The government has recently taken a move to introduce lower denominated bonds for Non-Resident Bangladeshis (NRBs) to help diversify fixed income tools.
People familiar with the matter at the Ministry of Finance told the FE on Thursday that the existing bonds meant for the NRBs are not popular among them mainly because of their high par values.
They said such type of lower denominated bonds namely US$50 par value will be popular as most of the expatriates don't earn much money.
They believe that such type of lower denominated bonds will increase their investments in the fixed income instruments.
The government issues fixed income instruments both for local and the expatriates as a means of borrowing tools to fund its budget.
Economists view that this is a good move but they argue that there should have 'incentives' to attract the expatriates.
Currently, the government is set to provide incentives on sending of remittances.
Dr Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, told the FE that if the expatriates get higher incentives, then they will invest in the bonds.
"The bonds should offer higher yields and then it will be popular," Mr Rahman said. This will diversify the bonds, he added.
The value of the proposed bonds and its yield rates have not been fixed yet, according to an official of the Ministry of Expatriates' Welfare and Overseas Employment (MoEWOE).
Currently, there are three bonds--Wage Earner Development Bond (WEDB), US Dollar Premium Bond (UDPB), and US Dollar Investment Bond (UDIB)--launched especially for NRBs with an aim to enhance remittance inflow.
The existing tools were found not much attractive to NRBs, and could not make significant headway so far.
When contacted, deputy secretary of MoEWOE Shaikh Muhammad Refat Ali said a meeting of the National Steering Committee on Migration was held last month to improve services for the migrants including introducing lower currency bonds. He, however, declined to give details in this regard.
On August 25, the meeting of National Steering Committee on Migration was held at the Prime Minister's Office with Prime Minister Sheikh Hasina in the chair.
The meeting primarily decided to introduce lower valued bonds. This was the first meeting of the committee, a senior official of the ministry said.
The target group will be low income Bangladeshi workers who are now working in Saudi Arabia, Singapore, Malaysia, the United Arab Emirates and Oman, he said, adding that the move has been taken to reduce their financial risks.
NRBs or their relatives generally invest their hard-earned money in informal trade or business. As a result, they often face losses or get victimized by their trade partners. So, the government will ensure security of their investments, he explained.
A process is underway to introduce the lower denominated bonds. The value of the proposed bond and yield rate will be finalised after holding meetings with stakeholders including ministries/divisions concerned and Bangladesh Bank, a source concerned said.
Earlier, a preparatory inter-ministerial meeting discussed the issue of introducing US$ 50 worth or lower denominated wage earner bonds/other bonds, he also mentioned.
"The government has taken various moves to encourage NRBs in making the existing investment tools attractive and boosting remittance into the country and remove policy barriers to obtaining bonds because of some policy barriers," a high official of the finance ministry told the FE.
The government are now working to remove these obstacles and make the investment tools more attractive, he added.
In July 2017, a foreign bank completed the first online NRB bond transaction (dollar premium bond) with a Brunei-based NRB customer. Some US$50,000 was netted in for the sole purpose of investment in the bond.
Presently, Bangladeshi nationals staying abroad and Bangladesh-origin foreign nationals residing abroad can invest in UDPB and UDIB. The bonds are issued in equivalent US dollar against foreign exchange remitted by wage earners.
Steps are on to simplify the process of investments in the existing bonds by NRBs, he added.
The government introduced the WEDB way back in 1981, followed by the UDPB and UDIB in 2002. Now the yield rate on WEDB is 12 per cent, UDIB is 6.50 per cent and UDPB is 7.50 per cent. Tax at source is free.
NRBs are allowed to get housing loan facility up to 75 per cent of the bond holdings of NRBs (Wage Earners Development Bond, US Dollar Investment Bond, US Dollar Premium Bond). Banks were instructed to open "Remittance Help Desk" in all branches for better remittance services, according to a BB annual report.
According to statistics of Department of National Savings (DNS), net investments in WEDB amounted to Tk 1.45 billion in the fiscal year (FY) 2010-11, Tk 1.45 billion in FY 2011-12, Tk 760 million in FY 2012-13, Tk 1.29 billion in FY 2013-14, Tk 4.28 billion in FY 2014-15, Tk 10.25 billion in FY 2015-16, Tk 9.16 billion in FY 2016-17 and Tk 17.33 billion in FY 2017-18.
Net sales of UDPB were worth Tk 170 million in FY 2010-11, Tk 710 million in FY 2011-12, Tk 310 million in FY 2012-13, Tk 260.93 million in FY 2013-14, Tk 80.0 million in FY 2014-15, Tk 49.40 million in FY 2015-16, Tk 99 million in FY 2016-17 and Tk 18 million in FY 2017-18.
UDIB fetched Tk 1.18 billion in FY 2010-11, Tk 2.98 billion in FY 2011-12, Tk 2.64 billion in FY 2012-13, Tk 440.68 million in FY 2013-14, Tk 1.25 billion in FY 2014-15, and Tk 1.86 million in FY 2015-16, Tk 1.51 billion in FY 2016-17 and Tk 1.67 billion in FY 2017-18.
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