Bangladesh Bank (BB) will finalize the policy to give incentives on remittance. The policy was supposed to be in place by 1 July 2019. Once the incentive policy is finalized, experts opine that foreign currency earners will feel encouraged to send more money home. This is mentionable that in a bid to encourage Bangladeshi expatriates living in various countries to send money home through legal channels, the government has given a special budgetary allocation for the fiscal year 2019-20.
BB officials, however, said the central bank has yet to finalize who gets the incentive. They said the policy makers of the Bangladesh Bank are working on the policy as to how to give incentives on remittances. Executive Director and Spokesperson of Bangladesh Bank Md Sirajul Islam said the budget had stated about 2 percent incentive on remittances sent by expatriates.
But how or what will be the format to give it, we have not yet finalized, he said. He said, “We are already talking about this in the ministry, but there is no progress worth mentioning.” Experts said, “It is a complicated process. This opportunity can also be misused.” Giving an example, they said suppose a person gets a salary of Tk 8,000 but he or she is sending Tk 2,00,000 as remittance in the hope of getting incentives.
“Hence, you have to think about it. How to pay incentive money and get real money from expatriates is difficult,” they added. A BB official said Bangladesh Bank is formulating a policy, which will take some months to implement. Earlier, Pakistan is the only country to introduce such incentive to encourage their expatriates to send more remittance to home, however market analysts said adding that, but the experience of giving this incentive is not good.
The Pakistani government had to suffer after introducing this system therefore we have to consider this before applying in our country, analyst said. It so happened that some people sent a big amount of money to a foreign country and then sent the same amount back to their own account declaring it as foreign remittance in the hope of getting incentive, they said.
Though they brought the money back through legal banking channel, yet the fraudulent act was detected by bank officials. Therefore, Bangladesh Bank should focus on this matter and create appropriate policy to ensure that there is no such problem in Bangladesh. The budget kept aside Tk 30.6 billion to give incentive to remitters for the coming fiscal year 2019-2020, aiming at facilitating expatriates who would choose formal channels to remit money, finance ministry officials said.
The Finance Minister said, “To mitigate the burden of increased expenses in sending foreign remittances and to encourage bringing in foreign remittance through legal channels, the special allocation will be used to reduce bank charges of the expats.” They may get 2 percent cash incentive on the remitted amount, they said.
The expatriate Bangladeshi workers and their families often face financial losses and risks due to accidents and various other reasons as there are no insurance facilities available to them, they said adding that, preparations have been made to bring the expatriate workers under the insurance scheme, which will be implemented shortly.
Earlier, the government and Bangladesh Bank (BB) were worried over a sliding trend in remittance inflow during fiscal years 2015-17. However, the country has made a strong comeback in recent times, thanks to some good steps taken up by the government, experts said. Besides, strong dollar rate and expatriate workers’ increased awareness of sending their hard earned money through legal channels have pushed the remittance inflow up, bankers said.
They expect the remittance inflow will increase further in upcoming months for this good initiative of allocating special funds from the government to encourage the expatriates to send more money home.