The New Nation - Internet Edition

Remittances have emerged as the largest source of foreign exchange earnings and employment for Bangladesh, topping US$ 7 billion this year.

Our greatest asset, the two million plus Bangladeshis employed overseas, by dint of their continuous struggle, hard work and sacrifice in socially and culturally alien milieus, have been funding our sustenance through their contribution to our national coffers.

Banks and remitting companies have been facilitating inward remittances at home and abroad to receive and deliver funds to intended recipients. What used to be the exclusive domain of the post offices to deliver funds through Money Orders etc., are now being effected through banking instruments and cash by banks and courier companies. Experiments are presently being attempted by the authorities to engage NGOs and other organisations with rural presence and wide reach for quick deliveries of overseas origin funds to beneficiaries located in the remotest areas of the country.

Multinational and NRB (non-resident Bangladeshis) owned remitting companies with offices in capitals and throughout most of the world are major global players in this business, transacting billions of dollars annually. Multinational companies usually engage in more than just remittance activities, like lending, borrowing, investing, currency trading etc. Consequently, their markets, volumes and costs are large, unlike remittance companies owned by NRBs in Europe, USA etc., who engage only in the remittance business, operate in one or two cities having substantial Bangladeshi populations, remitting only to home countries and operating on very tight budgets.

The "economies of scale" model justifying "high volume for low unit cost" certainly seems to take a drubbing in the case of the large multinational remitting companies. Interestingly, the smaller Bangladeshi companies have been consistently demonstrating that theirs is the better service and lower cost model, by not only delivering to beneficiaries within shorter times, but also offering better exchange rates thus more takas against foreign currencies. Add to this amount, the fees charged. The difference in fees charged by multinational and NRB remittance companies, range from US$ 4.00 to US$ 12.00 per remittance. This high transaction cost can be reduced in two ways. Either the government promotes using lower transaction cost companies or fixes remittance exchange rates. Simultaneously, the government will have to keep a sharp lookout for those who keep the extra Taka 1 per dollar do not use a part of this to fund decision makers in Bangladesh to maintain the status quo.

Ansarul Haq

New Brunswick, New Jersey, USA