Roadshows abroad to popularise forex bonds on cards

The government is planning to stage roadshows abroad to popularise four bonds among the Non-Resident Bangladeshis (NRBs) and expatriate workers as these bonds have been receiving lukewarm responses.

A Cash and Debt Management Committee (CDMC) recent meeting minutes revealed that the several decisions including roadshows aboard were taken.

Presided over by Finance Senior Secretary Abdur Rouf Talukder, the meeting decided to stage roadshows in the Middle East, Malaysia, European Union, UK and Italy to encourage the expatriates to buy Wage Earner Development Bond, US Dollar Premier Bond, US Dollar and Dollar Investment Bond from aboard. Those roadshows, the authorities hope, will encourage the NRBs to invest in the government treasure and bond too.

As per the meeting minutes, the government will convert three-dollar bonds into Dollar, Pound and Euro bonds so that more NRBs and expatriates buy those bonds, according to minutes of the CDMC meeting.

Official finance division said it is natural for the general population to be widely ignorant about the benefits and risks involved with an investment in bonds.

A number of factors could be responsible for such a poor response from the expatriates includes 2% cash support in sending remittances, the official also said.

Former finance advisor Dr AB Mirza Azizul Islam said if the government wants to attract Bangladeshi expatriates to foreign exchange bonds it should include two per cent cash support with the bond.

In the meeting, it is not at all surprising that the response from the NRBs and workers employed abroad to foreign exchange bonds floated by the government is rather lukewarm.

A number of factors could be responsible for such a poor response from the expatriates. More than 90 per cent of the Bangladeshi workers are employed in the Middle Eastern countries, Malaysia and Singapore and most of them being unskilled get unattractive wages.

They usually send the lion's share of their earnings back home for the sustenance of their families and repay the money that they had borrowed from friends and relatives or rural loan sharks.

A large number of expatriate workers have the propensity to construct a new house or buy lands while some others tend to save money for starting a small grocery or any other small business on their return home.

Another reason for poor response to US Dollar Bonds could be that most of the NRBs and the Bangladeshi workers abroad are unaware of the existence of these dollar-denominated bonds.

As result, the government asked the Bangladesh Bank and the National Savings Directorate (NSD) to launch campaigns both at home and abroad to motivate the NRBs and the Bangladeshi expatriate workers to invest in forex bonds.

The government might try all these at some costs, but the actual outcome remains in doubt. Barring the WEDB, two other forex bonds for wage earners also offer unattractive interest rates on the bonds ranging between 6.5 per cent and 7.5 per cent per annum. Some the bonds are of high denominations. As a result, high denominations but low yields have made the bonds unattractive to most NRBs and expatriates who sent 16.4 billion US dollars back home during the fiscal year 2018-19.

Meanwhile, the cash subsidy or 2% incentive does not apply to investments in wage-earner development bond, US dollar investment bond and US dollar premium bond.

Earlier, the Bangladesh Bank clarified the issue as investors were confused, many going to banks demanding incentives on the three types of bond, like the one on remittance. The central bank sought the opinion of the Finance Ministry on the matter. The ministry said that investment on these three types of bonds was not eligible for a cash subsidy.

The government introduced the 2% cash incentive against inward remittance to encourage it’s legal channelling, for the fiscal year (FY) 2019-20.

And it allocated 3,060 crore taka for this incentive for the same fiscal year.

The inward remittance flow was 18.24 billion US dollars in FY20 after the incentive was introduced.

So, the government has continued to pay 2% cash subsidy on remittance in the FY21.

ask/wi