New market, investment opportunities may help remittances to rebound
Ashraful Islam
Following a shocking decline in inflow of remittances last fiscal year, financial analysts have called for exploring new market for exporting manpower tartetting better pay package for exapatriate Bangladesh workers to promote sustainable domestic development and business in future. Terming the trend a cause for concern for the economy as a whole, stakeholders have insisted that the country must build necessary human resources and pursue economic diplomacy for attaining the goal of capturing overseas jobs in the most promising market including that of the Middle East.
Bangladesh Bank’s statistics showed that the country had received remittance worth US$14.22 billion in 2013-14 fiscal year, which was 1.6% lower than $14.46 billion receipt the previous year. Dhaka saw a decrease in remittances earning after many years – in the fiscal year 2000-2001, it dropped to US$1.8 billion from US$1.94 billion the year before.
The decline has been attributed to fall in export of manpower to destinations such as six countries of Gulf Cooperation Council (GCC) and also shrinkage of job opportunities in some developed countries. The GCC countries, which imported more than 85% of Bangladesh workers in 2000, now account for 59% of the total manpower being exported from Bangladesh, meaning a 26% decline in a decade.
Experts have cautioned that the decline in remittance inflow also be instigated by stagnating investment and the trend might have negative effects on future investment and business activities. The country’s foreign exchange reserve may also be under pressure in course of time if and when there would be rising investments that require higher import bills.
‘Remittances cushion the gap between the export earning and cost of import every year. We don’t recive the full amount of export proceeds due to costs of imports of raw materials and in that sense we earn hundred percent foreign currency from remittances. So, it would be alarming if we continue to see declining trends in remittances earning. It would not rebound unless we can increase manpower capturing new markets consolidating the old ones,’ said Dr Mohammad Farashuddin, former governor of Bangladesh Bank.
His views were echoed by his successor, Dr Salehuddin Ahmed who said the migrants began returning from major destination – the Middle East. ‘We could not make it up with new entrants into the overseas job market, As a result, the remittance earning marked an inevitable decline for the first time in many years,’ he pointed out. Salehuddin explained that remittance earners make their investments in housing sector which has not grown in recent years. ‘The lack of cvonfidence in investment atmosphere is also a cause for decline in remittance earning,’ he added.
Research Director at Bangladesh Institute of Development Studies (BIDS) Dr Zayed Bakht said if the remittance inflow continues to show declining trend, there may a mismatch between demand and supply of foreign exchance. ‘Due to lacklustre demand for investment at present, we don’t see pressure on foreign exchange and if the situation improves and investors regain interests, we may then face problem with foreign exchange due to uncertainty in remittances earning,’ he said.
Athough the remittance rose in July, the first month of the fiscal, stakeholders said this was because of the cerelbration of Eid-ul-Fitr when the country always sees a spending spree. Remittances inflow dropped the following month, if not compared to the previous year.
At a just-concluded conference of non-resident Bangladeshis, they came up with a set of demands for improvomg the situation. They demanded bettering services at Bangladesh missions abroad, diplomacy to brighten national image, simplifying the process of inivesments at share market by remittance earners and confidence building among the investors. The state minister for foreign affairs, Shahriar Alam, assured them of the government\s copperation in this regard.
Before the recent decline, the remittances registered a growth of 12.6% in 2012-13 fiscal year. In the past 30 years, remittances steadily grew, despite a sudden slide sometimes, and the growth even exceeded 40%. Between 2001-2010, remittance growth was over 20% on an average. In in the past three years, remittances growth came down to around 10% before showing a negative growth in the last financial year.
A survey by Bangladsh Bureau of Statistics found that remittances are spent most on meeting consumption expenses of the families of the money senders. Thus, it contribnued to growth of a number of sectors although the major portion of the foreign exchange earning is not directly invested. Any decline in remittance earning would not only hamper meeting basic needs of thousands of families it would also affect prospects of different business opportunities.
