In 2016, Bangladesh's manpower exports witnessed a robust growth of 36.31 per cent while the remittance inflow declined by 10.87 per cent in the same year. The country's Expatriates' Welfare and Overseas Employment Ministry (EWOEM) found varied reasons behind the drop of remittance inflow - including the growth of Hundi transactions and a sudden drop in the prices of oil from Middle Eastern countries.
According to the EWOEM, some 757,731 Bangladeshi workers went to various countries with jobs in 2016, up by 201,850 than the total figure of 555,881 in 2015. Although Bangladesh earned US $13.61 billion in 2016, the amount was US $15.27 billion in 2015. Meanwhile, EWOEM blamed Hundi transactions for the falling remittance as expatriate workers often use the illegal money-transfer channels to get better rates. The remittance flow is unlikely to grow unless hundi transactions are reduced if not prevented entirely.
Also in the last year, Bangladesh received the highest remittance worth US $2,989 million from Saudi Arabia while the second highest came from the United Arab Emirates (UAE) worth US $2,535 million. The secretary-general of Bangladesh Association of International Recruiting Agencies (BAIRA) stated that remittance inflow from the Gulf countries saw a slump due to their economic recessions triggered by the recent fall in oil prices. On the other hand, Bangladesh's imposition of various restrictions on purchasing bonds discouraged the expatriates to invest in the sector. Lifting such bans is crucial to the recovery of remittance inflow.
Moreover, Professor Tasneem Siddiqui of the Refugee and Migratory Movements Research Unit (RMMRU) claimed that a large number of Gulf-based Bangladeshi expatriates lost their jobs due to economic recession. In addition, Saudi Arabia and Malaysia increased their annual levies and residence fees leading to remittance reduction. Since numerous expatriates failed to get lucrative jobs, they could not save more. Therefore, both the government and Bangladesh Bank should take steps like encouraging expatriates to send remittance in a legal and formal channel and introducing awards for the highest remittance-senders to inspire the expatriates to send more remittance.
Additionally, EWOEM reported that 10.5 million Bangladeshis are residing in different countries around the world. In 2016, the highest number of Bangladeshi workers went to Oman with 188,247 while Saudi Arabia holds the second place with 143,913 Bangladeshis. Out of the Bangladesh's 64 districts, the majority among expatriate population in 2016 belonged to Comilla District with 86,352 people while the second highest hailed from Chittagong with 45,780 people. The flow of remittance largely contributed to the continuation of Bangladesh's economic stability amidst the global recession. Money sent by Bangladeshi expatriates worldwide - a key plank of the country's economy - has been dipping since the beginning of the current fiscal year 2016-2017.
Since remittance is Bangladesh's most reliable source of foreign funding, economists argue that the drop in remittance may affect the country's macro-economy. Remittance contributed to 13 per cent of the gross domestic product (GDP) in 2015. According to Bangladesh Bank, Bangladesh received around US $4.26 billion in the first four months between July and October of the fiscal year 2016-2017. The figure was down to 15.42 per cent from a little over US $5.03 billion received in the corresponding period during the fiscal year 2015-2016. In October 2016, remittance worth US $1.01 billion accounted to 4.23 per cent less than that of September 2016 and 8 per cent less than remittance in October 2015.
Furthermore, the continuous drop in cash flows for the past few months has negatively affected Bangladesh's macro-economic trends. If the downward trend continues, it may hit the ascending growth of GDP. Zahid Hussain, World Bank's leading economist in Dhaka opined that remittance drop is one of the three challenges for the economy. Other major challenges comprise low investments in Bangladesh's private sector and the adverse effects of Brexit on the world's economy. Experts also blame the global austerity measures leading to the low income of Bangladeshi expatriates world for the drop in remittance.
Evidently, Bangladeshi expatriates prefer the unofficial channels to legal ones in the hope of getting higher exchange rates. According to a recent governmental report, 78 per cent of the remittances sent by 8.6 million overseas workers comes through legal channels like banks, and 12 per cent through Hundi. In 2015-2016 fiscal year, remittance dropped by 2.52 per cent despite 7.6 per cent in the previous fiscal year of 2014-2015. The foreign exchange reserves are in a 'satisfactory' state in spite of the fall of remittance. On January 18, Bangladesh's forex reserve amounted to US $31.9 billion - luckily crossing the mark of US $32 billion within a day or two in the same month. Experts credited the rise in the flow of foreign loans and drop in import cost for the 'satisfactory' results.
The writer is a retired Professor of Economics, BCS General Education Cadre.