One cannot be sure about the response from the non-resident Bangladeshis (NRBs) to the proposed introduction of dollar bonds of lower denominations, but it will be worth trying. Given the level of income of most Bangladeshis employed abroad, mainly in the Middle East, Malaysia and some other Southeast Asian countries, the introduction of bonds having lower denominations, it seems, will be a realistic step. However, yield rates of those bonds, naturally, will be an issue of great import for the expatriate savers. They would expect better return on their investment. The bonds made available for the Bangladeshi wage earners so far have failed to attract satisfactory level of investment. Most NRBs find the bonds of higher denominations not affordable and their yield rates unattractive. The wage earners development bond (WEDB) introduced in local currency for remittance earners and their dependents in 1981 did carry higher yield rates, but its high denomination has been a problem.
Two other bonds---US dollar premium bond (UDPB) and US dollar investment bond (UDIB)--- introduced in 2002 do possess the same unattractive characteristics--- high denomination and low yield rates. All these have led to a very poor response to these bonds from the NRBs. The annual sales of these bonds remains highly insignificant compared to the country's annual remittance earning, which stood at US$16.4 billion in the last financial year.
The relevant policymakers have been rather clueless about channelling the remittance money to the real sectors of the economy. Bangladeshi workers abroad being mainly unskilled earn low wages and they usually leave behind a substantial debt burden at home. The money they remit is spent on the sustenance of their families and pay debt made to bankroll their high migration cost. The majority of them can hardly make any savings. Moreover, those who can manage some amount of savings are discouraged by the high denomination dollar bonds and their yield rates.
Thus, in addition to lowering the denomination of bonds and making their yield rates attractive, the government should do something practical to reduce the high migration cost of the outbound Bangladesh workers. The relevant authorities, at times, talk about ensuring low migration costs, but, in reality, they do little to this effect. Private recruiters and their agents are still exacting a very high cost from the poor job-seekers despite the fact the wages in most countries have shrunk significantly, particularly for the unskilled and low-skilled workers in recent years.
Along with lowering the migration cost, the government does need to produce enough skilled manpower and export a part of the same to potential markets. This, on the one hand, would help the country to boost its remittance income and enable wage earners to save more. The skilled wage earners, obviously, being more conscious about secure and productive investment would choose government dollar or similar kind of bonds. Ensuring a vibrant bond market and making the dollar-bonds tradable among NRBs might also help the government achieve its objectives.
