NEW YORK: India was the largest remittance-receiving country in the world, with migrant workers from the country sending home $69 billion in 2017, according to a report which said remittances to the Asia-Pacific region amounted to $256 billion last year.
The report ‘RemitSCOPE – Remittance markets and opportunities – Asia and the Pacific’ said India ($69 billion), China ($64 billion) and the Philippines ($33 billion) are the three largest remittance-receiving countries in the world in 2017. Pakistan ($20 billion), and Vietnam ($14 billion) are also in the top 10.
About 70 per cent of remittances sent to Asia and the Pacific come from outside the region and in particular from the Gulf States (32 per cent), North America (26 per cent) and Europe (12 per cent). By 2030, around $6 trillion in remittances are expected to be sent to developing countries by 2030: over half of these flows will arrive in the Asia Pacific regions, very often in small towns and villages.
Last year, migrant workers sent $256 billion to their families in the Asia-Pacific region, the report released by the International Fund for Agricultural Development (IFAD) said. The remittances represented 53 per cent of flows worldwide, growing 4.87 per cent since 2008, with rates flattening in recent years. Remittance outflows from the region amount to $78 billion, and 93 per cent of the flows remain in the region.
Remittances are particularly crucial in rural areas where poverty is the highest. Worldwide, an estimated 40 percent of the total value of remittances go to rural areas. However, in the Asia- Pacific region, remittances go disproportionally to countries with a majority of rural populations such as Nepal (81 per cent), India (67 per cent), Vietnam (66 per cent), Bangladesh (65 per cent), Pakistan (61 per cent) and the Philippines (56 per cent). Remittances to rural areas are generally costlier due to expenses associated with offering access points in distant locations.
Remittances contribute to the region more than 10 times the official development assistance in the region, the report said. In the region, 400 million people, one out of every 10 people, are directly affected by remittances either as a sender or as a receiver.
The report said while remittances benefit about 320 million family members in the region, most of them in rural areas, remittance markets still need to transform to ensure that families can benefit fully from the flows.
“The promise of technological innovation in the remittance marketplace could bring about a fundamental transformation for hundreds of millions benefiting from these flows. But this transformative change has not yet happened,” IFAD Senior remittance expert Pedro De Vasconcelos said.
In addition, De Vasconcelos pointed out that outdated regulatory barriers on both sending and receiving ends result in higher and less transparent costs for the 2 billion transactions a year – most amounting to just USD 200 to USD 300 each. They also make it less likely and more difficult to convert remittances into savings and investments.
According to the report, cash-to-cash transactions remain by far the most common form of transfer. It is only recently that technology is beginning to move markets towards account-to-account transfers through digital operations. There are now more than one million payment locations through the region, reflecting a greater digitalisation of transactions.
“For digitalisation of transfers to happen, regulators and private sector companies need to work further together to harmonize legal and regulatory frameworks between countries and support the design of products driven by customer needs,” De Vasconcelos said.
In the region, families generally spent about 70 per cent of remittances to meet basic needs, such as food, clothing, healthcare and education. The remaining 30 percent, amounting to $77 billion, could be saved and invested in asset-building or income-generating activities, helping families to build livelihoods and their future, De Vasconcelos added. The report said while financial inclusion has increased since 2011 with half of adults in the region having a bank account (excluding high-income economies) this does not represent the reality of the substantial majority of remittance receiving families where financial exclusion remains predominant.