Expatriate workers increasingly help float domestic economy

Published: November 27, 2012
Cheap to transfer: 2.8% is what you can expect to pay in fees on amounts you send from Saudi Arabia to Pakistan, while 7.5% is the average cost of remitting money for the top 20 bilateral remittance corridors. PHOTO: FILE

Cheap to transfer: 2.8% is what you can expect to pay in fees on amounts you send from Saudi Arabia to Pakistan, while 7.5% is the average cost of remitting money for the top 20 bilateral remittance corridors. PHOTO: FILE

KARACHI: Developing countries are expected to receive $406 billion in remittances in 2012, which is 6.5% higher than the remittances they received in 2011, according to a recent World Bank report.

The World Bank projects that remittances to developing countries will grow by 7.9%, 10.1% and 10.7% in 2013, 2014 and 2015 respectively, to reach $534 billion in 2015.

While the international economic downturn has adversely affected remittance flows to Europe and some other regions, South Asia is expected to fare much better than previously estimated, the report says. Remittance flows to South Asia are expected to clock in at around $109 billion in 2012, up by 12.5% over 2011, it said.

According to the State Bank of Pakistan (SBP), the country received remittances of $13.2 billion in fiscal 2012, which were 17.7% higher than the preceding fiscal year.

Similarly, in the first four months of the current fiscal year, remittances to Pakistan stood at $4.9 billion, higher by 15% compared to remittances received in the corresponding four-month period last fiscal year.

“Regions and countries with large numbers of migrants in oil-exporting countries continue to see robust growth in inward remittance flows, compared with those whose migrant workers are largely concentrated in the advanced economies, especially Western Europe,” the World Bank report says.

According to the Bureau of Emigration’s Assistant Director Farrukh Jamal, more than 80% of the manpower that Pakistan has exported resides in Saudi Arabia. “Almost 90% of recent emigrants from Pakistan currently work in the Middle East,” he told The Express Tribune in an interview two weeks ago.


The largest single-country chunk of remittances that Pakistan received in fiscal 2012 – amounting to $1.1 billion – was from Saudi Arabia. It was followed closely by the United Arab Emirates (UAE), with $963.1 million remitted from the country in the same period. The United States ($795.3 million) was the third biggest source of remittances during fiscal 2012.

Cost of remittances

The World Bank report says the high cost of sending money home is an “obstacle to growth of remittance flows.” It averaged 7.5% in the third quarter of calendar year 2012 for the top 20 bilateral remittance corridors, and 9% for all other countries for which cost data were available, it says.

Interestingly, the two most important bilateral remittance corridors for Pakistan – UAE-Pakistan and Saudi Arabia-Pakistan – are among the “five least costly corridors” in the world, according to World Bank’s Remittances Prices Worldwide project.

For example, sending $200 from the UAE to Pakistan costs $4.9, which translates into 2.4% and includes the transaction fee and exchange rate margin. Similarly, transferring the same amount from Saudi Arabia to Pakistan costs $5.6, or 2.8% of the remitted amount.

On the other hand, the World Bank says, the Singapore-Pakistan remittance corridor is among the “five most costly corridors” in the world: it costs almost $57 to transfer $500 from Singapore to Pakistan, which comes around 11.4% of the remitted amount.

Workers’ remittances and compensation of employees for Pakistan – which comprise current transfers by migrant workers and wages and salaries earned by non-resident workers – were 5.5% of the country’s gross domestic product in 2010, the latest year for which the relevant data is available on the World Bank’s website.

Published in The Express Tribune, November 27th, 2012.

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Reader Comments (16)

  • hasan
    Nov 27, 2012 - 6:16AM

    There is nothing correct about these figures, Pakistan Stock market is probably worlds most unregulated and corrupt market where anyone can white stashed black money without checks. All these remittance is nothing but looted black money coming back. World over pakistanis are laid off after recession, domestic economy have completely collapsed, there is no govt and the country is basically run by the non state actors. Who will deposit money here? It defies common sense as mentioned by several economists. Its true that South Asia will see rise in remittance, because of India which tops the list to get 75 billion of clean investments and remittance, much more than china. Not some muddy corrupt black money like ours.


  • Nov 27, 2012 - 7:22AM

    If 2.8% is the cost of remittance it can not be termed as cheap if sent through banking channels This may be because of a fixed charge levied on the remittance irrespective of the amount. Hence lower the amount of remittance, higher the cost of remittance in terms of percentile.


  • Anonymous
    Nov 27, 2012 - 9:47AM

    I dont know where you live and where you get these absurd ideas from, I am an overseas pakistani and I regularly send money to Pakistan. Similarly numerous Pakistani do the same.


  • Wasim
    Nov 27, 2012 - 10:10AM

    @Hasan.. Poor knowledge takes you no where.. do some reserch before posting on any forum.


  • Pakistani
    Nov 27, 2012 - 10:39AM

    @hasan….why we always criticize our country and people…do u really think India is corruption free….i am living in Dubai with many indian colleagues and the story they tell me is more worst than Pakistan…..so grow up and try to do some thing constructive for your country if you want to


  • Pakistani
    Nov 27, 2012 - 12:32PM

    @Anonymous….being an overseas Pakistani our heart is filled with love for our beloved country and nation and this is why because living overseas makes us think the importance of our country. I request to the people to be constructive and positive rather than being always negative .Negative attitude will take us NO WHERE .


  • Shehryar
    Nov 27, 2012 - 1:19PM

    For example, sending $200 from the UAE to Pakistan costs $4.9, which translates into 2.4% and includes the transaction fee and exchange rate margin. Similarly, transferring the same amount from Saudi Arabia to Pakistan costs $5.6, or 2.8% of the remitted amount.

    I did not expect such a stupid anology from ET…I know for Saudi at least…the transaction fees are fixed for certain ranges. For example, Western Union charges 25 SR for amount up to 25,000 SR while banks usually charge SR 10-25 only for amounts up to 25,000 SR. So the example of 2.8% with respect to 200$ is absurd. There is no transaction fee in Saudi which is charged as a percentage of remitted amount.


  • meekal a ahmed
    Nov 27, 2012 - 1:56PM


    That is an excessive statement. ALL this inflow is not “black money coming back”. Some of it certainly is.


  • ishrat salim
    Nov 27, 2012 - 2:06PM

    @Pakistani: I believe in my opinion ” good governance with corruption is acceptable, than bad governance with corruption “…..so, except some country, most of the countries in the world are not free from corruption, yet due to good governance, the rule of law & system, corruption is camouflaged….e.g most countries spend 90 % & swallow 10 %, whereas in Pakistan we swallow 90 % & spend 10 % on our peoples welfare…that is the difference…my dear Watson.


  • Pakistani
    Nov 27, 2012 - 2:35PM

    @ishrat salim…..i admit the situation is not good but keep complaining and criticizing will not solve the problems…rather complaining its better to work as much as possible on our part to bring change in the society…for example in my area in karachi no body cares about the cleanliness of the area.If you talk to some one they will say “IT IS THE RESPONSIBILITY OF THE GOV”. Gov can not clean each and every street of the country. Being a responsible citizen it is our duty also to make sure the things are working correctly.


  • Usman
    Nov 27, 2012 - 3:26PM

    what nonsese.No transaction fee is charges if you seend minimum Rs.8,000 from UAE


  • Someone in the know
    Nov 27, 2012 - 3:51PM

    Hmm… I am quite surprized by the FEE being mentioned here for Remittances to Pakistan. I work for a bank and as part of the Remittance department itself. Almost 95% of all remittances coming to Pakistan from Saudia, UAE and UK are to be processed without a single rupee being charged from the Remitter or Beneficiary.

    Other than Western Union, almost 99% of all Exchange Companies in UAE and UK and Bank Alrajhi and Bank AlBilad in Saudia are required to remit funds to Pakistan without charging a single US cent. These companies are being reimbursed by the Government of Pakistan for their services, albeit such reimbursements are currently more than 11 months delayed. However, as these companies are working under contractual agreements with Paksitani Banks, they are bound, by their signed agreements, to deliver FREE SERVICES to Pakistani Remitters.

    There are a number of correspondents, all across the globe, that are part of this FREE SEND MODEL.


  • Pakistani
    Nov 27, 2012 - 4:48PM

    sending money from UAE through HBL or UBL is absolutely FREE…no matter how much the amount is


  • Sheikh Ali Tariq
    Nov 27, 2012 - 6:29PM

    @ hasan:

    Dude you need to read some news when you are back to your normal self. India to receive 75 Billion clean investment is a joke!!!!

    Recently I read at Bloomberg that Walmart has suspended some of its top staff in India due to corruption allegations;

    The 3G scam in India led to the courts there cancelling mobile phone operating rights worth billions of dollars of foreign companies.

    Stop kidding yourself and stop claiming things you know nothing about. We live in a corrupt world where 3 American Generals are under going investigations for scandals (which I don’t want to discuss here); China’s last President said in an interview that the biggest threat to Chinese growth is corruption;

    And India…..you wanna know more; dude India is the mother of all corrupt societies; it has corruption in its airline industry, in its media, telecom, politics, agriculture and only God knows where else.

    I don’t mean to say Pakistan is all rosy; but the fact is nothing has been proved by the courts against our Airline industry, telecom industry or agriculture sector; on the other hand India is in deep mess.


  • Ishrat salim
    Nov 27, 2012 - 8:30PM


    Did I say anything wrong ? Is this not going on in our country ?……let us face the truth, only then we can improve ourselves.


  • Hasan
    Nov 27, 2012 - 8:35PM

    Here is my research to all those commenting.. Lets accept that we are fooling ourselves with these fudged numbers.

    (search google for IGC report on Pak remittance).. Top reasons for increase in Pak remittance in IGC report

    Shift in remittances from formal to informal channels
    Whitening of black money earned in Pakistan through remittances
    Transfer of undeclared export earnings through remittances
    Transfer of earnings from illicit/illegal activities (kickbacks, commission, drugs,
    artifacts etc.)
    Transfer of receipts from sale of assets abroad (apartments, houses, real estate)
    acquired through genuine earnings/transfer or through transfers of black money or
    income earned through illicit/illegal activities.

    This is ET report on how dishonestly FBR gives tax amnesty to anyone bringing in money.. absolutely no check

    Here is another report that highlight trend of Pak emmigration (people leaving this country forever). And with recession in West, how come we see such rise?

    Europe’s migration actually has turned negative since 2009 but Middle East remains positive.
    Between 2004~2009, North American migration did not increase.



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