Wage earners' remittance inflow and contribution to the economy

In the post-pandemic period, the world economy struggles to survive from the impact of Ukraine-Russia war by altering international business and trade pattern in sporadic ways. Developing countries like Bangladesh suffer most to cope with this scenario and noticed sharp decline in its foreign currency reserve as it has to pay bulk amount of money for international transactions. Global crisis over fuel, medicine, industrial raw materials, grain supply etc., mounted pressure on Bangladesh economy in the last couple of years, and to tackle the situation the government sought solution through taking loan amounting 4.5 billion USD from IMF.

Beside the RMG sector, Bangladesh largely relies on wage earners' remittances. It is estimated that more than 13 million Bangladeshis are now living abroad, temporarily and permanently, in as many as 162 countries (BMET, 2022), and among whom more than 2.4 million are Diasporas. On average and collectively, these migrant workers and Diasporas are sending huge amount of foreign currencies through legal channel for their families and friends, and silently contributing to the economic development of the country.

According to BMET, Saudi Arabia (KSA) is currently hosting more than 2.5 million Bangladeshis followed by UAE (1 million+), Malaysia (1 million+), UK (9,00,000+), Italy (4,00,000+) and USA (2,13,000+)- either as contractual migrant workers or as permanent residents. In 2021, USAID in one of its reports mentioned that the US-Bangladeshi Diaspora remits US$10 billion or more each year to Bangladesh, which contributes 13-15 per cent of total remittances received by the country.

A close look at  2022 Wage Earners' remittance flow and foreign currency reserve shows that the contributions of wage earners remittances to total foreign currency were 5.29 per cent in July, 5.21 per cent  in August, and 5.03 per cent in December. However, the average contribution counted as 4.44 per cent (Source: Bangladesh Bank data, 2022).

To increase remittance flow through legal channel, the government has taken a number of initiatives like: providing incentives up to 2.5 per cent on each remittance transfer, expansion of digital payment systems, special wage earners' bond, and extension of investment sectors for remittance earners. However, the number of initiatives and actions to strengthen the role of Expatriate Welfare Ministry for setting comprehensive integration mechanism and institutional structure are meant to recognise the contribution of expatriates and encourage them to invest more in the country. Though the government drafted the 'National Reintegration Policy for Migrants, 2022', and kept the provision for migrants' entrepreneurship promotion (in section 2.4.3.2.), it did not mention any specific modality for Diaspora investment.

Both the migrant workers and Diasporas have the willingness to invest in trade and business, while some limitations within the existing system as well as complex legal bindings are hindering the process of large scale investment. According to a study of Commonwealth in 2018 (Understanding the Investment Potential of the Bangladesh Diaspora: Results of the Commonwealth Diaspora Investor Survey Country Report, 2018), only 7 per cent of Bangladesh Diaspora members currently own a business in Bangladesh, while nearly half of those interested in setting up a business (47 per cent) in near future. It also revealed that, 61 per cent Diaspora send money for family and friends, among whom 29 per cent of them have savings or deposits in banks, 7 per cent own business individually or under partnership. While figuring out their business interest, the survey found that 18 per cent has interest in investment in property or real estate, 31 per cent showed interest to invest in education, 27 per cent in health, 20 per cent in ICT, and 14 per cent in other sectors like banking or FIs, light engineering and manufacturing sector, textile, leather, agriculture and food processing sectors. Meanwhile, according to different national and international development organisations like BOMSA, OKUP, Helvetas Swiss Intercooperation, the contractual migrant workers are investing in SMEs, local trades and business i.e., livestock, agriculture, RMG, transport, grocery or retail shop, tourism, manpower export, machineries or light engineering and food processing industries. Fewer of them expressed interest on export-import business or invest in industry as there are complexities or legal bindings for business registration/ certification, land acquisition and utility connections for industrial set-up, and access to financial aids or loans etc. Additionally, some of them experienced losses and lost interest for investment which ultimately created negative impact on country's economy.

Leveraging opportunities and expansion of space for migrant workers and Diaspora investment could facilitate the smooth flow of inward remittance, and increase the foreign currency reserve. Confirmation of securing investment of Diaspora and migrant workers through ease in business permission or certification, land acquisition for industrial set-up, financial transactions or fund transfer mechanism etc., could be helpful for them. Moreover, the government should carry extensive survey and study on finding limitations in business growth, and identification of investment sectors, and set a diversified Diaspora Centre to create international network beyond any political influence or bias.

Aminul Hoque Tushar, a Labour Migration Analyst, is Advisor, Bangladeshi Ovibashi Mohila Sramik Association (BOMSA)

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