Editorial

Remittances and hope

The study also calls for a bigger effort to channelise money coming home through the formal banking system.

Editorial February 23, 2011

A pioneering new study commissioned by the Pakistan government and carried out by the International Organization of Migration, finds that remittances from overseas can quite dramatically change the quality of life for households that receive them, allowing families to pull children out of labour, purchase land or agricultural implements, pay for marriages or put them in savings. The small-scale study looks at 500 households in nine high-migration districts of the country and in Azad Kashmir. Its findings show the average total remittances received per household from the time the migrants went abroad were Rs 1.05 million.

The study offers us a better understanding of why so many people are determined to go abroad, sometimes putting their lives at risk to do so. We have heard accounts of stowaways and of those captured, or killed, by border guards while attempting to move across international frontiers. The small, dusty town of Taftan on the Balochistan-Iran border is a place where a number of such journeys begin. Some end not very far away. But the desperation of people to reach venues overseas remains unchanged, with a huge, illegal trade in the business flourishing in towns such as Gujranwala, where false documents of every kind are prepared.

Given, however, the highly positive impact remittances can have on families, offering roads towards development and social progress, the report recommends policy steps for the government. It suggests that the process of migration be made simpler and steps be taken to limit the exploitative role of middlemen who bank on the desperation of people. The study also calls for a bigger effort to channelise money coming home through the formal banking system, rather than the ‘hundi’ networks favoured by many and points out that money sent in from Saudi Arabia and other countries can quite significantly alter the fortunes of those able to send a member of their family overseas, with even unskilled labourers earning far more than they would at home.

Published in The Express Tribune, February 24^th, 2011.

COMMENTS (2)

Mazhar Mughal | 13 years ago | Reply The sustained rise of remittance flows to Pakistan is surely (at least partly) due to the diverse profile of Pakistani Diaspora. Pakisan receives remittances from three distinct regions (the Persian Gulf, North America and Europe), which follow divergent business cycles. The increased importance of UAE (especially Dubai) in the country’s total reciepts can be due to different reasons. One of them is money laundering and money whitening, as mentioned by Dr. Meekal. Another can be the rising indirect trade between India and Pakistan, for which remittances may serve as a convenient return corridor. The foremost reason, in my view, is probably the economic situation in UAE. Abu Dhabi, the most oil-rich of the seven Emirates is enjoying a boom, thanks to high International oil and gas prices. On the other hand, Dubai is going through a crunch period due to the construction bust, the latter causing loss of many jobs and repatriation of savings by the Pakistanis working there. There is anecdotal evidence of heavy investment by the Pakistanis in Dubai’s real estate sector. Some of these investments may now be repatriated through remittances, now that the real estate binge is over. These factors together are probably substantially inflating the formal and informal money transfers between UAE and Pakistan.

Meekal Ahmed | 13 years ago | Reply There is something fishy about these figures. Remittances kept rising even when the global economy had gone into it's worst slump since the Great Depression. There was the melt-down in Dubai as well. Some economists and tax experts speculate that there is a lot of money laundering going on. Section 111 (4) of the income tax act actually (and inadvertently?) encourages money laundering. Of course we have an anti-money laundering law. But no one has ever been accused of it as no one has ever been accused of tax fraud in 62 years.

Replying to X