A NEWSPAPER recently reported that, 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. Some 3000 crore taka might be allocated in the 2019-20 budget for this purpose.
The report also said the government was actively considering the proposal to make sending remittance cheaper as migrant workers still need to pay a high charge when they send remittance through the international system. 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.
The government has been discussing the issue of increasing remittance inflow through official channels as most of the remittance was being sent through hundi, an unauthorised way of money transaction. In this regard, the government had formed a five-member committee in 2017. The committee found that migrant workers prefer hundi for sending remittance as it is cheaper than the official channel.
In 2017-18, remittance inflow increased remarkably 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. In June last year, a rumour had spread through social media that value added tax (VAT) to be slapped on inward remittance in the proposed budget for 2018-19. Later, it was proved that a vested quarter spread the rumour to encourage migrants sending remittance through illegal channel.
We usually observe that remittance flow drops if expatriates experience a fall in their income in the Middle Eastern countries, and if they send money home through hundi. Usually, the unofficial exchange rate remains much higher than the official rate. We must say, the government should take effective initiatives so that migrant workers get encouraged to send money through official channel.
