Here are two trendy developments in terms of inward remittance and ready-made garments (RMG) export to the USA. The first one has had a breath of fresh air as though in a spurt. It requires consolidation and building on the momentum created in the remittance sector. The second one calls for a halt to the decline in apparel export to the US and roll it back into relative vibrancy.
Marking a break with a gloomy trend in remittance, this major foreign exchange earner has buoyed up. As for the other source of export earning, the RMG sector of which a slice goes to Generalised System of Preferences (GSP)-denied US market we have earned every dime through the hard way. There Bangladesh is losing market if only slightly but enough to set alarm clock to break our somnolence.
When expatriate Bangladeshis had sent home US$12.77 billion in 2016-17, posting a steep fall by 14.47 per cent year-on-year, the lowest in six years, we decided something had to be done. The lure of open market exchange rates and quick delivery of cash to beneficiaries pulled many in the expatriate community into the clutch of informal channels operators.
Heartening to note though the size of inward remittance grew by nearly 11 per cent to US $ 560.42 million in the first five months of the current fiscal year. Markedly it rose to US $ 1,21 billion in November 2017 alone, up by US $ 51.98 million from US $ 1.16 billion in October last, according to Bangladesh Bank figures.
Central Bank officials claim that the turning of the corner has taken place due to its strengthened monitoring focused on curbing illegal fund transfers.
A slew of measures are attributed by officials to the uptrend in remittance inflows. Currently, 29 exchange houses of 15 commercial banks operate across the globe to bolster inflow of foreign currencies. Besides, all banks have set up 1,196 drawing arrangements overseas for collection of remittances from wage-earners.
Mamun-UR-Rashid, managing director of standard bank, said, 'mobile finance service providers ( MFS) were asked recently by the central bank to suspend suspicious accounts of agents who settle cross-country financial transactions by bypassing the money laundering and terror financing laws'. This, he observed, paid off by boosting remittance income.
It will be utopian to suggest that one fine morning the Hundi operatives and the users have hung their gloves as the latter became decent converts to funneling money through formal banking routes!
We need to factor into the mix heavy depreciation of Taka as against the American greenback. The advantage of open market rate of foreign currencies with which the Hundi operators were enticing their gullible customers was all but lost to them. The migrant workers weighing up the risk factor in addition to good rates they were getting from official channels opted for the latter.
In this context, we raise a pertinent point: Determine by all means the proportion of remittances increasing by virtue of the central bank's measures to counter Hundi and that which is attributable to the bonus points due to depreciation in the value of Taka.
Bangladesh is the third largest exporter of garments to the US market after China and Vietnam. Our share of the US market dropped to 6.35 per cent - last year it was 6.57 per cent. In spite of Banladesh's RMG sector having dexterity and good quality products, it is losing out on lead time that will have to be improved upon. Also, we need to overcome gas and power crises in the sector.