Remittances and export earnings are the two main sources of foreign exchange for a developing country like Bangladesh. Remittance is mainly income earned through expatriates and it is the lifeblood of the country’s economy and the basis of development, the golden step of dreams and one of the driving forces of the economy. The contribution of remittances to the development of the country is 12 percent of the total GDP and the position of Bangladesh is seventh in the world. Remittances sent by expatriates are contributing significantly to the development of Bangladesh. The amount of foreign exchange remitted by expatriates is half of the country’s total export earnings.
Bangladesh Bank Reserve stood in a respectable position because of expatriates. But recently, the government has taken several precautionary measures due to the decrease in the reserves and remittance flow of Bangladesh Bank. In this case, the economists have emphasized on the export of skilled manpower to collect more remittances and identify the existing problems of expatriates and solve them. Because remittance money has created small entrepreneurs and the country’s economy is in a strong state.
Hundi (illegal money transfer) is naturally the biggest obstacle to remittance collection. Hundi dealers are spread like a net across the globe, they are very strong and always active and they have also the power and ability to illegally transfer money from one end of the world to the other in an instant. After depositing the remittance amount with the designated agent, the hundi money is delivered to the addresses of their relatives. There is no doubt that money laundering has a negative impact on the country’s economy. Money laundering through hundi is a serious detriment to the economy and is the biggest drag on remittance flows.
According to a Washington-based research firm Global Financial Integrity (GFI), hundi circles have become so active in various countries that they are delivering money to customer addresses much faster and without any harassment than banking or any other means. Cost of transferring money through Hundi is low, that is why traffickers prefer Hundis. Contrary to the import and export of Bangladesh, money goes abroad through smuggling and hundi money comes through remittance. As there are many problems in sending money through legal channels, expatriate workers are also using hundi to send remittances to the country.
Basically, those who are staying abroad illegally or whose visas have expired, are forced to send remittances through Hundi. According to a survey by the International Labor Organization (ILO), 40 percent of the amount of remittances that expatriates send to the country from abroad comes through the banking channel, 30 percent comes in cash form directly through expatriates or their relatives and the remaining 30 percent comes through hundi.
Relatives of expatriates do not really understand what hundi is. Similarly uneducated and unskilled expats have no idea about Hundi. They are more than happy to send money to relatives quickly through any medium. Uneducated expatriates cannot go to the bank and express the need to send remittances in English or in the language of the respective country, on the other hand, many are afraid of writing and sending money to the country through the bank is troublesome and time-consuming, so they send money through Hundi. They don’t even try to understand how harmful hundi is to the country’s economy. But when it was explained to them, they regretted it, that is why they need to be given a proper idea about Hundi before their migration.
Expatriate victims say that to send money through banking channels, valid income certificates are required. Similarly the beneficiaries of remittances have to give full details. As a result, many people are more interested in sending money to Hundi including bKash, considering the banking channel as harassment. Expats who have not received legal status due to various reasons, even if they earn money, they cannot send it through banking channels. As a result, most expats are choosing illegal channels instead of legal channels. Again, if you send money through Hundi, you get a better price than the bank.
Also there is no charge to pay. It does not end here, they complain that they have to suffer another form of harassment while withdrawing the money sent by expatriates from the bank. According to them, it takes more time. Due to lower bank rates and reduced charges, the amount of money is reduced. But if you send it to hundi, you save time, on the one hand, and you get more money. On the other hand, the hundi traders go directly to the house of the expatriate worker and give money. Due to these reasons, most expatriates are encouraged to use illegal channels to avoid the hassle of sending money through legal channels. In this, money is reaching the nearest people in an easy and short time.
Due to these reasons, expatriates are choosing illegal channels to avoid the hassle of legal channels in sending money to the country.
According to the exchange house of banks located abroad, remittances are being hampered due to additional strictures on money laundering. Where earlier remittances could be sent very easily, now various questions are asked. Due to this, on the one hand, expatriate income is continuously decreasing, on the other hand, the flow of hundi is increasing. In this context, according to an official of an exchange house in the Middle East, some rules have to be followed in the respective countries to send remittances through banking channels. Many of the expatriates are reluctant to follow that rule. They are willing to send money quickly and without any questions. Due to this reason, the dominance of the Hundi circle along with bKash increases, a large part of the expatriates do not come to the bank’s exchange house.
Statistics of Bangladesh Bank says that the lowest remittances have come in the last financial year in the last five financial years. In the last financial year, Bangladeshi expatriate income decreased by 14 and a half percent., out of this, $7307.10 million came from the Middle East, which is 15 percent less than the previous fiscal year. $2267.20 million came from Saudi Arabia. Remittances from the country fell by 23 percent. In 2015-16 fiscal year, remittances from the United States amounted to $2424.30 million. In the last financial year, it has come down to $1688.80 million. On the other hand, remittances from Malaysia decreased by 17 percent. Decreased from all Middle Eastern countries except Qatar.
Since there is no opportunity to obtain citizenship in many countries in the Middle East, every expatriate has a certificate of monthly income. Due to which expatriates have to send money to the country depending on their income. Expatriates cannot legally remit money earned through overtime work outside of charter. Because if you can’t provide the correct information of additional income, you have to get into legal complications. Recently, 15,000 Kuwaiti expatriates from different countries have been expelled from the country due to lack of proper source of income. Because of this, many expatriate victims have become worried about taking these measures as their monthly income is several times higher than the expatriate income certificate. They demand that the hard-earned income should not be sent illegally, the government should resolve those problems through bilateral discussions.
Many others go abroad on valid visas but become illegal because they cannot renew Akama or work permits and those who work illegally abroad through brokers, because they do not have the opportunity to legally send the money earned by working somewhere, they are leaning towards hundi. Many people earn legally but cannot legally send remittances even if they want to because the bank or exchange house is located hundreds of miles away from their residence. Then they are forced to depend on the nearest hundi.
The number of expatriates is only increasing due to the large number of unskilled workers going abroad from Bangladesh through brokers. But labor-wise remittances are not increasing. Higher-skilled expatriate workers have been found to be employed in better-paying jobs and send more remittances than low-skilled workers in the long run.
Studies have shown that unskilled workers remit much less than skilled workers. The quality of workers in Bangladesh is very low even by international standards. It has been observed that unskilled expatriates go abroad illegally and are subjected to various frauds and they cannot legally send remittances despite their hard earned money. For this reason they do not choose Hundi to send remittances.
Expatriates say that countries like India, Pakistan, Nepal, Sri Lanka, Philippines have various Apps to send remittances from abroad and they can send remittances legally to their country through banking channels instantly through these Apps. But since Bangladeshi expatriates do not have such Apps, many are leaning towards Hundi instead of sending money through banks. Recently, the service charge has been waived off for sending remittances in response to expatriates’ demands, which is a very positive decision.
Expatriates say that legalization of illegal workers of various countries through bilateral negotiations, emphasis on the export of skilled and trained manpower and provision of easy remittances through Apps will reduce the flow of hundi and increase the flow of remittances.
The author is a Banker and Columnist; He lives on Satish Sarker Road, Gandaria, Dhaka.
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