BANGLADESH: Global financial crunch set to cut remittances
DHAKA, 21 November 2008 (IRIN) - Millions of Bangladeshis will be hit by an expected downturn in remittances because of the global financial crisis, experts warn.
Some five million Bangladeshis work abroad, mostly in the Middle East, in healthcare, engineering, domestic service and manual labour.
“We won’t feel the blow of the cut in overseas employment immediately, but after two to three years remittances will definitely dry up if no major changes take place,” Syed Ashraf Ali, former executive director of the Bangladesh Bank, in Dhaka said.
Although foreign workers make up just 2.8 percent of the population, they contribute more than 9 percent of gross domestic product (GDP).
Remittances are Bangladesh's second-biggest source of foreign income after ready-made garments, which earned US$10.7 billion in the last fiscal year.
“Remittances are like a goldmine for Bangladesh, playing a key role for stability in the balance of payments and mitigating unemployment problems here,” said economist Atiur Rahman, chairman of Shamunnoy, an NGO. “We will be in deep crisis if remittances are destroyed.”
Remittances at $10 billion
Bangladeshis working abroad sent home $7.5 billion in the first 10 months of 2008, up 37 percent on the same period a year earlier.
The central bank expects the inflow of remittances to reach $10 billion in the current financial year (July 2008-June 2009).
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| Bangladeshi workers agitate at Dhaka airport after being expelled by the Malaysian |
But as the global financial crisis worsens, those figures will likely decrease, as major labour markets reduce their quotas.
“Signs are there that the demand for Bangladeshi labour will drastically slide in the Middle and Far Eastern countries,” Jahangir Kabir Chowdhury, a leading recruiting agent, told IRIN, adding that Saudi Arabia and Malaysia, two major employers of Bangladesh migrant labour, had already slashed their quota for Bangladesh from September.
At a recent conference in Dhaka, Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development (UNCTAD) warned that the ongoing global economic slowdown would further affect remittances to third world countries, including Bangladesh, where approximately 38 percent of inhabitants live below the poverty line.
While there are no exact figures on how many people will be affected, throughout Bangladesh at least one family in every village is dependent on regular remittances to survive.
Citing International Labour Organisation (ILO) statistics, Supachai said the financial crisis would raise global unemployment by 20 million in 2009 and push 40 million people into extreme poverty.
Globally, migrant workers remitted $250 billion in 2008, he said.
Saudi Arabia tops the list of remittances to Bangladesh followed by the USA, United Arab Emirates, Qatar, Oman, Bahrain, Kuwait, Libya, Iran, Hong Kong, UK, Germany, Japan, Malaysia, Singapore, Australia, Italy and South Korea.
About three million Bangladeshis living in the Middle East send approximately 70 percent of all remittances.
According to the statistics for the latest fiscal year, Bangladesh received about 27 percent of its remittances from the US and European countries.
The number of workers who went abroad for jobs in 2000-2005 ranged between 180,000 and 250,000, while about 380,000 workers left in 2006 and 832,000 in 2007, according to the Bureau of Manpower Employment and Training.
Today 1.5 million wage earners live in Saudi Arabia alone.
Bangladesh stands fifth among the top remittance recipient countries in the world. [See: www.iom.int]
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