Collective Efforts Are Needed to Increase Exports and Boost Expatriate Earnings

Hiren Pandit

Exports and expatriate incomes these two are the major sectors of foreign exchange earnings. Reserves now stand at $35.7 billion. 34 billion after repayment of liabilities. But unfortunately, the two major sources of foreign exchange earnings of the country, have declined for the last two consecutive months. This decline has added to concerns about foreign exchange reserves. Bangladesh Bank released the remittances and Export Promotion Bureau (EPB) reports recently. It can be seen that after September, the expatriate income also decreased in October. The amount of expatriate income received last month was the lowest in the last eight months. This income is 7.37 percent less than last year’s October.

According to EPB’s calculations, export earnings in October fell by about 8 percent compared to the same month last year. This downward trend started last September. Earlier, export earnings had increased for 13 consecutive months. However, if we compare September with October, it can be seen that the export income has increased by 11 and a half percent. The exporters also expressed their doubts about the EPB export figures. Exports and expatriate income are now being increasingly looked at because Bangladesh Bank’s foreign exchange reserves are dwindling. This increases the value of the dollar, which causes the price of almost every commodity to rise. The load-shedding that has been going on for months is also an indirect reason for the decrease in foreign exchange reserves. Due to the lack of dollars, various banks have faced difficulties opening credit letters to import goods.

According to the latest calculations of the central bank, foreign exchange reserves are now equivalent to 35.72 billion (3 thousand 572 crores) US dollars. Asian Clearing Union (ACU) liability is to be paid in the current month against the import of goods. In this, foreign exchange reserves may decrease to 34 billion dollars. It should be noted that in August last year, the reserve was slightly more than 48 billion dollars.

Now export and expatriate income is a cause of great concern in the current situation. Purchase orders have also decreased in the apparel sector. As a result, expatriate income should now be emphasized. In addition to the income, attention should be paid to how the dollar consumption is being done. The Bangladesh Financial Intelligence Unit (BFIU) has said that products have been imported at an increased price of up to 200 percent. So, what was their punishment? How Bangladeshis have come out on top in home buying in Dubai. How did this money go out? The value of the dollar has slightly increased in bringing expatriate income. This will increase the future income slightly.

The current financial year 2022-23 had a good start in terms of commodity exports. Exports worth 8.59 billion dollars in the first two months. The growth was also 25 percent. Exports have been declining since September. Exports worth 435 million 66 million dollars in October, which is 7.85 percent less than the same period last year. However, as of the first four months (July-October) of the financial year, overall product exports are still higher than last year. Exports worth 1,685 million dollars in these four months, a growth of 7 percent.

More than 80 percent of product exports come from the ready-made garment sector. Generally, if exports of ready-made garments increase, overall product exports also tend to be positive. However, an exception occurred in October. Garments accounted for $3.68 billion of the $4.36 billion in exports in the month. This income is 3.27 percent higher than in the same period last year. This means that overall merchandise exports declined in October despite an increase in apparel exports.

Meanwhile, the leaders of BGMEA and BKMEA were surprised by the increase in garment export earnings in October. They say that they observe how much ready-made garments are exported through Chattogram seaport and Dhaka airport every day. Apparel exports in the first 20 days of last month were 18 percent lower than in the same period last year. As on October 28, it was 15-16 percent less. But the income has increased at the end of the month as seen by EPB. Different sources mentioned still exports increased. According to EPB data, exports of leather and leather products increased by more than 17 percent, along with ready-made garments. On the other hand, exports of agro-processed products, frozen food, jute, and jute products decreased.

Expatriate incomes have been declining ever since the dollar was pegged. Last October, expatriates remitted foreign currency equivalent to USD 1.52 billion, which is 7.37 percent less than the same period last year. It fell by more than 10 percent in September. In the first four months of the fiscal year, total expatriate income came in at $7.2 billion, which is only 2 percent higher than the same period last year. People concerned say that the central bank and commercial banks are taking decisions one after the other about the price of the dollar. This hurts expatriate income.

The officials of the exchange houses of Malaysia and Italy say that the dollar cannot be bought at a price higher than 107 takas for Bangladesh. But hundi or illegal way is getting 109 takas per dollar. As a result, expatriate Bangladeshis are not coming to the exchange house to send large amounts of income. The country’s major sources of foreign exchange are three-the export sector, repatriate income and foreign loans, investment, and grants. An increase in repatriated income and exports increases foreign exchange reserves, which increases the country’s capacity.

We cannot increase the source of foreign exchange overnight. Therefore, whatever is necessary to increase expatriate income should be done. Exporters have to ensure necessary gas electricity. Necessary facilities should be given. Foreign exchange expenditure in the non-manufacturing sector should be strictly stopped.

Remittance plays a very important role in keeping the economic momentum of our country normal. Apart from this, the decline in remittances has become a cause for concern in the ongoing reserve crisis. Last October, expatriates sent remittances of $1.525 billion, the lowest in eight months. In addition, in September of this year, remittance or expatriate income came to 154 million dollars. Accordingly, remittances have decreased by 1 percent within a month. On the other hand, the amount of remittance flow in October last year was 164 crore 69 lakh dollars. Accordingly, remittances have decreased by 7.37 percent in one year. That is, for the second consecutive month, the number of remittances, one of the sources of reserves in the country, has decreased.

But in the first two months of the current financial year 2022-23, the reserves have come more than last year. July came in at $2.1 billion, the highest in the previous 14 months. And it was 12 percent more than in July last year. In addition, remittances came in at $204 million in August. There was a growth of 12.60 percent. A total of $4.13 billion in remittances came in between August and September, which was 12.30 percent higher than the same period last fiscal.

Such a decline in remittances is undoubtedly worrying. Because in the meantime, the shadow of concern about the reserve has started to fall. In that case, the decline in remittances, one of the main sources of reserves, is not a positive sign at all. People concerned say that the central bank and commercial banks are taking decisions one after the other about the price of the dollar. This is hurting remittances.

There are three major sources of foreign exchange in the country. The export sector, remittances or remittances, and foreign loans, investments, and grants. An increase in remittances increases the foreign exchange reserves, which increases the capacity of the country.

Since the dollar price was fixed, the remittances started to decrease. In this regard, economists emphasize the effective management of exchange rates. According to them, the value of the dollar has been slightly increased to increase remittance collection in the future. But as a result, the currency is still overvalued, due to which expatriates are suffering. In this case, there is no alternative to proper management of remittances. There will be pressure in the next year especially as the remittance income is shrinking down. Apart from this, people related to the sector feel that the remittances through the banking channel have decreased because expatriate workers are getting higher exchange rates from other sources including hundi compared to the banking channel.

Economists said, despite the increase in manpower exports, the main reason for the decline in remittances is the Hundi. Banks are now offering a maximum rate of Tk 107 on remittance. Their hundi traders are giving up to 110-112 taka. Again, they go to the expatriate’s workplace without any hassle and collect the money. There is also a difference of opinion that remittances will not increase only if foreign employment increases. After Covid, a record number of people went abroad from the country last year. But the remittance did not increase. The big issue is how many skilled workers are being sent abroad. Because sending unskilled workers takes years to recoup their expenses. Besides, UAE is the biggest foreign employment market after Saudi Arabia.

Meanwhile, despite various incentives, remittance flow is not increasing. In this case, mobile banking is also being blamed along with Hundi. The hundi market has become crowded due to volatility in the dollar exchange rate. In this case, migrants are encouraged to send remittances illegally. Even after giving two and a half percent incentives from the government, the benefits are not met. However, if the Central Bank’s directives to increase the number of exchange houses abroad for collecting remittances are implemented, there is a possibility of dollars coming through legitimate channels. In this case, there is no option to campaign on behalf of the government. Expatriates should be made aware that hundi is illegal. Besides, the active role of Embassies located abroad is necessary to stop the activities of hundi. Besides, emphasis should be placed on sending skilled workers for employment abroad. For this, apart from the administration, expatriates also need to be aware. As the hundi operation is illegal, expatriate workers should be made aware of the importance of sending remittances through proper banking channels rather than sending remittances through hundi. In this case, there is no alternative to the promptness of the embassies of the countries concerned. If expatriate workers are aware along with the government, then we can overcome the ongoing crisis based on everyone’s participation, it can be hoped. It should be remembered that the country belongs to all of us, if the country is in crisis, everyone will suffer. Therefore, there is no alternative to the collective efforts of all in overcoming the ongoing crisis.

Hiren Pandit is a researcher
and a columnist.

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