In the fiscal year 2024, expatriates from the United Arab Emirates (UAE) sent an impressive $4.60 billion to Bangladesh, marking the highest remittance amount from any country.
This figure surpassed remittances from traditional destinations such as Saudi Arabia, the United Kingdom (UK), and the United States of America (USA).
According to the latest data from Bangladesh Bank, the second-highest remittance came from the USA, totalling $2.96 billion, the UK followed with $2.79 billion and Saudi Arabia contributed $2.74 billion.
When compared to the previous fiscal year (FY23), UAE's remittance grew by 51.8%, rising from $3.03 billion, the USA saw a decline of 15.91%, down from $3.52 billion, the UK experienced a growth of 34.13%, up from $2.08 billion and Saudi Arabia’s remittance dropped by 27.32%, from $3.77 billion.
Labor migration trends
Data from the Bureau of Manpower, Employment, and Training (BMET) shows that in the first six months of 2024, 33,665 people left Bangladesh for work in the UAE.
Since 2004, the UAE has received a total of 2,157,832 Bangladeshi workers. In comparison, Saudi Arabia has taken in 3,885,375 workers and the UK has received 21,410 workers.
This significant increase in remittances from the UAE has been helping Bangladesh’s economy, especially during a foreign currency reserves crisis. However, experts have raised concerns about the possibility of smuggled money returning as remittance to take advantage of incentives and legalize the funds.
Economists concerns
Abu Dhabi and Dubai are currently seen as major hubs for money laundering. It's unclear how investment funds are being transferred from Bangladesh, given that Bangladesh Bank has only approved a few institutions to make foreign investments in the UAE.
However, in recent years, many individuals have been accused of illegally sending money to the UAE and investing there.
Some economists believe that smugglers might be repatriating smuggled money to benefit from incentives, which could then be laundered again. This process has likely contributed to the sharp rise in remittances through legal channels.
Former Bangladesh Bank governor Mohammed Farashuddin highlighted the issue earlier, stating that the government is giving incentives to expatriate income, most of which is going to big fish and middlemen. They are allegedly disbursing only a fraction of the incentives to actual remittances while laundering the rest back to Bangladesh for themselves.
Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD), also questioned the surge regarding skills and pay; there aren't any significant distinctions between the workers going to Saudi Arabia and the UAE. So, it is necessary to see who is sending the money from the UAE and why this sudden spike.
Historically, Saudi Arabia had been the top remittance sender for Bangladesh. However, it briefly lost this position to the USA in the second half of 2022 before regaining it by the end of FY23.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, explained to Dhaka Tribune that the adoption of a flexible exchange rate reduced the difference between official and informal rates, encouraging more remittances through banking channels. Additionally, some banks provided extra incentives, boosting the inflow further.
However, on May 8, the central bank introduced the crawling peg exchange rate system, allowing banks to buy and sell US dollars within a fixed band at around Tk117. Even some banks are giving more for buying greenback with a 2.5% incentive fixed by the government
In FY24, Bangladesh received a record $23.92 billion in remittances, the highest in the last three years. This has provided crucial support to an economy grappling with a foreign exchange crisis for the past two and a half years.
