Mahfuja Mukul : Manpower export from Bangladesh is increasing every year. However, remittances are not increasing in proportion to the rate of export of manpower. According to analysts and economists, remittances have decreased as expatriates send money illegally to the country through hundi, hoping to get more money because the dollar price is higher in open market or curb market than in banks.
According to a study by the Refugee and Migratory Movements Research Unit (RAMRU), 40-45 percent of remittances to Bangladesh come through hundi.
Meanwhile, at the third Global Business Summit at the Intercontinental Hotel in the capital on September 17, in the presence of the newly departed Expatriate Welfare and Foreign Employment Minister Imran Ahmed, it was said that 60 percent of Bangladesh’s total remittances come through Hundi.
Apart from this, according to an information from the Criminal Investigation Department (CID) of the police, at least five thousand agents of various Mobile Financial Services (MFS) including Bikash, Cash, Rocket and Way are involved in the hundi gang. Due to them, Bangladesh is deprived of approximately $7.8 billion annually. In September 2022, CID chief Additional IGP Mohammad Ali Mia gave this information in a press conference. CID’s financial crime and cybercrime unit arrested 16 hundi dealers in three rounds of joint operations in Dhaka and Chittagong. On this occasion, the press conference was held that day. Analysis of these data shows that remittances of Tk 60-70 thousand crore are coming to the country in the form of hundi.
However, the data of the Bureau of Manpower Employment and Training (BMET) says that the export of manpower from Bangladesh is increasing every year, but remittances are not increasing at that rate. According to BMET data, only 2 lakh 17 thousand 659 people were exported from Bangladesh in 2020. In contrast, remittances to the country are $21.75 billion. In 2021, the export of manpower was 6 lakh 17 thousand 209 people, and remittances came to $22.07 billion. In 2022, export of manpower was 11 lakh 35 thousand 873 people, remittance came $21.28 billion. And lastly in 2023 the export of manpower is more than 13 lakh. In contrast, remittances came in at $21.92 billion. In other words, in the three years after 2020, 10.82 lakh Bangladeshis went abroad, but the remittance increased by only $17 million. Analysts say that if remittances came through legitimate channels at the rate at which manpower exports increased, the amount of remittances collected would have exceeded $30 billion.
Eminent economist and research director of Center for Policy Dialogue (CPD) in this regard. Khondkar Golam Moazzem Hossain said, “The simple answer to the question why remittances are not increasing at the same rate as the export of manpower is increasing is that remittances are not increasing at the expected rate as remittances are not coming through formal banking channels and more are coming through hundi.” The government has increased the incentive from 2 percent to 2.5 percent to encourage expatriates to send remittances through legal channels. Apart from this, a bank is giving more incentives to attract more remittances through its channels. But that doesn’t work either. This is because the dollar rate varies from place to place in the country. Bank is giving like Tk 110, there is Tk 117-120 in curb market. As a result, expatriates are sending more remittances through Hundi in the hope of more profit.
Stating that more remittances come through legal channels and what should be done to prevent hundi, this economist said, ‘Those who are involved in illegal business called hundi in the country should be caught and punished under the law. This is not a very difficult task for the government to do, it just requires goodwill. Because using mobile banking, it is easy to find out who is doing hundi from which number or from which ID by mobile tracking. Therefore, hundi can be prevented only if the government, central bank or law enforcement agencies are active.
However, Ramru founder chairman Tasnim Siddiqui cited other factors besides hundi as the reason for the decline in remittances. In the light of time, he said, ‘Remittance is not reduced only because of Hundi, there are other reasons behind it. Despite the recent increase in manpower exports, migrant workers cannot send remittances in the first year of international migration. On the other hand, a large number of workers migrated but returned to the country after being unable to work or being cheated in various ways. Its amount is about 31 percent. Due to these reasons, the remittance is reduced. Apart from this, the confidence of migrants in banks has decreased, which has affected the flow of remittances through legitimate channels.
Amid the crisis, the dollar continues to swell: Meanwhile, the rupee continues to depreciate against the dollar. In other words, the dollar is becoming more inflated by weakening the money. Dollar crisis has been going on in the country for almost two years. Due to the demand of this foreign currency, the price has increased steadily in the recent year. Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers Bangladesh (ABB) have reduced rates slightly towards the end of the year. However, ignoring the decision of the two organizations, most of the banks bought and sold dollars at a much higher price. Some banks have been punished twice. As a result, the rupee continues to depreciate against the dollar.
According to Bangladesh Bank, currently the interbank rate per dollar is Tk 110. On January 1, 2023, every dollar traded at Tk 107. That is, in the last one year, the value of the domestic currency has decreased by Tk 3 against the dollar.
On the other hand, there has been a lot of devaluation of money in terms of dollar value in banks. Because many banks are not complying with the prices set by ABB and Bafeda. At the end of last year, a few banks bought remittance dollars for Tk 124. This price of the dollar was Tk 5 higher than the open market and about Tk 14 higher than the fixed rate of Bafeda.
On the other hand, the price of rupee has fallen the most against the dollar in the open market. Because at the end of 2023, the dollar was sold at the highest price in history in the open market. At that time, the price per dollar was around 130 rupees. At the beginning of October of the recent year, the price of every dollar rose to Tk 120 in the open market. After that, the price of the foreign currency started increasing rapidly.
Bangladesh Policy Research Institute (PRI) Executive Director Ahsan H Mansoor said, Bangladesh Bank’s policy on dollar exchange rate was wrong from the beginning. As a result, there has been a lot of instability in the value of money. There is a big difference in the dollar-buck exchange rate between the curb market and the interbank market. A long time ago the exchange rate of the dollar should have been left entirely to the market. Some banking problems are also associated with these problems.
On the other hand, in 2022, the taka depreciated by 21.21 percent against the dollar. At the beginning of that year, the price of the dollar was Tk 85.80. By the end of the year, it had increased to Tk 104. The price of this coin increased by Tk 18.20 during the discussion period.
Earlier, in 2022, Bangladesh Bank had taken disciplinary action against six banks for buying dollars at a higher price than the declared rate. Then in September 2023, 10 banks bought dollars at a higher price. On September 27, Bangladesh Bank imposed a fine of Tk 1 lakh on each of the head of the treasury department of 10 banks.
On the other hand, due to the impact of the dollar crisis, the reserves are continuously decreasing. Bangladesh Bank has been strict to control imports to solve the crisis. In this, the import is slightly reduced, but the price inflation is increasing at a high rate. Inflation in the country has been above 9 percent for a long time.
Reserves have decreased further: According to the data of Bangladesh Bank, currently the reserves have decreased to $2,543 million. At the beginning of this January, the amount was $20.07 billion. Reserves fell by $1.56 billion in a week as Akur payments and dollar sales continued.
Bangladesh Bank has imposed a margin of 75 percent to 100 percent on LC of imported products to deal with the pressure of dollar crisis. Due to this, the amount of imports has decreased. Compared to October 2023, the rate of credit opening for imports decreased by $340 million in November. On the other hand, exports in July-October increased by only 3 percent compared to last year.
Apart from this, Bangladesh Bank has increased the policy interest rate to control inflation. Last November, the policy rate was increased from 7.25 percent to 7.75 percent. As a result, the interest rate of the money borrowed by the banks from Bangladesh Bank has increased. Controlling inflation is the key challenge for financial sector regulators.
Experts say that dollar crisis has developed in the country due to several reasons. Imports are more than export earnings. Spending now exceeds dollar income.
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