Productive use of remittance

Remittance flows from overseas Bangladeshi workers are maintaining uptrends. According to the Bangladesh Bank (BB), a total amount of remittance valued some $14.93 billion were received in the country during the last calendar year marking a 25.36 growth over the previous year.There has been a slight fall in remittance flow in the current year. But it is considered to be a transient phenomenon. The unimpeded rise in the flow of remittance in recent years indicated better management in this area. Greater amounts were seen coming through the officially approved channels and the unofficial sending of remittance through the hundi system was getting squeezed. There are plans at different stages of implementation to make the remittance flow through the official channels more attractive to Bangladeshi expatriates. Steps are being taken to more and more shorten the time required to dispatch the remitted money to their beneficiaries at home. Further cuts are being contemplated in the fees that banks and money exchange houses now charge the remitters. More facilities are being developed for the remitters to find facilities for sending the money at their doorsteps.
All of these measures will certainly likely help in the maintenance of the remittance uptrend. But increasingly the question which is looming large is : to what good or productive uses the remitted money have been utilised, so far. Increasing remittances received by the Bangladesh Bank certainly do play a very useful role in shoring up the country’s balance of payments position and to carry out the country’s import operations smoothly. The beneficiaries of remittances inside the country are paid the equivalents in Bangladeshi Taka and such cash flows on a regular basis are helping the rearing of entire families.
But it should be obvious that the regular large flows of remittances, generally, are helping more and more consumption in the country. Typically, receivers of remitted money spend the amounts on buying lands, ornaments, luxury goods, spending for weddings and other status symbols and sheer consumption on day to day necessaries. Very little can be traced back to spending on the establishment of industries or related productive activities that can help employment and economic growth.
There is also another unwanted side to remittance and this is inflation.The remitted money is helping to swell the total flow of money in circulation without corresponding level of productive activities. The result is monetary inflation. Greater purchasing power in the hands of families who are the beneficiaries of remittances and it seems that there is now not a single village in the country without some individuals working overseas, is helping to drive demand upwards for many consumption items and also pulling up their prices in the process.
Therefore, it is imperative to start a process that would lead to guiding of remitted resources more and more into production activities. Government cannot coerce the beneficiaries of remittances not to indulge in sheer consumption. But opportunities can be created for them to invest their resources in gainful productive ventures. The new government needs to engage in early planning to determine in what ways it can create incentives for private persons –who are the beneficiaries of remittances–to consider investing at least a part of the money they receive as remittances. Side by side, government should seek to draw gradually a part of the remitted money into official saving and other schemes such as industrial bonds. The net of such efforts will be boosting the rate of national savings and utilizing the same for industrialization and related productive activities causing the economy to expand. The sooner the government gets down to forming and executing such policies, the better.