The current fiscal year looks good for the remittance industry despite the continuous fall in number of workers going abroad for employment. At the end of the first five months of the current fiscal year which ended in mid-December 2018, remittance inflows have increased by 32 percent compared to the corresponding period in the last fiscal year, according to a recent report by Nepal Rastra Bank, the central monetary authority of the country.
Even though the number of workers going abroad for foreign employment decreased by more than 40 percent in the review period, remittance sent by the Nepalis working abroad reached Rs 376.59 billion.
In the first five months of the current fiscal year, 92,931 Nepalis left for foreign employment compared to 155,381 in the corresponding period of the last fiscal year.
One of the major reasons behind the surge in remittance despite the fall in number of people going abroad for employment, according to experts, is appreciation of the US dollar against the domestic currency. A weak domestic currency means the greenback sent from abroad is worth more when exchanging to local denominations.
The Nepal Rastra Bank (NRB) report also indicated other reasons for the surge in remittance inflows, with inward remittance increasing by more than 19 percent.
According to industry experts, inclusion of remittance sent from South Korea via formal channels was one of the reasons behind the surge in the volume of remittance.
“Earlier, Nepalis working in South Korea used to send back money via informal channels,” said Suman Pokharel, CEO of IME Remit, a leading remittance service provider in the country. “But these days, they are using formal channels and the remittance received is included in the national statistics.”
Another reason that Pokharel points out behind the surge is the government’s effective crackdown of illegal channels like hundi, through which a significant chunk of remittance was being sent to the country.
Meanwhile, the fall in number of Nepalis that went abroad for employment has been attributed to the decline in the number of workers going to Malaysia, one of the most popular destinations for Nepalis seeking foreign employment.
Only 2,532 workers left for Malaysia in the first five months of the current fiscal year compared to 49,057 departures in corresponding period of the last fiscal year, a drop by whopping 95 percent.
The fall in departures to Malaysia that plummeted after the government shut down various agencies charging hefty fees from Malaysia-bound Nepali workers during the visa processing phase has yet to pick up.
Labour migration to Malaysia under the new recruitment system has yet to resume. “If departures to Malaysia get back on track, it can provide a huge boost to the industry as remittance will increase by 15 to 20 percent,” said Pokharel.