Economy shines on demographic dividend

A steadily high proportion of working people comes as a blessing for the country that reaps its benefit since independence when a multitude of workforce underpinned labour-intensive clothing industry at home and also turned to overseas for forex – two key economic drivers.

In due course, manpower export came to the aid of gradually pulling up the fragile economy in the post-independent period while today at the crossroads of Golden Jubilee, Bangladesh’s economy looks grandstanding.

With seven and a half crore people, the economic journey of a newly liberated country began which is now on an upward trajectory, and which has surpassed many of its neighbours in terms of growth, and is touted as an “Emerging Tiger of Asia”.

The biggest challenge to generate adequate employment for a huge number of workfolks after liberation was well-managed by the sprawling garment industries and by the demand of manpower in the middle-eastern countries.

The readily developed diplomatic ties with the gulf nations boosted manpower export that paved the way for earning remittances, which played a pivotal role in turning around the economy and reducing poverty.

According to the World Bank report, remittance contributed 6.6 per cent to the GDP last year.

Remittance earnings

Remittance earnings jumped 917 times from 1976 to 2020, according to the data of Bureau of Manpower, Employment and Training (BMET). No data is available from 1971 to 1975.

In 1976, Bangladesh earned only $ 23.71 million or Tk 35.85 crore in remittances, which went up to a staggering $ 21.75 billion or Tk 1.85 lakh crore last year.

From 1976 to September 2021, the country received more than $ 249 billion or Tk 18.52 lakh crore remittances, according to the BMET data.

How remittance rises

Various initiatives worked well to boost remittances. Facilitating manpower export and remitting process as well as cash incentive against inward remittance by the government attributed to the rise in remittance earning.

Since 2019-20 the government is providing 2 per cent cash incentive for expatriates’ inward remittance through legal channel (banking/digital) while a remitter will get 2 per cent cash incentive up to $5000 without any documents.

Bangladesh’s remittance growth in 2020 was the highest in South Asia with 18.4 per cent rise from the previous year, said a World Bank report released on May this year.

Refugee and Migratory Movements Research Unit (RMMRU) Chairperson Tasneem Siddiqui told The Business Post that remittance gap between male and female worker is narrowing.

“If we want to increase remittance income in future, women workforce has to be sent overseas on a par with their male counterparts with adequate protection,” she suggested.

Poverty reduction

A World Bank report released in 2013 showed, from 2000 to 2010, people’s income rose by 34 per cent, resulting from 106 per cent increase in international remittances, which was one of the major drivers for poverty reduction.

In this context, Prof Mustafizur Rahman, distinguished fellow of Centre for Policy Dialogue (CPD) told The Business Post that poverty alleviation has been one of the key drives with the help of remittances over the previous decades.

“Most migrant workers are from low-income families and their remittances helped a lot in boosting income,” he adds.

“Remittance also helps to keep exchange rate stable through increasing foreign exchange reserves. During the pandemic, it helped a lot to cut down recession.”

Despite the outbreak of pandemic, Bangladesh received on average $ 2 billion dollar in remittance every month during the last financial year. However, in recent months, it is in falling trend.

Central Bank’s role

The central bank has also a big role to play in boosting remittance earnings.

Serajul Islam, spokesperson and executive director of Bangladesh Bank, said now beneficiaries can receive remittance from abroad within 48 hours.

Remittances are also available through digital wallet, international card, mobile banking, agent banking and 1,465 exchange houses.

He added that the central bank is distributing properly the 2 per cent cash incentive. Besides, deposit scheme and housing loan facility for expatriates have also been introduced.

Sending cost

According to research, during the pandemic, remittance through illegal channel (hundi) almost came to a halt. As a result Bangladesh received a higher amount of remittance than it did during the pre-pandemic period.

Tasneem Siddiqui said they have an estimate that if remittance comes fully through legal channel, it would be around $30 billion a year.

The service charge of legal channel is high in South Asian region, according to a World Bank report released on November 17, 2021.

Sources in the central bank said the average cost of sending $ 200 to Bangladesh from a number of top 10 remittance sending countries is $3.48, and $2.11 for sending $ 5.

The cost goes around 5 to 7 per cent, said a source in private bank.

Manpower export

It has been possible to raise remittance income through boosting manpower export by developing diplomatic relations with Middle East and Gulf regions that started since the mid-seventies.

The BMET data shows in 1976 Bangladesh embarked on its journey to send migrant workers to Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar, Bahrain and Libya.

Apart from these counties, Malaysia became a major destination of manpower export after 1990s.

In 1976, total overseas employment was only 6,087, which in 2017 went up to 10 lakh -- highest in the county’s history.

From 1976 to September this year, the country sent a total of 1.34 crore migrant workers.

Manpower exporter and former general secretary of Bangladesh Association of International Recruiting Agencies (BAIRA) Ali Haider Chowdhury told The Business Post that, from 1975 onward, manpower export started gradually with the help of private recruiting agencies.

“At that time, the activities were centred in Chattogram. Later, as the demand increased, it became Dhaka-centric,” he added.

Prior to the pandemic, on average 7 lakh migrant workers flew abroad per year which helped reduce the pressure on the local labour market.

Migration cost

Migration cost is still high here compared to many other countries in the world. According to a survey report published by the Bangladesh Bureau of Statistics (BBS) last year, the average cost is $5,000 or Tk 4.16 lakh.

However, RMMRU research says from 2014 to 2017 these costs have been steadily declining and are still on the declining trend.

In this regard, RMMRU Chairperson Tasneem Siddiqui viewed that as of now the average migration cost for a male workforce is Tk 3.45 lakh while it is Tk 3.07 lakh for female.

She adds that there is no government initiative to reduce the cost of labour migration; rather the market tendency is such that it does not cost more.

About the BBS result she mentioned probably the survey has highlighted the first-time migration cost, which is usually higher than that in the second or third time.

Skill required

Although the number of Bangladeshi expatriates working in many Asian countries is higher, remittance income is comparatively lower because of unskilled migrant worker.

Asked about it, Ali Haider Chowdhury said the Middle East is still a big market for Bangladesh, but for the unconventional markets in Europe like Romania, Spain, Germany and Japan, skilled manpower is required.

Prof Mustafizur Rahman pointed out that the demand in foreign labour market will change in future. Medical services, homecare and catering industry will be the new avenues of opportunity for labour migrants, and Bangladesh has to remain set to keep pace with the new demand.

Bangladesh vs neighbours

According to the World Bank report, Bangladesh remained third in South Asia with $21.7 billion remittance last year.

The country has become the seventh-largest remittance earner among low- and middle-income countries and the eighth-largest earner in the world in 2020.

Pakistan, also the sixth-highest recipient globally, received $26.11 billion in 2020.

India became the largest remittance earner in both the world and the South Asian category having received $83.15 billion in 2020.

China came second, receiving $59.51 billion in 2020, followed by Mexico, the Philippines and Egypt that received $42.88 billion, $34.91 billion and $29.60 billion respectively.