The country received remittance worth $18.21 billion in the fiscal year 2019-20, which is 9.6% higher than the previous year
Bangladesh reached a new record in remittance in the last fiscal year, despite the global financial turmoil caused by the Covid-19 pandemic.
The country received remittance worth $18.21 billion in the fiscal year 2019-20, which is 9.6% higher than the previous year, according to official figures. In fiscal year 2018-2019, the country had received $16.4 billion and $14.98 billion in 2017-2018.
Experts say the huge influx of remittance found its way into the country through legal channels as transactions through “hundi” — an age-old illegal hand-to-hand financial transaction system — massively dropped amid the pandemic, which was followed by widespread lockdowns and travel restrictions around the world.
But contradicting the influx of the record sum in remittance, a Bangladesh Civil Society for Migration (BCSM) study suggests that only 39% of the families of migrant workers received remittance in the last three months of the last fiscal year, 2019-20.
Till September 18, a total of 141,036 migrant workers returned home following the pandemic, while 181,273 migrant workers managed to go abroad. The government had a target of sending 700,000 fresh workers abroad this year.
Talking to Dhaka Tribune, experts said as Bangladesh achieved a new record in remittance at a time when all conditions and principles of the global economy were against it. This indicates that huge sums of money were changing hands in and out of the country through illegal channels before the pandemic began.
They also said apart from the government losing huge revenues in taxes from these illegal transactions, marking a new remittance record during the pandemic has unveiled the real picture of such international financial transactions.
Reasons behind the increase
Dr Tasneem Siddiqui, the founding chair of the Refugee and Migratory Movements Research Unit (RMMRU), told Dhaka Tribune that there were several reasons why the remittance amount went up during the pandemic.
Firstly, recruiting agencies every year manage visas, each costing between $1,500 and $2,000, via different companies and agencies from receiving countries, she said. If 600,000 workers were to move abroad, these recruiting agencies will have to pay some $900 million in total for visas.
This amount is usually paid via hundi after the money is collected from the migrant workers abroad. This year, however, there was no scope of such transactions as workers failed to go abroad, she said.
Secondly, Tasneem said, financial transactions related to gold smuggling totally rely on the hundi system. As very few people purchased gold in the last seven to eight months, the rate of gold smuggling also dropped — leaving smugglers unable to collect the money from migrant workers. Because of that, most migrant workers had no other way but to use legal channels.
Thirdly, many businesses, including readymade garments and construction companies, resort to under-invoicing to avoid taxes while importing materials, Tasneem said. The rest of the payment is made by money collected from migrants via hundi. And after imports stopped because of the pandemic, such illegal transaction had also come down significantly.
Fourthly, the government’s 2% incentive for sending remittance through the proper banking channel has attracted people to use legit means of fund transfers.
“This is why only 39% of families of migrant workers received more in remittance compared to the total sum remitted by the entire expatriate workforce in previous years,” said Dr Tasneem, also a professor of political science at Dhaka University.
“Earning of migrants reduced significantly in April, May, and June of this year. Therefore, a spike in remittance does not indicate an increase in earning by migrants,” she added.
Zahid Hussain, the former lead economist for the World Bank in Bangladesh, told Dhaka Tribune: “Earnings depend on the health of the economies in which Bangladeshi workers are serving. Due to an economic recession, receiving countries had reduced their workforce as well as workers’ salaries.”
“More money came through the banking channel as the hundi system was totally closed this year,” he added.
Prediction of coming years
With fears of a second wave of Covid-19 in the US, UK, and European nations in the coming winter, oil prices might fall to a new low in the coming days. Till now, no country has been able to overcome the impact of the first wave of the pandemic yet.
“The UK, US, and European countries are assuming that the second wave may be heavier than the first wave of Covid-19. These economies yet to overcome the impact of the first wave of Covid-19,” Zahid said.
He continued: “In the gulf, oil revenue dropped to the sediment. Therefore, many countries now have halted many government projects which were funded from oil revenues. Many Bangladeshi migrant workers who were working in such government projects, are now unemployed.”
“If the situation does not improve fast, there will be no scope of increasing earnings of migrant workers in near future,” he added.
If the pandemic is brought under control soon, the world economy may fully recover to its previous state within the next two years, the economist commented.
Brac Migration Program Head Shariful Hasan told Dhaka Tribune: “Some 50 million people are directly dependent on remittance. Oil price in gulf countries, where 75% of our migrants are working, has been on the low. The problem may not be solved soon.”
“In the future, no country will take unskilled workers. Kuwait has already said they will not recruit unskilled workers anymore. But, 50% of Bangladeshi migrants are totally unskilled. We have only 2% of professional migrants abroad.
“It will be hard to increase earnings in the coming years,” he added.
Shariful also suggested finding alternative employment opportunities for Bangladeshi workers.
Similarly, RMMRU Chair Dr Tasneem said: “There is no alternative but to build skilled manpower through training in order to increase remittance. Medical professionals will be the key sector for global recruitment from now.”
Remittance at a glance
A total of 13,080,501 Bangladeshis went abroad since 1976.
Of them, the highest number, 4,183,585, went to Saudi Arabia; followed by 2,372,398 to United Arab Emirates; 1,518,268 to Oman; and 1,057,177 to Malaysia.
The rest of the migrants went to other different countries.
Saudi Arabia was the highest remittance sending country in the 2019-2020 fiscal year.
In 2019-2020, migrant workers from Saudi Arabia sent $3,533.9 million, followed by UAE with $2,264.28 million, the US with $2,154.16 million, Kuwait with $1,237.78 million, the UK with $1,252.95 million, Malaysia with $1,120.87 million, and Oman with $1,107.3 million.