Diplomacy with neighbouring countries has increased opportunities for Nepalese to migrate abroad. For instance, migration was made easier by the Indo-Nepal Treaty of Peace and Friendship of 1950, which allowed Nepalese citizens to legally cross the border and take up work in India (IOM 2011, Tiwari 2010). Consequently, many Nepalese have migrated to India to engage in agricultural work and the country continues to be a major destination country for migrants from Nepal. Migration between the two countries is mostly not documented due to the free border-crossing without the need of a passport or visa. According to estimates, about 1.5 million Nepalese were living in India in 2004, of which 150,000 were women (NIDS 2010).

Encouraged by increasing global demand for labour migrants, the Government of Nepal actively promotes overseas migration. According to estimates of the Nepal Ministry of Labour and Transport Management, there are 2.27 million Nepali migrant workers abroad (IOM 2011). Approximately 900 migrant workers leave the country to work abroad every day. The Government of Nepal recorded that 298,094 people officially migrated from Nepal to different countries during fiscal years 2008 and 2009 (NIDS 2010).

Malaysia is the main destination country for official labour migration through the Ministry of Labour. During fiscal year 2009, 38 per cent of the Nepalese labour migrants went to Malaysia. The number of migrants from Nepal to Malaysia dropped significantly in fiscal years 2006 and 2007 due to policy changes set by the Government of Malaysia but then rose again. Member countries of the Gulf Cooperation Council (GCC)2 are also major destination locations, led by Saudi Arabia, which hosted 21 per cent of the labour migrants in fiscal year 2009, followed by Qatar, with a 19 per cent share and the United Arab Emirates, with an 11 per cent share. Destinations in East Asia, such as Hong Kong, China, and Republic of Korea became increasingly popular especially in the first half of the last decade, but flows to this subregion have dropped in recent years (table 2).

In 2009, only 3.4 per cent of the officially deployed migrant workers from Nepal were women. However, according to other estimates, women make up 10 per cent of the migrant workers, and this portion is trending higher. Many women migrants remain unrecorded because they often migrate through irregular channels, or use India as a transit country and proceed to the destination country through arrangements made by private recruitment agencies in India. Also of note, a large number of women migrants are single mothers and educated (Bhadra 2007). The leading destination countries for migrants from Nepal differ between men and women. Migrants to the main destination countries Malaysia, Saudi Arabia and Qatar are almost all male. However, Lebanon is the main destination for female Nepalese migrants, comprising 98 per cent of the total migrants to the country (table 2).

As mentioned earlier, remittance flows to Nepal are relatively large in line with the high level of migration from the country. These remittances, however, have both positive and negative effects on the country.

On the positive side, remittances function as a cushion or safety valve for the economy and as an informal social protection mechanism for migrant households. They are also a source of foreign currency, which helps keep the current account deficit under control even in periods of economic slowdown due to political instability. Of note, remittances contributed significantly to poverty reduction in Nepal during 1996–2009. Despite an internal conflict that started in February 1996 and continued until the Government signed the Comprehensive Peace Agreement on 21 November 2006 with the Communist Party of Nepal, there was a significant decrease in poverty. It dropped 11 percentage points from 42 per cent in 1996 to 31 per cent in 2004 (Tiwari 2007). The Government also benefits from migration through the fees generated during the recruitment process as well as from those paid by recruitment agencies.

On the negative side, remittances put inflationary pressure on the economy, which pushes up the prices of land and housing (Tiwari 2010). Notably, the rate of inflation has been trending higher in recent years, peaking at 11.6 per cent in 2009, partially due to remittance flows (World Bank 2011). In addition, remittances have contributed to the appreciation of the real exchange rate and expansion of the non-tradable sector. To counteract the negative effects, Nepal Rastra Bank, the central bank of Nepal, has made efforts to use fiscal and monetary policies to maintain economic stability. This requires increasing investment in the tradable sector in the long run.


2 The member States of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.