IMAGINE the contributions of the Bangladesh's overseas workers to the national economy. Since 1976 they have remitted near about $30 billion. The amount is more than that the country has actually received as loans, grants and foreign direct investments combined during this period. What is more important is that the remittances are unrequited transfers.
Many do feel that the finance minister, the central bank officials and businessmen should formally express gratitude to near about 4.0 million Bangladesh nationals who are toiling hard -- many even work in harsh and extreme conditions -- in foreign lands and sending money back home. Most of them are not even aware of the contributions they have been making to the national economy. Most of the remitters who are working in the Middle Eastern countries as unskilled and semi-skilled workers do only know that they are sending money back home for the sustenance of their families. But in reality the engine of economic growth would have slowed down to a great extent without the remittance money.
The country needs sizeable amount of foreign exchange for importing capital goods, raw materials, consumer goods and debt-serving. The government is now in the midst of some sort of difficulty as far as the forex market is concerned. Having a minimum of 3.0 billion reserve to be eligible for its poverty reduction growth facility (PRGF) of the International Monetary Fund (IMF) and imprudence on the part of a section of new private commercial banks in managing their funds have made the situation rather uneasy for the government. But more than expected flow of remittances has come to the rescue of the government. Though a sort of short supply of the greenback does still persist in the market, the central bank has assured all concerned that the situation would ease within a couple of weeks.
From a meagre $576 million in 1986, the remittances from the Bangladesh expatriate workers has now reached near about $4.0 billion, implying an annual average growth rate of about 9.0 per cent. Thanks to the boom in oil revenues in the 1970s, it created large job opportunities in the Middle Eastern countries for the workers from the South Asian countries, including Bangladesh. The Kingdom of Saudi Arabia has been at the top among the countries in terms of remittances from the Bangladeshi expatriates. Until recently, Kuwait and the UAE used to secure second and third positions. But since 2002, the second largest amount of remittance has been coming from the USA. The flow of remittance from the UK has also gone up during the last couple of years. The increase in the remittance flow from the USA and the UK might have a link with the changing attitude to Muslims in those countries following the terrorist attacks in the USA and other western countries by the Islamic radicals.
The higher flow of remittances into the country through formal banking channels in recent years has been mainly due to some changes made by the central bank to ensure speedy disbursement of the funds remitted to the beneficiaries. A good number of exchange houses have been opened up by the public sector banks. The private commercial banks have entered into arrangements with many foreign exchange houses. Besides, banks have reduced their commission on remittances. Foreign remittance monitoring cells have been set up in different banks for tracking inflows of remittance money and addressing obstacles to its smooth flow. Moreover, the recent continuous slide in the value of Taka vis-à-vis the greenback has been encouraging the Bangladesh workers to remit more money back home.
The various schemes introduced by the government such as Wage Earners' Development Bond, Non-resident Foreign Currency Deposit account and National Savings Scheme have also attracted more remittances. In spite of all the improvements made to attract remittance money to channel through the banking system, the remitters still encounter various problems. That is why a large chunk of the remittance is entering the country through illegal channels, known as Hundi operators. These operators pay the remitters more than official exchange rate and ensure very prompt delivery of the money to the beneficiaries of the remitters. According to a study, still about 40 per cent of the total money remitted by the Bangladesh workers comes through Hundi channels. Hundi operators do not subject the remitters to much paperwork and maintain complete secrecy of transaction. A number of studies have confirmed that a big chunk of remittances made through unofficial channels is used in financing illegal trade of goods, gold and drugs into Bangladesh. This could be one of the major means of capital flight from Bangladesh.
Many fear that the gain from remittances is unlikely to continue after some years. Though the number of people working abroad has gone up over the years but their actual rate of wages has gone down considerably. There was a prediction in the early part of 2002 that the world labour market would go through a decline due to economic recession. But the prediction did not come true. For the last couple of years, the world economy was in a better shape with the US market recovering from a slump and the Europe and Japan had a better economic track record. The Middle Eastern countries are basking in surplus cash because of oil price boom. For the time being, the labour market outlook at least in the Middle East, the traditional destination of the Bangladesh workers, seems to be promising.
The finance minister and the central bank people do know the role of the remittance money in their task of managing the economy. The finance minister does very often appreciate the role of workers abroad. But that should not be enough. The government needs to ensure that these people are treated well by the Biman staff and customs and immigration officials at ZIA.