Remittance in investment
EXPATRIATE Bangladeshis remitted $10 billion in the just-ended fiscal year, posting a strong 22% rise over the same period in last fiscal. The per capita amount that our migrant workers have remitted is higher than that of India, which is the highest remittance receiving country in the world.
This robust inflow of remittance has raised the country's foreign currency reserve to an all time high of $7.84 billion, well above the safe threshold to meet three months' import bills. This is borne out by the near doubling of the country's foreign currency reserve during this period through notably higher remittance inflow in the last few years.
The inflow of remittances has increased by about 150%. in the past few years. It stood at $8,86 million in the first month of the ongoing fiscal year, marking an 8% growth over the month of July of last fiscal.
The World Bank said on July 29 that Bangladesh was expected to receive remittance worth $10.87 billion in the current fiscal year if the global oil price did not fall and the local currency was not appreciated. But the negative side is that a high proportion of the remittances is used just for consumption, without helping to boost up the country's economy on a long-term basis.
We may learn a lesson from the Philippines on use of remittances, where they are a source of investment. An increasing number of migrant workers there are using remittance not just for consumption but also for investing in small businesses.
Philippines, a major labour exporting and remittance receiving country, which received $16 billion in 2008, has developed a trend among the remittance recipients to spend a higher proportion of remittances in investment instead of consumption.
There is increasing evidences that the families receiving a significant amount of remittance prefer to have at least one family member as self-employed or heading a small enterprise, suggesting that remittance may also help them to start and sustain small businesses.
A recent survey of Asian Development Bank revealed that, 900,000 Filipinos shifted from the low income group to the middle-income group by using remittance to invest in small business enterprises, Which has reduced the poverty rate by at least 5%.
The migrant workers of Bangladesh are not lagging behind in any way. But in the absence of state patronisation or an appropriate investment policy, the higher proportion of their remittances are being used by their family members just for consumption or to improve their lifestyles.
A recent World Bank study revealed that migrant's households in Bangladesh spend more on food and lifestyle rather than in a productiveway. They eat better, dress better and buy more household appliances than a non-migrant household.
Earning of the migrant workers is a prominent source of foreign currency for Bangladesh. But their earnings have not been contributing towards boosting the country's economy for the lack of proper initiatives
The government introduced Wage Earners Development Bonds for its migrant workers, which were out of reach for most of the migrant workers and their families living in the rural areas and unable to go through cumbersome process of buying it.
The government is now planning to provide banking services to a huge number of migrant workers and their families through mobile phone, and to set up an expatriate welfare bank.
The expatriate welfare ministry should seriously consider issuance of bonds specially designed for the migrant workers, which can be easily bought, and make them available in rural areas so that their families can buy them.
The funds thus mobilised should be invested through a competent management board, with public and private sector representatives, for taking up well thought-out projects having relevance to the welfare of our migrant workers.
India issued Resurgent Bonds in 1998 in the wake of international sanctions imposed on it because of its nuclear tests, and raised $4.2 billion, which helped it to withstand the shock of economic sections.
Use of remittance as a means to run small business enterprises may be a good solution. The government should formulate a well thought-out policy encouraging the migrant workers and their families to invest in small-scale agro-based industries, and provide them with the necessary technical assistance and marketing facilities.
To use the untapped potentials of our migrant workers, the government, on the one hand, should take serious steps to keep the present robust inflow of remittance alive and, on the other, formulate an appropriate investment policy for the migrant workers to invest their remittances in the productive sectors.
A.N.M. Nurul Haque is a columnist of The Daily Star.
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