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Impact of Remittances on Pakistan’s Economy – History and Wa

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by

Ijlal Mobin

on 11 October 2014

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Transcript of Impact of Remittances on Pakistan’s Economy – History and Wa

SCHEMA
What is remittance?
Types of transferred money.
Forms of remitted money.
Channels
Legal
Illegal

TYPES OF REMITTANCE TRANSFERS
Domestic Transfer
FORMS OF REMITTED MONEY
Family Remittances
Community Remittances
Migrant Worker Remittances
Social Worker Remittances

CHANNELS OF REMITTANCE
Banks channels
Wire transfers (SWIFT)
Money transfer agencies
Foreign exchange broker/firms

REASONS FOR INCREASE IN REMITTANCES
Increased demand for labor in M.E.
New job opportunities in Europe
Job opportunities in the US and UK
Australia: an attractive job market
Investment return in host country & Pakistan
Shift from unofficial channels to official channels
Low transaction cost over different channels

REMITTANCE
The transfer of money by migrant/non migrant workers residing in foreign countries to their home countries for many different purposes.

Impact of Remittances on Pakistan’s Economy – History and Way Forward
Remittances within the same country
International Transfer
Remittances between two different countries
Inward Remittance
Outward Remittance
Sent from foreign countries to one’s home country
Process of sending money to foreign countries from one’s home country

(Hawala/hundi etc)
Fei ch’ien System
Chit System – Yonder day’s ATM
Chop System

Whitened black money
Under-voicing
Kickbacks and commissions
Illegal earnings (smuggling, extortion etc)

Legally accepted conduits:
Illegal means:
Others:
Rapid increase in out migration or workers
MAJOR HISTORICAL EVENTS AND THIER IMPACT ON REMITTANCES
The nuclear tests 1998
From USD 1.5 billion in 1997/98 to USD 1.06 billion in 1999/2000
Increased money transfer through unofficial means
The 9/11 attacks on the US
Increased vigilance post 9/11
Anti-money laundering law 2002
The real estate collapse in UAE 2009
Pakistan Remittance Initiative (PRI) 2009

CURRENT SCENARIO
Remittances and GDP
One million dollars increase in Remittances
Eleven million dollars increase in our GDP
Remittances and Poverty Rate
More Remittance
Less Poverty

Remittances and Employment
Increase in aggregate demand
More consumption

Less unemployment

FUTURE OUTLOOK
Global remittances will reach $515 billion in 2015
Lion’s share for developing nations
7th largest remittance receiving state
Numeronym-11
New vistas:
East Asia & Far East
Scandinavian Countries
EU
Saudi Arabia
New financial instruments by the banking sector
RECOMMENDATIONS
Focus on official channels
Beyond monetary remittances
Generation of new strategies
Setting-up remittances market
Direct remittances towards investment activities
New migration policy
Reducing the cost of migration
Improving the recruitment system policy
Improving the working environment of migrants
CONCLUSION
"Whether Pakistan will be able to sustain the recent increase in remittances depends on whether the rise in labor migration is to continue and, more importantly, if the composition of the migrating workforce continues to tilt in favor of highly skilled workers. Obviously, any positive impact of a continued export of high-skilled labor should be carefully weighed against the potential cost of this ‘brain drain’. "
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