MCCI suggests remittance bank as inflow dives

Dhaka,  Sun,  28 May 2017
Published : 18 May 2017, 22:01:01
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MCCI suggests remittance bank as inflow dives

FE Report


The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) has suggested taking encouraging steps for sending remittances through banking channels to prevent the declining trend.

"In such a situation, the government and Bangladesh Bank (BB) should take appropriate steps to encourage expatriate workers to send remittances through the official channels," the chamber said in its quarterly review of the economy.

MCCI suggests remittance bank as inflow divesQuoting the Human Development Report 2016, the chamber also suggested setting up a remittance bank for easy and transparent inflow of foreign exchange income into the country.

The chamber said remittance inflow during the July-March period of the current fiscal year (FY) dropped by 16.86 per cent compared to the corresponding period of the previous fiscal.

"Remittance inflow has been on the decline, year-on-year, in the last nine months as low oil prices, weak global economic growth and fiscal tightening in the middle-eastern countries and the Russian Federation along with a rising trend of sending hard-earned money by non-resident Bangladeshis (NRBs) using informal channels continue to hurt the key source of foreign exchange," it noted.

Quoting the central bank data, the MCCI review said Bangladesh received US$9.195 billion in remittances in July-March of FY'17 compared to $11.06 billion during the same period of FY'16. But remittance inflow during January-March quarter of the current fiscal decreased by 25.28 per cent to $3.027 billion compared to $3.57 billion in the same period of the last fiscal year.

Noting that remittance has fallen globally, the chamber said that remittance inflow in each month of this fiscal (FY'17) was lower in Bangladesh than the previous year, which indicates that the full year's receipt could be way below last fiscal year's inflow of $14.931 billion.

In FY'16, remittances of Bangladeshi workers accounted for about 6.0 per cent of the country's gross domestic product (GDP). It also supports growth through its impact on household income and consumption.

Remittances accounted for about 30 per cent of the current account receipts in FY'15, offsetting the trade deficit.

The chamber noted that overall development activities in the Gulf Cooperation Council (GCC) countries are gradually shrinking because of lower prices of fuel oils on the global market as well as the declining exchange value of the US dollar.

A consequent fall in labour demand in the GCC economies, the source of about 55 per cent of all remittances, may lead to further declines in remittance inflows.

"The slow growth of remittance inflows is indeed puzzling when a huge number of people have taken overseas jobs in recent years," the review said, quoting data of the Bureau of Manpower, Employment and Training (BMET).

"Nevertheless, if the current trend of falling remittances does persist, it would have an adverse credit impact by dampening consumption and widening the current account deficits," the chamber said.

    syful-islam@outlook.com  
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