Global remittances rise

By Lalin Fernandopulle

The number of migrant workers and their remittances globally have increased sharply over the past 15 years, the Global Forum on Remittances (GFR) held in Thailand recently revealed. It stated that for the majority of developing economies in Asia and the Pacific remittances are the single largest financial inflow having a significant impact on the economic well-being of recipient families and the growth and stability of recipient economies.

The forum revealed that given the importance, remittances continue to attract high level domestic and international policy attention. Policy efforts focus on facilitating the safe and efficient flow of remittances and maximising their impact on economic growth and development.GFR stated that a major challenge is to achieve the appropriate balance on policy and regulatory issues in terms of risk mitigation, consumer protection, innovative approaches and strengthening the development impact of the inflows.

The annual global remittances is around $ 400 billion and in 2012 over 59 million migrant workers from Asia representing one third of all migrants from developing countries remitted well over $ 260 billion accounting for 63 percent of all remittance flows to developing countries. Bangladesh, China, India, Indonesia, Pakistan, Philippines and Vietnam are the top 10 remittance receiving countries in the world.

Remittances account for over 10 percent of GDP in Bangladesh and the Philippines, over 20 percent of GDP in Nepal, Samoa and Tonga and 51 percent in Tajikistan.

Remittances from Sri Lankan migrant workers surpassed $ 6 billion last year according to statistics which is a 16.8 percent increase from US$ 5.15 billion in 2011. Worker remittances were 10 percent of the GDP in 2012.

It is estimated that around 1.7 million Sri Lankans work abroad and account for around 17 percent of country's working population.

The GFR stated that the quality and cost of remittance services are among the most fundamental determinants of the impact of remittance flows. The services vary across remittance markets based on market conditions in sending and receiving countries.

In rural areas where remittance distribution networks are often poor, the average cost of remittance services could be as high as 25 percent. The G8 member countries in 2009 set an ambitious target of reducing the average cost of transferring from 10 percent to five percent by 2014.

India was used as an example of a success story noting how it offers remittance services enabling Indian migrant workers in the US and UK to send remittances online directly from thir bank account or credit card reducing the costs in some cases by over 30 percent.