Money transfers by Bangladeshi migrants in Malaysia fell by more than 51% in the first nine months of the current fiscal year, while remittance inflow from the US, Italy and Germany ticked up during the period, according to the central bank data.
In the July-March period, the overall remittance stream was reduced by around 18%.
The money flow to Bangladesh from the Middle East stumbled the most as remittances from Oman plummeted by around 42%.
Many migrant workers sent their savings home through the formal channel, causing an upsurge in remittances even amid the Covid pandemic. But the pandemic-led job loss and income cuts and suspension of migration affected the money flow later.
Though the pandemic waned and migration resumed subsequently, economists say remittances may take time to return to normal conditions.
Remittance from Middle East falls 22.16%
Money transfers by migrants in six Middle Eastern countries – Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain – dropped $2.17 billion in the first nine months of the current fiscal year. The fall from these countries contributed to more than 65% of the overall remittance drop compared to the corresponding period last year.
Money transfer from Saudi Arabia – the top remittance sending country – amounted to $3.49 billion in July-March in FY22, while the figure was $4.36 billion during the corresponding period last year. Remittance from the Kingdom of Saudi Arabia alone logged a $0.87 billion shortfall in the first nine months of FY22.
Meanwhile, remittance from the United Arab Emirates plummeted by more than 32% to $1.27 billion.
The slide from Oman is around 42%, while it is 12.61% for Kuwait, 3.59% for Bahrain and 0.29% for Qatar.
Malaysia tops remittance fall
In the first nine months of FY21, remittances from Malaysia reached $1.56 billion. But they stood at only $0.76 billion during the same period this year. This means the remittance fall from the country is 51.51% as compared to the previous fiscal year.
Despite a decline in overall remittances, the UK ranked third this year from the previous fifth place. Until March in the last fiscal year, expatriates had remitted $1.52 billion from the country, while they sent home $1.45 billion in the July-March period of the current fiscal year.
Remittance from Singapore decreased by 39.37%. In the first nine months of the last fiscal year, Bangladeshi expatriates sent $0.48 billion from the country, compared to $0.29 billion in the current fiscal year. In addition, remittance from South Korea registered 46.06% negative growth this year.
US, Italy and Germany are exceptions
While remittance inflow witnessed a negative growth, money transfers from the United States, Italy and Germany rose in July-March period this fiscal year.
Remittance from the US stood at $2.50 billion in the first nine months of the last fiscal year. The amount rose to $2.52 billion in FY22, posting a 0.85% growth.
Remittances from Italy reached $0.60 billion until March in the last fiscal year. As of last month, Bangladeshi nationals in the European country had sent $0.75 billion home in the current fiscal year, posting a 24.61% growth.
Germany, which is at the bottom of the list of remittance-sending countries, has also seen a slight increase in money transfer to Bangladesh. Compared to the previous fiscal year, remittances from the country increased by 17.53% during this period of the current fiscal year.
Professor Mustafizur Rahman, Distinguished Fellow of the Centre for Policy Dialogue (CPD), said remittances from US and Italy have increased thanks to a strong comeback by foreign nations.
He said those who went abroad did not return home during the pandemic. Even though their income decreased, the money flow did not stop.
He said countries like Malaysia and Singapore sent many Bangladeshi workershome during the pandemic, people who could not return later. Besides, thesecountries did not open the doors wide for new workers, leading toa significant remittance fall.
Noting that money transfers from the Middle East will increase again, the economist said the number of workers going to the countries of the region has surged again. It may take a year for these countries to be among the top money senders to Bangladesh.
Informal channels back in business
During the pandemic, money transfer through informal channels like "hundi" almost stopped. But it resumedonce the virus situation normalised – affecting the remittance flow through the formal channel.
Even with the government providing 2.5% cash to remittances through the formal channel, illegal money transfer arrangements still remain operational.
Khondaker Golam Moazzem, research director of CPD, said kerb market dollar rates are more than what the banks offer. This often encourages migrant workers to send money through informal channels.
He said the 2.5% incentive will not yield much if hundi cannot be stopped.
According to economists and researchers, remittances could hover around $20-$21 billion at the end of FY22.
Sirajul Islam, executive director and spokesperson of the Bangladesh Bank, also assumed that the amount could be around that figure.
"Remittances have increased significantly since March this year as compared to February. We are hopeful that remittance inflow will surge further centering on Eid," he added.