Remittance Boost Bangladesh Economy

Dhaka, Bangladesh | September 25, 2009 by D-8 Secretariat

The amount of money sent home has reached a new record high in Bangladesh

The amount of money sent home by Bangladeshis living abroad has reached a new record high, according to the Central Bank of Bangladesh. In August, the total sum of money sent home reached a historic peak of $937m - up 30% from a year ago.

The boost to the Bangladeshi economy comes despite the global recession hitting overseas jobs. Remittances are the country’s second-highest revenue earner after exports.

There are an estimated 6.5 million Bangladeshis living and working abroad, mainly in the Middle East, South East Asia, Europe and the United States.

Millions at home are dependent on money sent by their expatriate relatives - money that has been credited for the decline in poverty in the country.

“This is the highest monthly remittance we have received in our history,” said Ziaul Hasan Siddiqui, deputy governor of the Central Bank.

“The figure also shows that the global recession had little impact on the flow of remittance to Bangladesh although job opportunities in the major markets have declined in recent months.”

Many other countries have reported a sharp decline in remittances during the economic downturn.

But analysts say many Bangladeshis are in low-end jobs and so the recession has not hit them as hard as it has affected blue collar workers.

The increase in remittances could also be partly due to two upcoming religious occasions - the Muslim festival of Ramadan and the major Hindu religious celebration of Durga Puja.

However, the upward trend may not continue for long, as overseas employment has fallen in past months due to declining demand. The flow of migrant workers returning home has also increased.

The government of Bangladesh has identified seven new countries - including Lebanon, Sudan, Romania and Greece - to send workers to.

The state will seek to open diplomatic missions in those countries, to look for job opportunities.

Bangladesh received $1.823 billion during the July-August period of fiscal 2009-10, registering an 18.19 percent growth over the corresponding period of the previous fiscal, the Bangladesh Bank (BB) data showed.

The central bank of Bangladesh earlier took a series of measures to encourage expatriate Bangladeshis to send their hard earned money through formal banking channel instead of the illegal “hundi” system and boost the country’s foreign exchange reserves.

As part of the measures, the BB has issued four more licenses to three commercial banks in the last month for setting up exchange houses in different parts of the world aimed at expediting remittance inflow.

Four state-run commercial banks and dozens of private commercial banks have also stepped up efforts to increase remittance flow from the Middle East, the United Kingdom, Malaysia, Singapore, Italy and the United States.

“We are establishing new contacts with overseas exchange houses so that our overseas workers can find it easy to send money back home. We’re also trying to set up our own exchange houses,” Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told media in Dhaka.

Bangladesh’s foreign exchange reserves stood at $9.149 billion on Thursday due to the robust remittance.

The BB officials said the foreign exchange reserve would come down slightly as the central bank is set to pay around $512 million to the Asian Clearing Union (ACU) in a day or two.

The ACU is an arrangement among the central banks of Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan and Sri Lanka to settle trade related payments on a multilateral basis.

D-8 Organisation has developed various plan to further improve remittance sector of the D-8 Countries. The organization plans to set up a D-8 Working Group of Migrant Workers, Remittances, and Microfinance to help coordinate policies among the countries. Meanwhile, during the working visit to several international organisation in Geneva and Rome in 2008, D-8 Secretary General has formally invited a number of potential participants from IFAD, and OFID to share ideas on how to optimize this growing sector for the benefit of the D-8 countries.

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