BB gives cues for remittance fall

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Rezaul Karim | Published: August 04, 2014 00:00:00 | Updated: August 03, 2014 23:12:03

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The central bank has identified the spending of a substantial amount on the renewal of work permits by many Bangladeshis in Saudi Arabia, the job market squeeze in Qatar and the closure of bank accounts of small money-transfer companies in the UK as the major reasons for a significant fall in the country's inward remittance flow.
Besides, appreciation of the Bangladesh Taka (BDT) against the US dollar and the country's political turmoil preceding the January 5 general election also played their part in driving down the remittance inflow, the latest analysis of the Bangladesh Bank (BB) has revealed.
The country counted a negative growth in foreign remittance in the immediate past fiscal year (FY) due mainly to significant reduction in receipts from the Kingdom of Saudi Arabia (KSA) and other countries, according to official findings that have stirred up worries among the finance ministry officials.
The highest 18.56 per cent fall was recorded in remittances from Saudi Arabia followed by Qatar with 10.23 per cent, the UK with 9.11 per cent and the UAE with 5.11 per cent.                        
The central bank sent its analytical report to the Ministry of Finance (MoF) after Finance Minister AMA Muhith had wanted to know about the reasons behind the negative growth in the country's remittance income in the fiscal 2013-14.
"Being concerned over the matter, Finance Minister AMA Muhith asked the BB to provide information explaining why the remittance inflow has fallen," a high official of the ministry said.
The country's remittance earnings recorded a decline in the FY 2013-14 for the first time in 13 years.
The decline in remittance inflow was, however, marginal at only 1.61 per cent over that of the previous fiscal,
The volume of money sent by the Bangladesh nationals employed abroad had been on the rise consistently over the years save the FY 2001.
Saudi Arabia is the largest labour market for Bangladesh, both in terms of remittance and the number of expatriates.
The inflow of remittance from the KSA declined in the FY '14 by at least US$710.57 million over that of FY '13, according to the BB data.
On the other hand, the remittances from the UAE, the UK and Qatar fell by about US $144.54 million, 90.36 million and 29.36 million respectively in the FY 2013-14, according to the BB data.
The BB report also pointed out that expatriates living in the KSA expended their significant amount of earnings there for renewal of work permits.
Relatives back at home corroborated the central bank observation on this point that the wage earners faced serious problems for a number of factors including political one.                 
The Saudi government enhanced the charge for the renewal of work permit, sources said.
The remittance earning in the last FY was affected due to political disturbances in the first half of the fiscal, the central bank analysis mentioned.
The propensity to remit might also have declined because of the appreciation of taka against the US dollar in the first half of the FY 2013-14, according to the BB study.
Besides, money-laundering law had been applied largely in different countries in the globe, which created complexity in sending money back home. "As a result, growth in remittance earnings was hindered," the analysis said.
On the other hand, remittance earnings from Qatar had been on a decline as its labour market squeezed gradually, the BB report said.
Accounts of small money-transfer companies have been closed by the Barclays bank in the UK. The bank tightened rules in a bid to cut money-laundering and terror financing. This hampered the activities of the money- exchange houses. As a result, the scope of remitting money through the official channel had narrowed, the BB said in its analysis.
In the analysis, the BB has recommended increasing the number of drawing arrangements with exchange houses, including strengthening the disbursement management.
The BB said in the recommendation paper that initiatives should be taken at both public and private levels to increase manpower export. Also, the government should try for exploring new labour markets.
Besides, a combined initiative might be taken to increase the remittance inflow in the country from different countries. In this connection, a long-term work plan should be taken by the ministry of finance, the ministry of expatriates' welfare and overseas employment and the Bangladesh Bank, the study suggested.
A total of 96,068 workers went abroad with jobs during the period from January to March of the current year against 107,626 during the corresponding period last year. It shows a decrease of 11,567 overseas jobs in three months.
Presently, drawing-arrangement facilities are there with 900 money- exchange houses across the world.  
"The flow of manpower export has declined because the stock of Bangladeshi migrants abroad is not growing like it used to do earlier," Dr Khondaker Golam Moazzem, additional director of CPD, told the FE Saturday.
"This is because of two reasons: Bangladesh is failing to send more workers abroad to traditional markets and exploring new markets."
He opined that manpower export under the government-to-government (G2G) arrangement was not successful. As result, remittance earning and flow of manpower export both got reduced.
"So, the government should encourage the private channels to increase the manpower export to traditional and new markets," he said.
In future, he added, Bangladesh would face challenges to export manpower due to changes in domestic policies of the host countries. "Many countries are not agreed to import manpower."