Bangladesh remittances higher than Pakistan’s

[Naveed Yaseen]

By Mansoor Ahmad

LAHORE: Worker remittances, which account for 4.2 per cent of the gross domestic product, are increasing, but are still low when compared with Bangladesh having less qualified low-wage workers around the world.

In Pakistan, remittances have increased almost seven-fold from $1.075 billion at the start of the century in 2000 to $7.025 billion in 2008 and are rising even when global recession is impacting remittances in some countries. According to recent data, Bangladeshis working outside their country sent home over $9 billion, 20 per cent higher than Pakistan.

Despite the increase in remittances, the money received through legal banking channels, the unofficial ‘hundi’ business is thriving in Pakistan. Operators of that illegal business have changed the way they conduct it. In some cases, they receive money from the expatriates in the host country and give them a code number. Their sub-office in Pakistan makes payment to the recipient on disclosure of the code number. As an additional safeguard, a copy of the identity card of the recipient is also obtained before making the payment.

Some of the operators are more cautious. They phone the recipient and inform him that they would deliver the money at home and ask him to keep a photo copy of his identity card. They never visit the recipient house at the scheduled time and date and go later and deliver the money.

The authorities, however, have adopted a lax attitude towards hundi operators. The business is on the rise as expatriate workers seem to have more confidence in hundi operators than the official channels which also charge less.

The profile of Pakistan workers abroad has changed in the last decade. Low-skilled workers in the Middle East have declined considerably while children of these workers have now become educated and skilled. They either get better wages in that region or have migrated to developed countries.

Meanwhile, the trend of immigration from Pakistan has changed. Most of the skilled workers are now immigrating to the developed economies like the US, Canada, United Kingdom and Germany. They earn better wages and remit handsome amounts to their families and relatives in Pakistan, but these remittances are not reflected in official figures.

Total remittances sent home by Bangladeshi workers in 2000 were $1.903 billion, which increased to $8.979 billion in 2008, a four-time rise. Most of its workforce is in the Gulf or Saudi Arabia, who are the lowest paid foreigners in these countries. Remittances account for 9.5 per cent of the GDP of Bangladesh.

India is the largest recipient of worker remittances, which amounted to $45 billion in 2008, accounting for 3.1 per cent of the GDP. China is the second largest recipient as it received $34.490 billion in 2008 equivalent to 1.1 per cent of its GDP. In Tajikistan, the remittances worth $1.750 billion accounted for 45 per cent of the GDP, followed by Moldova (38 per cent), Tonga (35 per cent), Lesotho (29 per cent) and Honduras (25 per cent).

According to the World Bank, remittance flows to developing countries began to slow down in the third quarter of 2008 after several years of growth. This slowdown is expected to deepen further in 2009 in response to the global financial crisis, although the exact magnitude of growth moderation (or outright decline in some cases) is hard to predict given the uncertainties about global growth, says the WB.

In 2009, remittances are expected to fall by 0.9 per cent. Migration flows from developing countries may slow as a result of the global growth slowdown, but the stock of international migrants from these countries is unlikely to decrease, says the World Bank.

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