Money matters: Experts discuss value of remittances

Say proper utilisation can help achieve national goals.

ISLAMABAD: Remittances form the backbone of Pakistan’s economy and their need will rise in the near future. This was said by International Islamic University Islamabad International Institute of Islamic Economics Professor Dr Atiqur Rehman on Monday at a seminar.

The event on ‘Valuing Worker Remittances in Pakistan and their Utilisation for Achievement of National Goals’ was organised by the Sustainable Development Policy Institute (SDPI).

Rehman underlined that Pakistan and China have agreed to increase bilateral trade by US$5billion. “This means $5billion increase in trade deficit, how could this be financed?” he said.



He also highlighted the opportunities to increase remittances’ inflow. He said investable part of remittances formulates a very reasonable amount, which can finance millions of job opportunities and development projects. “This investable portion puts no significant impact on the economy as it goes into capital intensive business. Federal and provincial governments could initiate projects financed by remittances,” he added. He said there was no audit system to determine profit and a proportionate tax for real estate business, while in comparison attraction of agriculture and industry decreases.

“The government needs to impose a tax if earning from plots exceeds the income tax slab and needs to put a restriction on the number of plots allowed per person. If the number of plots exceeds the limit, the tax rate should also be increased. The businesses creating high employment opportunities could be identified and provided a tax rebate,” Rehman said. He suggested that remittances could be diverted to energy projects and other profitable labour intensive businesses and development projects. He maintained that unemployment can be eliminated if remittances are properly utilised.



Dr Ghulam Muhammad Arif of Pakistan Institute of Development Economics said informal means of remittances are higher in Pakistan as compared to neighbouring countries. He said that highest migration was observed in Punjab and Khyber-Pakhtunkhwa, where economic prosperity is much better than Sindh and Balochistan, and where migration level is comparatively low. “We need to make poor communities part of the migration,” he said.

FAST University Assistant Professor Dr Khurram Nazir stressed upon documentation of economy and said that remittances are largely used for household and not for investment. “We need to facilitate and incentivise them, thus encouraging them to send money through formal channels. For this, the government needs to offer a high rate of return for remittances,” he suggested.

Published in The Express Tribune, August 11^th, 2015.