The robust inflow of remittance from the expatriate Bangladeshis has become the lifeline of the national economy with the exports of readymade garments, country’s largest export sector, declining amid the coronavirus fallout.
Bangladesh’s remittance inflow registered a 10.85 percent growth in the just concluded 2019-20 fiscal year over the previous FY to hit a record high of $18.20 billion despite the Covid-19-induced ongoing global economic recession and fall in oil prices.
Economists say remittance is now making greater contribution to the Bangladesh economy than the readymade garment sector as the country has to spend a large portion of the export earnings for import of raw materials.
According to NBR data, RMG sector fetched Bangladesh $34.13 billion in the 2018-19 FY but the export earnings from the industry declined by 18.84 per cent to US$ 27.70 billion in the 2019-20 FY.
The central bank’s reviews on RMG sector suggest that value addition of the sector is around 61 percent, meaning the net export from the industry was around $17 billion, less than the annual remittance figure.
According to the Ministry of Expatriates' Welfare and Overseas Employment, over 10.2 million (1.02 crore) expatriate Bangladeshis, mostly unskilled or semiskilled, are working in 174 countries across the world.
Economists suggest giving focus on sending skilled manpower to sustain the growth in remittance inflow.
“Cash incentive to the remitters helped boost remittance inflowing last FY. Bangladesh needs to send skilled manpower to sustain the growth,” eminent economist Zahid Hussain told Bangladesh Post.
He said that otherwise it is unlikely that the growth will sustain next year as Bangladesh expatriates have faced many challenges abroad.
The economist said that most of the unskilled workers of Bangladesh working in the middle-eastern countries fear losing jobs as many companies have temporarily closed while many small businessmen are passing critical time amid the coronavirus pandemic.
“We need to create skilled manpower for jobs abroad side by side tapping new job markets like in the European region to raise remittance inflow further,” he added.
According to official data, the remittance inflow stood at record $1.83 billion for a single-month in June 2020, exceeding the previous milestone of $1.74 billion in May last year.
Due to the huge amount of expatriate income, the country's foreign exchange reserves reached an all-time high of $36.14 billion this month.
Most of the remittance came from middle-east countries including Saudi Arabia, the largest labour market in Bangladesh.
Bangladeshi expatriates from Saudi Arabia sent to $ 4015.16 million in the last fiscal, up by almost 30 percent than in the previous fiscal.
This amount is 22 percent of the total remittance inflow.
It was followed by $2872.5 million from the United Arab Emirates, $2403.4 million from the United States, $1372.2 million from Kuwait, $1364.9 million from the United Kingdom, $1245 million from Oman, $1231 million from Malaysia, $1019.6 million from Qatar, 699 million from Italy and 457.8 million from Singapore.
An official of Bangladesh Bank (BB) mentioned that timely initiatives were taken by the government at various times which apparently resulted in an increased awareness among expatriate workers to send their hard-earned money through legal channels, pushing up the remittance inflow.
Besides, the higher growth of remittance inflow is attributed to a budget declaration of 2 percent incentive to remitters on inward remittance for the last fiscal year.
However, the government has allocated Tk 30.6 billion in the national budget for the fiscal 2019-2020 for giving 2 percent cash incentive, aiming at facilitating the expatriates to mitigate the burden of increased expenses in sending foreign remittances.
Bangladeshi expatriates sent home $11.65 billion in FY11, $12.84 billion in FY12, $14.46 billion in FY13, $14.23 billion in FY14, $15.31 billion in FY15, $14.93 billion in FY16, $12.77 billion in FY17 and $14.98 billion in FY18 respectively.
Earlier, the government and Bangladesh Bank were worried over a sliding trend in remittance inflow during fiscal years 2015 to 2017.
However, the country has made a strong comeback in recent times, thanks to some good steps taken by the government, BB officials said.
It also helped increase the country’s forex reserves, they added.