Global remittances rise 7% to Dh1.17tr
Global remittances rise 7% to Dh1.17tr
By Saifur Rahman, Business Editor Published: March 31, 2008, 00:09
Dubai: Global remittances rose seven per cent last year to $318 billion (Dh1.17 trillion) up from the previous year’s $297 billion, according to the latest World Bank report.
India topped the global list of the remittance recipients with $27 billion (Dh99.1 billion), followed by China with $25.7 billion (Dh94.32 billion), Mexico having received $25 billion (Dh91.75 billion), the Philippines $17 billion (Dh62.39 billion) and France with $12.5 billion (Dh45.88 billion).
Rich countries are the main source of remittances led by the US with $42 billion in recorded outward flows in 2006. Saudi Arabia ranks as the second largest with $15.6 billion.
Of the $318 billion, about $240 billion (Dh880.8 billion) went to developing countries last year, which is eight per cent higher than the $221 billion (811.07 billion) recorded in 2006.
These flows do not include informal channels, which would significantly enlarge the volume of remittances if they were recorded.
“In many developing countries, remittances provide a lifeline for the poor,” said Dilip Ratha, World Bank’s senior economist, and author of the report.
“They are often an essential source of foreign exchange and a stabilising force for the economy in turbulent times.”
Despite a near stagnation in remittance flows to Mexico and a deceleration in other Latin American countries contributed to a slowdown in the rate of growth of remittances, its flow to developing countries remains robust because of strong growth in Europe and Asia.
As money transfers are being subjected to more intense scrutiny by regulators, the remittance industry has experienced a shift in remittances from informal to formal channels, the report says.
But the same regulations have also increased the documentation requirements for opening bank accounts. Large money transfer operators have therefore benefited from the shifting flows.
More recently, the remittance industry has also seen the introduction of cellphone-based remittances and several pilots involving remittance-linked financial products.
Mobile banking and partnerships with cellphone companies can potentially extend remittance services to millions of people in remote, rural areas. UAE’s largest telecom operator etisalat has started a pilot project to facilitate remittances through mobile phone.
These changes may imply a shift from cash-based remittances to account-based remittances in future.
“The remittance industry is experiencing some positive structural changes with the advent of cell phone and internet-based remittance instruments. The diffusion of these changes, however, is slowed by a lack of clarity on key regulations (including those relating to money laundering and other financial crimes),” the report said.
“Remittance costs have fallen, but not far enough, especially in the South-South corridors.”
Countries in South Asia and East Asia are experiencing robust growth in remittances. In the Philippines, remittances rose by 15 per cent year-on-year during the first nine months of 2007. Both Bangladesh and Pakistan reported over 20 per cent growth in remittances during the first nine months of 2007.
“High oil prices and strong economies in the oil-exporting Middle Eastern countries are contributing to strong demand for migrant labour. In India, the largest remittance-recipient developing country, private current transfers grew by 30 per cent in the first half of 2007,” he said.
While South-South migration nearly equals South-North migration, rich countries are still the main remittances source, led by the US, according to the World Bank’s new Mig-ration and Remittances Factbook 2008, released recently.
The US was also the top immigration country in 2005, with 38.4 million immigrants, followed by the Russian Federation 12.1 million.
Among low-income countries, India had the highest immigration volume with 5.7 million, followed by Pakistan with 3.3 million.
The top immigration countries, relative to population are Qatar with 78 per cent followed by the UAE with 71 per cent, Kuwait having 62 per cent, Singapore 43 per cent, Israel 40 per cent and Jordan 39 per cent.
In many developing countries, remittances provide a lifeline for the poor.”
World Bank’s senior economist