Topic 01: How to Increase Foreign Remittance Inflow to Bangladesh

One-Page Summary
Introduction: so important at both micro & macro levels!

Macro: Micro:
1. build foreign exchange reserves 1. increase household income back at home
2. improve the balance of payment position 2. improve the standard of living
3. help debt-servicing 3. promote household investments & savings
4. boosts economic growth 4. reduce financial hardship

Current Scenario:
Currently, around 7.5 million Bangladeshi migrants
Let’s take a look at the quarter inflows of remittance in 2023:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter (running)

Barriers:
1. ongoing global economic downturn
2. extensive network of Hundi
3. difference in dollar rates between banks and the informal market.
4. migrant workers with no valid documents
5. lack of financial literacy among migrant workers abroad and their relatives
6. unavailability of banking channels in rural areas
7. high transaction costs/service charges for sending remittance
Steps Taken by the Government:
1. 2.5 percent cash incentive
2. The government and the Bangladesh Financial Intelligence Unit working together to prevent
Hundi.
3. bond facilities:
a. The Wage Earner's Development Bond (WEDB),
b. Us Dollar Premium Bond,
c. US Dollar Investment Bond.
Further Suggestions:
1. Curtailing illegal capital inflow through Hundi is imperative.
2. Financial literacy as well as familiarity with the benefits of MFS
3. more innovative deposits and secure bonds to invest in foreign currency
4. Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) in highly potential
sectors like ICT and textile.
5. Online training sessions to enrich banking knowledge as well as immigration clearance.
6. Capitalizing on demographic dividend through the skills development of workers, especially
women.
7. a. Increasing the ceiling on investment in bonds by expatriates
b. Removing the prevailing cap on buying bonds up to Tk 1 crore, and limits on reinvestment
opportunities
c. Friendly VAT & taxes on bonds
8. Promoting digital payment methods through a cross-border banking remittance channel app
9. Establishing exchange houses abroad
10. More digital services in remote areas
11. Treating migrant workers with respect and dignity at airports
12. Implementation of smart economic diplomacy & strengthening the diaspora communities

Conclusion:
…the lifeline of an import-dependent economy...
…close collaboration among government agencies, financial institutions along with their
regulators—Bangladesh Bank, diplomatic channels, and other stakeholders….
…desired status of a developed nation by 2041.