BB mulls urgent steps to raise flow of remittance

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Shakhawat Hossain
The Bangladesh Bank (BB) is likely to take urgent steps to increase the inflow of remittance amid forecasts that the deepening global financial meltdown might cause a slide in the country's income from remittances, officials said Sunday.
The central bank's steps might include cut in charges taken by banks, postal service operators and money changers on delivery of remittances and offering incentives for investing the money in the country's productive sectors.
Besides, some other measures to bring home remittances through official channels and enhance activities to the welfare of millions of expatriates might also be taken, according to the officials.
The BB in a meeting today (Monday) will review the steps with high officials from the ministries of finance, foreign affairs, and expatriates' welfare and overseas employment.
BB Governor Salehuddin Ahmed will preside over the meeting, which has been convened after the World Bank's recent projection of the economic growth at 4.8 per cent-5.7 per cent for the current fiscal year (June 2008-July 2009) due to the declining volume of remittances.
The caution by the WB, the country's main development partner, came amid the fear that the recession in high-income countries and the falling oil price might cause economic slowdown in Middle East countries also.
Some 5.0 million Bangladeshis work abroad, mostly in Middle East.
They sent home US$ 7.914 billion in the last fiscal year and are expected to remit $10 billion in the current fiscal.
In a recent conference in Dhaka, Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development (UNCTAD) warned that the ongoing global economic slowdown would further affect the flow of remittances to the third world countries, including Bangladesh.
While there are no exact figures about how many people will be affected, at least one family in every village of Bangladesh is dependent on remittance for their survival.
Remittance is Bangladesh's second-biggest source of foreign income after the ready-made garments, which fetched $ 10.7 billion last fiscal.
The country received $3.752 billion in remittance in the first five months of the current fiscal with a growth rate of 33.77 per cent over that of the corresponding period of last fiscal.
With the remittance playing a vital role in maintaining stability in the balance of payments and mitigating unemployment problems, it becomes imperative for the country to keep its flow intact, said a senior central bank official.
He said it is proper time to offer the facilities to encourage the expatriates to send the money through the official channel and invest the money in the productive sectors.
Still more than 25 per cent of the total remittance is sent home through 'hundi' the most common of the unofficial channels of money transfer, he said.
Migrants use official channels such as demand draft issued by any bank or exchange house, traveller's cheque, telegraphic transfer, postal order and account-to-account transfer.
The BB official said charges for providing such facilities by local banks, postal service operator and money changers are high and should be reduced to encourage the senders to utilise the official channels.
At present there are no significant incentives for the expatriates to invest in the country's productive sector. Most of the money, spent in unproductive sectors, can be invested in productive sectors if the incentives are on offer, he added.