Asia's multibillion-dollar remittance flow drying up
Sandeep Malakar | Tuesday, 10 March 2009
OVER the past three to four years, one of Asia's fastest growing industries has been exporting workers, especially to the oil-driven, construction-crazed economies of the Middle East.
Remittances have become a major contributor to foreign exchange earnings and gross domestic products (GDPs), peaking at an estimated $116 billion in 2008.
This year, the money flows were expected to slow as construction projects are shelved and other jobs dry up in the Gulf nations, such Abu Dhabi, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates, which employed up to 13 million foreign workers, 11 million of them from Asia.
The remittances saved millions of families from impoverishment and boosted the region's economies.
Last year, remittances to Asia amounted to $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $7.0 billion for Pakistan, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labour Organisation (ILO) estimates.
The inflows accounted for 9.5 per cent of Bangladesh's GDP, 2.4 per cent of India's, 15.5 per cent of Nepal's and 11.6 per cent in the Philippines, the UN agency said.
But recession and plummeting oil prices are expected to take a deep bite into the remittance flow in 2009.
The World Bank estimates remittances from South Asians in the Gulf could decline by 9.0 per cent in 2009, compared with a 38-per-cent increase in the previous year.
India would be among the hardest-hit. An estimated 5.0 million Indian migrant workers, who work in six Gulf nations, send home more than one-fifth of India's total overseas remittances.
While India's Ministry of Overseas Affairs insists that the situation is not alarming, there are reports of job losses and wage cuts in the United Arab Emirates and Bahrain in the wake of the falling oil prices and decline in the construction, real estate and tourism sectors because of the ongoing global financial crisis.
'Remittances are a catalyst in India's growth as they make up 3.0 per cent of the country's GDP,' one ministry official said. 'A drop in the figures could act as a drag on the economy.'
The Indian consulate in Dubai has said construction firms there had bulk-booked planes to send soon 20,000 to 30,000 workers home on long leave or to divert them to projects in Qatar.
An estimated $260 billion of real estate projects are reported to have been delayed or shelved in the Emirates alone. Dubai's construction boom has crashed, sending thousands of workers back home and thousands of them left cars at the airport as they could not repay anymore.
Pakistan - with 24 per cent of its remittances coming from the United States and 56 per cent coming from the Gulf - was expecting to be hit in the second half of 2009.
Nepal, where remittances sustained the economy during the recent years of civil war and political turbulence, fears that mass layoffs this year would mean more than economic instability at home.
'If hundreds of thousands of people employed in foreign countries are sent home, it could lead to social problems,' Nepalese economist Shankar Sharma said.
In the Philippines, where remittances have been the lifeblood of the economy for decades, the government is looking for new, riskier markets for its chief export: English-speaking labour and managers.
The government is reviewing deployment bans to risky alternative destinations such as Iraq, Lebanon and Nigeria to find jobs for retrenched Filipino workers.
Remittances from Indonesian workers, dependent on the export-driven economies of Malaysia and Singapore, are expected to decline to around $3.0 billion this year, said Fauzi Ichsan, an economist with Standard Chartered Bank.
The Indonesian government expects that at least 100,000 Indonesian workers in Malaysia would have to return home this year.
More affluent Asian countries are facing mounting political pressure of migrant workers returning home.
Japan, with its exports falling, has been laying off Brazilian workers of Japanese ancestry. Since September, flights to Brazil have been fully booked for returning labourers.
South Korea has promised subsidies to companies that hire only local workers.
The trend bodes ill not just for remittances but also for the employment conditions of the Asian workers desperately seeking jobs in a shrinking market.
'The danger is that the laid off migrant workers, who had invested their meagre assets at home to find work abroad, will be desperate to stay on, whatever it costs to recover their investments, said Manolo Abella, chief technical adviser for the ILO on labour migration. 'Many will become illegal and be vulnerable to abuse.'
Courtesy : Deutsche Press-Agentur
Remittances have become a major contributor to foreign exchange earnings and gross domestic products (GDPs), peaking at an estimated $116 billion in 2008.
This year, the money flows were expected to slow as construction projects are shelved and other jobs dry up in the Gulf nations, such Abu Dhabi, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates, which employed up to 13 million foreign workers, 11 million of them from Asia.
The remittances saved millions of families from impoverishment and boosted the region's economies.
Last year, remittances to Asia amounted to $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $7.0 billion for Pakistan, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labour Organisation (ILO) estimates.
The inflows accounted for 9.5 per cent of Bangladesh's GDP, 2.4 per cent of India's, 15.5 per cent of Nepal's and 11.6 per cent in the Philippines, the UN agency said.
But recession and plummeting oil prices are expected to take a deep bite into the remittance flow in 2009.
The World Bank estimates remittances from South Asians in the Gulf could decline by 9.0 per cent in 2009, compared with a 38-per-cent increase in the previous year.
India would be among the hardest-hit. An estimated 5.0 million Indian migrant workers, who work in six Gulf nations, send home more than one-fifth of India's total overseas remittances.
While India's Ministry of Overseas Affairs insists that the situation is not alarming, there are reports of job losses and wage cuts in the United Arab Emirates and Bahrain in the wake of the falling oil prices and decline in the construction, real estate and tourism sectors because of the ongoing global financial crisis.
'Remittances are a catalyst in India's growth as they make up 3.0 per cent of the country's GDP,' one ministry official said. 'A drop in the figures could act as a drag on the economy.'
The Indian consulate in Dubai has said construction firms there had bulk-booked planes to send soon 20,000 to 30,000 workers home on long leave or to divert them to projects in Qatar.
An estimated $260 billion of real estate projects are reported to have been delayed or shelved in the Emirates alone. Dubai's construction boom has crashed, sending thousands of workers back home and thousands of them left cars at the airport as they could not repay anymore.
Pakistan - with 24 per cent of its remittances coming from the United States and 56 per cent coming from the Gulf - was expecting to be hit in the second half of 2009.
Nepal, where remittances sustained the economy during the recent years of civil war and political turbulence, fears that mass layoffs this year would mean more than economic instability at home.
'If hundreds of thousands of people employed in foreign countries are sent home, it could lead to social problems,' Nepalese economist Shankar Sharma said.
In the Philippines, where remittances have been the lifeblood of the economy for decades, the government is looking for new, riskier markets for its chief export: English-speaking labour and managers.
The government is reviewing deployment bans to risky alternative destinations such as Iraq, Lebanon and Nigeria to find jobs for retrenched Filipino workers.
Remittances from Indonesian workers, dependent on the export-driven economies of Malaysia and Singapore, are expected to decline to around $3.0 billion this year, said Fauzi Ichsan, an economist with Standard Chartered Bank.
The Indonesian government expects that at least 100,000 Indonesian workers in Malaysia would have to return home this year.
More affluent Asian countries are facing mounting political pressure of migrant workers returning home.
Japan, with its exports falling, has been laying off Brazilian workers of Japanese ancestry. Since September, flights to Brazil have been fully booked for returning labourers.
South Korea has promised subsidies to companies that hire only local workers.
The trend bodes ill not just for remittances but also for the employment conditions of the Asian workers desperately seeking jobs in a shrinking market.
'The danger is that the laid off migrant workers, who had invested their meagre assets at home to find work abroad, will be desperate to stay on, whatever it costs to recover their investments, said Manolo Abella, chief technical adviser for the ILO on labour migration. 'Many will become illegal and be vulnerable to abuse.'
Courtesy : Deutsche Press-Agentur