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Bangladesh - Bank & Finance - 4 weeks ago

Labour markets failed to attain remittance target

Staff Correspondent: The flow of remittances from all major labor markets of the country is decreasing at an alarming rate. The only exception to this is the United Arab Emirates (UAE). In the first nine months (July-March) of the current fiscal year, expatriate income from the UAE came to the country at 327.7 million. At the same time, only $196.69 million came from Saudi Arabia, the main labor market. In other words, the gap between the remittance flow from the Emirates and Saudi Arabia is more than 60 percent. The UAE has retained its title as the top remittance market since the start of the current financial year.
Apart from Saudi Arabia, there has been a major disruption in the flow of remittances from the United States. In the first nine months of the current financial year, Bangladesh’s expatriate income from the world’s largest economy was only $194 million. But in the last financial year also, a record $352 million remittance came from the United States. The remittance flow from the country was on the growth trend for the previous three years as well. The disruption in that flow dropped the United States from the top spot to fourth. Saudi Arabia dropped to third place. However, the name of United Kingdom has risen to the second place as the remittance flow is stable. In addition to Saudi Arabia and the United States, the remittance flow of major labor markets including Malaysia, Oman, Qatar, Singapore is now quite slow.
Just as a major slump in expatriate income from key labor market Saudi Arabia has raised concerns, a big jump in remittances from the UAE is raising questions. Those concerned say that Saudi Arabia’s remittance market is gradually coming under the control of Hundi. It is also becoming difficult to send money out of the country through legal channels. On the contrary, the UAE is now recognized as one of the top centers of global trade due to the ease and liberalization of laws. Bangladeshi big and medium businessmen have also opened offices in different cities of the country including Dubai. Many are investing in the Emirates by smuggling wealth out of the country. Apart from the money sent by the migrant workers, a part of the smuggled money is now entering the country as remittances.
Managing Director (MD) of Social Islami Bank Zafar Alam told in this regard, “Dubai in the Emirates has now become the center of global investment. The government of the country is providing various facilities to the investors besides simplifying the laws. A large number of Bangladeshi workers are also working in the country. Some of the big businessmen have opened offices in the country. All in all, Emirates is now a place of attraction for Bangladeshis. All these may have an impact in terms of increasing remittances.
Zafar Alam also said, ‘I visited the Emirates last year to encourage expatriate Bangladeshis to send remittances through legal channels. At that time, besides signing agreements with several remittance houses, I spoke at gatherings of Bangladeshis in four big cities. The expatriates then pointed out some of their problems in sending remittances through legal channels. We have tried to solve them. As a result of these activities, our remittance flow from the UAE has increased.
According to the data of Bangladesh Bank, the UAE was ranked third in the list of the top remittance receiving countries of Bangladesh in the financial year 2020-21. The amount of remittances sent by Emirati expatriates that year was $243.99 million. Then in 2021-22 financial year, the remittance flow from the country decreased to $207.18 million. In the fiscal year 2022-23, it increased again to $303.38 million. However, in the first nine months of the current financial year, remittances from the Emirates reached $327.7 million.
About 250,000 Bangladeshi workers have gone to the Emirates since 2021 as migrants. However, many times more Bangladeshi workers have migrated to Saudi Arabia than that. According to the data of Bangladesh Bureau of Employment and Training (BMET), 38,85,375 Bangladeshi workers migrated to Saudi Arabia in the last two decades from 2004 to this year. Of these, about 1.6 million have gone in the last three years. However, the flow of remittances from the country has not increased at this time, but it is facing a disaster. Three years ago, i.e. in the financial year 2020-21, remittances from Saudi Arabia came to the country at $572.14 million. Since then, the flow has been decreasing continuously. In the financial year 2021-22, the expatriate income came to $454.19 crore, but in the last financial year it came down to $376,53 crore. And in the current financial year, the situation is facing more disaster. In the first nine months of the fiscal year 2023-24, remittances from Saudi Arabia were only $196.69 million.
All parties say that even though a record number of Bangladeshi workers have migrated to Saudi Arabia, a significant number of them are now unemployed. Many get jobs but the pay is much less than expected. At the end of the month, many Bangladeshi workers do not have surplus money to send home due to the rising cost of living. Again, the income of a large part of Bangladeshis living in Saudi Arabia is going to the hands of hundi traders. Expatriates have also become interested in sending money through hundi as the dollar rate is higher than through banking channels. It is also known that some influential Bangladeshi businessmen have built this bustling business of hundi around expatriates living in Saudi Arabia.
Bangladeshi Abu Bakar runs an electrical goods shop in Jeddah, Saudi Arabia. Talking about the plight of expatriates, he told, “The old cities and markets of the whole of Saudi Arabia are being demolished. The government wants to build a modern city and market in the demolished area. Many Bangladeshi entrepreneurs had businesses or shops in these areas. These traders used to send the most remittances from Saudi Arabia to the country. Due to the demolition or closure of hundreds of old markets, the income of Bangladeshis has decreased significantly. On the other hand, the Saudi government has imposed various restrictions on the trade and work of foreign workers by law.
These laws also have an impact on the decrease in the income of Bangladeshis.
A large part of remittances sent by expatriates from Middle Eastern countries including Saudi Arabia comes to the country through Islami Bank Bangladesh Plc. The bank’s managing director Muhammad Munirul Mawla told, “The flow of remittances coming through our bank is normal. Trying to bring more. Saudi Arabian expats are required to send remittances directly through the bank. And the country’s bank regulations have been changed. Now expatriates have to deposit money in the bank only after showing the source of income.
However, a top executive of a private bank said on condition of anonymity that the remittances of Bangladeshi expatriates in Saudi Arabia are now in the hands of big hundi traders. They collect money from expatriates. He is negotiating with the country’s banks on the value of the dollar by increasing that figure. If the price is high, they sell it to the bank, otherwise they sell it to the hundi.
Expatriate Bangladeshis sent a total of $2,191 crores or $21.91 billion as remittances to the country last year. And last year remittances came to the country $21.28 billion. Accordingly, expatriates sent more than $630 million in remittances in the outgoing year. In this case, the growth in remittances in 2023 has been 2.96 percent. Although last year a record 13 lakh 5 thousand 453 Bangladeshis migrated in search of livelihood. In 2022, the number of Bangladeshi immigrants was 11 lakh 35 thousand 873. That is, in the last two years, more than 24 lakh Bangladeshis went abroad for work, but the remittance did not increase accordingly. In the first three months of this year, another 236,000 Bangladeshi workers have migrated.

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