Origin of remittances

The bulk of remittances received by countries in South and South-West Asia comes from temporary labour migrants. One obvious reason for this is that temporary labour migrants now outnumber those who have migrated permanently to settle in Australia, Europe or North America. Another factor is that most temporary labour migrants move overseas without their families with the aim to remit their earnings back home, while permanent emigrants leave their country of origin for a number of different reasons and tend to take their families with them and, as a matter of course, spend more money in the country of destination. Notably, some of the temporary labour migrants in GCC countries remain in the host country for an extended period but are not usually given the opportunity to permanently settle there.

There are a number of driving forces behind remittances, including among others, pure altruism, insurance motives, strategic motives, such as expecting non-monetary returns from the remittance-receiving family, and investment motives. Research has shown that for temporary labour migrants, insurance or strategic motives seem to be the main drivers to remit, while for permanent emigrants investment motives have a greater importance (Rapoport and Docquier 2005, Akkoyunlu and Kholodilin 2006).

Although remittances are more often associated with labour migration, all migrants, including refugees and asylum-seekers, have the potential to remit. This potential largely depends on the conditions the migrants face in the host country. Remittances made by temporary migrant workers or permanent emigrants are usually welcome, while those sent by refugees are sometimes considered controversial as they may be sent with the intention to help perpetuate existing conflicts or strengthen oppositional political movements (Kapur 2004). In some countries, diasporas have provided support to warring parties while in the post-conflict era, large diasporas have the potential to be sizeable sources of investment funds in the rebuilding period (Van Hear 2003).

The central banks of most countries of the subregion publish remittance data by country of origin. According to data from the Central Bank of Bangladesh, between 60 and 70 per cent of remittances received by the country in the past decade originated from GCC countries (IOM 2009). Among these countries, most remittances came from Saudi Arabia, the United Arab Emirates and Kuwait. Apart from GCC countries, the United States of America (about 15 per cent) and the United Kingdom of Great Britain and Northern Ireland (about 10 per cent) were important countries of origin of remittances.5 Similarly, about 60 per cent of remittances to Sri Lanka during a 5-year period up to 2009 originated from GCC countries plus Jordan and Lebanon, 18 per cent from countries in the European Union and only 4–6 per cent from countries in North America (Sri Lanka Bureau of Foreign Employment 2009). Similar shares were also reported from Pakistan in 2010, with 60 per cent of the remittances from GCC countries, 20 per cent from the United States of America, and 10 per cent from the United Kingdom of Great Britain and Northern Ireland (State Bank of Pakistan 2010).

Despite the country’s strong reliance on remittances, the Central Bank of Nepal does not publish data on remittance inflows. However, according to the Nepal Living Standards Survey conducted during 2003 and 2004, a total of 27 per cent of remittances came from GCC countries and 23 per cent originated from India (Nepal 2004). The inflows and proportion from GCC countries are expected to rise in line with the increased number of Nepalese migrants to these countries.

 

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5 See www.bangladesh-bank.org/econdata/wagermidtl.php.