Fall in remittance: the reasons

Daily Sun, April 3rd 2011
M. Serajul Islam

A report in a leading English Daily on declining remittance flow to Bangladesh made a few doomsday predictions. The report was based on an interview with economists and analysts. The doomsday scenario was based on developments in Libya, Tunisia and Egypt and these events influencing pro-democracy movements leading to political instability in the oil rich ME countries where our expatriates work in millions. These gentlemen have predicted that as a consequence thousands of Bangladeshis would be sent home leading to dramatic fall in remittance that in turn would have a disastrous impact upon the economy.

One of the few success stories of Bangladesh has been the contribution of our expatriates in sending to the country their hard earned income as foreign remittance. Last year, our expatriates sent home foreign exchange worth US 10.92 billion that had a huge positive impact on the economy and society. That amount was a 2.2% growth on the previous year and was a sharp fall in remittance flow from previous successive years when remittance flow had grown in double digit figures.

The learned gentlemen who gave this leading weekly the interview did not look at right places for the reasons for remittance declining so sharply in 2010. True, there was the worldwide economic depression that no doubt adversely affected the oil rich countries of the Middle East such as Saudi Arabia, UAE and Kuwait, our three largest destinations for manpower export. That world economic recession started in end of 2008 and was there for the whole of 2009. Yet in 2009, our remittance growth was in double digit.

In 2010, that economic recession did not deteriorate. In fact, it showed signs of recovery. Also, the demand of the type of manpower that we export to these countries did not fall either. Next door Nepal has sent larger number of its expatriates to these countries last year whereas Bangladesh failed to send any additional manpower in the same year. In fact, last year many Bangladeshis have been sent home. Those the newspaper interviewed would have done better if they had looked into these facts to get to the root of the problem of declining remittance.

Their concern about Libya is a correct one because we had sent 60,000 people there. But in the overall remittance business, our expatriates to Libya who were cheated by those who sent them there were able to send only a little over US$ 100 million. Thus the Libyan case is not an appropriate one to conclude any doomsday scenario for the remittance market. The emphasis of a democratic wave running across the ME and in its wake, creating major political instability in the oil rich countries leading to our expatriates returning home in large numbers is also a case of misplaced emphasis.

Tunisia and Egypt that have been overrun by a democratic surge are not manpower export markets for Bangladesh. Jordan, Yemen and Syria where the democratic wave has started to make significant impact, are also not manpower exporting destinations for Bangladesh. Only in Bahrain where we are witnessing political disturbances is a manpower market. However, the movement in Bahrain is not similar to the movements in Egypt, Tunisia, Libya or Yemen. In Bahrain, it is a sectarian conflict where the majority who are Shiias is seeking to be free from rule of the minority Sunnis and the downfall of the ruling royal family.

The other countries of Middle East are the very rich oil/gas producing countries. True, the rulers in these countries have little regard for democracy and people’s rights. Hence in these countries, the majority of the people has democratic aspirations and has shown inclinations to seek their democratic rights. There has been news of limited political unrest in Saudi Arabia where again such unrest coming from minority Shiias influenced more by neighbouring Bahrain than by Libya, Egypt or Tunisia. Nevertheless, fearing political demands in future, the Saudi King has offered a multi-billion dollar appeasement package, including creation of 60,000 new jobs.

There are qualitative differences in economic conditions in the oil rich countries compared to Egypt, Tunisia, and Yemen for instance to make them instantly or in the short term susceptible to mass upsurge and downfall of regimes. Tunisia and Egypt, the trail blazers in the movement for democracy drew inspiration from the majority of the people who were economically deprived largely because the inability of the governments to deliver due to lack of financial resources. In Tunisia for instance, the whole movement was triggered when a young man committed suicide by putting himself on fire to escape his economic hardships.

In Egypt, the vast majority of the people, particularly the youth, got together against President Mubarak’s dictatorship because they too were economically depressed and felt that democracy was the panacea for their economic ills. In Syria, Yemen and strangely in Libya too, the majority who came out into the streets have done so in order to seek an end to their economic ills through capturing power or by getting rid of the dictatorial regimes.

There is no doubt that the people in the oil rich ME countries have also been affected by Tunisia, Egypt and Libya in the context of seeking their democratic rights. However, the driving force that moved people to the streets to overthrow the regimes in Tunisia, Egypt and Yemen has been economic. The oil producing countries are so rich and getting richer at regular intervals by windfall gains from rising prices of oil that they possess the power to take out the economic factor for pro-democracy movement almost totally out of the equation. Hence it is extremely unlikely that pro-democracy movements in ME will attain the intensity and force as in Tunisia, Egypt or Yemen.

The other element in the equation that a lot of those who are suggesting democratic upsurges all over the ME like those seen in Egypt and Tunisia is missing is the nature of society in the oil rich ME countries. Although at one level, they do not share political power with the people, on another level there is the element of equality between the rulers and the people that removes a lot of the hatred that we have seen in Egypt and Tunisia for the erstwhile dictators. These rich countries are based on tribal linkages that provide the element of equality to blunt the conflict between the ruler and the ruled and also the hatred that moved peoples in millions in Egypt and Tunisia to fight to overthrow their dictators.

Nevertheless, the democratic movements in Egypt, Tunisia, Libya, and Yemen are bound to resonate in the shores of these oil rich countries, like the effects of the Tsunami. Like the effects of the Tsunami, the rulers of these countries would also be warned in advance about what is coming and hence they would no doubt be encouraged and prepared to make the necessary democratic changes to avert any serious uprising.

Therefore those who have pictured the doomsday scenario that oil rich ME would be faced with political instability leading to depleting seriously our manpower export market may have over stated the case. Nothing dramatic is likely to happen; not in the short term. They would be better advised to look at the cause of the depletion of our export market to the ME that has happened and continuing, elsewhere, in the failure of our foreign policy. Our favour for secularism and haste to ban Jamat are much more important reasons for the depletion. Bangladesh’s rating with these oil rich countries is now on an all time low and the proof of it is in the sharp decline of foreign remittance from the oil rich ME countries.

The writer is a former Ambassador to Egypt and Japan and a former Secretary to the Government.