The remittance inflow remains to be one of the few silver linings in an otherwise not-so-buoyant economy at the moment.
The remittance earnings, according to a report published in The Financial Express, are set to be over $18 billion at the end of the current calendar year, representing more than 18 per cent growth over that of 2018. The inward inflow is projected to be over $20 billion during the current financial year 2019-20.
The growth of remittance inflow in 2019 is mainly attributed to the depreciation of taka and the cash incentives offered to remitters at the rate of 2.0 per cent against the remitted amounts.
Such attribution seems to be true because the remittance inflow has recorded a notable growth though the number of outbound workers was fewer in 2019 compared to that of the previous year.
In the first 11 months of 2019, the number of outbound workers was 604,060 compared to 684,962 of the same period of 2018. The higher remittance flow this year was not because of any hike in wages of the migrant workers. The incentives in the form of depreciation of taka and 2.0 per cent cash reward against the amount remitted have worked wonders, it seems.
The first factor-depreciation of taka vis-à-vis US dollar--- has some impact, no doubt. But the depreciation at a rate little over 1.0 per cent over a period of one year is not that big by any count. In fact, economists are finding that the real effective exchange rate (REER) of taka has been kept at an unreasonably high level.
The Bangladesh Bank (BB) has in a way been helping the REER to be high through regular injection of US dollar in the market. The approach is not that conducive to the growth of the country's export which has slowed down in recent months. Further depreciation of taka would help both exporters and remitters. The change will have all the potential to boost export revenues and remittance inflow.
However, the government may not be interested in revising the REER at the moment because of the domestic price situation. Any erosion in the value of taka would make imports costlier, thus, fuelling inflation.
The government's cash incentive for the remitters, which has been introduced for the first time from this fiscal, is proving to be an effective tool to boost remittance inflow. It has earmarked an allocation of Tk 30.60 billion in the national budget for disbursement as cash incentive to encourage the expatriate Bangladeshi workers to send their hard earned money through official channels.
However, there might have been some irregularities in the utilisation of the government's incentive money. Syed Mahbubur Rahman, managing director of the Mutual Trust Bank (MTB) and chairman of the Association of Bankers, Bangladesh (ABB) has indicated such a possibility. While talking to the FE on Friday last, he requested the central bank to strengthen its monitoring and supervision to avoid possible misuse of the incentive scheme.
The request is not at all out of context. For, irregularities do happen rather regularly with the government incentives offered to operators in various sectors of the economy. There are many instances where exporters pocketed incentives, given as subsidies, without sending any shipment. Ingenuity on the part of a section of Bangladeshi entrepreneurs in gobbling up incentive money is almost matchless!
Whenever the issue of remittance inflow comes into focus, questions are often raised about the treatment that the government metes out to the migrant workers.
That the migrant workers do face a lot of hassles while securing jobs abroad is an old story. Yet these people, who are mostly poor and unskilled, are still suffering in the hands of either recruiting agents at home or employers abroad. Nor have there been effective steps to extend help if they are deported or forced to leave jobs prematurely. There is a welfare fund for migrant workers, but its activities are not much known to the people.
Now, the issue which is more important right at this moment is the prospect of remittance growth in 2020 and beyond. The twin factors--cash incentive and depreciation of taka-- do have limited effect on the inflow. So, what will be important here is the sending of a greater number of workers to external job markets.
But that is the area where the problem lies. Some important and traditional job markets such as Kuwait, UAE and Malaysia are now shut to the Bangladeshi workers. The largest market-the Kingdom of Saudi Arabia-- is open, but it has imposed restriction on recruitment of foreign nationals in certain sectors. And this has squeezed the employment opportunities in that country to a large extent. Consequently, more and more Bangladeshis are being forced to leave the KSA. More than 55,000 Bangladeshi workers returned home between January and November this year from their workplaces and nearly half of them were from the KSA.
It has been emphasised time and again that Bangladesh should create a large pool of skilled hands and send them abroad to help beef up remittance inflow. But, in reality, not much has been done to this effect. The long queues of job-seekers are still dominated by unskilled people.