Remittances of Asias Migrant Workers

Paul Vandenberg
Asian Development Bank Institute
_____________________________________________________________
5th ADBI-OECD-ILO Roundtable on Labour Migration in Asia:
Building Effective Structures and Institutions for Migration Governance
28-30 January
Shanghai, Peoples Republic of China

____________________________________________
The views expressed in this presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of
Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this
paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be
consistent with ADB official terms.

Migration and
global income distribution
Regional and global migration allows adjustment from labour
surplus to labour deficit countries
Fewer barriers allow more complete market adjustment

The pressure for greater migration is heightened as a result of:

slow growing and ageing populations in wealthier countries
faster growing and youthful populations in poorer countries

Redistribution of workers to employment opportunities results in a

redistribution of income
through remittances from richer to poorer countries

What is the long-term prospect?

That poorer countries grow faster and create more/better job

opportunities to retain their citizens?
That the disparities between rich and poor countries remain and even
widen, with increased migration and higher levels of remittances?

Factors affecting flow of remittances

Extent of labour migration

More migrants, more remittances

And the flow is increasing

Level of worker earnings

Higher wages, higher remittances

Permanence of migrants in host country

More permanent, less remittances (?)

Ease/cost of sending money

Easier/less costly to send, more official remittances

Cost are coming down
But AML/CT efforts have potential to dampen flows

Remittances received by Asia

Top Asian recipients of remittances,
2013 and 2014 (estimate)
80

$ billions

60
2013

40

2014

20
0
India

PRC

Philippines

Pakistan

Bangladesh Viet Nam

Share of Total Remittances Received by Asia,

2014 (estimate)
10%

2%
Top 6 countries: > $10
billion each

14%

Next 6 countries: $5-$10

billion each
Middle 13 countries: $1$5 billion each
73%

6 countries each receive

more than $10 billion
annually
India and the Peoples
Republic of China are top
with over $60 billion each

Rest of Asia: 29 countries:

< $1 billion each

Total remittances to Asia in

2014 estimated at $283 b.
6 countries account for
nearly of the total
Another 29 countries
account for 2% of the total

Importance to the economy

Remittances as a share of
output are high in some
countries
They are equal to more than
10% of GDP in 10 of 47 Asian
countries
Central Asia and Pacific
countries are particularly
dependent

Remitttances as % of GDP

Remittances as a share of GDP, 2013

50%
40%
30%
20%
10%
0%

Remittances as a share of GDP

Remittances share of GDP, 2013

In most countries, remittances

are equal to less than 1% of GDP
(20 of 47 countries)
In 17 countries they represent
between 1% and 10% of GDP

< 1%

1%-10%

> 10%

10
15
Number
of countries

20

25

Growth of remittances
Growth of remittances
Remittances, $ milions

600,000
500,000
400,000
300,000
200,000
100,000
0
2006

2007

2008

2009

2010

2011

2012

2013

2014

Asia has seen steady and

fairly rapid growth of
remittances in nominal
terms
Growth slowing somewhat
in recent years

Growth of remittances and Asian GDP

Ccmpound annal growth rate (%)

16.0
14.0
12.0
10.0

Growth of remittances,
2006-2014 (nominal)

8.0

Growth of GDP, 2006-2013

(nominal)

6.0
4.0
2.0
0.0
2006-2009

2010-2013/4 2006-2013/4

Remittances grew at
annual rate of nearly 15%
in 2006-2009, slowing to
8% in 2010-2014
Outpaces Asian GDP
growth

Sources of flows to Asia

Receiving
country: India
Origin
countries:

PRC

Philippines

Bangladesh

Pakistan

Viet Nam

UAE

15,685

Hong Kong,
China

US

11,956

US

13,071

Saudi Arabia

2,801

Saudi Arabia

1,547

India

2,189

Australia

881

Saudi
Arabia

8,382

Japan

4,314

Canada

2,032

Kuwait

1,024

UAE

1,707

Canada

843

UK

4,267

Singapore

3,929

Malaysia

1,247

UK

853

UK

1,521

Germany

604

Bangladesh

4,082

Canada

3,910

Japan

1,138

US

694

Qatar

1,233

Cambodia

434

17,021

US

10,604

India

6,620

Saudi
Arabia

2,967

US

5,679

Total top 5

44,372

42,245

17,822

10,738

9,617

8,441

Total all

69,350

60,246

24,453

14,060

14,010

10,000

% of top 5

0.64

0.70

0.73

0.76

0.69

0.84

% of top 1

0.23

0.28

0.43

0.47

0.21

0.57

Sources of flows - patterns

Origin of remittances to Asia is fairly concentrated

65% to 75% of each countrys flows come from their 5 sources

Viet Nam is exception with higher concentration (84%),
especially in one source (US = 57%)

Healthy combination of intra-Asia and outside-Asia sources

US, UK and Canada are main outside sources
Main Asian sources are Gulf States (S. Arabia, UAE and others)
and intra-South Asia (India, Bangladesh)
Viet Nam is the exception with mainly outside-Asia sources

PRC sources from non-oil and high-income countries

(Figures are from latest bilateral remittance matrix, 2012)

Cost of sending remittances

Remittance costs

Cost of remittances in receiving

countries has fallen considerably
since the late 2000s

16

Cost as % of sending amount

14
12
10

PRC
India

Indonesia
Turkey

Global

In Indonesia, Turkey and India, the

cost has fallen below 8% and
lower than the global average
Cost for Indonesia have risen
recently
For the PRC, it remains above the
global average

2
0
2008

2009

2010

2011

2012

2013

2014

Developments: economic
Continued slow growth in affluent regions
Europe hobbled and deflating
Very high unemployment in some cases (Spain)
Japan slow growth despite Abenomics
May all result in moderating employment demand
and limiting wage growth
But ageing creates a demand for migrants
Bright spot: US and Canada

Developments: Asia
Slowing growth in PRC
Impact on the region

Modi impact in India

Can he revive economic growth and job growth?

Thailand-Myanmar dynamic

Coup and uncertain growth in Thailand

Reform and potential in Myanmar
Does that mean less migration/more returnees?

Oil price decline

Impact on the many migrants in the Gulf States

Developments: Asia
Moves to introduce or raise minimum wages

Large increase, for example, in Thailand

Helpful only in situations where migrants covered by
the minimum wage
Impact on remittances unknown

Agreements to increase labour mobility

ASEAN: Efforts on professional labour (MRA) but only

a very small portion of migration
Increased agreement on unskilled, semi-skilled and
vocationally skilled would have more impact
Progress being made

Financial inclusion
Hot topic

Considerable talk/policy/effort (?)

Coupled with financial education and literacy

Relates also to payment services

Along with credit, savings, insurance

Potential of mobile money transfers

Across borders (?)

To agents who can then transfer across borders
But remains small

Thank you
Paul Vandenberg
Senior Economist
Capacity Building and Training Department
Asian Development Bank Institute
Tokyo, Japan
pvandenberg@adbi.org
www.adbi.org
All results are preliminary. Please request permission from author to cite.
The ideas and conclusions presented herein reflect those of the author and
not necessarily the ADBI (or its Advisory Council), or the ADB (or its Board of Directors or its member
countries.