US becomes top remittance source for Bangladesh

Staff Reporter :
The United States has surpassed the Kingdom of Saudi Arabia (KSA) as the top source country of remittances to Bangladesh during the first six months of the current fiscal year (2022-2023).
Bangladeshi diaspora in the USA sent home $1.96 billion remittances during the July-December period of the current fiscal year, as compared with $1.69 billion in the corresponding period of last fiscal year, showing 16 per cent year-on-year growth, according to data released by the Bangladesh Bank (BB).
 “Despite persistent economic implications from Russia’s war in Ukraine and the Covid-19 pandemic, the US economic recovery is among the strongest of G-7 nations with record-high employment rates and wage hikes. Besides, Bangladeshi expatriates living in the USA are high-skilled and do white-collar jobs there. Both these factors augur well for total remittance inflows,” economist Dr Zahid Hussain told The New Nation yesterday.
For the last two years, the US was the second biggest source of remittances to Bangladesh after Saudi Arabia.
Besides, workers’ remittances from KSA continue to fall due to economic and labour market conditions, and a widening gap in exchange rates in the formal and informal channels.
Bangladesh received $1.90 billion remittances from KSA during July-December 2022 as compared to $2.43 billion in the corresponding period of the last year, recording a 21.53 per cent year-on-year decline, showed the BB data.
“Remittances from Saudi Arabia have been falling primarily due to growing Saudisation of the labour market,” said migration expert Dr Tasneem Siddiqui, adding, “Besides, Bangladeshi workers in the KSA are low-skilled and low-paid which have implications for remittance inflows.” She added, “In Saudi Arabia, Bangladeshi workers get 800 riyals and the workers of other countries get 1,000 to 1,200 riyals. To earn more remittances, we must improve skills of our workers.”
Tasneem Siddiqui, founding chair of Refugee and Migratory Movement Research Unit (RMMRU), also said that a large number of Bangladeshi expats prefer informal channels for sending money home as there is a significant gap between the official exchange rate of US dollar and that in the kerb market. This also led to drop in remittances from KSA.
Since the opening of Bangladeshi workers’ entry in the Gulf job market, the KSA remained the top destination for Bangladeshi workers as well as top contributor to Bangladesh’s remittances.
Currently, over 52 lakh Bangladeshi workers have been working in the KSA, which is the largest economy in the Arab world.
According to the central bank data, workers’ remittances from the KSA dropped to $4.54 billion in the fiscal year 2021-22 from $5.72 billion in the previous fiscal year (2020-21). When asked, Mohammed Abul Basher, President of Bangladesh Association of International Recruiting Agency (BAIRA), said, “Remittances from Saudi Arabia continue to drop due mainly to surge in ‘hundi’ transactions amid exchange rate mismatches.”
He said, “Even if the Bangladeshi expatriates in KSA send their income home, it is not added to the foreign exchange reserves of the central bank because of the hundi. As a result, inward remittances from the Gulf nation marked a significant fall.”
The BAIRA leader urged the government and the central bank to take serious efforts to curb inflows of remittances through illegal channels. Otherwise, remittances coming from the KSA keep falling in the months to come.
Basher also mentioned that Bangladesh exported about 11 lakh manpower abroad in 2022. About seven lakh Bangladeshis went to the KSA with work visas in this period.
Besides, the United Arab Emirates (UAE) remained the third largest remittance source for Bangladesh during first six months of the current fiscal, when migrant workers’ sent home $133.71 billion remittances during the first six months of the current fiscal year.
The UAE is the second-largest destination for Bangladeshi migrant workers. Currently, more than 10 lakh Bangladeshis are now working there.
On the other hand, remittances sent by expatriate Bangladeshis in the UK were $911 million, inflows from Kuwait were $762.80 million, from Qatar were $699.26 million, from Italy were $610.91 million and from Malaysia were $543.45 million during the July-December period of the current fiscal year.
On a cumulative basis, the inflow of workers’ remittances in Bangladesh during July-December 2022 amounted to $10.49 billion compared with $10.24 billion recorded in the same period last year, showing a rise of 4.23 per cent.
In the fiscal 2021-22, Bangladeshi expatriates sent home $21.03 billion remittances through official channels which were $24.77 billion in the previous fiscal year (2020-21), according to data from the central bank.
Remittances are the major source of external financing for Bangladesh. It also helps accelerating economic growth, balancing balance of payments, increasing foreign exchange reserves, enhancing national savings and increasing velocity of money.