Rate of foreign remittance inflow had been falling over the past few months and last September it went down to USD1.34 billion, the lowest in 41 months till then. However, from the following months (October and November) remittance inflow has been showing improvement. For instance, according to reports published early this month, year-on-year, in November the country received 21 per cent more remittance than it did in the same month last year at US$1.93 billion. However, compared to the (remittance) receipt of the immediate past month of October at US$1.98 billion, it was less by 2.42 per cent. Even so, it looks like the falling trend of remittance inflow has reversed to some extent. It is believed that this higher volume of remittance received is due to the policy of some banks to add Tk5.0 to Tk6.0 to every US dollar (officially exchanged for Tk109.75 as fixed by the central bank in November) bought from the remitters. This excludes the 2.5 per cent incentives provided by the government and the banks to the remitters to encourage migrant workers to send their money through official channels instead of the informal ones. It is believed that last two months' improvement in remittance inflow has to do with the additional amounts paid for the remittance dollars in excess of the greenback's official rate. But problem still remains as the official limit being set at Tk.114.75 per US$, the state-owned banks (SoBs) are handicapped in that the money exchanges are selling the greenbacks at rates around Tk 120 or more. The private banks are taking advantage of the situation and doing better business than the SoBs. Small wonder that migrant workers will prefer those banks or exchange houses that would offer them better rates for their hard-earned dollars.
So, the slightly better performance of inward remittance as noticed during the last two months is no guarantee that the positive trend will persist so long as exchange rates for US dollar are not uniform. In that case, the government, especially the SoBs will have to discover more innovative ways to incentivise the migrant workers so they find the official channel more lucrative than the unofficial and illegal means to send their money home. In this connection, reports that bank officials will visit different overseas countries and see for themselves the problems the migrant workers face while sending their money home and how they handle those issues and discuss ways to increase the volume of remittance flow into the country are certainly welcome. To this end, the Bangladesh Foreign Exchange Dealers Association (BAFEDA), the members of which are the chief executives of the different commercial banks, on December 14 sent letters to the banks concerned. Undoubtedly, the idea of physically meeting the migrant workers to convince them of the benefits of using formal means to remit money is a novel one. And through this personal contact, the migrant workers will get the opportunity to express their grievances, if any, as well as the hurdles they face using formal mode of money transfer. For instance, the complicated documentation process of opening bank accounts such as availability of the required papers and other such issues often act as disincentives for the migrant workers to use official channels. Admittedly, the low-paid migrant workers are either not familiar with process, or that they lack the linguistic abilities to do the formalities of filling up of forms and other related tasks on their own. Also, a significant amount of fees as service charge they have to pay against the money transferred through banks put a damper on the migrant workers' spirit to send money through official routes. Worse yet, transfer of remittance home being a rather lengthy process through formal channels, the migrant workers prefer the illegal hundi networks as their operatives go door to door to collect money from the migrant workers. As expected, these expatriate workers get the opportunity of cutting a more profitable deal with the hundi operators against the dollars they would remit to their relatives at home. The challenges, therefore, facing the government agencies like the banks to motivate the migrant workers to use official channel for money transfer is enormous. Given the way the migrant workers are treated at the Bangladesh's diplomatic missions abroad, or at the airport at home or in any other government offices, it would, understandably, be a hard sell to the migrant workers to be persuaded by any call of patriotism in this case. Still, such efforts at becoming familiar with the overseas migrant workers, it is believed, produce some results. It would be better if the responsible diplomatic officials of Bangladesh's diplomatic missions in the host countries also accompany the bank executives during those rapport-building visits with migrant workers.
But for any such moves to produce results will require addressing the basic issue of the prevailing non-uniform exchange rates for greenback against Taka. Because this is the primary cause of falling trend of remittance inflow in the country. Consider that the remittance dollars are a vital contributor to the country's foreign exchange reserve, which has been on an unabated decline since August 2021 when it was at US$48 billion. On the 13th of this month, the forex reserve stood at USD 19.16 billion. The second tranche of the IMF loan and the amount from the Asian Development Bank (ADB) will add around USD1.31 billion to the existing forex reserve. That is obviously not much to take the forex reserve situation to a comfortable level. So, of necessity, the government must continue its efforts on all fronts towards enhancing the flow of hard currency into the country.
© 2024 - All Rights with The Financial Express
