Export of skilled labor

ByRichard C. Sloan

Apr 15, 2022

A UNB report released on Tuesday, April 12 indicates that the flow of remittances to the country from the United States and other Western destinations has shown a robust trend lately. This is reassuring given that remittances from traditional sources in the Middle East over the past few months since August 2021 have followed a downward curve. The Bangladesh Bank (BB) report shows that on August 25 last year, the reserve was at its peak at $48 billion. But last month (March 7), the amount fell to $43.9 billion after a $2.16 billion import bill was paid to the Asian Clearing Union (ACU ). However, the reserve position improved slightly this month (April) to US$44.30 billion following an increase in inflows of remittances.

Even so, with this amount of reserve dollars, the country can only cover five months of import costs, which is undoubtedly a safe position. But compared to the foreign reserve position in the past, it is rather weak. Even so, the decline in the foreign exchange reserve should not in itself be of concern, as it must anyway be used to meet various obligations, including the payment of import bills. With the resumption of economic activities, especially foreign trade, the pressure on the country’s foreign exchange reserve has obviously increased. This has been a source of concern for some experts, particularly following the collapse of the Sri Lankan economy. Certainly, one of the many factors that have led to the misery of this country is of course its acute current account deficit. At the same time, Sri Lanka’s foreign exchange reserve has fallen alarmingly, forcing that country’s incumbent government to seek direct foreign aid to bail out its economy.

However, being mainly dependent on tourism, Sri Lanka’s economy has been hit hard by the pandemic. Moreover, ill-conceived mega-projects aside, its agriculture has been badly shaken by a poor organic switchover policy. As a result, millions of farmers went bankrupt. Food grains have become scarce due to poor harvests. With foreign currency reserves nearly depleted, the nation cannot buy energy and essentials. This is indeed pathetic for a very promising middle-income country in South Asia! But it is a purely human calamity that could be avoided if the country’s economy was managed wisely.

Bangladesh’s economy, compared to Sri Lanka’s, is on a stronger footing. Certainly, the pandemic has done a lot of damage to the economy and people’s livelihoods. But after a short-lived initial setback, the economy has started to recover. All major sectors of the economy, including agriculture, RMG exports and, in particular, remittances, performed better than expected, even under the grueling conditions induced by the pandemic. This means that Bangladesh’s economy has already passed one of the toughest tests in its history. Today, the economy faces post-pandemic challenges, including global market volatility for energy, commodities and food grains. Such market instability was not unexpected. The post-pandemic economic resurgence globally has driven up the price of energy. The global economy is advancing rapidly to recoup the losses suffered during the two years of the pandemic. As a result, it gets hot. The war in Ukraine only made things worse. As a result of these developments globally, the cost of imports has recently started to increase by leaps and bounds. But the country’s foreign exchange reserve has not kept pace with growing import volumes and costs.

Foreign exchange earnings from exports, which have boomed after the pandemic, will hopefully allay some fears related to the decline in the volume of remittances from the Middle East. Even so, the government needs to understand why remittances from the Middle East, including Saudi Arabia, where the largest number of migrant workers from Bangladesh are employed, have declined. One wonders why it should be so when even during the most difficult months of the pandemic, inward remittances surged, beating all the predictions of the pessimists. Some are of the view that migrant workers abroad avoid official channels to send their money home. Many are thought to send their winnings home through private money exchanges or using other informal exchanges, including hundi. Some might even carry their foreign earnings by hand when they return home.

As a result, the government, it is said, is deprived of these dollars. The exchange rate of the taka against the US dollar in the open market being higher than that of the official rate may be one of the reasons why migrant workers might use unofficial money transfer channels. In these circumstances, the government can solve this problem by offering shippers incentives in various forms. But if the decline in the volume of remittances is due to fewer people sending their earnings home, the question would be worth investigating. If fewer people join overseas jobs or if the majority of those who return do not return to their overseas jobs, that is concerning. As remittances abroad by expatriate workers are essential to keep the wheel of the economy turning, it is time for the government to adopt short, medium and long-term strategies to develop this vital sector of the economy. . The government should focus on exporting skilled labor overseas. This would improve the image of Bangladesh in the countries hosting these expatriate employees and help in earning higher volumes of foreign currency for the country.

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