Decline in remittances poses a new challenge

Bangladesh has received a jolt in earnings from remittances from abroad. It is not one-off decline, rather a continuing downtrend which is concerning. Last February wage earners' remittances stood at $936 million representing 17.6 per cent decline from the level of   corresponding period in the  last fiscal. The February figure is the lowest since November, 2011 when the country had received $900 million.   
Actually, in 2016 -17, remittance  receipts  decreased every month compared  to the same period a year ago.
Remittances are the country's second largest foreign exchange earner  next to garments. That too without any investment comparable to anywhere near what  the RMG sector   involves-- in terms of  local value addition for apparel export.
At any rate, what needs to be noted  is that the decline is impacting negatively on the   current account  balance and eroding balance of payments. According to the central bank data, the current account balance turned  negative by $726 million and the trade deficit widened to $3.88 billion during July-November period.
Mirza  Mohammad  Azizul Islam ,economist and former adviser to caretaker government has given his perspective in the following way: "A large part of the remittances comes from the Middle East. The economies of the region have weakened through falling oil prices over time, budget deficits have grown and desperate fiscal consolidation efforts have got underway. Consequently, wage earners' incomes have  shrunk; several may have clung   to their jobs with reduced salaries ; some may have lost their jobs altogether. What's more, the demand for jobs is decreasing there. So   remittances have slumped.
But Mirza Aziz holds the view  resonating with most observers that  the official  remittance  figures may fall far short of  the actual  inflow, much of it being routed through 'Hundi'. The open market value of dollar is enticingly  higher than the official rate, so that overseas workers fall for the  unofficial,  illegal channels.
 A case in point is the penalisation of 25 Bangladeshi shop-keepers in Dubai only last month on the ground that they had  sent money  out through illegal means. Such shops, it was alleged , were  using  a mobile Apps called 'Bikash' to remit money  to Bangladesh  at a  low cost. It is as well that host countries are discouraging   illicit money  transfers and trying to prevent them at the root. 
However, responsibility devolves on the part of the country, more precisely, on Bangladesh Bank, to incentivise money transfers  from abroad by cutting on   time and costs of operating the service through banks. Also effective rate of exchange may have to  be offered having regard to volume of inflows. Simultaneously, the government  will have to undertake promotional  programmes targeted at potential remitters. These will be to sensitise them against   dangers   money-laundering poses  to national economy as well as personal risks they are taking on   them.
Zahid Husain , lead economist of the World Bank, Dhaka office adds a new angle to remittances taking a tumble. He maintained in January that the fall in remittance inflow 'is not  just because of  the depressing effects of low oil prices on incomes  and employment in the oil-exporting countries.' 'Since July last year', he added, remittances have declined  very significantly from the USA and the UK as well.'  
"The rising trend of remitting money through informal channels and the uncertainties caused by the unexpected Brexit and the US election results might have affected the remittance flow," according to the World  Bank, Dhaka  office economist.
His prognosis , insofar as  the Gulf countries' 'sharper fiscal consolidation' goes, is that we have to brace up to a 'sharply' slower remittance flows.
Mitsuhiro Furusawa, deputy managing director of the IMF on a recent visit to Dhaka underlined  that the 'weakening of  remittance  is a new challenge for Bangladesh.'
 It is high time the country explored newer pastures for manpower export based on skill training oriented to potential or real demands in continents beyond Asia, Europe and North America. As a land-short country, it has to think out of the box and explore new  frontiers  of   opportunities topped up by a built-in negotiating capacity to cut good deals. At the end of the day, the diplomatic missions abroad will have  to prove equal to the task.