Published in The Financial Express on Wednesday, 7 January 2015.
News Analysis
Looking at inflow and outflow of remittance
Shamsul Huq Zahid
Two important issues concerning inflow and outflow of remittance were brought to the fore last Sunday.
A Bengali business daily, quoting an International Labour Organisation (ILO) report, said remittances worth in between $4.3 billion and $5.7 billion are being sent to the near and dear ones by expatriate Bangladeshis using illegal routes. The inward annual flow of remittances through legal routes now hovers between $14 and $15 billion.
The other issue, which is far more serious in nature if viewed in the context of its impact on the economy, was raised by the Centre for Policy Dialogue (CPD), a private think tank.
The CPD at a press conference said Bangladesh has become the third largest remittance source of India, with around $3.7 billion dollar sent in 2013. And a portal of professionals, the Silicon India, has predicted that the remittance from Bangladesh to India would continue to increase in the coming years.
That the remittance money is entering the country using illegal hundi routes is an open secret. Earlier, the hundi system used to dominate the remittance earning, mainly because of the large gap between the official and the kerb market exchange rates and highly insufficient and cumbersome banking network. However, none did ever know the exact volume of remittance entering the country using illegal hundi channel.
But following extensive expansion of banking network at home and establishment of exchange houses in major destinations of Bangladeshi migrant workers, the dominance of the hundi system has been on the wane in recent years. Yet none knows for sure the size of the money still being sent back home by the workers using the hundi route. The ILO report has come up with a probable size that should be enough to trigger concern among the relevant agencies and take appropriate measures to help reduce the size of hundi money.
The reasons for such a big amount of money still being sent through illegal hundi channels are identical to those existed decades back. The difference in rates offered by banks and hundi operators is one reason and the other is the fastest delivery of remittance money to the beneficiaries, particularly those living in rural areas, sans the procedures followed by banks.
Besides, a sizeable amount out of their own earning is carried back home by the expatriate workers themselves. The amount is exchanged at the kerb markets or from authorized exchange houses that offer more than what is offered by banks.
The exchange houses are supposed to maintain details of their transactions in prescribed forms. But they never adhere to rules and do business the way the like. The relevant section of the central bank does hardly pay any on-the-spot visit to see whether the transaction records are maintained as per rules.
The availability of unaccounted-for foreign exchange in the kerb market has always been a handy source of flight of capital albeit in small amounts from the country. But put together, the small outflows would be bigger in size.
The issue of outflow of funds to neighbouring India deserves immediate official attention. Thousands of so-called skilled Indian and Sri Lankan nationals, both legal and illegal, have been working mainly in the country’s apparel industry. Because of the geographical proximity, the number of Indian nationals is far greater than that of the Lankans.
Many Indian nationals are, reportedly, also working in the information technology (IT) sector and a good number of them do not have valid work permits. The government agencies concerned have never taken the issue of illegal foreign nationals in due cognizance for reasons best known to them. Only recently, the law enforcing agencies managed to detain a few illegal foreign nationals, most of whom have their origins in Africa.
A country which has considerable dependence on the remittance money earned by its nationals at the cost of their sweat and blood cannot afford the reverse flow of funds for reasons that can be addressed rather easily.
Is it that difficult to develop skilled human resources locally to replace the Indians and Sri Lankans employed in the local apparel factories? It should not be a big ask for a nation which is only second to China in apparel exports. Neither the country’s policymakers nor the apparel factory owners have been serious enough to take note of the issue and do the needful.
It is understood that foreign nationals who are being hired by the domestic apparel units, are technical hands. The industry is now more than three decades’ old and industry operators are well aware of the manpower requirement. But it is not known whether they have ever raised the issue of technical manpower requirement with the policy-makers and requested the latter to help fill the vacuum.
But there is no room for any further delay to find out the replacement and stop the outflow of hard-earned foreign exchange. There are lots of technical institutions imparting primary, intermediate and higher level technical education. The trade bodies representing the apparel sector might sponsor foreign trainers so that a few of these institutions can create skilled hands enough to meet the requirement of their member units.
zahidmar10@gmail.com