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Bangladesh’s Remittance Position and Required Measures

  • A.K.M. Atiqur Rahman
  • 30th June, 2022 03:24:44 PM
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Bangladesh’s Remittance Position and Required Measures

According to the World Bank’s ‘Migration and Development Brief’ published a few days ago, Bangladesh was ranked seventh out of ten top remittance recipient countries in the world last year. In 2020, Bangladesh also maintained that position. However, the amount of remittance received last year was $22 billion. That means remittances grew by 2.2 per cent from $21.70 billion in 2020.  In 2021, remittances received by nine other countries namely India, Mexico, China, Philippines, Egypt, Pakistan, Nigeria, Ukraine and Vietnam were $89 billion, $54 billion, $53 billion, $37 billion, $32 billion, $31 billion, $19 billion, $18 billion and $18 billion respectively. India, like in the past, topped the list of remittance recipient countries. Pakistan was in sixth place. Of the top ten countries, three are South Asian countries.

The report has further said that in 2021, South Asian countries enjoyed a 7 per cent gain in remittance to $157 billion. While the remittances of India, Pakistan, Bangladesh and Nepal have increased, the remittance of Sri Lanka has declined. For 2022 and 2023, the growth rate of Bangladesh's remittance has been estimated at 2 per cent. On the other hand, India's remittance growth rate was 8 per cent and Pakistan's 20 per cent in 2021. But for 2022 and 2023, the growth rates of Pakistan and India have been estimated at 8 per cent and 5 per cent respectively. Sri Lanka's remittance is expected to decline further this year. However, a 4.4 per cent growth in remittance is anticipated in South Asia for 2022.

We know that developed countries, including the GCC countries, are the major remittance sourcing countries. In fact, the number of a country’s migrant nationals working in those countries is the determining factor in the amount of remittances a country receives. The top five remittance sourcing countries in the world in 2021 were the United States ($76.6 billion), Saudi Arabia ($40.7 billion), China ($22.9 billion), Russia ($16.8 billion) and Luxembourg ($15.6 billion). Other notable remittance sourcing countries were Singapore, Japan, United Kingdom, United Arab Emirates, Qatar, South Korea, etc.

According to the Bangladesh Bureau of Manpower Employment and Training (BMET), the total number of Bangladeshi workers who went abroad from 1976 to May 2022 was 14,138,140. Of them, 33 per cent went to Saudi Arabia, 17 per cent to the UAE, 11.15 per cent to Oman, 7.48 per cent to Malaysia, 5.97 per cent to Singapore, 5.81 per cent to Qatar, 4.48 per cent to Kuwait and the rest to other countries. It is clear from the above statistics that except Saudi Arabia, the United Arab Emirates, Qatar and Singapore, the numbers of Bangladeshi migrant workers in other major remittance sourcing countries are not so much.

During the period 1976 to 2019, about 236,978 persons (1.84 per cent) in the professional category, 4,455,855 skilled workers (34.54 per cent), 2,004,739 semi-skilled workers (15.54 per cent) and 6,201,711 unskilled workers (48.8 per cent) had left Bangladesh for employment abroad. About half of those migrant workers were unskilled. The financial benefits from the unskilled workers are certainly much less than those of the professional or skilled categories. In countries where the rate of skilled migrant workers is higher than that of unskilled workers, the amount of remittances is usually higher. In addition, the higher the number of migrant workers works in the developed world, the higher the remittances they can send. In developed countries like the United States, Japan, Singapore, the United Kingdom, South Korea, etc., the salaries and allowances of the employees are much higher than in other countries. Since the number of Bangladeshi migrant workers in those countries is less than other major migrant workers sending countries like India, Mexico, China, Philippines, Egypt, Pakistan, etc., our remittance does not come in proportion to the number of our workers.

The following table will give our readers an idea of the fact mentioned above while comparing the number of migrant workers sent by Bangladesh and India every year from 2011 to 2017 as well as the amount of remittance the two countries received every year for the same period. We can see that the difference between the numbers of workers sent per year by the two countries was not so much, except in 2013 and 2014; but the yearly remittance received by Bangladesh was one-fifth of India. It is true that there are other factors in the case of India’s so high remittance inflows.

Table: Flows of Migrant workers and Remittance of Bangladesh and India from 2011 to 2017 (source: World Bank)

There is no doubt that Bangladesh is not getting its expected remittances vis-à-vis its number of migrant workers. The government of Bangladesh is well aware that they are sending more unskilled workers than skilled workers abroad. Although various initiatives have been taken to develop skilled manpower, we still do not see positive results in this regard. More emphasise needs to be given to the development of vocational education than the expansion of general education. A very small portion of our migrant workers is engaged in those sectors where higher wages are available. We have no other choice but to train our foreign job seekers to meet the demands of the world labour market. In the major remittance sourcing countries, such as America, Saudi Arabia, China, Russia, Luxembourg, Singapore, Japan, etc., the number of our migrant workers is less than the number of migrant workers of other top remittance-receiving countries. Our workers in those countries are engaged in low-paid jobs. With this in mind, we have to take necessary measures while sending workers to those countries.

Recruitment costs of Bangladeshi migrant workers are very high. According to the World Bank report, Bangladeshi migrant workers in Qatar are likely to have paid about $1.5-2.0 billion in fees in 2011 and 2020. The cost of recruiting a Bangladeshi worker for Malaysia is around RM 20,000 (about $4,700) after paying the fees to agents in Bangladesh. The amount of actual remittances receives by Bangladesh, therefore, is very low due to the high recruitment cost. If they can be sent abroad following a migrant-friendly recruitment process, it is possible to reduce migration costs by 70-90 per cent.

South Asia has the lowest remittance costs (4.3 per cent) than other regions of the world, but they are still about 50 per cent above the SDG target of 3 per cent. We need to work on this issue. Although the incentives given by Bangladesh on remittance have benefited the families of remittance senders financially and remittances through legal channels have increased over the years, sending money through ‘hundi’ has not stopped yet. Anyway, incentives may be a temporary measure to encourage expatriate Bangladeshis to send money through legal channels. But incentives on remittances may not be the way to reduce remittance costs.

The Bangladesh authorities do not maintain any country-wise annual data on the total number of Bangladeshi workers working abroad. Although statistics on the total number of workers going to any country every year are available, there is no yearly country-wise information on the number of returnees. Even, any yearly country-wise data on the stock of our migrant workers are not maintained by our authorities concerned. There is also a lack of accurate information on Bangladeshis illegal route users, particularly who went abroad on travel visas or who were the victims of human trafficking. These data would help our authorities to take necessary measures in the management of our migrant workers.

In fact, we need to take necessary measures not only to increase the number of migrant workers but also to have more high-skilled workers who would be sent to higher-income destinations, preferably to developed countries. Once we are able to do that, certainly we might have similar inflows of higher remittances like India or other top remittance recipient countries.

The writer is a former ambassador and secretary