Taka to Dhaka keep declining

Cash remittances to Bangladesh from its global diaspora of migrant workers – the country’s second-largest source of foreign exchange behind the garment industry – continue to slide. The Bangladesh Bank, the country’s central bank, reported that in January, such remittances totaled $1.25 billion, a 5.8 percent decline from the year-earlier period, and the sixth consecutive month of falling inflows. From July 2013 to January 2014, the first seven months of the current fiscal year, remittances amounted to $8 billion, a 9 percent drop from the comparable year-ago period.

Bangladeshi migrant workers in Saudi Arabia

The central bank projected that remittances will fall 4 percent for the whole fiscal year. “Starting from fiscal 2014-15 it will be important for remittance growth to pick up … as imports are likely to grow further following a year of import compression,” the bank warned in a statement.

Bangladeshi officials attribute the steady drop in remittance income to the reduced number of migrant workers journeying to the Middle East. The Daily Star newspaper, citing data from the Refugee and Migratory Movements Research Unit of the University of Dhaka, reported that only about 450,000 Bangladeshi migrants found jobs overseas in 2013, a 33 percent plunge from the prior year. Also, a large number of Bangladeshi jobseekers returned home, especially from either tightening labor markets and/or stricter visa regimes in Saudi Arabia, the United Arab Emirates, Malaysia and Kuwait.

A report in the Dhaka Tribune newspaper pointed out that the number of Bangladeshi workers overseas peaked in 2008 – when about 875,000 workers went abroad — and has been in general decline ever since. The following year, the number plunged to 475,000. In 2013, only about 389,000 Bangladeshis migrated for work out of the country. Expatriates’ Welfare Minister Khandker Mosharraf Hossain said that the export of workers had fallen due to the global recession, noting that the recruitment of Bangladeshi workers to Kuwait and the UAE virtually stopped, and was substantially reduced in Oman, Saudi Arabia, and Malaysia.

But, remittances from workers abroad are crucial to the impoverished, overcrowded South Asian country – billions of dollars of remittances in the past few decades have helped push up Dhaka’s foreign exchange reserves above $18 billion, Reuters reported. Bangladesh, a state of some 160 million people, has an estimated 9 million migrant workers in the Middle East, Europe, North America and elsewhere; they sent a total of $14.5 billion in remittances during the 2012-2013 fiscal year.

M. Abdul Latif Mondal, a former government secretary, wrote in the Dhaka Tribune, “Expatriate workers’ remittances play an important role in our socioeconomic life. At the macro-level, remittance helps Bangladesh make investments for industrial development and modernize its industries. This helps us increase our export of manufactured goods, which ultimately helps in making the balance of payments favorable.” Mondal further noted that in 2011 remittances were almost double the value of foreign direct investment in Bangladesh. “Micro-level benefits encompass both the community and family,” he added. “At the community level, it generates multiplier effects in the local economy, creating jobs and spurring new services.”

In order to boost remittances, the Bangladesh central bank suggested a comprehensive effort to increase the skills of migrants and to improve incentives for such workers overseas to remit funds back home for the purposes of investments.

Bangladesh’s chaotic politics may also be hurting remittances, suggested Subir Bhaumik in the Economic Times. In early January, parliamentary elections deteriorated into turmoil and violence after the opposition Bangladesh National Party and its Islamist allies boycotted the polls, thereby giving a fragile and disputed victory to the ruling Awami League. The central bank noted that uncertainty over the elections likely dissuaded investments into the country – both by foreign sources and Bangladeshi migrant laborers.

Courtesy: IBT