''''''''Increasing remittance from Non-Resident Bangladeshis By Md. Nadimul Islam''''''''
Expatriate Bangladeshis sent US $9,461.15 million remittance in the first eight months of the current fiscal 2017-18, which is 16.56% higher than the amount received in the corresponding period of the preceding fiscal.
According to Bangladesh Bank (BB), the country received $8,117.07 million remittance during July-February period of 2016-17 financial year.
“The flow of remittances into the country rebounded in the current fiscal as BB took some measures to streamline the legal channel for encouraging the Non-Resident Bangladeshis (NRBs) to send home money,” BB Deputy Governor Abu Hena Mohammad Razee Hassan told BSS on Monday.
He said the recent flow of remittance indicates that it is gradually increasing and this trend is likely to continue in the upcoming months.
Over the past few decades, remittances from non-residents (NR) have become an increasingly important source of external funding for many developing nations, including Bangladesh. While migrants have always been sending money home to their families, only recently has this remittance begun to play an important role in the economies of these countries, and scholars have begun to pay attention. Numerous issues relevant to NR remittance, such as the process of remittance, its influence and effects on national economy, skills-building institutions for increased remittance, etc. deserve close attention. A. International and non-resident remittance. It is often difficult to get accurate data on remittances since a good amount of it is sent via informal routes, such as through mail, or through a friend and/or a family member. The official data is quite encouraging for the developing nations. The table below gives an overview of the remittances to all developed nations, and to Indonesia, Thailand, Bangladesh and India. As we can see in the Table above, the remittance from non-resident Bangladeshis (NRBs) has seen phenomenal growth; in the last 12 years, it has grown almost six times, from $1.1 billion to $6.4 billion. While Thailand's growth remained minimal during these years, all three other countries have gone through remarkable growth; Indian remittance grew almost four times, and while less than India in volume, and far less than India in gross volume, the growth of remittance in Indonesia and Bangladesh has been almost six-fold. According to the World Bank, in 2001 NRB remittance was around 2% of Bangladesh's national GDP; in 2007, it stood at an impressive 8.8%! In comparison, remittance in Indonesia, Thailand and India stand at 0.6%, 1% and 2.8% respectively.
B. Ways to increase the flow of remittance.
Based on the numbers above, it is conceivable that Bangladesh can increase its remittances as well. While the NRB remittances will reach, at the current rate of growth to an approximately $10-12 billion dollars a year by the year 2012, the government can play a pro-active role to accelerate this growth in a number of ways. Analysts suggest that with appropriate measures taken, the remittances can grow substantially higher than what they are now. In order to achieve the goal of increasing remittances, the government will have to tackle 4 major management tasks: (1) Increase the number of people working in the countries where most of the remittances come from; (2) Build skills-building institutions, train and send skilled workers to earn, sometimes, two to three times more than the unskilled work-force; (3) Create and increase a desire among the NRBs to send money home; and, (4) Create sufficient, capable and, most importantly, reliable infrastructure to facilitate remittance.
Given the significant benefits of improving the efficiency of the remittance system, a governmental forum (consisting of Canada, France, Italy, Japan, Russia, the US, and the UK), in cooperation with the World Bank, came up with a set of recommendations published in a report titled "General Principles of International Remittance Services." This document provides a set of security measures, and some excellent recommendations to improve banking and other issues. However, the following are some important and immediate recommendations the government can begin to work on:
(1) Reduce remittance costs: Cost is a significant factor for small, individual transfers. The IDB estimated that the total cost of sending money to Latin America and the Caribbean amounted to almost $4 billion in 2002, approximately 12.5% of the total remittances to the region! The World Bank also noted that reducing costs allows the remitters to have more disposable income, resulting in more remittances;
(2) Establish as many remittance centers as possible: Set up remittance points at as many places as possible, with employees speaking the language of the remitters. Often, because of the language barrier, workers do not use the official channels; make it simple, quick and welcoming for those who want to send money;
(3) Negotiate with the governments of the countries: This will help to increase the volume of money that can be sent legally; alternatively, negotiate for more frequent legal remittances.
(4) Establish faster and safer methods of transferring money to the recipients: Often, the long delays in receiving the money, perhaps because of the local postmaster's negligence, the distance to the local banks, insecurity of traveling with money, etc. discourage remitters from sending money through legal channels, and the government loses the opportunity to use valuable foreign currency. The government needs to eliminate these obstacles, real or imaginary, as soon as possible by establishing centers with prompt and safe services.
The World Bank and IMF have reported that the efforts to reduce remittance costs through creating competition have paid off, and the cost has declined considerably for many countries. For example, in US-Mexico corridor, in 1991 the cost of sending $300 from the US to Mexico was $26; in 2005, it dropped to $11! These institutions are hoping to report that the reduced cost as well as efficient and safe transfer of money will result in a much larger volume of remittance. Bangladesh can easily follow this path, and, with other measures taken, hopefully the remittances in the coming years will be far more encouraging!