Remittance Thru’ Formal Channels: Govt plans 3pc cash incentive
The government may give migrant workers a three percent cash incentive to encourage them to send remittance through official channels.
The initiative would result in the migrant workers collecting more money than they send. For instance, if they send Tk 100, they would be able to collect Tk 103.
On Monday, Prime Minister Sheikh Hasina gave directives in this regard to Finance Minister AHM Mustafa Kamal during a meeting on the upcoming budget, a finance ministry official said yesterday.
Some three thousand crore taka might be allocated in the 2019-20 budget for this purpose, according to the official.
Ministry officials said the government was actively considering the proposal to make sending remittance cheaper.
Migrant workers still need to pay a high charge when they send remittance through the international system.
According to the World Bank, the global average cost of sending US$200 is 7-8 percent, whereas the Sustainable Development Goal target is to reduce the rate to 3 percent.
For the last three years, the government has been discussing the issue of increasing remittance inflow through official channels as most of the remittance was being sent illegally.
To overcome this situation, the government formed a five-member committee in 2017.
Based on several visits to Middle-Eastern countries, the committee found that migrant workers prefer hundi for sending remittance as it is cheaper than the official channel.
In 2015-16, remittance -- one of the main contributors to the country’s foreign currency reserve -- increased by only 2.52 percent.
Later in 2017-18, remittance inflow increased by 17.32 percent but slowed down in the current fiscal, showing around 10 percent growth in the first ten months.
The decreasing remittance inflow has also resulted in the country’s foreign reserve not growing.
On May 15, the reserve was US$31.12 billion down from US$32.94 billion on June 30 last year.
The government could not fix the mechanism to give such incentives earlier, fearing misuse of the fund reserved for it.
Finance ministry officials said they would prepare a regulation soon to ensure the fund allocated as incentive for migrant workers cannot be misused.