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65pc remittances from UAE sent ‘unofficially’
10/13/2005
The government is encouraging remittances from the UAE and other Gulf states through the banking channels to boost the country's foreign exchange reserves, reports BDNEWS.
Mutual Trust Bank, a private commercial bank, is planning to appoint representatives to woo remittances, about 65 per cent of which is sent through unofficial channels, including hawala.
"About 70 per cent of the remittances from the UAE are sent through informal channels. We want to reduce this ratio by motivating expatriate Bangladeshis to use formal channels," Mosharraf Hossain, the bank's CEO said.
He said as the import bill of the country increased, the level of forex reserve is declining. As a result, the government had to devalue the taka currency several times this year, he added.
"If exports do not go up, the country's reliance on remittances of foreign exchange will increase. We are here to facilitate legal remittances to boost the forex reserves of the country," he added.
Remittances from the UAE to Bangladesh surged by 18.41 per cent in the last fiscal year, ending June 2005, reaching Dh1.62 billion ($442.24 million), compared to Dh1.37 billion the previous year, according to Bangladesh Bank.
This translates into an average annual per capita amount of Dh5,410, or a monthly Dh450.83 by an estimated 300,000 Bangladeshi expatriates, most of whom are labourers who remit money regularly to support their families.
The UAE is Bangladesh's second largest source of foreign remittances in the Middle East and third in the world after Saudi Arabia and the United States.
The Wall Street Exchange Centre, the largest UAE-based foreign exchange company engaged in sending remittances to Bangladesh, hosted a number of gatherings with Prime Bank, Mutual Trust Bank and Brac Bank to increase the volume of funds channeled through the exchange house to Dhaka.
Shajahan Bhuiyan, managing director of Prime Bank, said: "The dangers of illegal remittances are manifold, including high risks that the money will go missing or be embezzled."
He said the process is highly illegal and the person involved in the act will have to seven years of rigorous imprisonment with a financial penalty, according to Bangladesh law.
"The nation as a whole is deprived of foreign currency if money is sent through illegal channels. The proceeds received against hundi or hawala are 100 per cent taxable."
Expatriate remittances are one of Bangladesh's largest sources of foreign currency after garment and textile exports and are a vital resource when exports decline.
Remittances by expatriate labourers in the UAE totaled $4.0 billion in 2004, representing 5.3 per cent of the UAE's GDP. The highest was 7.2 in 1996.
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