Exports of goods and services are the prime sources of foreign currency that we use to meet the cost of imports on which is dependent our industrialisation and ultimately our development. 'Ready-Made Garments' (RMG) and 'Wage Earners' in foreign countries are two top vehicles that bring foreign currency to Bangladesh. Earnings from RMG sector has already crossed US$ 28 billion out of US$ 35 Billion worth of total exports from Bangladesh in 2016. Wage earners brought more than US$ 15 billion in about the same period.
Success stories of entrepreneurs in RMG sector inspire us as they are publicised in the media. But we hardly hear songs of praise about wage earners whose contribution is no way less than those in RMG.
The fact that should take us completely by surprise is that the intrinsic quality of foreign exchange earnings made by wage earners is far superior to that made by RMG. Wage earners' hard currency earnings are unencumbered with absolutely no expense or financial risk. On the other hand, there is a lot of window dressing behind the glittering amount of foreign exchange earned by RMG. The real value of exchange earnings through RMG sector should be derived only after adjustment of a plethora of costs and risks, such as import costs, stuck-up loans, and other accounting jugglery made by banks to show such loans as performing assets. Except for a handful of big RMG factories, probably more than 50 per cent small readymade garment factories are either closed or kept on artificial life-support. Statistics are not, however, available as to what a Himalayan amount of foreign exchange has been drained by RMG sector alone.
Bangladeshis are scattered around the globe as an enterprising demographic. There is hardly a country in the world where Bangladeshis are not living as both skilled and unskilled workers. There has historically been extensive Bangladeshi manpower migration to foreign countries, especially to UK, USA, Saudi Arabia, Kuwait, UAE, Oman, Qatar, and Malaysia. Most of the Bangladeshi diaspora moved abroad to escape poverty and for better living condition. There are also large Bangladeshi communities in various countries of the Persian Gulf, particularly the UAE and Kuwait, where they are classified as foreign workers. Nearly two million long-term Bangladeshi migrants are living in developed countries like United Kingdom, USA, Italy, and Canada many of whom are working there as professionals of different knowledge-based skills. They are mostly settled there as citizens or permanent residents along with their families.
It is estimated that more than three million Bangladeshis, mostly men, are living abroad and they are regularly remitting money to their family members living in Bangladesh. Bangladesh, compared to its neighbouring countries, is yet to make a breakthrough in this respect. The number of Bangladeshi expats abroad, for instance, is small compared to sixteen million Indians living abroad. More than 1.2 million Bangladeshis, the largest Bangladeshi population abroad, are now working in Saudi Arabia and about 800,000 Bangladeshis, the second largest Bangladeshi population abroad, are working in the UAE.
Remittance into Bangladesh from Bangladeshis working and living abroad is the second biggest sector of foreign exchange earnings after RMG. Studies conducted by different agencies found out that hard currency remittance to Bangladesh by its wage earners is about five times the size of foreign aid the country receives and nine times the size of foreign direct investment (FDI) in Bangladesh and contributes more than 10 per cent to gross domestic product (GDP).
On an average there was a twenty per cent yearly increase in remittance from wage earners until recent years. Such foreign remittance from Bangladeshi expatriates, of late, is falling ominously! During the last July-February period remittance from wage earners has plummeted by almost 18 per cent from that of the corresponding period of the previous fiscal year. When remittance was about US$ 15 billion in 2015-2016, meaning US$ 1.25 billion every month, remittance in the month of February, 2017 was only US$ 936.2 million, the lowest monthly incoming remittance in the last five years. It is an issue of great concern. The future would be bleaker if immediate and aggressive measures are not taken to stop the slide and maintain its healthy growth.
Due to fall in global oil price some may blame economic slumps in the Arab oil-producing countries, from where the bulk of our remittances emanates, as the reason for the downtrend of remittance inflow. This reasoning is not tenable as there has been increase in the overall employments of foreign workers in the Arab countries, especially ahead of Expo 2020 to be held in Dubai in the United Arab Emirates (UAE). It is, however, true that the UAE and Malaysia have not been issuing working visas for Bangladeshis on regular basis for the last four years.
INTRODUCING INCENTIVES TO DEFEAT HUNDI: Rather than being increased why the volume of remittance inflow is being decreased? There are many reasons, and the main reason is illegal remittance through non-banking channels.
Earlier, about 25 per cent of remittance used to be sent through non-banking channels and now illegal remittance is about 50 per cent, according to knowledgeable quarters. This malpractice is depriving the country's balance sheet of billions of hard currencies. If we add up the amount of remittance being sent through non-banking channels the total amount of legal and illegal remittance sent by wage earners in 2015-2016 should stand at US$ 30 billion which is approximately US$ 2.0 billion more than the total foreign exchange earning of US$ 28 billion made by RMG in the same fiscal period.
Historically, the "Hundi" system of money transfer has been very popular with Bangladeshi expatriates as the system stood the test of time by ensuring fast and efficient delivery of cash to their relatives back home. Of course, there are instances where "Hundi" traders robbed the remitters by not delivering cash to their beneficiaries.
Of late, some banks, especially in the private sector, are trying to deliver money just as fast with a view to defeating the "Hundi" transactions. One such bank is BRAC Bank with outlets all over the country and their system of money transfer under the brand BKASH has been so efficient and reliable that the brand has become a verb-like google and xerox. Bikashing is so popular that even "Hundi" traders display unauthorized signboards of BKASH in front of shops in foreign countries as a kind of an advertising subterfuge in order to entice expatriates to remit money home through them though such "Hundi" has nothing to do with BKASH or BRAC Bank.
The government is thinking to waive remittance fee in those cases where an individual amount of remittance is small. Such incentive is good and also open for a remitter to misuse but not sufficient at all to kill "Hundi" traders who are smart enough to defeat banking channels by offering incentives unthinkable on the part of a bank. A "Hundi" trader offers a remitter not just higher exchange rate and speediest delivery. The trader delivers remittance to the beneficiary well in advance even before getting the equivalent amount from the remitter.
Incentives should be given in areas which are beyond the reach of "Hundi" traders and where only the government can play its role. "Hundi" business can be killed overnight if the government today declares that genuine and registered wage earners who will be sending home their remittance through banking channels will get priority in getting government-sponsored plots and shops and be eligible for grand lotteries and also for loans at lower rate of interest if they intend to do business after coming back to Bangladesh provided they fulfill some criteria.
Before offering incentives to remitters the central bank should build a robust 'Data Base', akin to CIB (Central Intelligence Bureau), with a provision for any individual remitter to sign up for a web-based "Remitter Account" (different from his/her Bank Account), on the basis of his/her National Identity Card, which the remitter or the beneficiary can browse from time to time to see the history of his/her remittance transactions.
The same "Remitter Account" should have "Tracking System" where routing of a remittance from the source abroad all the way to the beneficiary's account via various check points may be tracked by the remitter or the beneficiary so that any delay in the process can be pointed out. The 'Remitter Account' may be compared with a web-based online Bank Account and the 'Tracking System' with that of courier services like FedEX. Incentives mentioned in the preceding paragraph may be offered only to those remitters who would sign up and get themselves duly registered in the Data Base and who should fulfill some criteria that will guarantee that the remitter channeled all his remittances through banking channels.
Such a Data Base is good for genuine remitters who got jobs legally and hold genuine passports. What about those illegal wage earners who in spite of themselves were compelled to forsake their passports and got jobs abroad with a different identity. Their money is sent by a third party like their employers. In such cases beneficiaries may be allowed to sign up for a similar "Remitter Account". But there should be a separate set of criteria for them to fulfill to avail of the incentives so that unscrupulous elements cannot misuse the Data Base.
Authorities should enforce laws against money laundering and launch massive awareness campaigns through mass media against unofficial remittance of money through "Hundi", which can lead to exploitation, fraud, and security risks. But strict laws or sugar-coated words alone cannot motivate the remitters and kill the centuries-old "Hundi" business. Real incentives must be offered to the genuine remitters. "Hundi" people may entice remitters by a little bit of financial incentives or some personalized services; but they cannot publish in newspapers an advertisement that their remitters are eligible for a grand lottery, or for a plot of land, or for a shop. Wage earners won't vie for a RAJUK plot at Dhaka. They would be content with a small plot of land or a small shop at Upazilla levels which the government can easily sponsor only for wage earners who would be sending their hard-earned money in the form of hard currency through banking channels.
The writer started his banking career in Agrani Bank and retired from Bangladesh Krishi Bank as a General Manager.
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