, $216 million in February, $199 million in March, $204 million in April, $225 million in May, $254 million in June, $191 million in July, $222 million in August. And $240.5 million in September, remittances had exceeded $2 billion.
In the 2023-24 financial year, remittances through banking channels totalled $23.92 billion. This compares to $21.61 billion in 2022-23, $21.03 billion in 2021-22, and $24.77 billion in 2020-21, which remains the highest amount of remittances ever recorded.
