Remittances – The Key To Making Bangladesh a Middle Income Country

We have all heard the talk about making Bangladesh a middle income country. One of the key components is remittances by expatriate Bangladeshis living and working in other countries. Sadly, those with the largest capacity to send remittances, i.e. professional Bangladeshis are low on the list of remitters. In fact, laborers working in middle eastern countries, such as UAE, Qatar, and Saudi Arabia send much higher amounts of remittances than the professionals in America or the U.K.

It has been suggested that increasing Manpower exports could help Bangladesh in achieving its goal of becoming a middle income country. This week the Executive Times has run a series of articles on this very topic. The introductory article is copied and pasted below, but I urge you read the entire series to learn more about this valuable part of Bangladesh’s economy and the possibilities for the future.

Like many developing countries, Bangladesh heavily depends on the remittances or transfers of money by the Bangladeshis living abroad. Indeed, Bangladeshi migrant manpower is the greatest source of earning foreign currencies for Bangladesh. It generates a lot more money than the international Foreign Aid or FDI flow to the country.
In recent years remittance flow into the country has increased hugely. This is mainly due to the increase in the country’s manpower export. With more than $ 6.5 billion in foreign exchange earnings generated by remittances per year, Bangladesh is one of the highest remittance-receiving countries of the world: it has been ranked 5th among developing countries and 11th among all countries.
According to Bureau of Manpower, Employment and Training, about 5.4 million (5390854) people went abroad for overseas employment during the period from 1976 to 2007, accounting for almost $48 billion’s ($ 47973.52 million’s) worth of remittance inflow into the country. The actual figure is expected to be higher if remittances sent through informal channels are taken into account. Formal channels include banks, credit unions, MTOs such as Western Union, and postal services, while the informal money transfer agents include friends, families, unregistered money transfer businesses such as hawla dealers, and trading companies. As in most of the developing countries, the informal channels here are quite prominent.
There is no exaggerating the importance of manpower export and its impact on the economy. Over the years, remittance inflows into the country have been growing significantly. In 2007 remittances received were to the tune of $ 6,568.03 compared to $ 5,484.08 in the previous year, a growth of almost 20 percent. This year, so far, the remittance has been very satisfactory. According to Bangladesh Bank, Remittances receipts during July-October 2008 increased to $2985.32 million from $ 2187.78 during July-October, 2007, an increase of $797.54 million or 36.45 percent.
However, with the current global financial crisis continuing, remittance flow into the country in the coming months may slow down because earnings by the Bangladeshi expatriates may be affected and also because the number of Bangladeshis getting employed overseas may fall. So far the Middle East countries, especially Saudi Arabia and the United Arab Emirates, have been the major destinations for overseas employment for Bangladeshis, together accounting for the largest amount of remittance. Compared to European countries, the Middle East has still been less affected by the global financial crisis. But as months roll, the global credit crunch is having its impact on some of the countries in the region such as the Emirates which employs a huge portion of Bangladeshi workforce especially in the construction sector. Some of the real estate projects in this area have already been halted, which means laying off workers, and consequently Bangladesh may see a number of its workers returning to their country. Also, less construction work in this area will mean less export of manpower in the coming months.
So, exploring new destinations for manpower export is vital. Recently, Libya has shown a keen interest in recruiting a large number of Bangladeshis and manpower export to Malaysia has also increased substantially. However, most of the manpower exported to these regions is still in the category of unskilled workers. In terms of exporting professionals or highly skilled workers, Bangladesh is still lagging far behind. In order to export more skilled workers the government needs to ensure that Bangladeshi workforce get quality training at home. Moreover, adequate consultations and other types of assistance need to be provided.
A vast portion of recruitment, almost 40%, is managed by the private recruiting agents in the country. Some of these agents are allegedly involved in fraudulent activities, not only causing inhuman sufferings of the workers but also tarnishing the image of the country abroad. Bangladesh Government needs to regulate the recruiting agents properly and ensure that the culprits in the sectors are brought to justice. The Government should also ensure strict monitoring so that no fraudulent activities can be carried out by any dishonest recruiting agents in the country.

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