Since a sizable portion of money is sent back to Bangladesh by expatriates, remittances serve a crucial role in sustaining the country's economy. The US is now Bangladesh's top provider of remittances, surpassing more established nations like Saudi Arabia.
Due to the vast number of its inhabitants who work abroad in countries like the US, Saudi Arabia, and the United Arab Emirates, Bangladesh is one of the top beneficiaries of remittances worldwide. Remittances from these expats are a crucial source of foreign income for the nation. Remittance inflows, which had been halted by Covid-19 and the global economic downturn, have steadily increased throughout the post-pandemic recovery.
Remittances or expatriate income totaling $1,772 crore entered the nation in the first 10 months of the previous fiscal year, from July to April. This income has increased by 2.36% compared to the same time last year. The expatriate income for the first ten months of the previous fiscal year was $1,730 crore.
While 2 million Bangladeshis reside in Saudi Arabia, only 0.5 million do so in the US. In the past, Middle Eastern workers have led the way in sending money home. The country sending the most money abroad in the current fiscal year, however, is the US.
The Bangladesh Bank reported that the entire amount of expatriate income in 2021–22 was $2,103 crore. Saudi Arabia brought in the most money from expats, $454 crore. With $344 crore, the US had the second-highest foreign income, while the UAE had the third-highest with $207 crore.
But recently, the pattern has shifted. Expat Bangladeshis who live and work in the US sent back almost $305 crore in expatriate income in the first ten months of this fiscal year. Additionally, Saudi Arabia accounted for the second-highest amount of expatriate income, totaling $303.9 crore. With about $240 crore, the United Arab Emirates (UAE) had the third-highest expatriate income.
Expatriate Bangladeshis residing in the US sent $834 million home in the first three months of this year, down from $966.89m in the same period last year, according to data from the Bangladesh Bank. If the overall profits of the first nine months of the current fiscal year are taken into account, the US continues to be the leading source of remittances for Bangladesh.
In contrast, over the same time period, remittances from Saudi Arabian expats fell by 19.5% annually to $910m. With $999.76m, the USA ranked first among countries sending remittances to Bangladesh in the July–September 2022 quarter. Saudi Arabia also came in second place in this.
Why are US remittances increasing?
There are a few variables that contributed to the increase in inflow as remittances from the US hit $304 crore in the first 10 months of the current fiscal year, such as:
Covid-19 facilities: The US government gave special compensation to people who lost their employment as a result of the pandemic, which enhanced remittance flows because expatriates had larger incomes than people in Middle Eastern nations did.
Legal channels and incentives: The predominance of official banking channels and the simplicity of transferring money through legal channels have encouraged foreign nationals living in the US to send their income home, which is good for the overall remittance inflow. In addition, the hundi method is not widely used in the US.
The incentive rate for sending remittances through banking channels has risen from 2 to 2.5% by the Bangladeshi government. The expats are therefore more motivated to send money through authorized methods.
Education-related migration: The US draws skilled labour from Bangladesh, raising expatriates' incomes. Remittance inflows have surged as a result of the growing number of Bangladeshi students attending American universities for higher education.
The percentage of Bangladeshi students enrolled in American universities and colleges increased by 23.3% between the academic years 2021–2022 and the year before.
The record-breaking number of 10,597 students from Bangladesh chose to study in the US during the previous academic year, according to the 2022 Open Doors Report on International Educational Exchange.
Over the past ten years, the number of Bangladeshi students studying in the US has more than tripled, going from 3,314 in the 2011–12 academic year to 10,597 in the 2021–22 school year.
More competent personnel: Despite the fact that there are fewer Bangladeshis employed in the US than in other major labour-migration destinations, skilled migrants' higher incomes translate into significant remittance payments.
Vice President of the American Chamber of Commerce in Bangladesh (AmCham), Syed Mohammad Kamal, claimed that skilled workers relocated mostly to the US since their wages there are greater than in other countries. This may be the reason why there have been more remittances coming from the US.
"Bangladeshis have been migrating to the US for many years, and now that a generation has grown up, they are sending money home," he continued.
Change in migration trends: The pattern points to a slow but steady rise in educational migration to North America, Europe, and Australia, which is being pushed by alluring facilities, scholarships, and possibilities for higher study.
Middle East difficulties
According to figures from the Bureau of Manpower, Employment and Training (BMET), Saudi Arabia is Bangladesh's top labour export destination, accounting for approximately 40% of the total number of workers sent. However, remittance inflow is comparably lower than in the US, and the following are some of the contributing factors:
Hundi method: Middle Eastern nations continue to significantly rely on the informal Hundi system for remittance, which restricts the amount of remittance transferred through legal channels despite an increase in the export of labour.
Unemployment and low pay: Due to economic difficulties, the Middle East has seen increasing unemployment rates and lower pay for foreign workers. Many individuals have been living in poverty for a long time despite the new export of manpower in recent years. Remittance inflows from the region, particularly nations like Saudi Arabia and the United Arab Emirates, have decreased as a result of these issues.
March saw a record-high surge in remittance inflows.
After the dollar crisis started, the number of remittances entering the country decreased. Two significant holidays in Bangladesh, Pohela Boishakh and Eid ul Fitr, saw record-breaking remittances. Remittance reception typically rises during festivals. The Bangladesh Bank said that non-resident Bangladeshis sent $2.02 billion in March, an 8.6% rise from the prior year. There is also an expectation of a significant surge in remittances during Eid al-Adha.
Nandita Roy is a freelance contributor.