Use of remittance money in productive activities
Sunday, 19 April 2009
Remittance income, a vital lifeline of the Bangladesh economy, has recorded a substantial rise in recent years, reaching nearly $9.0 billion in the last fiscal (2007-08). The earning made the country one of the top ten remittance recipient countries in the world in 2008. Though return of a few thousand jobless expatriate workers home from the recession-hit Middle Eastern countries for the last few months is being taken as an ominous sign, the remittance money would continue to play an important role in the country's balance of payments (BoP). There could be some decline in the remittance inflow during the current or next fiscal because of the recession, but the global economy would surely pick up again, leading to rise in demand for foreign workers in the Middle East and South East Asian countries.
The government has been, apparently, happy with an uninterrupted increase in the remittance income over the years. Despite concern expressed by a number of leading economists at home and donor agencies, no effective move has so far been initiated by the authorities concerned to monitor how the money sent home by the expatriate workers is being spent. Studies have found that nearly 80 per cent of the remittance money is being utilised for consumption and non-productive purposes. There is no denying that the wages of most migrant workers, particularly those who are unskilled ones, has gone down over the years. Besides, meeting the day-to-day expenditures of the families back home and repayment of money that they had to borrow to pay for the fees charged by the manpower agents remain at the top of the list of their priorities. What is left in excess of those is, generally, invested in building a new house or buying a few bighas of land. However, the skilled workers do earn handsome amounts as wages. Yet they are also prone to making unproductive investments, mainly in real estate.
The central bank, according to a report published in this daily last Friday, has initiated a plan to arrange loans or provide business advisory services to the jobless migrant workers. The plan, which is being launched on a very limited scale-only 2000 returnee-migrants will be covered in some specific districts to help the members of the target group to start off their own small enterprises. The objective of the project is to help the returnees support their families and meet other payment obligations. Under the project, which is being supervised by a foreign consultant, the returnees will get advice on investment opportunities, entrepreneurship and vocational training and access to loan and market linkage advisory services.
The central bank move to help the jobless migrant workers is laudable. But the bank does need to take up the issue of remittance investment in its entirety. The major part of the remittance income that finds its way into unproductive investments should be brought into activities that truly benefit the remitters as well as the national economy. Unskilled migrant workers, who are not paid handsomely by their employers, usually do not have spare funds for making investments. But the remittance being made by the skilled and semi-skilled workers employed in the countries in the Middle East, South East Asia, the USA and other European countries can well be attracted to productive investment by offering the due incentives. Mere verbal exhortations would not, however, help attain the desired objectives. The central bank would have to devise schemes lucrative enough to attract migrant workers to put in their money in productive activities.
The government has been, apparently, happy with an uninterrupted increase in the remittance income over the years. Despite concern expressed by a number of leading economists at home and donor agencies, no effective move has so far been initiated by the authorities concerned to monitor how the money sent home by the expatriate workers is being spent. Studies have found that nearly 80 per cent of the remittance money is being utilised for consumption and non-productive purposes. There is no denying that the wages of most migrant workers, particularly those who are unskilled ones, has gone down over the years. Besides, meeting the day-to-day expenditures of the families back home and repayment of money that they had to borrow to pay for the fees charged by the manpower agents remain at the top of the list of their priorities. What is left in excess of those is, generally, invested in building a new house or buying a few bighas of land. However, the skilled workers do earn handsome amounts as wages. Yet they are also prone to making unproductive investments, mainly in real estate.
The central bank, according to a report published in this daily last Friday, has initiated a plan to arrange loans or provide business advisory services to the jobless migrant workers. The plan, which is being launched on a very limited scale-only 2000 returnee-migrants will be covered in some specific districts to help the members of the target group to start off their own small enterprises. The objective of the project is to help the returnees support their families and meet other payment obligations. Under the project, which is being supervised by a foreign consultant, the returnees will get advice on investment opportunities, entrepreneurship and vocational training and access to loan and market linkage advisory services.
The central bank move to help the jobless migrant workers is laudable. But the bank does need to take up the issue of remittance investment in its entirety. The major part of the remittance income that finds its way into unproductive investments should be brought into activities that truly benefit the remitters as well as the national economy. Unskilled migrant workers, who are not paid handsomely by their employers, usually do not have spare funds for making investments. But the remittance being made by the skilled and semi-skilled workers employed in the countries in the Middle East, South East Asia, the USA and other European countries can well be attracted to productive investment by offering the due incentives. Mere verbal exhortations would not, however, help attain the desired objectives. The central bank would have to devise schemes lucrative enough to attract migrant workers to put in their money in productive activities.