Remittance hit by low oil price
Inward remittances fell 7.75 percent year-on-year to $1.19 billion in April as low oil prices continue to erode the incomes of the countries that host most of the Bangladeshi migrant workers.
In the first 10 months of this fiscal year, $12.23 billion was received as remittance, down 2.39 percent year-on-year.
With a decline in crude prices impacting the fortunes of oil exporters, remittances from workers in Middle Eastern countries appear to have contracted, the World Bank said in a report.
About 68 percent of the Bangladeshi migrant workers reside in the Gulf Cooperation Council countries -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- which have been hit by the slump in crude oil prices.
And they accounted for 64 percent of last fiscal year’s record $15.3 billion remittance receipts.
But Finance Minister AMA Muhith is hopeful of a pick-up.
“Between March last year and August this year, remittance income has not peaked as we had expected because there was stagnancy in manpower exports,” he said in a report submitted to parliament last week.
But in recent months, manpower exports went up significantly: some 311,642 Bangladeshis went abroad for jobs in the first six months of fiscal 2015-16, up 43.2 percent from a year earlier, according to the minister.
“So, I hope the current stagnancy in remittance will go away very soon,” he added.
Millions of foreigners from South and Southeast Asia and elsewhere flocked to the GCC countries during the economic boom of the past decade, filling relatively low-paid posts in the oil industry, construction and services as well as many middle-management and professional positions.
As the low oil prices have slowed the Saudi economy and put a strain on its budget, the government has decided to restrict employment opportunities for expatriates and push Saudis into jobs previously held by foreigners.
In Saudi Arabia, layoffs have been concentrated in the construction sector so far, which analysts estimate employs around 45 percent of foreigners.
The majority of the migrant workers in GCC countries are low-skilled that include construction workers.
Hit by shrinking state contracts and delays in payments owed to construction firms by the Saudi government, the companies have been laying off tens of thousands of people since last year.
“Predictably, remittances from Bangladeshis abroad are correlated with the investment demand in Gulf countries, which includes spending on construction projects,” said the WB.
When employment opportunities are squeezed, it hurts migrant workers first and the most, said Zahid Hussain, lead economist of the WB Dhaka office.
A top executive at a major Saudi company told Reuters in January that he would not be surprised if one million foreigners had to leave the kingdom by the end of this year.
Displaced foreign workers could try to find jobs in other sectors. But it will be hard for many do so in a slowing economy, and many lack training for skilled jobs.
If they cannot find a company to sponsor a work visa for them, they will have to leave the country within 90 days.
Remittances sent by more than eight million migrant workers play a crucial role in the country's economy, helping reduce the overall incidence of poverty as well as maintaining a healthy balance of payments.
It has helped reduce the poverty level in Bangladesh by 1.5 percent, according to the WB. It also accounts for about 66 percent of the country's foreign currency reserves, providing Bangladesh with a strong and stable external position.