Mandatory savings scheme with special benefits for remitters on cards

The Ministry of Expatriates' Welfare and Overseas Employment is preparing a new policy offering a package of services to migrant workers returning home. The package, aimed at boosting remittance inflow, will include a first-ever compulsory savings scheme along with special benefit packages.

The savings scheme will take part of a worker's remittance to which the government will add an amount. This entire sum will be returned with interest to the remitter when they come back.

Expatriates will be able to use this fund for productive investment and business opportunities including business start-up support, access to banking and microcredit after returning home.

The  policy, The National Reintegration Policy for Migrants, is being prepared for two main reasons – the overall welfare of the expatriates and boosting remittance inflow to beef up the waning foreign exchange reserve, Dr Ahmed Munirus Saleheen, secretary to the Ministry of Expatriates' Welfare and Overseas Employment, told The Business Standard (TBS).

"The idea of the savings scheme is that the remitters will give us a part of the remittance and the government will add some more to it. When they come back to the country, the entire sum will be returned to them with interest," he said.

"For example, if an expatriate sends Tk100, we will take Tk10 from that amount and add Tk5. So, Tk15 will be deposited in the bank account. Upon return, Tk15 will be returned to the expatriate, plus the interest," the secretary said.

Under the new policy, some special benefit packages (i.e. offers, gifts) from banks and financial institutions will also be given to returnees and their family members based on remittances received.

About the additional benefits, Munirus Saleheen, who is also the chairman of Probashi Kallyan Bank, said, "This will be determined through discussion with banks and other financial institutions."

"After getting approval from the top level of the government, we will finalise the proposals under the new policy. We will go for massive publicity later on so that migrants are encouraged to remit through formal channels," the secretary added.

The Reintegration Policy will encompass a wide range of comprehensive measures and services designed to facilitate the economic, social, and psycho-social reintegration of returnee migrants, including creating a returnee database, one-stop service centres and entrepreneurship training.

The government is now offering a 2.5% cash incentive on remittance, up from 2%, to encourage migrants to use legal channels to send money home.

Earlier, a new insurance scheme for the expatriates was introduced on 10 December under which any Bangladeshi outbound worker will be eligible for a Tk10 lakh insurance coverage – up from the previous Tk4 lakh – for workplace deaths and permanent disabilities like loss of the eyes or hands.

The Bangladesh Bank has already been taking various measures to boost the remittance flow in the formal channel.

Under the new policy, commercial banks and financial institutions will also promote the importance of transferring remittances through formal channels and extend flexible financial services, including digital wallet transfer for migrants, especially for returnee women migrants.

Comprehensive financial literacy training, budgeting and financial counselling will also be introduced to the migrants for the proper utilisation of remittance.

"We have more than one crore expatriates. After consultation with various stakeholders in the immigration sector, the government has come up with these proposals in the draft policy with an aim to provide economic benefits to migrants as they return home," Asif Munier, a migration expert and also the consultant of International Labour Organisation (ILO) told TBS.

"The proposals are crafted in such a way that can have a positive impact on the flow of remittances," he said.

"A specific portion of the remittances sent by expatriates will be compulsorily deposited in an account. They will get it back after they return from abroad. Along with the principal amount, there may be various incentives under the scheme," Munier said.

Regarding the special benefit packages, he said, "Just as commercially important persons get various benefits from banks, remitters will get a gift or something like that from financial institutions in exchange for sending money through the legal channel. Besides, they will get benefits based on various investments."

The migration expert, however, thinks that the experience of other countries should be taken into account before implementing the policy.

"Since it is a new policy, we should go through some sort of trial. There will also be some risks. So, it has to go through monitoring," he said, adding: "There can be a panel of experts in financial transactions to monitor these issues."

Bangladesh is the sixth-largest source country for migrants  globally, and the eighth-largest remittance-receiving country, according to the International Organisation for Migration (IOM).

The country sent the highest-ever 10.28 lakh workers (till November) this year and is likely to cross the 11 lakh mark by December, according to data from the Bureau of Manpower, Employment and Training.

Following Russia's invasion of Ukraine in February, which put a squeeze on the country's external trades and foreign exchange reserves, some 1.30 crore Bangladeshi nationals staying abroad came to the spotlight.

In the last fiscal year, they remitted $21 billion to home – the cheapest and easiest forex earning for Bangladesh.

As the government looks to boost migration and remittance inflow further amid a dollar crunch, the authorities have been instructed to provide expatriates with more benefits than before.

Officials hope the facilities, in return, will encourage the Bangladeshi diaspora to send more greenbacks home through the formal banking channel instead of the illegal but more profitable "Hundi" that offers better rates.

"The savings scheme can be promoted so that migrants do not face difficulties after returning to the country. But looking at key issues like high immigration costs also increases their savings opportunities," Professor Dr Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, told TBS.

"So, it cannot be said right now that the money will flow from the informal to the formal channel because of the savings scheme. It is not clear yet," he said.

"It should also be seen whether the health of the banking sector is strong or not. Because if it is not done properly, it can end up being a disincentive," Mustafizur Rahman said, adding: "If the policy is prepared comprehensively, the country and the migrant workers will benefit from all sides." 

After a 14% growth in July and then a steep fall for three consecutive months, November remittances grew 4.54% compared to October. Bangladeshis abroad transacted $159 crore to home in November. 

Amid the crisis for the US dollar, the central bank undertook a slew of measures for remittance resurgence, including relaxing money transaction rules, waiving transaction fees and increasing the number of money exchange shops abroad. 

Besides, the central bank allowed popular mobile financial services such as bKash, Rocket and upay to team up the exchange houses abroad for bringing in foreign currencies. This will merge three money transaction layers into one, paving the way for money transactions to be instant.

Comprehensive reintegration measures

A wide spectrum of services is required to facilitate the economic, social, and psycho-social reintegration of returnee migrants.

These include health services including mental health, financial services, skills recognition, re-skilling for employment in the domestic labour market, re-migration, support for small and medium-sized enterprises (SMEs), access to social services including legal support, and counselling support for career development.             

Returnee database, One-stop service centres  

The Returning Migrants Management of Information System (ReMiMIS) will be enhanced to establish a comprehensive database with information on the educational attainment, skill levels, experience, and aspirations of all returning migrants, especially women migrants. 

One-Stop Centres for Migration Services will be established for migrants, including returnee women and gender-diverse groups, to access all information and obtain specific services needed by returnee migrants and their family members.

Reintegration support programmes will be decentralised and linked with One-Stop Centres for Migration Services and other local-level government structures to ensure that all returnees can avail of support.

The government will also ensure Active Labour Market Measures for the reintegration of returnee migrants.

Referral mechanisms will be established to facilitate returnees' entry into local labour markets through One-Stop Centres for Migration Services.

Integration into labour markets will be prioritised through a multi-dimensional skill development programme. 

Besides, the capacity will be built in diplomatic missions to explore emerging labour markets for the employment of skilled returnee migrants. 

"Donor organisations are focusing on the reintegration of returnee migrants in the next few years and so does the government. Since it is a priority for both sides, we hope the policy will be implemented soon," said migration expert Asif Munier.