13 May 2023
Bangladesh is ranked 6th among the top 20 countries of origin for expatriates, with 7.5 million Bangladeshi migrants living in countries other than their own to earn a living, according to a report by IOM UN Migration. They send money to Bangladesh from abroad to offer financial support to their families back home.
But despite having such a large diaspora community, Bangladesh could not make it to the top 10 remittance-receiving countries, except in 2015 when Bangladesh was placed in the list of top 10 recipient countries of remittances, the same report revealed.
These migrants, however, used the legal channels, through which they sent in $12.45 billion in the first 7 months (July to January) of the current FY22-23, according to a report by Dhaka Tribune (DT) which sourced its data from the Bangladesh Bank (BB).
Government regulations play a critical role in shaping the money transfer industry, and the case is no different in Bangladesh. Depending on their design and implementation, such regulations can either promote or impede the flow of remittances. In Bangladesh, the government has put into place several policies to boost remittance inflows, which have greatly impacted the industry. Let’s look at some critical government regulations in Bangladesh that have impacted the money transfer industry.
One of the most significant moves by the Bangladeshi government to enhance the money transfer industry has been the adoption of digital technology. The government has promoted the use of mobile banking and other digital platforms to transfer money, a move that has reduced transfer costs and increased the speed of transactions. This has made it easier for migrant workers to send money to Bangladesh online, boosting remittance inflows.
The government has also used fiscal policies to encourage remittance inflows. For instance, it has offered tax incentives to remittance service providers, thereby reducing their operational costs and allowing them to offer competitive rates to customers. This has made remittance services more attractive to migrant workers, leading to increased remittance inflows.
In an effort to curb the use of informal channels for money transfers, which are unregulated and often associated with illegal activities, the government has promoted the use of formal channels. This has involved educating the public about the benefits of using formal channels, such as the security of transactions and the ability to track funds. As a result, more people have been drawn to use these channels, increasing remittance inflows. ACE Money Transfer has proved the key player in this regard by offering matchless remittance solutions to customers.
The government has also undertaken regulatory reforms to create a more conducive environment for money transfer service providers. These include easing licensing requirements, reducing regulatory burdens, and fostering a more competitive market. These moves have attracted more players into the market, offering customers a wider range of options and potentially driving up remittance inflows.
The Bangladeshi government has also entered into agreements with foreign governments where a large number of Bangladeshi migrant workers are based. These agreements aim to protect the rights of workers and facilitate the smooth transfer of remittances. This has boosted the confidence of migrant workers in the remittance process, leading to an increase in remittance inflows.
Finally, the government has taken steps to increase transparency in the money transfer industry. This has involved implementing measures to prevent money laundering and other illegal activities. By doing so, the government has increased trust in the remittance process, leading to more people using formal channels to send money home. As a result, legal channels have ensured every money transfer to Bangladesh from overseas is counted, adding value to the country’s foreign reserves and economic growth.
Although several modes of sending remittances are available to expatriates worldwide, the use of legal channels is what benefits the most, remitter, recipient and countries between which the exchange of remittances takes place.
Bangladesh received $1.96 billion in January sent through legal channels, up from $1.69 billion in December, a report by the Bangladesh Bank (BB) revealed.
Therefore, it is essential to have an understanding of how legal channels of transferring remittances benefit you and your country because, after all, the flow of remittances serves most developing economies as lifelines.
This blog will shed light on how government-regulated remittances benefit the Bangladeshi economy.
Before understanding the benefits of using legal channels to send remittances, let’s first take a quick look at some of the reasons why some expatriates want to use illegal channels for money transfers to Bangladesh from overseas.
The reasons can be many and largely depend on the economic policies of the concerned governments. But some of the common reasons are discussed briefly below.
The primary reason to use illegal channels to send remittances from abroad is to evade the tax you must pay in the process. Because you do not earn a huge amount in a foreign country, the difference between your currency and the foreign makes the amount substantial after conversion.
So, paying taxes can mean a slash on the amount being sent.
While you register with the concerned regulatory bodies for processing your remittances, they keep an eye on your financial transaction and subject you to explanations in certain contexts should you earn more than your normal income. But it is rather rare.
There can be times when you earn and send back more than you normally do. It can also result from making savings and holding your transfers for some time for any reason.
In such a scenario, government departments in developing countries can push you into a legal imbroglio. To avoid this, people resort to the use of illegal remittance transfer channels.
Read This to learn about ensuring the security of your online money transfers.
And you cannot afford to let go of the money that you earn after so much effort as a Bangladeshi migrant in a foreign land.
It is appropriate to take a look at the quick facts about the Bangladeshi economy.
Owing to the flailing economy, which cannot provide for the country's entire population, people from Bangladesh travel to developed countries to find jobs, earn a living and look for reliable ways how to send money to Bangladesh to offer financial aid to their families back home.
Understanding how using legal channels to transfer remittances benefits you, the recipient and your country is important.
With the use of legal channels to transfer funds back home, Bangladeshi migrants save themselves from online scams. They can seek redress from departments mandated to prevent online fraud in case something wrong happens.
One of the reasons that the Bangladeshi economy is faring better than some of the regional economies is that the migrants use legal channels to send money online back home the incurring taxes go directly to the government kitty, which pushes the economy upwards.
Using legal channels to send money online to Bangladesh allows the government to create investment opportunities in the country by creating a supportive environment as the incoming amount comes on record and allows the government to devise investment opportunities accordingly.
Through legal channels, you help the government circulate money, leading to equal distribution of resources. An economy needs to stay healthy. Otherwise, the concentration of wealth takes place, which is detrimental to an economy.
Governments normally keep remittance regulations relaxed with low taxes and lesser legal complications, except when the need arises to take action to the contrary due to economic uncertainties.
Similarly, the Bangladeshi government keeps its regulations lax in encouraging the use of legal channels to transfer remittances.
This is how your use of legal channels to send money to Bangladesh benefits the country and economy.
In conclusion, government regulations have had a substantial impact on the money transfer industry in Bangladesh. Through various measures, the government has been able to boost remittance inflows, which are a crucial source of foreign exchange for the country. However, it is important for the government to continue reviewing these policies and making necessary adjustments to ensure that they remain effective in the changing global economic environment. As a leading and trusted remittance provider, ACE Money Transfer constantly stands by the Bangladeshi diaspora communities to increase remittance inflows to the country.
Your online money transfer to Bangladesh with ACE Money Transfer is not only the legal way of doing so; it throws several benefits your way, like speed, live currency exchange rates, safety, low fees, and much more without a slight complication – legal or otherwise.
Resources:
Bangladesh 6th among top 20 countries of origin for migrants | undefined (tbsnews.net)
Bangladesh received $1.96bn in remittances in January amid dollar crisis (dhakatribune.com)
GDP (current US$) - Bangladesh | Data (worldbank.org)
GDP per capita (current US$) - Bangladesh | Data (worldbank.org)
