Bangladesh (Commonwealth) _ Migrant workers were known to have played a role in the overthrow Sheikh Hasina in July and August of last year.
They aimed to criticize Hasina’s government by refusing to use official remittance methods. They didn’t start sending record numbers of remittances through official channels until Hasina fled.
In December, migrant workers sent a record $2.63 billion in remittances, a 33% increase from the previous year. Remittance inflows from Bangladesh hit a record $26.9 billion in 2024, up 23% from 2023. This provided a vital lifeline to the nation’s depleted dollar reserves.
Though impressive, this increase in remittances does not yet reach Bangladesh’s potential, which may be realized if the majority of migrant laborers chose official channels over unofficial ones.
Numerous investigations show that a significant amount of money is sent to Bangladesh through unofficial banking systems. For instance, Bazlul Haque Khondker, chairman of the South Asian Network on Economic Modeling (SANEM), stated in a 2022 keynote address at a seminar titled “Measures to increase remittance flow through legal ways easily and securely via digital medium” that approximately 49% of remittances enter the nation illegally.
As a perceived ‘act of patriotism,’ the new government’s confidence has prompted migrant workers to use official channels; nevertheless, this trend has also been influenced by a number of policies. The difference in exchange rates between official and unofficial channels decreased from Tk7–10 to Tk3–5 per dollar in 2024.
Because of this, banks reported having more foreign currency than they needed, which relieved pressure on reserves and allowed the nation to pay off $3 billion in debt without experiencing a crisis. Despite continuous import payments, rising dollar inflows increased reserves to nearly $21 billion. Letters of credit (LCs) that were past due also decreased dramatically, from nearly $2 billion to $400 million.
“We suggest giving employees who contribute money through authorized means a card. There would be substantial benefits for these workers. A whole part of the third terminal, for example, could be set aside for migrant workers; however, eligibility would depend on the amount sent via official methods. Changes in exchange rates are necessary to make formal channels more competitive.
According to experts, the overall amount could rise by at least 50%, if not double, if the full potential of remittances could be realized through official channels. An estimated $35–40 billion in remittances would be able to reach Bangladesh as a result, greatly boosting the country’s economy.
According to Shariful Hasan, who oversees the Brac Migration Program, remittances might rise by 1.5 times or even double if migrant workers had simple access to digital technology and financial systems.
He asserts that, despite frequent claims to the contrary, this system does not physically transfer any money.
According to him, Hundi basically entails corruption, money laundering, and facilitating payments for a range of illegal operations. As an illustration, a migrant worker in Saudi Arabia may be approached and asked to donate money to their family. But that money doesn’t arrive here. Someone else instead provides the money to that family in Bangladesh.
Ultimately, this money originates from corrupt sources, including funds used for illegal activities or money laundered from government personnel. Therefore, he continued, “the money sent through hundi offers no real benefit aside from the $27 billion in official remittances.”
In a prior interview with TBS, Iftekhar Ul Hasan Chowdhury, CEO of the Oman-based Gulf Overseas Exchange Company, stated that Oman is a $2 billion remittance market. Remittances increased dramatically under COVID-19, and Bangladesh received almost $1.5 billion in remittances from Oman in a single year.
However, the sum dropped to roughly $700 to $800 million once hundi was reinstated. It had risen to about $1 billion by the end of last June.
“I think that at least 40% of people use illicit means to send money. We might earn almost $2 billion in remittances from Oman each year if all Bangladeshis transferred their money through official routes,” he stated. He pointed out that the image is essentially the same throughout the Middle East.
