The recent dollar crisis has brought remittance, one of the principal ways of earning foreign currency, to the centre of discussion. No sooner had we started to recover from the Covid-19 induced stereophonic economic crisis than our banks have been failing to provide their customer with uninterrupted LC service due to the inadequacy of dollar. Additionally, Ukraine-Russia war and the US-China trade tension-induced prolonged global statelier, commercial, energy, and economic crisis have been putting a negative effect on the income of Banks.
Again, due to the downward trend of competition for the products, some merchants are levying excess prices on their products to make unscrupulous profit. In a standard market system to balance the cost, all merchants, either small or large, should get the equal opportunity to open LC, where banks still need to ensure this amid the ongoing dollar crisis.
Ensuring the remittance inflow and increasing its amount can be an essential tool to recover from this prevailing dollar crisis. According to the annual report 2021-22 of the Expatriates’ Welfare and Overseas Employment Ministry, we have almost 1.2 crore immigrants in 174 countries. In 2022 alone, 11 lakhs 35 thousand and 873 employees went overseas, according to the Bangladesh Bureau of Manpower, Employment and Training (BMET).
In the first three months of the current year- a total of 3 lakhs 23 thousand and ten employees went overseas, BMET added. Out of these listed employees, many more go outside every year in liaising with various broker syndicates through illegal ways.
The concern is that, although almost 1.5 million employees have gone abroad in the last 15 months, our remittance inflow hasn’t risen proportionally. Sending unskilled workers is responsible for this where Hundi is even more accountable. Addressing his research in a workshop held in the previous year, Finance Minister AHM Mustafa Kamal said 51 per cent of our remittances are coming through the Hundi channel that was 42 per cent a few years ago. On the contrary, in a separate survey of International Labour Organization (ILO), it has been seen that only 40 per cent of our remittances are coming through banking channels, and 30 per cent of the remaining 60 per cent are coming as direct cash through illegal approaches, and the rest through Hundi.
The main reasons for Hundi to receive such attention from the expatriates are better exchange rates, hassle-free and faster transactions. Proper implementation of laws and regulations alone cannot tackle this situation. Behavioural change and moral obligation and incentive packages should be prioritized to intercept the illegal inflow of remittance. We should thank the government to take timely decision to provide 2.5per cent cash incentives on remittance.
Based on the statements of the sources mentioned earlier, our total annual remittance inflow must have been between 48 billion dollars to 60 billion dollars which is almost double or more than that of the current influx. If we consider the report of ILO, it is lucid that we can soar up our remittance inflow to almost 45 per cent even without confronting Hundi. But it will never be a realistic approach to fix our policies excluding Hundi from consideration. Manifold steps of the government regarding this matter can be recalled here again. It can be specially mentioned here that, in a letter written for the Governor of Bangladesh Bank and a Senior Secretary of the Finance Ministry, the Bangladesh High Commission in Malaysia has suggested to set up a reasonable exchange rate, increase the interest rate against bonds and raise the incentives for remittance from 2.5per cent to 5 per cent to prevent Hundi.
Furthermore, a roundtable discussion was held on the first of November 2022 regarding the MFS- based remittance sending issue, where a detailed discussion was made on the importance of investing in exchange houses and app development. Moreover, we already know and see firsthand that workers from other countries can easily send their remittances through MFS apps. In this way, we can easily track the detailed transaction record too. That means it will be a win-win situation for both parties.
Besides these laudable ventures and suggestions, if the below-mentioned propositions can be considered in policy-making stages, justice will be ensured to those of our remittance-earning brothers and sisters who are sacrificing their youth and family time. It will likely be able to recover from the ongoing dollar crisis also.
Besides having 2.5per cent ongoing incentive facility, each immigrant will get an additional 10 per cent incentive on legally sending remittances from banks end while returning to the country. Again, they will not have to apply to avail of the mentioned incentives on their remittance. Our overseas missions will provide them a certificate for legally sending remittances and the immigrant workers will upload the verified copy to the app/software for the purpose of account registration. The whole process can be conducted using specially-made software/apps.
Let’s put an example supporting the proposal to understand it lucidly. Assume that Mr Rahmat Ali is a Saudi immigrant who can send an average of Tk 50 thousand as remittance to the country monthly. In a two-year cycle, he can send a total of Tk 12,00,000. The individual will upload the receipt copy of transaction through legal channels i.e., Banks, MFS etc., to the definite app/software as proof of sending these remittances. He will receive an amount of 1200000×10 per cent or 120000 taka as an incentive from any bank in the country while he submits the required verified transaction history.
One of the top contributors to our export earnings is Readymade Garments (RMG). This has been made possible by taking some timely steps such as incentives to enter into new foreign markets, incentives to export selective products, tax-free raw material import facilities, packing credit prior to the shipment by the banks, margin-less back-to-back LC for procuring the raw materials of the exported goods, and finally the risk-taking attitude of commercial banks. All these factors collectively brought our RMG sector to a new height such and as a result, according to the Export Promotion Bureau (EPB), our export earnings rose to 52.08 billion dollars in the FY2021-22.
In the same way, if we can value our immigrants and help them with friendly policies, it will be possible to flourish in the remittance sector too. This incentive package can be considered as a kind of Deposit Pension Scheme or gratuity for our immigrant workers will help them being financially established in a sustainable way. Basically, it is seen that they barely bring any additional amount with them to support their family when they return to their home after a long time.
So, if we can make them understand our scheme and instigate them to send money through legal channels to have the planned benefits, our remittance inflow will get a rise. Also, our remittance fighters who have been sacrificing their young age for the sake of their family members will get financial stability which will ultimately help us to build up a welfare country and pay a portion of our debts to our immigrant workers.
The writer is a banker. He can be contacted at [email protected]