Bangladesh has seen an increase in the remittance sent from the United States, the biggest economy in the world, along with an upward trend in investment in NRB savings bonds.
Bangladeshi expatriates in the US have remitted $343.5 million in July, the first month of the fiscal year, more than double the amount they sent a year earlier, reports bdnews24.com.
Migrant workers in Saudi Arabia, the UAE and the United States account for half of the total remittances that Bangladesh receives a year, according to the central bank.
Saudi Arabia and the UAE were the first and second destinations in terms of remittances for Bangladesh. Over the last seven months, the US has taken the second spot, overtaking the UAE.
Between January and July, Bangladeshis in the US remitted about $1.65 billion in remittances, while about $1.42 billion came from the UAE.
Remittance from the US crossed $2 billion for the first time in the last fiscal year.
Expats around the world remitted $18.2 billion in fiscal 2019-20. Among them, $4.01 billion came from Saudi Arabia, while $2.47 billion came from the UAE and $2.4 billion from the USA.
Inward remittances from Saudi Arabia increased 29.1 per cent in the last fiscal year, while funds from the UAE decreased 2.7 per cent. Remittance coming from the USA had the highest increase of 30.4 per cent.
Migrants in Saudi Arabia remitted $632.6 million in July, the first month of the fiscal year, while Bangladeshis in the US sent $343.5 million. Expats in the UAE remitted $285 million in the same month.
Kuwait, which used to yield more remittance than the USA until 2012, has moved to the fourth place on the list.
At least 12 million Bangladeshis work in different countries around the world according to the Ministry of Expatriates’ Welfare and Overseas Employment. The majority of them work in the Middle Eastern countries.
In the USA, the number of Bangladeshis are 800,000 with 250,000 of them living in New York. Jackson Heights and Jamaica house most of the Bangladeshis in the USA.
At present, the expatriates are sending money to Bangladesh through banking channels only, due to the outbreak of coronavirus pandemic, Hasanuzzaman Hasan, chairman of USA-Bangladesh Democratic Club said. “This is why the remittance has increased,” he said.
“The 2 per cent cash incentive given by the Bangladesh government has boosted the remittance flows from the US. One gets Tk 170 as an incentive if they remit $100 home. This has motivated the expatriates to remit more.”
The number of Bangladeshi expats increased in the US, said Hasan. “They have different occupations and many of them earn quite well.”
“American banks don’t provide much interest against deposited money, while people can have 12 per cent interest if they buy NRB savings bonds in Bangladesh. Hence, the expats are remitting more for buying bonds and getting more cash incentives.”
Bangladeshis living in the US are in a ‘better position’ in terms of profession and hence earning more in comparison to those living in the Middle Eastern countries, he said.
Though the coronavirus pandemic has hit the US economy hard, job loss is not expected to be rampant, said Hasan. People’s income may decrease for a while but it will be fine when the situation goes back to normal. Therefore, the remittance flow from the US will remain unaffected in future, he said.
“Those [expatriate Bangladeshis] living in New York without legal documents have received an incentive from the Trump government during the pandemic, and they are sending that money home through the bank accounts of their friends.”
Bangladesh received a record amount of remittances amid the pandemic because of the cash incentive offered by the government and closure of Hundi or illegal channels to send money, believes Zaid Bakht, chairman of Agrani Bank.
“It’s good news that remittance flow from the US increased. It’ll be a positive factor for our economy if the US remittance flow remains the same keeping the overall remittance unaffected despite the downward trend in remittance from the Middle Eastern countries,” said Bakht, also a researcher in Bangladesh Institute of Development Studies or BIDS.
In many developed countries, banks do not offer interest when clients deposit their savings. For the expats, therefore, Bangladesh has provisions of buying Wage Earner Development Bond, US Dollar Premium Bond and US Dollar Investment Bond, which are profitable for them.
Expatriates have invested Tk 150 billion in these bonds as of Jun 30, compared to Tk 120 billion in the same month a year earlier, according to data from Bangladesh Bank.
“Expatriates are more interested in buying investment bonds due to different initiatives taken by the central bank. This is why the investment increased,” said Serajul Islam, executive director of Bangladesh Bank.
The government has announced a 2 per cent cash incentive in the 2019-20 budget in a bid to boost remittance inflows. The government incentive is continuing through fiscal 2020-21.