Remittances: Bane Or Boon?

Remittances fill the gap in balance, Desirable is an economy with less influence.

Remittances have become rescuer of Bangladesh's macroeconomic stability. Riding on remittances, Bangladesh managed to narrow down the current account deficits. In 2023-24(Jul-Apr) , current account deficit was $6 billion, it became $1.4 billion in 2024-25(Jul-Apr).During the same period ,overall deficit came down to $656 million from $5.5 billion. Meanwhile, in 2023-24(Jul-Apr), remittance was $19.12 billion and it became $24.53 billion in 2024-25(Jul-Apr).(Source: Bangladesh Bank)

We have never been a trade surplus economy. Foreign aid and remittances pop up the current account balance for so long. Macroeconomic mismanagement deteriorated the current account balance, starting the free fall of forex reserve. Forex reserve starts to grow following the latest receipt of the IMF credit pack and WB' s budget support. Import has been tightly controlled since the govt introduced the monetary tightening policy.In addition, govt freely floated Taka,sustaining no fall in its value. Rather, Taka is appreciated in recent times.

The improvement in current account deficits is due to remittances, controlled import and nonintervention in central bank's decision making process. There is widespread fear that both exchange rate of Taka and current account balance may plunge when the restrictions on import are relaxed. There are some other factors need to be taken into account like [increased] oversight on external trade in recent years and depreciation of USD. USD has depreciated 1.77% in last one month and 7.52% in the last one year (source: www.tradingeconomics.com). The long-term desire of the US to weaken it further in future so that the economic policy makers use the USD as an instrument to get more foreign market share for American goods and services.

Bangladesh heavily [relies] on USD to settle international transactions. So depreciation of USD also played a role in appreciating Taka in the midst of free floating of Taka. In this backdrop, it will be difficult to depreciate Taka in the future. Depreciated Taka will be key to augment export and bring more remittances.

Too much dependence on remittances exposes weakness of our economy. If you look at the sources of remittances, you clearly see the USA, Saudi Arabia,UAE,Uk and Malaysia top the list [of major sources of remittances].

And most of these remittances reached Bangladeshis through Islami Bank, Agrani Bank,Janata Bank,BRAC Bank and Trust Bank. Amid trouble, Islami Bank is still the bank that brings most remittances from abroad every year. The bank is also responsible for opening most LCs for import of food grain and fertilizer. Back in 2023, a group swindled billions of Taka from the bank in the name of importing food grains, jeopardizing the banking of it and other specialized banks.

Not only that amid negotiations with the IMF, Jeddah and Dubai based exchange houses tried to manipulate the exchange rate of Taka.

So this Middle Eastern based remittances give the countries of that region leverage over our economy.

We have to either diversify our remittance sources or focus on trade surplus through bringing more exportable item, market diversification and innovation. Any shock to our remittance sources will definitely put our macroeconomy at stake, worsening our future debt burden and prolonging the economic recovery.

Time To Look For Alternate Overseas Job Market

External job market for Bangladeshi workers does not look that good. Traditional market like Saudi Arabia remained stagnant. Only conditional recruitment is going on there after it remained closed for Bangladeshis for sometime: Bangladeshi female domestic worker should be sent to resume recruitment of Bangladeshis.

Meanwhile, Malaysia, another major destination for Bangladeshi workers, has launched an amnesty program for illegal immigrants. "Back for Good" program, launched in August 1 and will expire by December 31, aims to curb significantly illegal foreign workers who have overstayed their visas by sending them back to their country of origin after paying a punitive fine. One year later they will be eligible for re-recruitment. News report hints that around 30000 undocumented Bangladeshi workers will face full brunt of B4G program. Situation is so dire that national flag carrier, Biman Bangladesh Airlines, has increased frequencies of flights between Kuala Lumpur and Dhaka to meet the deadline so that stranded Bangladeshi workers do not face severe punishments.

Falling remittances flow from traditional sources and adverse policies in some markets cue new efforts to search alternative markets. There are some destinations  that look promising but series of bad incidents overshadow the good prospect.

Series of killing by gunshots imperil the very existence of Bangladeshis in South Africa, where they successfully started grocery and other small businesses. In the  last five years, around 400 Bangladeshis were gunned down. News reports indicate that South Africa too is a popular destination for undocumented Bangladeshi workers. Having worked for two or three years, many managed to grab legal documents. Even these undocumented workers are not insulated from ghastly gun violence.

Earlier, law-enforcement agencies back home arrested cohorts of abductors resided in Libya for abducting Libya-bound illegal Bangladeshis and asking for ransoms to relatives back home.

In Saudi Arabia, tortures meted out to female domestic help of Bangladeshi origin turned Bangladeshis' stomach. Reuters carried a report that claimed that there was an online site for selling poorer women, hailing from third world countries, to Middle Eastern clients. In that nomadic culture housemaid does not enjoy a respectable life.  Once a migrant worker told me that God made "halal" till knee part of a washerwoman's body. I don't know how much truth it contained but I was shell shocked. Even I find the French word, "femme de chambre" or "bedroom woman",  for a domestic help shocking. The French colonized a large part of sub Saharan Africa and part of Middle East. Maybe the word has its roots from that part of the world. Look at the final resting places of the Pharaohs whose decorated secret chambers also contained mummies of slaves. The film "Charlie Wilson's War" offers another account of sporting spectacles of slave girl trade.

In the movie, a congressman throws party for elites and stages a funny slave girl trade. These social elites get along well with their Middle Eastern partners. Perhaps the auction is intended to entertain the guests. Since vestiges of nomadic culture is still prevalent in those societies, we should take precautionary steps while sending housemaid there.

Back in last week of November, around 35 female workers took refuge in a repatriation center in Saudi Arabia, fleeing violence at workplace. Luckily, frequency of such horrifying incidents precipitated the Saudis to launch a special service to take calls from housemaid in distress.

Bangladeshi government needs to do more: recruiting more Bangladeshi staff who speaks dialects of workers at the embassy in Riyad, signing more complementary agreements  with the Saudis to ensure safety of these workers and stalling the recruitment for sometime if necessary.

 In Karnataka ,India, a drive against Bangladeshi domestic help was launched couple of months ago. Karnataka government alerted the apartment owners and advised them to discharge their domestic help as soon as possible. It appeared that Bengali domestic helps cook very well and very docile so Bengali middle class there prefers recruiting them. Language barrier does not appear to be a major problem in communicating like Saudi Arabia.Somehow the xenophobia that evil quarter may misuse the poor workers led to this anti-Bangladeshi drive in the region.
Given the dismal picture in existing overseas employment markets , searching new one as well as more efforts of engagement with the existing markets are called for.

(Source: Bangladesh Economic Review 2018)

If we take a close look at the remittances for the last 10 years we will see that remittances from Saudi Arabia and UAE declined for the last five years. Meanwhile, remittances from USA,UK and Malaysia increased significantly for the last ten years.
Since we inclined heavily towards sending semi-skilled and unskilled workers, it is better to devise new ways so that we could send more workers to new overseas markets and induce others to take more workers from us.
Bangladesh could lobby other traditional markets to replicate the Malaysian "B4G" program. Under the program, workers in rotation will go abroad and come back to home for a predetermined period. Government initiatives can assure the participating workers that government will take care of their housing and healthcare needs if they comply with the rules of the program. Government can also build subsidized housing unit for this target group of workers.

Bangladesh could also sign special agreements with India to send domestic help, construction worker and agricultural laborer. If any major Indian city does not have reservation from hiring Bangladeshi domestic help, then under government-to-government contract special work permit can be awarded to this kind of workers. Local Indian High Commission can ensure smooth distribution of the permits and can make sure that remittances sent by these emigrant Bangladeshi workers may end up in right hands and may use in home renovation, providing good education to children and providing good medicare.

There are many humanitarian NGOs in India. They work for vulnerable groups and operate many safe houses. Unlike Middle Eastern countries, Bangladeshi domestic help will enjoy safe and secure life there as the population in general is not hostile towards them.
In exchange, Bangladesh can issue more professional visas to Indians, hailing from those Indian States that welcome Bangladeshi workers, to work on RMG, textiles and IT sectors. It will help tremendously to balance the remittance flows between the countries.
Iran and countries belong to former Soviet Union could also be viewed as potential destinations of overseas employment. Unfortunately,Bangladesh never explore the Iranian construction, agriculture and shipbuilding industries where Bangladeshi workers could make valuable contribution.US sanctions could cause some trouble as Iranian central bank also falls under the new sanction, but Bangladesh could join multilateral initiatives to bypass them.

African countries could be destinations for setting up small businesses and agricultural farms. Bangladesh could ink deals with South Africa and Libya to provide law enforcement assistance in those countries in a bid to reduce the incidence of gun violence and human trafficking. If Bangladeshi financial institutions are allowed to operate in these countries, then small businessmen could get easy credit to start businesses.


Tragic tales of our migrant workers in Saudi Arabia , South Africa and Libya insinuate that overseas employment industry is infested with thugs and they act here without facing any obstacle and remorse. While innocent souls perished abroad, reputation of the country took a bad hit. Undeniably foreign hands also took part in this kind of criminal act. Unfortunately, from our part, we have not yet taken any step to identify the culprits and to bring them to book. Nonchalance stance hampers the traditional markets and puts obstacles to finding new ones for our workers. Unless we address the issues at home, chances are slim that things will be better for our overseas employment situation.