A number of US-dollar denominated government savings tools have so far failed to generate any notable enthusiasm among the prospective savers. In fact, over 95 per cent of overseas workers are not educated enough to go through a cumbersome process and even do not earn money enough to keep it in those bonds. A huge volume of paper works requiring a lot of certificates naturally entails a big hassle. Hence the reported lukewarm response from the country's expatriate workers to three specific investment bonds is unsurprising. There are, according to a report in the FE last Saturday, no takers of Wage Earners' Development Bond (WEDB), US Dollar Premium Bond and US Dollar Investment Bond. Most overseas workers purchase some other less complex savings tools that yield good returns. In fact, the WEDB, Dollar Premium and Investment Bonds cannot be promoted as 'attractive' savings tools among most of the country's workforce.
The reasons for which most Bangladeshi expatriate workers prefer not to invest their hard-earned savings in longer-term government bonds are understandable. Most of their remittances do otherwise go to finance consumption needs of the members of their families at home and the rest of the amount are used largely for acquisition of assets such as land. Their close relatives even set up small businesses in markets not far from their homes. As such, remittances generally contribute to the family budget, not capital flows. Given the socio-cultural and educational background of the majority of migrant households, they are generally ill-prepared to undertake risky ventures.
It is also true that spending of remittance money on various kinds of consumption-oriented needs is otherwise contributing to improved health, education and human capital, enhancing both private and public welfare. It may also be that in some cases, a considerable part of the remittance-related investment increases stock of wealth of the migrant households in the form of land, housing and jewelry. These have indirect macro-economic effects on development. Remittances have, no doubt, a distinctive positive effect on the rural economy where lack of effective demand is often a serious constraint on economic growth. A large part of the remittances is almost invariably spent on locally produced goods and services.
Thus, new demands for a variety of goods and services, largely from a class that had previously little purchasing power, have a powerful impact on production of both tradable and non-tradable labour-intensive goods and services, land markets, construction activities and spread of banking servicing and commerce. The consequent stimulus to the domestic economy, through better utilisation of installed capacity of the existing industries and other enterprises in services sector or in creation of such new capacities, far exceeds the value of the initial rounds of expenditure. By generating a multiplier effect, they do ultimately stimulate demand, output and income. Beside inadequacy of investible fund on the part of a large majority of the overseas Bangladeshi workforce for making purchases of government bonds or securities, such investments do usually take place under conducive political, socio-economic conditions for the creation of which both domestic and foreign investors have for long been demanding. It will be befitting for the authorities concerned to persuade big wage-earners employed in corporate houses abroad or the Bangladeshis doing businesses in the Middle East or elsewhere in the industrialised countries to buy long-term investment bonds at home.
Investment bonds for wage-earners abroad
FE Team | Published: March 02, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
Share if you like