Usage and Impact of Regular Inflow of

Remittance from U.K. in Bangladesh:

A Study on Sylhet

A seminar paper prepared as a part of BBA Program as the course no. BAN-200 (seminar
& viva) by the student of 2nd year 2nd semester, under direct supervision of Prof. Dr. Md.
Nazrul Islam, Head, Department of Business Administration, Shahjalal University of
Science & Technology, Sylhet-3114.
Usage and Impact of Regular Inflow of
Remittance from U.K. in Bangladesh:
A Study on Sylhet

Submitted to
Chairman
Examination Committee
2 year 2nd semester examination-2008
nd

Department of Business Administration

Shahjalal University of Science & Technology, Sylhet.

Supervised By
Prof. Dr. Md. Nazrul Islam
Head,
Department of Business Administration
Shahjalal University of Science & Technology, Sylhet.

Submitted By
Name Registration No.
Rajeshwar Bhattacharjee 2005731012
Bidita Saha 2005731021
Md. Kamal Uddin ` 2005731035
Md. Noor-E- Alam Mazumder 2005731038
Nur-E-jannath 2005731052
Mohammad Ahsan 2005731053
Md. Monirul Islam 2005731056

2nd year 2nd semester

Department of Business Administration
Shahjalal University of Science & Technology
Sylhet

Date of submission: March 22, 2009

2
e¨emv cÖkvmb wefvM Department of Business Administration
¯‹zj Ae g¨v‡bR‡g›U GÛ weR‡bm School of Management and Business Administration
GW&wgwb‡÷ªkb Shahjalal University of Science and Technology
kvn&Rvjvj weÁvb I cÖhyw³ Sylhet-3114, Bangladesh.
wek¦we`¨vjq PABX: 88-0821-713491/714479
wm‡jU -3114, evsjv‡`k| 716123/713850/717850 Ext: 274
wcG we G·t 88-0821- Fax: 880-821-715257
713491/714479 Website: www.sust.edu

Ref: Date: / /

Letter of Certificate

This is to certify that the assign topic “Usage and Impact of Regular Inflow of
Remittance from U.K. in Bangladesh: A study on Sylhet” has been recognized by me
subsequent students of 2nd year 2nd semester, Department of Business Administration who
have worked as a team under my direct supervision,

Name Registration No.

Rajeshwar Bhattacharjee 2005731012

Bidita Saha 2005731021

Md. Kamal Uddin ` 2005731035

Md. Noor-E- Alam Mazumder 2005731038

Nur-E-jannath 2005731052

Mohammad Ahsan 2005731053

Md. Monirul Islam 2005731056

It’s also certify that the paper is an original one and has not been submitted elsewhere
previously for publication in any form.

They are wished all the best in their effort.

……………………………….

Dr. Md. Nazrul Islam

Professor
Department of Business Administration
Shahjalal University of Science and Technology
Sylhet.

3
March 22, 2009
Professor Dr. Md. Nazrul Islam
Head
Department of Business Administration,
Shahjalal University of Science & Technology, Sylhet.

Subject:-Letter of submittal.

Dear Sir,

We are assigned to prepare a seminar on the topic entitled Usage and Impact of Regular
Inflow of Remittance from U.K. in Bangladesh: A study on Sylhet. For collection of
data, we have investigated much information, literature and taken survey on local branch
of Bangladesh Bank, several commercial banks and a number of families. In our study we
have found a lot of information on inflow of remittance from U.K. in Bangladesh.

We are provided necessary supports from our university and related authorities. Surely
this study will enhance our knowledge and experience and work as an important source
of information for future work on this topic.

May we note here that, there has been no dearth of sincerity on our part to being the issue
under study into proper focus. However, we would like to request you to consider if any
error is found in the paper.

Finally, we would like to request you to accept our paper and thereby permit us to present
it before the panel of experts.

Thank you in advance for your assistance and advice in this connection.

Sincerely yours,
Rajeshwar Bhattacharjee
Reg. 2005731012
Bidita Saha
Reg. 2005731021
Md. Kamal Uddin `
Reg. 2005731035
Md. Noor-E- Alam Mazumder
Reg. 2005731038
Nur-E-Jannath
Reg. 2005731052
Mohammad Ahsan
Reg. 2005731053
Md. Monirul Islam
Reg. 2005731056

4
 Executive Summary

Foreign remittance is money remitted in foreign currency. That means transfer of fund
from one place to another place in foreign currency. International remittances are the
portion of migrant workers’ earnings sent back from the country of employment to the
country of origin.

Foreign remittance can be inward and outward. Remittance in foreign currency that
comes in the country is inward foreign remittance and remittance in foreign currency that
goes out abroad is outward foreign remittance.

Migrants use different methods in sending remittance involving both official and
unofficial channels. Officially, transfer of remittance takes place through demand draft
issued by a bank or an exchange house; travelers’ checks; telegraphic transfer; postal
order; account to account transfer; automatic teller machine (ATM) facilities; electronic
transfer and in kind. Besides official channels, money is remitted by hundi or hand
carried by the migrant or friends or family of the migrant. The government modified
every year the Money Laundering Act to prevent the illegal way of money transfer.

From the point of view of utilization, different types of transfers can be discerned. Firstly
and most importantly, individual transfers to families or friends. The available data shows
that the bulk of remittances are used for consumption purposes. Investment in business or
traditional productive uses and in savings is rather limited, but remittances are also seen
as important financial means to investment in human capital, housing and land purchase.

Remittances contribute significantly to the national economy. The impact at the

household level is less straightforward. On the plus side, remittances allow families to
meet their basic needs; open up opportunities for investing in education, health care, etc.;
loosen up constraints in the family budget to invest in business or to save; are a kind of
emergency resource; provide a social security for the elderly; and can boost the local
economy. The negative impacts of remittances are a possible dependency on this money
flow and inflation. However, there is no conclusive evidence of the impact on income
distribution. Possibly remittances could result in neglecting the local productive activities
in the receiving areas.

5
 Acknowledgement

This study bears imprint of many persons valuable contribution. We would like to
express our gratitude to all those people who have been influential in making our paper
successfully their insights, advice and suggestion have helped us to improve our text and
made it even more valuable and user friendly.

We are extremely grateful to Professor Dr. Md. Nazrul Islam (Head, Department of
Business Administration, Shahjalal University of Science and Technology, Sylhet) ,
supervisor of our seminar, for his cordial co-operation and spending valuable time for us.
He has been a never-ending source of equanimity and extraordinary competence at every
stage of work.

We are grateful to Md. Zillur Rahman (Lecturer, Department of Business Administration,

Shahjalal University of Science and Technology, Sylhet), for his enthusiastic co-
operation in collecting sources.

We are also grateful to the authority of Bangladesh Bank and authorities of respective
commercial banks that helped us a lot during our survey.

We are highly grateful to those family members who help us by providing data as we
need to complete our survey.

We would like to give a special thanks to our friends, senior brothers and sisters who
helped us by providing information and encouragement for providing useful suggestions.

We would like to express our grate gratitude to above people for their assistance to fulfill
our aim. For their valuable relentless dedication, insights, good humor and tenacity we
are in their debt.

6
 Table of Contents

CHAPTER-1. INTRODUCTION Page no.

1.1 Background of the Study ………………………… 9

1.2 Objectives of the study ………………………… 10
1.3 Review of Literature ………………………… 10
1.5 Research Methodology ………………………… 11

CHAPTER-2. CONCEPT OF FOREIGN REMITTANCE

2.1 Remittance ……………………….. 14

2.2 Inward and Outward Foreign Remittance ……………………….. 15
2.3 Methods of Transferring Remittance ……………………….. 16
2.4 Public and Private Actors in Remittance Transfer ……………… 18

CHAPTER-3. INFLOW OF REMITTANCE AT A GLANCE

3.1 Regular Inflow of Remittance in Bangladesh ……………………. 23

3.2 Regular Remittance Inflow from U.K in Bangladesh …………..... 26
3.3 Bank Wise Remittance Inflow ………………………... 29
3.4 Remittance Inflows in Sylhet ……..…………………. 31

CHAPTER-4. ANALYSIS OF THE SURVEY RESULTS

4.1 Impact of Remittances on National Economy ……………………. 33

4.2 Usage and Impact of Remittances in Families ……………………. 41

CHAPTER -5. CONCLUSION AND RECOMMENDATION

5.1 Recommendation ……………………………….. 50

5.2 Limitations ……………………………….. 51
5.3 Conclusion ……………………………….. 52

Reference ……………………………….. 53

Appendices ……………………………….. 54

7
 CHAPTER -1.

INTRODUCTION

╠ Background of the Study

╠ Objectives of the study

╠ Review of Literature

╠ Research Methodology

8
1.1 Background of the Study

In modern age foreign remittance is a buzzword for all developing countries. Because it
is just not a part of the income of nations, it is a power on which developments run
smoothly. Yes, remittance is that kind of instrument by which standard living condition
and development can be ensured. Without remittance developments never are imagined
by any developing countries. Because inflow of remittance not only ensures development
but also ensure the reduction of poverty.
Now-a-days remittance has kept the economy of Bangladesh more dynamic. The main
sources of our national income are exports precede, foreign direct investment, foreign
loans and grants and foreign remittance which is earned by working labors in abroad. By
exporting man power of our own, our country receives huge amount of remittance in
every month from different developed countries. The foreign remittance plays an
important role on the socio-economic development of our country. Generally primary
money supplies to the entrepreneurs of small and medium enterprises are financed from
the major portion of foreign remittances. Besides these foreign remittances play a great
contribution on the social activities such as, marital programs, various cultural programs,
medical sector, and educational sector and so on. Totally the contribution of foreign
remittance rising of living standard can not be described so easily. So the importance of
foreign remittance in the economy of Bangladesh is widely recognized and requires little
reiteration.
This study attempts to identify key issues regarding the impact of foreign remittance on
our economy saw ell as our entire society. We have first discussed the overview of
foreign remittance around the world and in Bangladesh. According to the study based on
Sylhet region, we have categorized the inflow of foreign remittance in the Sylhet region
as well as our country. Then we studied the futures to be considered as to identify the
usage and utilization on the current socio cultural situation concerning the foreign
remittance. Addition to this, we have made a survey on Bangladesh Bank, top ten
commercial banks in and about twenty families in the Sylhet region to get the actual view
of overall situation. The following section explains the observational methods that were
employed to capture the concurrent inflow, usage and utilization faithfully in our study.
The next section present results from the observation and monitoring study. And then the
final section describes the recommendations of the study’s results.
This study argues that foreign remittance is an indispensable part of our economy in
current situation. How smoothly and properly they are used and utilized with personal
and social needs and demands are crucial to the success of foreign remittance utilization.
Our article describes massive impact of foreign remittance individual and social life. To
figure out the level of uses, we identified some features of inflow of remittance that will
act as the parameter of uses of foreign remittance. Our empirical data illustrate the scope
of investment on different productive and profitable sectors by when concerning the
utilization of foreign remittance. A secondary aim of this article is to point out the new
sector for investment and to improve the mutual condition on the overview of the usage
of foreign remittance in our area of study.

9
1.2 Objectives of the study

The major objectives of the study are as follows:

I. To estimate the amount of regular inflow of foreign remittance in Sylhet as well as

in Bangladesh.
II. To know about the proper usage and impact of foreign remittance in national
economy.
III. To identify the promising investment sectors of foreign remittance in Sylhet.
IV. To encourage the people of Sylhet and the commercial banks to invest foreign
remittance in different industrial sectors in Sylhet.

V. To analyze the relevant strength, weaknesses, opportunities and threats of the

utilization of foreign remittance.
VI. To find out the usage of remittance from England in the families of Sylhet.

1.3 Review of Literature

The usage and impact of remittance is an important current issue. To get a clear idea
about this subject, the definite area is the deep analysis of the obtained information from
books, newspapers, journals, articles, prospectus individuals and so on. Basically any
type of study, thesis or research is made on the basis of acquired information from two
main sources. There are – primary and secondary sources. In case of our research about
The Usage and Impact of Regular Inflow of Remittance from U.K. in Bangladesh,
primary sources are surveys conducted in various banking institutions and households
and relevant information obtained from internet. On the other hands, information and data
are collected from Economic Review of Bangladesh; weekly, monthly, quarterly and
annual report of Bangladesh Bank; research paper of Bangladesh Bank, various journals,
newspapers (specially The Daily Star), books and prospectus are used as secondary
sources. In order to make the study effective and meaningful, sufficient numbers of
graphs are added thereon.

10
1.4 Research Methodology
The use of foreign remittance is now become a significant issue in our present economy.
It has a great impact on our lives as well as our entire country. Based on the inflow of
remittance the proper uses and are dependent. To reach/obtain our desired
outcome/destination we have taken some steps to identify categorize and analyze data
and information regarding foreign remittance. On doing this we have followed
descriptive research design. The research was fully based on researcher judgment and
techniques.

Sources of Data:

We have collected data from two sources for our research. These are:

1. Primary Sources: Twenty household respondents

2. Secondary Sources: Bangladesh Bank, top ten commercial banks, Bangladesh
Investment Board, others.

Data Collection:

To get dependable and error free standard data we have taken primary data from relevant
sources. In case of primary data we have collected quantitative and qualitative data. Here
we followed/used the data are totally survey based. Besides these, we also have taken
external secondary data from relevant journal research paper, several report from
published materials. Finally we have collected the data from internal sources.

The data collection process was fully structured. We formed open-ended and close-ended
questionnaire for household respondent as well as for the banking organizations. All data
are collected by personal interview. 100% respondent responds on our survey. Our time
was limited around 15 days. We work as a team. To find out actual Information we
followed different statistical data and figure.

Data Analysis:

We have collected data from primary and secondary sources. For primary data we
tabulated the classified data. Analysis work after tabulation is generally based on the
computation of various percentages. In the process of analysis, relationship or differences
supporting or conflicting with original or new hypothesis should be subjected to test of
significance to determine with what validity data can be said to indicate any occlusion.

11
Research Design:

Our Research design was descriptive to find out actual data because we have strived for
better recommendation. Information related with foreign remittance include the rate of
percentage, annual inflow, type, process, consumer actual needs and satisfaction level,
proper utilization on industrial or productive sectors, the impact on GNP,SWOT analysis
and so on.

For our seminar paper we have also dependent on some secondary sources for data and
information collection. We collected external published data and some computerized data
from several journals, reports, features, documentary and other researcher reports.

Primary data were collected from the direct participation and observation on the Sylhet
city. We have targeted the main households the central bank and other commercial banks.

We have developed a questionnaire that was fully structured. Actually we have strictly
maintained our consideration and judgment to select sample and take most relevant
survey method.

12
 CHAPTER - 2.
Concept of Foreign Remittance

╠ Remittance

╠ Inward and Outward Foreign

Remittance

╠ Methods of Transferring Remittance

╠ Public and Private Actors in

Remittance Transfer

13
2.1 Remittance
Foreign remittance, in simple terms, means money remitted in foreign currency. That
means transfer of fund from one place to another place in foreign currency. International
remittances are defined as the portion of migrant workers’ earnings sent back from the
country of employment to the country of origin (ILO, 2000). Remittance can also be sent
in kind. Transfers that take place in kind are quite difficult to measure. Levitt (1996)
identified ideas, practices, identities and social capital that flow from receiving to sending
countries as social remittance. One may however argue that social capital, identities and
ideas that are taken by the migrants from their countries of origin to the countries of
destination should also be seen as social remittance. In this case, it flows from origin to
destination.

Remittances can be individual and it can also be collective. When individuals send
remittance to his or her household or kith and kin that can be termed as individual
remittance. When a group of migrants, their associations or professional bodies mobilize
resource together and send for collective or community programs that can be termed as
collective remittance. Individual remittances are mostly geared towards the family
whereas collective remittances are generally used for community development.

When migrants send home part of their earnings in the form of either cash or goods to
support their families, these transfers are known as workers’ or migrant remittances.
Remittances have been growing rapidly in the past few years and now represent the
largest source of foreign income for many developing countries. The official data on the
inflow of remittances into Bangladesh refers to the transfer of funds made by migrant
workers through the banking channel (and through post offices) (Mahmud, 1989). The
records of such transfers can be easily separated from other foreign exchange transactions
since these take place under what is known as the Wage Earners’ Scheme (WES).

Not only are remittances large but they are also more evenly distributed among
developing countries than capital flows, including foreign direct investment, most of
which goes to a few big emerging markets. In fact, remittances are especially important
for low-income countries.

Remittances are typically transfers from a well-meaning individual or family member to

another individual or household. They are targeted to meet specific needs of the
recipients and thus, tend to reduce poverty. In fact, World Bank studies, based on
household surveys conducted in the 1990s, suggest that international remittance receipts
helped lower poverty (measured by the proportion of the population below the poverty
line) by nearly 11 percentage points in Uganda, 6 percentage points in Bangladesh, and 5
percentage points in Ghana.

14
2.2 Inward and Outward Foreign Remittance

2.2.1 Inward Foreign Remittance

All remittances that come from foreign countries to the local country regarded as inward
foreign remittance. That means remittance in foreign currency that comes in the country
is inward foreign remittance.

Sources of inward foreign remittance are

I. Export Proceeds
II. Remittance by Expatriate Bangladeshi/Bangladesh national working abroad
III. Commissions/Fees etc. earned by local business people (indenting commission,
recruiting agents commission, export brokers commission)
IV. Foreign loans and grants, donation and gift.

2.2.2 Outward Foreign Remittance

All remittances from a local country to a foreign country local currency credited to non-
resident money accounts of foreign banks or convertible money accounts constitute
outward foreign remittance. That means, remittance in foreign currency that goes out
abroad is outward foreign remittance.

Sources of outward foreign remittance are

I. Payments of import liabilities

II. Payments of consular fees and commissions etc.
III. Foreign travel quota through travelers cheque/ Foreign currency
IV. Educational expenses for students abroad/medical expenses and other purposes
V. All other payments sent abroad in foreign currency.

15
2.3 Methods of Transferring Remittance
Migrants use different methods in sending remittance involving both official and
unofficial channels.

2.3.1 Official channels

Officially, transfer of remittance takes place through demand draft issued by a bank or an
exchange house; travelers’ checks; telegraphic transfer; postal order; account to account
transfer; automatic teller machine (ATM) facilities; electronic transfer and in kind. When
remittances are transferred directly from the foreign account of migrant worker to his
own account at home it is known as direct transfer. This can be through telegraphic
means or otherwise. Remittances are frequently sent through demand draft in Taka issued
by a bank or an exchange house in favor of a nominee of migrant. Usually the draft is
sent by post or in emergency by courier service. One can send remittance through the
postal authorities. In such case the remitted money is handed over to the receiver by the
local post office. Travelers’ cheque are also used as a means to send remittance.

However they will be treated as official transaction when they are encashed through
banks. At the time of coming from abroad one can bring foreign currency.

If the amount is more than US$5000 one has to declare at customs by filling up the FMJ
form. Migrants can also send remittance to their Non-resident
Taka and Non-resident foreign currency accounts.

2.3.2 Unofficial channels

Hundi or Money Courier is the most common among the unofficial channels of transfer.
Hundi refers to illegal transfer of resource outside the international or national legal
foreign currency transfer framework. Organized groups based in diverse cities such as
London, New York, Dubai, Kuala Lumpur and Singapore conducts hundi operation
through their partners in Bangladesh.

From some countries remittances are sent by moneygram. It can be only collected from a
local agent on production of a satisfactory identity document.

Besides this, other unofficial methods are, sending remittance through departing friends
and relatives; personally hand carried by the senders themselves without declaration, and
in the form of visa/ work permit for sell or family use.

There are some macro and micro level reasons behind Hundi operations in Bangladesh.
The macro level reasons were:

• The demand for foreign exchange from racketeers who wish to finance smuggling
of various items including gold;

16
 • The demand from importers’ for foreign exchange from other sources in order to
benefit from the existing tax regime by under-invoicing imports;
• An unholy alliance among officials of financial institutions, business and hundi
operators;
• Financing recruitment charges of the recruiters;
• Difference between official and unofficial exchange rates;
• Quality and speed of service, and ability to reach clients both in destination
countries and in the source countries.

From individual’s perspective, the hundi system provided the quickest method for
sending money and little fees for transaction. Hundi operation used the social network of
the migrants, which made door to door service available.
Bank transactions required paperwork, and officials were not always customer friendly.
Given the less-educated background of most migrants, many of them opted for hundi
channel. Besides, an important social reason for choosing hundi was the need to maintain
confidentiality. Migrants desired to send money to two or more persons secretly without
creating tension among the receivers i.e., wife and father of the sender.

Such micro level research is not readily available on methods used in sending remittance
by the Bangladeshi immigrants from industrialized countries.
However the macro data of Bangladesh Bank on remittance flows from all over the world
highlights an interesting feature. In 2002, an abnormally high growth of remittance flow
in the formal channel was witnessed from the UK and the US. Over a period of the last
seven years, the growth of remittance remained between 4-6 percent with regard to the
US. In 2001, remittance from the country grew by 47.99 percent. Remittance flows from
the UK were erratic during this period. In some years, it registered growth, and in others,
it declined. Surprisingly, in 2001, from January up to November, remittances grew 136
percent. Such unusual growths are attributed to increased surveillance of governments of
concerned countries and improved services of the banking sector since 2001.

17
2.4 Public and Private Actors in Remittance Transfer

There are several actors involved in the area of remittance transfer. Among them,
Ministry of Finance (MoF) and Bangladesh Bank (BB) are the two most important
institutions. Besides, Ministry of EWOE (MoEWOE); Ministry of Foreign Affairs
(MoFA); Ministry of Commerce (MoC); Bureau of Manpower, Employment and
Training (BMET); National Savings Bureau (NSB); Privatisation Commission (PC) and
Board of Investment (BoI) are other relevant ministries and agencies in the public sector.
Nationalised Commercial Banks (NCBs), Private Commercial Banks (PCBs), and
exchange houses holding drawing arrangements with public and private banks operating
in Bangladesh are the other public and private actors. A new bank, established by a
Micro-finance Institution (MFI) and Refugee and Migratory Movements Research Unit
(RMMRU) of the University of Dhaka are two of the recent non-traditional players in the
area of remittance.

2.4.1 Direct Actors

Ministry of Finance

Ministry of Finance (MoF) is the prime policy making body regarding banking and
remittance. Macro-economic policies that affect exchange rate, monetary and fiscal
mechanisms, foreign exchange reserve etc. are regulated by this ministry. The Internal
Resources Division (IRD) of the MoF floats savings instruments in market, frame rules
and identify purchase procedures.

Bangladesh Bank

Bangladesh Bank (BB) is the central bank of Bangladesh. Among other powers and
functions, BB regulates scheduled bank activities, acts as a clearing-house, maintains
foreign exchange reserves and monitors floating exchange rate mechanism in the current
accounts. Bangladesh Bank encourages the nationalized and private banks to link up with
foreign banks and exchange houses in the destination countries. It has a separate
department for regulating and monitoring remittance entitled Foreign Exchange Policy
Department (FEPD). It also generates analyses, interprets and distributes data on inflow
of remittance.

Nationalized Commercial Banks

Nationalized Commercial Banks (NCBs) of Bangladesh make direct banking facilities

available at the doorsteps of Bangladeshi emigrants especially in those countries where a
large number of Bangladeshis are employed. Five NCBs are deeply involved in
remittance transfer. These are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank Ltd.
and Bangladesh Krishi Bank (BKB). Among the NCBs, BKB is solely targeted towards

18
agricultural development in rural areas. Within Bangladesh these five NCBs have 2945
branches. Through them they can disburse remittances even in distant areas. Besides their
own branches, NCBs have opened exchange houses in joint collaboration with different
banks and financial institutions in different countries of the world.

Private Commercial Banks

Private Commercial Banks (PCBs) are also involv

ed in remittance transfer. Of the PCBs, Islami Bank of Bangladesh Ltd. has been found to
be most proactive

in the area of migrants’ remittance. National Bank, International Finance and Investment
Corporation (IFIC), Prime Bank and Uttara Bank are other private banks involved in
remittance transfer. Most of their activities are in the Middle East. Saudi Arabia is the
major working area of Islami Bank along with Qatar, Bahrain and UAE. National Bank is
operating in Oman, Kuwait, UAE, Qatar, Bahrain and Saudi Arabia. IFIC has curved out
a major niche in Bangladeshi community in Oman and has its largest share with 41% of
the market. It also has branches and exchange offices in Nepal and some other Middle
Eastern countries. Uttara Bank runs exchange house in Qatar in collaboration with a local
financial institution.

Corresponding Relationships

In almost all countries of the world, both NCBs and PCBs have corresponding
relationships with banks through which Bangladeshi migrants may easily send their
money to their beneficiaries’ accounts with any branch of any bank in Bangladesh.

2.4.2 Indirect Actors

Ministry of Expatriates’ Welfare and Overseas Employment (MoEWOE)

The government, in responding to the demand of the expatriate Bangladeshis and the
migrant workers, created a new ministry entitled the Ministry of Expatriates’ Welfare and
Overseas Employment (MoEWOE) in December 2001. Prime function of the ministry is
to create, promote and regulate employment in overseas. An important consideration for
promoting employment is to ensure steady flow of remittance (GoB, 2003). This ministry
has appointed labor attaches in 13 foreign missions to protect the rights of migrants and
disseminate information on dos and don’ts in the receiving countries including
information on official remittance transfer mechanism.

19
Ministry of Foreign Affairs (MoFA)

The Bangladesh missions in various migrant receiving countries also have a role in the
remittance transfer process. Among other things, the labor wing in foreign missions
assess the feasibility of opening new branches of Bangladeshi banks in the country
concerned and the efficacy of foreign banks and exchange houses whose names are
proposed by Bangladeshi financial institutions for developing correspondent relationship.

Bureau of Manpower, Employment and Training (BMET)

BMET is the executing agency of the MOEWOE in regulating migration. Some of the
major functions of BMET were to develop and implement training programs, collect and
analyze market information on labor, and control and regulate the recruiting agencies.
The government believed through the above activities BMET would be able to ensure
maximum outflow of labor and inflow of remittance. An important objective of BMET is
to take measures for increasing the flow of skilled labor so that the remittance flow is
enhanced.
Besides, the above two ministries, MoC, PC and BoI are some more indirect players in
remittance transfer.

2.4.3 Non-traditional Players

Micro-finance Institutions (MFIs)

Micro-finance Institutions (MFIs) have emerged as a non-traditional player in remittance

area. MFIs have been delivering various banking facilities in rural Bangladesh for over
two decades. The largest MFI of Bangladesh, BRAC has already established a bank.
BRAC Bank has developed corresponding relationships with different international banks
and participating in remittance transfer. It is using 1200 branch offices11 of BRAC in
quick transfer of remittance at the grassroots. Grameen Bank, the global pioneer of
micro-finance, had sought permission to BB for taking part in remittance transfer and
utilization. BB was favorably disposed to this idea. However, Grameen Bank was
established under the Social Act Ordinance, 1983. The bank is governed through that. It
does not allow her to deal with foreign exchange. Therefore, in order to participate in
remittance area, the ordinance has to be amended in the parliament. As this is
cumbersome process, Grameen Bank is yet to get involved with remittance.

Research and Training Institution

Refugee and Migratory Movements Research Unit (RMMRU) of the University of Dhaka
is the only research, training and advocacy institution that specializes on migration. It has
conducted major researchers in different areas of migration ranging from streamlining
labor recruitment process, female migration, returnee reintegration, and work condition
of migrants, impact of labor migration on national economy and households, and

20
Bangladeshi Diaspora. The pioneering study on migrant remittance to Bangladesh that
covered nature of remittance receiving families and remitters, methods of remittance
transfer, comparative costs, and, scope of microfinance institutions in remittance transfer
and utilization was conducted by RMMRU. The immediate past Governor of Bangladesh
Bank officially recognized the contribution of this research in policy reforms for
increasing official flow of remittance.

RMMRU has two training programs on migration. Both of them are geared towards
capacity building of actors involved with migration. One is for young academics and
professionals on ‘Social Science Research and Migration’.

The other one is specifically targeted towards channeling information to the potential
migrants. Local level government representatives along bank officials and NGO workers
at the grassroots are provided training on ‘Labor Migration Process’. This is a one-week
residential training program.

Among other things, the training provide information on relative merits and demerits of
remittance transfer through formal and informal channels, investment instruments
available for the migrants both in public and private sector, practical demonstration on
remittance transfer procedures etc. For imparting the training, a module has been
developed by RMMRU with the help of government functionaries, bank officials, and
members of returnee migrants’ associations, academics, lawyers and executives of MFIs.
Besides RMMRU, BMET and Welfare Association of Returnee Bangladeshi Employees
(WARBE) also use this module in their pre-departure briefings and orientation training of
migrants respectively. Different ministries, public and private banks, and government
agencies call upon RMMRU expertise in the area of migration including remittance.

21
 CHAPTER - 3.
Inflow of Remittance at a Glance

╠ Regular Inflow of Remittance in

Bangladesh

╠ Regular Remittance Inflow from U.K in

Bangladesh

╠ Bank Wise Remittance Inflow

╠ Remittance Inflows in Sylhet

22
3.1 Regular Inflow of Remittance in Bangladesh

The outward migration of labor and the remittances that are generated as a result have
been a feature of Bangladesh’s post liberation history. The earliest official records on
remittances indicate that the country received about US$24 million in overseas
remittances in 1976. Since then foreign remittance receipts have grown at an exponential
rate.
Remittance to Bangladesh has increased from $1088.72 million in the 1993-94 to
$7914.78 in 2007-08(Table 1). That is about $6826.06 million has increased over 15
years of time. Table 1 and figure 1 show the increases.
Table 1: Remittance inflow in Bangladesh
Year Million US $
1993-94 1088.72
1994-95 1197.63
1995-96 1217.06
1996-97 1475.42
1997-98 1525.43
1998-99 1705.74
1999-00 1949.32
2000-01 1882.1
2001-02 2501.13
2002-03 3061.97
2003-04 3371.97
2004-05 3848.29
2005-06 4802.41
2006-07 5978.47
2007-08 7914.78
Source: Bangladesh Bank

9000
8000
7000
Million US $

6000
5000
4000
3000
2000
1000
0
6

8
4
99

-9

-9

-0

-0

-0

-0

-0
95

97

99

01

03

05

07
-1

19

19

19

20

20

20

20
93
19

Ye ar

Figure 1: Graphical Representation of the Table 1

23
3.1.1 Remittance Sets Benchmark

Remittance inflows set a new record in 2008 crossing $8b mark. According to
Bangladesh Bank (BB) statistics, in the just concluded calendar year remittance worth
$8.22b came into the country .The figure was $769.79 million last December. Table 2
and figure 2 show remittance benchmark:
Table 2: Remittance sets benchmark

Month 2007 (in million $) 2008

Jan 462.55 710.74
Feb 500.32 689.26
Mar 537.29 808.72
Apr 543.74 781.71
May 557.02 730.26
Jun 516.38 753.58
Jul 567.11 820.71
Aug 470.95 721.92
Sep 590.67 794.18
Oct 559.05 648.51
Nov 617.39 761.38
Dec 635.39 769.79
Source: The Daily Star, 5 January 09

900
800
700
Amount in Million $

600
500
400
300
200
100
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Months

2007 2008

Figure 2: Graphical Representation of the Table 2

24
3.1.2 Flow of Remittance in % (Last 8 Months)

Remittance growth in February was the lowest in the last eight months due to the ongoing
global recession.
Although the overall remittance growth was 27 percent in the eight month period (July to
February) of the current fiscal year, in February it was only15 percent compared to the
previous Februarys $689.26 million.
The remittance inflow in February was $784.47 million, which was $859 million in
January. Except October, the last six months remittance growth ranged from 19 percent
to 53 percent.
In the first eight months of the current fiscal year the total remittance inflow was $6148.2
million against $4840.51 million in the same period last fiscal year. Table 3 and figure 3
show the flow of remittance:

Table 3: Flow of remittance in % (Last 8 months)

Months Jul Aug Sep Oct Nov Dec Jan Feb

Flow in 44 53 34 16 23 19 20 15
%
Source: The daily star, 4 Mar, 2009

60
53
50
44
40
34
Flow in % 30
23
20 19 20
16 15
10
0 S1
JUL AUG SEP OCT NOV DEC JAN FEB
2008-09

Figure 3: Graphical Representation of the Table 3

25
3.2 Regular Remittance Inflow from U.K in Bangladesh

3.2.1 Remittance Inflow from U.K in Bangladesh.

It is becoming increasingly evident that remittance inflow from U.K. is likely to be

adversely affected. In 1998-1999, $54.04 million came from U.K. in Bangladesh. In
2005-2006 that was $ 517.39 million and now it has been increased to $896.13 million in
2007-2008 which sets a benchmark. Table 4 and figure 4 show this increase:

Table 4: Remittance inflow from U.K

Year U.K.
($ in Million)
1998-99 54.04
1999-00 71.79
2000-01 55.70
2001-02 103.31
2002-03 220.22
2003-04 297.54
2004-05 375.77
2005-06 517.39
2006-07 886.90
2007-08 896.13
Source: Bangladesh Bank

Remittance inflow

1000
900
800
700
$ in M illion

600
500 Remittance inflow
400
300
200
100
0
1998- 2000- 2002- 2004- 2006-
1999 2001 2003 2005 2007
Year

Figure 4: Graphical Representation of the Table 4

26
3.2.2 Country Wise Remittance Inflows in Percentage
Bangladesh sent a record 832,000 people abroad in 2007, most of who chose to go to the
oil- rich Golf countries after skyrocketing crude prices led to a construction boom in the
Middle East. In fiscal 2008, 29.37 percent of remittances came in from the Saudi Arabia
and the second highest is USA is 17.44 percent alone. After the UAE in third, the UK is
the fourth largest remittance country for Bangladesh with just over 11.32 percent. Table 5
and figure 5 show the country wise remittances inflow:

Table 5: Country wise remittance inflows in percentage

Country KSA USA UAE UK Kuwait Qatar Oman Italy Bahrain Others
Percent 29.36 17.43 14.34 11.32 10.91 3.66 2.78 2.7 2.5 5
Source: The Daily Star, 16 NOV, 2008

KSA
USA
2.5 5
2.78 2.7 UAE
3.66 29.36
U.K.
10.91
Kuwait
Qatar
Oman
11.32
17.43 Italy
14.34
Bahrain
Others

Figure 5: Graphical Representation of the Table 5

27
3.2.3 Country Wise Remittance Inflows in Sylhet
Bangladesh sent a record 832,000 people abroad in 2007, most of who go abroad from
Sylhet region. They are most likely interested to go in U.K. In fiscal 2008, 45.5 percent
of remittances came in from the U.K. in Sylhet, which is near about 11 percent of total
country’s remittance inflow. The second highest is Middle East Countries, which are
carrying 30.25 percent. After the USA in third, the Canada is the fourth largest remittance
country for Sylhet. Table 6 and figure 6 show the country wise remittances inflow:

Table 6: Country wise remittance inflows in Sylhet

Country UK USA Middle East Canada Others

Percent 45.5 8.25 30.25 11 5

8.25 30.25

UK
USA
Middle East
Canada
11 Others

45.5
5

Figure 6: Graphical Representation of the Table 6

28
3.3 Bank Wise Remittance Inflow

3.3.1 Top Ten Banks of Bangladesh in 2008 (Remittance inflows)

In fiscal 2008, Islamic Bank Ltd. has acquired first position to take up $1585 million
remittance through legal channels and the second position is Sonali Bank with taking up
$1270 million. The third of Agrani Bank is taken up $630 million remittance and then the
National, Janata, Uttara, BRAC, Pubali, Prime and AB Bank are in positioned that shows in
the table 7 and figure 7 below:

Table 7: Top Ten Banks of Bangladesh in 2008 (Remittance inflows)

Banks Islami Sonali Agrani National Janata Uttara BRAC Pubali Prime AB
$ in 1585 1270 630 425 417 405 380 365 290 125
Million
Source: The Daily Star, 12 Feb, 2009

1600
Islami
1400
Sonali
1200
Agrani
1000
National
$ in million 800
Janata
600
Uttara
400
BRAC
200
Pubali
0 Prime
1
AB
Banks

Figure 7: Graphical Representation of the Table 7

29
3.3.2 Top Five Banks of Sylhet (Remittance inflows)
In fiscal 2008, the top five Banks of Sylhet which have taken up more remittances are given
below in Table 8 and figure 8:

Table 8: Top Five Banks in Sylhet (Remittance Inflows, January 09)

Banks Islami Sonali Prime Uttara Janata

Tk. In 26.56 2.92 3.79 11.05 2.29
Millions
Source: Bangladesh Bank

30

25

20

Tk. In Million 15

10

0
Islami Sonali Prime Uttara Janata
Name of the Banks

Figure 8: Graphical Representation of the Table 8

30
3.4 Remittance Inflows in Sylhet
Sylhet is the top zone who received large amount of foreign remittances in last 3 or 4 years.
A large number of people from Sylhet are involved in working in foreign countries,
especially in U.K. If we follow the remittance inflow in Sylhet from Year 2003-04 to 2006-
07, we can get perfect information regarding that. Table 9 and figure 9 show the annual
remittance inflows in Sylhet:

Table 9: Annual Remittance Inflow in Sylhet

Fiscal Year 2003-04 2004-05 2005-06 2006-07

Sylhet (TK in Crore) 954.4 1039.2 1223.8 1433.5
Source: Bangladesh Bank
.

1600
1400
1200
1000
Volme in
800
crore (Tk.)
600
400
200
0
2003-04 2004-05 2005-06 2006-07
Fiscal Year
Remittance inflow in Sylhet

Figure 9: Graphical Representation of the Table 9

31
 CHAPTER - 4.
ANALYSIS OF THE SURVEY RESULTS

╠ Impact of Remittances on National

Economy

╠ Usage and Impact of Remittances in

Families

32
Impact of Remittances
Given the different variables driving the remittances behavior are differently affected by the
state of economic activity over the business cycle. It is conceivable that remittances may be
pro-cyclical or even cyclical with the output in some of the recipient countries. Even if
remittance move counter cyclical with the output in the home countries of migrant workers,
the cycles in home and host country, economics may move together in sync, thereby making
it difficult for migrant workers employed in a crisis stuck economy to help out family
members facing similar condition back home.

4.1 Impact of remittances on national economy

The importance of the remittance flow to the economy of Bangladesh should not be
underestimated.
Remittances contributed more than 4 per cent to the country’s GDP and almost 20 percent of
foreign exchange earnings. Remittances amounted to one-third of the total amount of
government revenue from taxes and to 30 per cent of the total amount of debt service
payments. It equaled 60 per cent of the development budget. The total amount of foreign aid
which flows into Bangladesh is less than the total amount of remittances. Table 10 and figure
10 illustrate this for 2006-2007:
Table 10 Relationship of remittances to indicator

Indicator Relationship of remittances to indicator

(in %)
GDP 4.2
Government revenue 34.6
Annual development budget 58.9
Total foreign exchange earnings 19.1
Imports 19.0
Foreign aid disbursed 114.3
Medium- and long-term debt service 31.0
Source: Statistical Bureau of Bangladesh

120

100

80
Relationship of
remittances to 60
indicator (% )
40

20

0
GDP Government Annual Total foreign Imports Foreign aid Medium- and
revenue development exchange disbursed long-term debt
budget earnings service

Indicator

Figure 10: Graphical Representation of the Table 10

33
4.1.1 Impact of Remittance on GDP

The contribution of remittance to GDP has also grown from a meager 1 percent in 1977-1978
to 5.2 percent in 1982-83. During the 1990s the ratio hovered around 4 percent. However if
one takes into account the unofficial flow of remittances, its contribution to GDP would
certainly be much higher. An increase in remittance by Taka 1 would result in an increase in
national income by Tk 3.33. Table 11 and figure 11, which charts remittances as a percentage
of GDP, highlights its growing importance in the economy of Bangladesh.

Table 11: Impact of remittance in GDP growth

Year GDP
1996-97 9.62
1997-98 9.5
1998-99 9
1999-00 8.47
2000-01 9.6
2001-02 10.21
2002-03 10.35
2003-04 10.63
2004-05 10.57
2005-06 10.79
2006-07 10.58
Source: World Development Indicator CD-ROM 2000

12

10

8
GDP (in %)

0
19 97

19 98

19 99

20 00

20 01

20 02

20 03

20 04

20 05

20 06

7
-0
-

-
96

97

98

99

00

01

02

03

04

05

06
19

Year

Figure 11: Graphical Representation of the Table 11

34
4.1.2 Impact of Remittance on GNP
Remittances, as a percentage of GNP, have also gone up approximately more than two
fold for Bangladesh from 1980 to 1999. From table12 and figure 12 it quite evident that the
trend of growth rate of GNP (Gross National Product) and the contribution of remittance to
GNP is quite similar. Thus, it can be said that remittances contribute positively to GNP.

Table 12: Impact of remittance in GNP growth

Year Growth rate of Growth rate of GNP

remittance (%)
1980-81 0.54 0.06
1985-86 0.80 0.27
1990-91 1.11 0.28
1995-96 0.58 0.25
1996-97 0.02 0.05
1997-98 0.21 0.06
1998-99 0.03 0.05
1999-00 0.12 0.05
Source: World Development Indicator CD-ROM 2000

1.2

0.8
Growth rate of remittance (%)
0.6
Growth rate of GNP

0.4

0.2

0
1980-81 1985-86 1990-91 1995-96 1996-971997-981998-991999-00

Figure 12: Graphical Representation of the Table 12

35
4.1.3 Impact of Remittance on Debt Payments
Table 17 brings out the contribution of remittance to the balance of payments and for debt
and services payments for Bangladesh. The data provides quite impressive results for
Bangladesh. Remittance as percentage of trade balance has increased for Bangladesh from
33.737 in 1980 to 57.668 in 1999. This indicates that remittance is quiet significantly
contributing to meet the trade imbalance of the country. For the peak year 1996-97,
remittances contributed almost 53.34% to overall balance of payment for Bangladesh. This
continued to increase as the year passed. Therefore, it can be suggest that remittance plays a
positive role in debt payment by contributing a significant amount in it. Growth rate of debt
payment as percentage of remittance (Table 13 and figure 13) shows that after 1997 the
remittance started to contribute more on the debt payment. If this trend continues than it can
be inferred that as years passes remittance is going to contribute more to the repayment of
debt of the country.

Table 13: Growth rate of debt payments % of remittance

Year Debt payments % of Growth rate of debt

Remit payments % of
remittance
1980 50 5
1985 52.78 5.56
1990 82.9 57.07
1995 68.34 -17.57
1996 59.84 -12.44
1997 51.36 -14.18
1998 50.66 -1.37
1999 54.71 8
Source: World Development Indicator CD-ROM 2000

100

80

60
Debt payments
% of remittance
40

Growth rate of
20
debt payments
%of remittance
0
80

85

90

95

96

97

98

99

-20
19

19

19

19

19

19

19

19

-40

Figure 13: Graphical Representation of the Table 13

36
4.1.4 Impact of Remittance on Consumption

The estimated consumption function is

C = 2226.1 + 0.944 YD
Here, C = Private consumption and YD = Disposable Income.
The estimated equation shows that the marginal propensity to consume in response to
disposable income is positive and is 0.94.The multiplier effect of remittance on consumption
is calculated as 2.826.This multiplier is used to calculate the proportion of private
consumption expenditure induced by the flow of remittance over time. The induced
component is measured by the value of remittance multiplied by 2.826.We estimate that
remittance induced consumption gradually increased over the years from 1972 onwards,
declining temporarily in 1984 and 1990.

4.1.5 Impact of Remittance on Balance of Payment, Investment and National

Savings

The financial flows triggered by international migration have had a dominant impact on the
balance of payments of all the labor exporting countries. At a time when massive increase in
oil imports and international recession put severe pressure on the country’s balance of
payments, remittances offered much needed relief. It has been estimated that during the late
1970s a 10 per cent increase in remittances led to a 0.32 per cent increase in private
consumption in the long run and fixed investment by 0.053 per cent. GDP increased by 0.22
per cent and GNP by 0.24 per cent. It is estimated that a 10 per cent increase in remittance
leads to a decrease in the ratio on the current account deficit to GNP by 0.40 percent in the
long run. It is argued that the immediate effect of increase in remittances is too adversely
affect exports due to increase in prices and wages but the net effect in the long run would be
positive. The important point to grasp is that the increase in income attributable to
remittances enables the economy to realize an excess of investment over domestic savings
through a corresponding excess of imports over exports with a smaller withdrawal on
external resources than would otherwise be the case. Nayyar (1984) explains, as a result of
remittance financed investments it “may appear to be paradoxical – but it is gross national
savings rather than gross domestic savings that would rise and the economy would be able to
realize a excess of investment over the latter.” What this means is that the effective savings
constraint on investment is not domestic savings but national savings, which take into
account remittances. According to Nayyar (1984) in a situation where the departure of
migrants does not reduce domestic output, remittance inflows should increase national
income. He also stated in his research paper that, the increase in income attributable to
remittances might enable the economy to realize an excess of investment over savings,
through a corresponding excess of imports over exports, with a smaller drawl on external
resources than would otherwise be the case. Unless the marginal propensity to absorb out
foreign incomes exceeds unity, remittance inflows should always improve the balance of
payments position or prevent it from deteriorating as much as it otherwise would.
The increased inflow of remittances significantly improved the balance of payment position
of Pakistan’s economy during the second half of the seventies and early eighties. The foreign
exchange made available because of workers’ remittances also reduced the external debt,
improved debt servicing ability, and decreased the nee for additional foreign loans (Burney,
1989)

37
4.1.6 Uptick in Remittance Inflows
Remittance inflows increase comparing last 5 months of 2007 and 2008. In October-
November of last fiscal year, the country recorded $559 million and $617 million
respectively. This uptick flow of remittance encourages workers to go abroad, especially in
U.K. and in Middle Eastern countries. In current fiscal year an additional 8lakh migrant
workers are projected. Table 14 and figure 14 show the uptick in remittance inflows:

Table 14: Uptick in remittance inflows

Months 2007 ($ in Millions) 2008 ($ in Millions)

Jul 567.11 820.71
Aug 470.95 721.92
Sep 590.67 794.18
Oct 559.05 648.51
Nov 635.34 767.57
Source: The daily star, Dec 5, 2008

1000
800
600
$ in Million 2007
400
2008
200
0
Jul Aug Sep Oct Nov
Months

Figure 14: Graphical Representation of the Table 14

38
4.1.7 Impact of Remittance on Credit-Deposit
Bangladesh is receiving a large amount of remittances in last 2 or 3 years. It is a good sign for
the economy of Bangladesh. These remittances are inflows as a deposit to the commercial
banks and they are using this deposit to provide advances for various kinds of investment. In
last fiscal year commercial bank received a large portion of their deposit from remittance, for
this reason proportion of giving advances increases. Table15 and figure 15 shows that
information.

Table 15: Credit Deposit Ratio of Remittance

Bank AB NCC Standard First Trust Shahjalal BRAC

Security Islami
Percent 91.57 95.63 97.96 96.39 83.24 95.01 88.53
Source: Bangladesh Bank

100

95 AB
NCC
90
Percentage Standard
85 First Security
Trust
80
Shahjalal Islami
75 BRAC
1
Banks

Figure 15: Graphical Representation of the Table 15

39
4.1.8 Impact of Remittance on Deposits and Advances in Sylhet
On the other side, in Sylhet maximum amount of remittance inflows and deposit is
increasing, but it is kept idle. Because people of this region are not much interested in
investment of remittance. For this reason, proportion of advances comparing with deposit is
very much low. A large amount of fund is kept idle here. Table 16 and figure 16 &17 shows
the deposit and advances in Sylhet.

Table 16: Deposits and Advances in Sylhet

Year Deposit Advances Credit–Deposit

Ratio
31.12.2005 9269 2106 22.72%
31.12.2006 11017 2314 21.00%
31.12.2007 12320 2570 20.86%
30.06.2008 13183 2916 22.11%
Source: Bangladesh Bank

14000
12000
10000
Period

8000 Deposit
6000 Advances
4000
2000
0
5

8
00

00

00

00
.2

.2

.2

.2
2

6
.1

.1

.1

.0
31

31

31

30

Amount in Crore (Tk.)

Figure 16: Graphical Representation of the Table 16

22%

Idle Money
58%
Statuary Liquidity
Reserve Ratio
Total Loan & Advances

20%

Figure 17: Comparative Analysis of Funds of Sylhet.

40
4.2 Usage and Impact of Remittances in Families
Focusing on the individual migrants, a more detailed and heterogeneous picture of the
remittance dynamics emerges. Roughly, earnings of migrants can be consumed, invested or
saved in the country of destination, or remitted to the home country and subsequently saved,
invested or consumed. The proportion of the income that migrants remit is dependent on a
number of factors. Remittances are likely to be higher in situations where the migrant leaves
broadly for economic reasons than political or social reasons, where they have temporary
rather than permanent resident status, where they are young, but married with family left
behind at home, and that remittances will increase as emigrant wages increase although at a
certain point, further increases in wage levels do not seem to translate into higher remittances.
Studies in Bangladesh seem to confirm these findings, although it is very difficult to make
generalizations. Sylheties migrant workers that many migrant workers from Sylhet division
are known to have large savings abroad (own emphasis). Without giving any tangible
evidence of this statement, the authority of the Investment Board repeated these findings in
personal interviews.

4.2.1 Individual transfers from migrants to children, wives, family

members or friends
Micro-level studies in Bangladesh, as well as a report of the International Group of the
British-Bangladeshi Professionals Association and our interviews elucidate that this is by far
the most common structure. Important to note is that – although in a lot of micro studies the
household is the focus of attention – not every member receives an equal amount of
remittances, or even has access to remittances. Our survey illustrates this. In the majority of
the 20 researched families, only one person received remittances, while in only two families
more than one people received remittances. In most families the father of the migrant
received the money, followed by the wife, the mother and the brother. Interestingly, although
maximum of the remittance senders were married, only minimum of the receivers were
spouses. Also, according to our survey most recipients of remittances were the parents. In this
case the parents were followed by the brother and the wife. Class variations seem to exist. In
Upper-class the wife was the most important recipient, while in middle-class it was the father
or mother.

Remittance in rural area generally boots consumption. A significant portion is used for
purchase of land and home construction. They also help to expand business in agriculture
products and construction materials. It may be mentioned here that while going abroad a
migrant worker generally collects the fund for this migration either by selling or by
mortgaging land. A very small portion of the remittance is used by the recipient for
investment in business or other savings. While returning home, the migrant workers bring
some luxurious products which reduce actual remittances that could be sending by them. It
will be mentioned here that if utilization of remittance can be categorized in productive and
non productive. Very insignificant portion of it is used for productive purpose.

41
4.2.2 Usage of Remittances in Household Level
The portion of remittance, the families use in consumption in different purposes such as food
and clothing, purchase of land, marriage and ceremonies, trading, education, health care and
so forth. They use maximum portion in food and clothing than in purchase of land than in
home construction and decreasing in respect. The subject matter of the above discussion is
expressed by the following way. Table 17 and figure 18 represents most often mentioned uses
of remittances by families

Table 17: Most often mentioned uses of remittances by families

Purpose Minimum % of Received Maximum % of Receive

Remittances. Remittances.
Food and clothing 20 35
Purchase of land 3 40
Home construction and 2 30
repair
Repay loans 10 19
Marriage and ceremonies 0 10
Education 0 5
Savings 5 15
Funding other people 0 7
migration
Investment in Business 5 10
Health care 0 7
Source: www.iom.com (Pattern of usage)

45
40
35 Minimum % of
30 Received
25 Remittance
20 Maximun % of
15 Received
10 Remittances
5
0
Investment
Savings
Food and

Home

Marriage and

Education

Funding

Health care
Purchase of

Repay loans

Figure 18: Graphical Representation of the Table 17

42
4.2.3 Impact of Remittance in Family Income
From our survey we have found that, the families fully or partially depend on foreign
earnings most of them are relied upon U.K. From our findings we can say that their family
income come from two sources, only foreign and both local and foreign sources. But in
findings only foreign income source is much lower than both local and foreign source. These
are shown in following table 18 and figure 19:

Table 18: Income source of families

Income source Proportion in %

Only foreign 17.64
Both local and foreign 82.36

90
80
70
Proportion in %

60
50
40
30
20
10
0
Only foreign Both local and foreign
Income source

Figure 19: Graphical Representation of the Table 18

43
4.2.4 Usage of Remittance in Families
From these families we have found that they use their foreign income in several sectors,
especially in household, savings and investment. These families are more interested to use the
maximum portion of remittance in their household consumption. They are merely interested
in savings and investment. For this reason the proportion of savings and investment is lower
than the household consumption. The following table 19 and figure 20 show the expression:

Table 19: Usage of remittance in families

Sectors of usage Rate

Household 56.47
Savings 25.88
Investment 17.65
Sectors of usage

investment
1
Savings
Household

0 20 40 60

Rate

Figure 20: Graphical Representation of the Table 19

44
4.2.5 Rates of Income from Remittance of U.K. in Families
For the purpose of our research we have divided the rate of family income in four classes and
their class interval is 25%. It is the percentage which a family receives from foreign
remittance as a contribution of their regular income. We surveyed different families and got
the information regarding these contributions. And we found that more families get their
family income from remittance is in the range of 25% to 50%. Others are lower than it and
the same percentage in the range of 50% to 75% and 75% to 100%. The following table 20
and figure 21 express the information:

Table 20: Rates of income from remittance of U.K. in families

Range of the rate of family income Percentage

0% to 25% 5.89
25% to 50% 35.29
50% to 75% 29.41
75% to 100% 29.41

29.41

35.29

5.89 29.41

0% to 25% 25% to 50% 50% to 75% 75% to 100%

Figure 21: Graphical Representation of the Table 20

45
4.2.6 Invested Sectors of the Families
Although the families of Sylhet are not much interested in investment, we found from our
survey some families who invested their foreign remittances in some particular sectors. They
invested a large amount in trading for a long time, but now a days their investment in Stock
Exchange is gradually increasing and gain the equal position with trading. The relevant table
21 and figure 22 are as follows:

Table 21: Invested sectors of the families

Invested sectors Rate

Real Estate Co. 23.53
Trading Co. 52.94
Stock Exchange 52.94
Shopping Moll 11.67
Restaurants 11.67
Others 5.88

5.88
11.67 23.53

11.67
Real Estate Co.
Trading Co.
Stock Exchange
Shopping Moll
Restaurants
52.94 Others
52.94

Figure 22: Graphical Representation of the Table 21

46
4.2.7 Preferable Sectors for Investing Remittance in Sylhet
By discussing with the authority of Bangladesh Bank and several commercial banks we have
selected some preferable and profitable sectors in Sylhet for the availability of resources in
which the families can invest their remittance. Then we prefer these sectors while surveying
the families and noted their responses regarding these sectors. Maximum families show their
interest to invest in juice factory comparing with other sectors. Table 22 and figure 23 show
the preferable sectors for investment in Sylhet:

Table 22: Preferable sectors for investing remittance in Sylhet

Preferable Sectors Rate

Tourism 35.29
Cold storage 29.41
Ceramics Industry 29.41
Juice Factory 41.18
Development of Tea Sector 17.65
Amusement Park 11.76
None 41.18

45 Tourism
40
35 Cold storage

30
Ceramics Industry
25
Rate

20 Juice Factory
15
10 Development of Tea
Sector
5
Amusement Park
0
1 None
Preferable Sectors

Figure 23: Graphical Representation of the Table 22

47
4.2.8 Inflow of Remittance in Families
In our survey the families may not give us the accurate information about the amount of
inflow of remittance from U.K. For this reason we estimated some specific range to collect
that information. And finally we found that maximum families (47.06%) receive annually
less than Tk. 500000 in average. And 29.40% families receive Tk. 500000 to 1000000. The
range of Tk. 1000000 to 2000000 and Tk. more than 2000000 got the equal percentage. The
following table 23 and figure 24 show the expression:

Table 23: Average annual inflow of remittance in families

Range of inflow (in Tk.) Rate

Less than 500000 47.06
500000 to 1000000 29.40
1000000 to 2000000 11.76
More than 2000000 11.76

50

40
Less than 500000
30
500000 to 1000000
Rate
20 1000000 to 2000000
More than 2000000
10

0
1
Range of Inflow (in TK.)

Figure 24: Graphical Representation of the Table 23

48
 CHAPTER - 5.
CONCLUSION AND RECOMMENDATION

╠ Recommendation

╠ Limitations

╠ Conclusion

49
5.1 Recommendation:

We have studied about “usage and impact of regular inflow of remittance from U.K. in
Bangladesh: A Study on Sylhet.” By analyzing our collected data we try to give some
recommendation about the increase of investment as well as the proper utilization of U.K.
remittance in Sylhet. These are given below:

I. To utilize the foreign remittance, Sylhet Chamber of Commerce and Industries should
immediately strengthen its industrial capacity to implement the Economic Zone
Project. As such it is important to give an institutional framework and ownership to
the Proposed Industrial Zone Project.

II. Potential investors and entrepreneurs should be attracted through offering them sound
infrastructure and utility facilities under private initiative.

III. Small and medium size agro-based (especially tea sector), fisheries and livestock,
mineral based and service oriented industries are having potential in Sylhet.
Individual sectors having high potential are agar, betel leaf, fish processing, gas and
coal based power, electric pull industries and so on.

IV. To get the privileges of maximum utilization of foreign remittance, SCCI in

collaboration with Sylhet Foundation should organize confidence building activities
i.e. workshops and seminar in and outside the country where non residents are living
abroad in order to attract potential investors.

V. SCCI, BOI, BSCIC, BKB, BSB, BASIC Bank should strengthen its institutional
capacity to identify activities that bring together the key stakeholders and create a
strong platform which will form a regional development.

VI. Special tax incentives for FDI (foreign direct investment) especially to encourage non
residents in a number of sectors can increase investment in Sylhet. To create investors
for industries by giving them attractive offer such as opportunity of giving less
income taxes and giving them the honors of a CIP (commercially important person).

VII. Government can take initiative in establishing in industrial estate and different types
of plants and processing units and afterwards transfer to the interested entrepreneurs.

VIII. Proper initiatives should be taken to import entrepreneurship development training

and capacity building activities for new business creation, business management and
export development.

50
5.2 Limitations:
While conducting the seminar work, we have faced impediments. These are as follows:

I. Our time duration was short in case of preparing the seminar paper.

II. It was difficult to collect the adequate and real data and information from the survey
conducted in the household.

III. Journal and publications related to inflow of remittance in Sylhet are not available.

IV. Branches offices of commercial banks in Sylhet are unable to provide previous year’s
information and data related to inflow of remittance in Sylhet.

V. Branch office of Bangladesh Bank in Sylhet has not sufficient information and data
about the country wise amount of inflow of remittance in Sylhet.

51
5.3 Conclusion:
Foreign remittance sent by the wage earners and other expatriate Bangladeshis to their
families and relatives at home are growing rapidly and now contributing a major portion of
income earned by Bangladesh from abroad. The volume of remittance receipts by Bangladesh
usually coming through official channels. But the unofficial channels are still playing a major
part in transferring the remittance, thereby depriving the government of a huge sum of
foreign currencies every year. In this situation, the government needs to give a closer look at
the performance of the formal vehicles of money transfer including the banks already in
operation. There are some arguments that remittances may create dependency, increase
consumer goods expenditure, generating inflationary pressures and so on. These remittances
have strong and positive impact on investment, national income and other significant sectors.
At the end of our research we find that the families in Sylhet fully or partially depend on
foreign earnings most of them are relied upon U.K. Most of the families use the remittances
in their household consumptions as well as in savings. But some families already invested in
some particular sectors. And they are very much interested to invest our selected preferable
and profitable sectors in Sylhet by using their remittance properly.

52
 REFERENCE

1. www.bangladeshbank.com

2. www.mof.gov.bd

3. www.iom.com

4. www.bbcc.com

5. www.currencyworld.com

6. Economic Review-2006

7. Economic Review-2007

8. Economic Review-2008

9. Foreign Exchange- by L. R. Chowdhury

10. Economic Trend- Online Edition

11. www.dailystar.net

12. The Daily Star

13. www.prime-bank.com

14. www.nationalbank.com

15. A Report on ‘Problems and Prospects of Investment in Sylhet Region’-

organized by Bank Officers Club, Sylhet.

16. CPD report of Prime Bank

17. Financial Express.

53
 Appendices

Appendix a:
Questionnaire

Appendix b:
Addresses of the family respondents

54
 Appendix a:
Questionnaire

1. Questionnaire for the Bangladesh Bank:

Department of Business Administration

Shahjalal University of Science & Technology
Sylhet, Bangladesh

Topic: Usage and impact of regular inflow of remittance from U.K. in

Bangladesh: A Study on Sylhet.

Name of Interviewee:
Designation:
Contact No.:

Please answer the questions to help and support our study-

(Information is only used to prepare the report & must be confidential)

1. Which countries have taken position as the top 10 countries to send remittance in
Bangladesh?

2. How much amounts are received by Sylhet on previous years?(According to top listed
countries)

3. How many commercial banks are authorized by Bangladesh Bank in the dealings of
foreign remittance?

 0-25  25-50  50-75  75-100

4. Which commercial banks can be said as the top listed banks according to receive foreign
remittances in Sylhet region?

55
5. How much portions are filled from foreign remittances in our GNP?

 10-20  20-30  30-40  40-50

6. Do you follow over the inflow of minimum annual limit of remittance?

 Yes  No

7. Do you think that the foreign remittances are properly used in Sylhet?

 Yes  No

8. If yes, then where it is invested?

9. If no then what are the reasons?

10. Have you taken any encouragement policy to inspire the commercial banks regarding
foreign remittances utilization?

 Yes  No

11. What are the policies for commercial banks to come forward in the industrial
development in Sylhet?

12. What types of initiatives are taken by Bangladesh Bank regarding the reduction of money
laundering?

13. What’s your opinion regarding the proper utilization of foreign remittances in Sylhet
region?

Thank you for cooperating us.

56
 2. Questionnaire for the Commercial Banks:

Department of Business Administration

Shahjalal University of Science & Technology
Sylhet, Bangladesh

Topic: Usage and impact of regular inflow of remittance from U.K. in

Bangladesh: A Study on Sylhet.

Name of the Bank:

Name of Interviewee:
Designation:
Contact No.:

Please answer the questions to help and support our study-

(Information is only used to prepare the report & must be confidential)

1. From which sectors maximum foreign remittance inflows have occurred?

□ Working Labor □ Export Proceeds □ Foreign Loans and Grants

□ Others

2. In your bank, which countries have positioned in the top ten places in remitting
currencies?

3. Which financial organizations act as the channels in the foreign remittance

transferring with your bank?

4. How much inflow of remittances has occurred in the previous years on your bank?

5. To increase the inflow of foreign remittance which policies are taken by your bank?

6. What is the rate of foreign remittance on deposit money in your bank?

57
7. On which sectors your bank has already invested in Sylhet region?

□ Real Estate Co. □ Trading Co. □ Shopping Mall □ Others

8. From your point of view, which sectors are profitable but proper investments aren’t
happened?

□ Tourism Sector □ Cold Storage □ Ceramics Industry

□ Juice Factory □ Development of Tea Sector
□ Amusement Park □ None

9. Have you any initiative to develop these sectors?

10. What are the barriers of your bank to invest in Sylhet?

11. What’s yours encouragement policy to people so that they contain inspiration to make
investment in more productive sectors?

Thank you for cooperating us.

58
 3. Questionnaire for the Families:

Department of Business Administration

Shahjalal University of Science & Technology
Sylhet, Bangladesh

Topic: Usage and impact of regular inflow of remittance from U.K. in

Bangladesh: A Study on Sylhet.

Name:
Age:
Address:
Contact No.:

Please answer the questions to help and support our study-

(Information is only used to prepare the report & must be confidential)

1. How many members are in your family?

□ Less than 6 □ 6 to 9 □ More than 9

2. What is the income source of your family?

□ Only foreign earning □ Both local & foreign earnings

3. How many family members are involved in sanding remittance?

□ 1 □ 2 □ 3 □ More than3

4. Which commercial bank you use as a medium for receiving remittance?

□ …………………

59
5. What is the rate of usage of remittance?

□ In family- ………..% □ In savings-…………%

□ In investment-…………%

6. What is the rate of your family income that comes from foreign remittance?

□ 0% to 25% □ 25% to 50% □ 50% to 75% □ 75% to 100%

7. Do you face any difficulties in case of inflow remittance?

□ Yes □ No

8. If ‘Yes’, than what are the difficulties?

9. In which following sectors you will invest your money?

□ Real Estate Co. □ Trading Co. □ Stock Exchange

□ Shopping Mall □ Restaurant □ Others

10. From your point of view which sectors are preferable to invest in Sylhet?

□ Tourism Sector □ Cold Storage □ Ceramics Industry

□ Juice Factory □ Development of Tea Sector
□ Amusement Park □ None

11. Which is the interval of time of receiving the remittance?

□ Monthly □ Quarterly □ Semi-annually □ Annually

12. What is the annual average inflow of remittance in your family?

□ Less than 500000 □ 500000 to 1000000 □ 1000000 to 2000000

□ More than 2000000

Thank you for cooperating us.

60
 Appendix b:
Addresses of the family respondents
Name Address Contact Number
Jebunnesa Nurani 74, Muglitula, 0821718596
Subidbazar, Sylhet.
Afiya Begum Nurani 13/1, Muglitula, 0821716384
Subidbazar, Sylhet.
Shakila Mahmuda Nurani 3, Muglitula, 0821717009
Subidbazar, Sylhet.
Noor Ahmad Pushpayan 40, Shibganj, 0821814099
Sylhet.
Fatema Nahrin Chowdhury House-23, Block A, Road-4, 01913023634
Upashahar, Sylhet.
Abdus Fahad Shahid Kumarpara, Sylhet. 01717190514
Nilkanta Dey Senpara, Sylhet.
Kishore Chowdhury Kashtaghar, Sylhet. 0821816105
Abul Lais Pushpayan 40/1, Shibganj,
Sylhet.
Shekh Azad Nurani 70/1, Muglitula,
Subidbazar, Sylhet.
Abdul Jabbar 57 Surovi, Tilagor, Sylhet. 01717458285
Sekh Rezaul Karim 23 Mousumi, Mirabazar, 0821713744
Sylhet.
Ataur Rahman Bosundhara 92, Raynagar 01916248368
Sylhet.
Jahidul Islam Tofadar Tafadar Vila, Tilagor, 01711580324
Sylhet.
Jahanara Begum Pushpayan 84, Shibganj, 01710943658
Sadi Ahmed Waves 33/A, Chandantula
Rathiraj Bhattacharjee Alpona 31, Shibganj, 01196166363
Sylhet.
Hasanul Amin Murad 29, Shahjalal Housing, 01716731009
Upashahar, Sylhet.
Mahibul Hasan 11, Paira, Darshandeuri, 01920087338
Sylhet.
Ahmed Maksud Kumar Para, Sylhet 01712710839

61
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