Bangladesh saw a $2.16 billion remittance inflow from the Kingdom of Saudi Arabia (KSA), a top destination for migrant workers, during the period of July-April of FY2023-24 and it was the fourth highest among the countries with top remitters.
Sector people think that remittance inflow may not reach $3 billion from Saudi Arabia before the current fiscal year ends on June 30. If that happens, it would be the lowest amount received from the kingdom in the last three years.
The country received $4.5 billion in remittance from KSAin FY2021-22 and $3.7 billion in FY2022-23, according to Bangladesh Bank data.
This year so far, BB data shows, the remittance inflow was $179.13 million, $182.60 million, $179.82 million and $195.41 million in January, February, March and April, respectively. If the inflow continues like this, then it is unlikely to reach $3 billion by the end of FY24.
Saudi Arabia is a major source of Bangladesh’s remittance income and a key manpower export destination. The total number of manpower sent to that country between 2004 and 2024is 38,85,375, which is 31.02 per cent of total Bangladeshi expatriates around the world.
Industry insiders have blamed hundi, an illegal system of cross-border transactions, for the decrease in the remittance inflow from KSA.The use of hundi,instead of the legal banking channel, by migrant workers to remit money deprives Bangladesh of much-needed revenue.
Regarding the issue, Policy Research Institute of Bangladesh (PRI) Executive Director Ahsan H Mansur told The Business Post, “Saudi Arabia is a big source of remittance. But we are not getting remittance through the banking channel from KSAunfortunately because of hundi.
“We have heard from many sources that an influential Bangladeshi businessman controls the hundibusiness in KSA. As a result, remitters are sending remittance through hundi more than they sent through banking channels.”
“But law enforcement agencies and other regulators can track those facilitating the hundi system,” he said.
Ahsan added, “If the government can tackle the hundi channel, remittance inflow through the banking channelwill increase. If remittance from KSAdoes not cross $3 billion, it’llbe very unfortunate.”
Speaking to The Business Post,OvibashiKarmiUnnayan Program Chairperson Shakirul Islam said, “More than 7,00,000 migrant workers went to Saudi Arabia with a three-month visa permit in 2022. Somehow these workers did not get contractual jobsthere, andsome workers got involved in malpractices.
“We have found that many workers fled [from their designated places] after reaching KSA and later became undocumented as well.”
He also said that a lot of migrant workers go to Saudi Arabia with the hope of getting jobs and somehow they get cheated.
On condition of anonymity, several senior officials also said that some influential businessmen are controlling the hundi trade in KSA.Hundi traders take money from remitters in KSA andthe businessmen in Bangladesh handover the same amount of money to the remitters’family members.The country is losing revenue as this illegal process continues.
The USD market has been in trouble since mid-2022. Since then, BB has taken many initiatives to bring it under control but it is yet to stabilise the market.
Earlier this month, BB introduced the crawling peg system to make the exchange rate more flexible for spot purchases and sales of USD for all purposes, including remittance and LC opening.
Under this system, a Crawling Peg MidRatehas been set at Tk 117 per USD, raising the exchange rate by Tk 7.
