Incentives to bump up remittance inflow
The government plans to extend incentives to Bangladeshi expatriates to encourage them to send money through the official channel in an effort to arrest the slide in remittance.
“I think this is a solution through which the fall in remittance collection could be tackled,” Planning Minister AHM Mustafa Kamal said at a press meet yesterday.
The matter has already been discussed with the prime minister, finance minister and the Bangladesh Bank, he said. The minister did not elaborate on the incentives.
In 2016, inward remittances stood at $13.61 billion -- the lowest in five years, despite a 35 percent increase in migrant outflow during the period. Remittance stood at $15.32 billion in 2015.
Migrant outflow, which, in theory, is positively correlated to remittance, was two lakh more last year. In 2016, a total of 749,249 migrant workers went abroad for jobs in contrast to 555,881 in 2015.
The physical flow of migrant workers has been increasing by the day, so there is no reason behind the fall in remittance, Kamal said.
“Remittance has been flowing in but in other channels and not the official one.”
Asked for a rationale behind extending incentives to remitters, the planning minister said: “There is a provision for incentives everywhere. Why can't the remitters be given that benefit?”
If the incentive comes in the form of cash remittance will go directly to the receiver's account through official channels, he added.
Experts and policymakers said remittance fell for various reasons including rising preference for hundi by expatriate Bangladeshis.
Zahid Hussain, lead economist of the World Bank's Dhaka office, earlier told The Daily Star that given the current international realities it is not reasonable to expect remittance growth to go back to double digits, as was the case three years ago.
A change in policy is needed to tap remittance that hinges on more than just sending money for family maintenance, particularly from the Bangladeshi diaspora.
“Our exchange houses in the Middle East, the UK and the US need to find ways of becoming much more remitter friendly with a view to minimising the hassles in transferring money through the formal channels.”
The BB needs to recognise that a money transfer currently takes various shapes and forms.
It needs to reform the foreign exchange regulations to enable the money transfer operators to connect with the banking system at the earliest and also to arrest the growing premium in the informal market through easing of excessive foreign exchange controls, Hussain added.
Meanwhile, at the press meet, Kamal lauded the WB for making a generous projection for Bangladesh's economic growth.
“The World Bank usually makes conservative projections, but this time it gave us high praise.”
The Washington-based multilateral lender last week in its Global Economic Prospectus said Bangladesh's GDP growth this fiscal year is likely to be 6.8 percent.
GDP growth stood at 7.1 percent last fiscal year, whereas the WB's projection was about 6 percent, the minister said.
“I don't know how they became so kind this time.”