UNITED NATIONS - / MaximsNews Network / 11 June 2008 -- The following is the full text of a statement delivered by Her Excellency Ismat Jahan, Ambassador and Permanent Representative of Bangladesh to the United Nations, during the "Diplomatic-Corporate Dialogue for Development" at the Waldorf Astoria in New York City on 03 April 2008.  The forum was hosted by the Permanent Mission of the Republic of Liberia, whose aim was to foster discussion and interaction between Permanent Representatives regarding the implementation of a diasporic development model in post-conflict countries.  See Ambassador Milton Nathaniel Barnes' "A Proposed Alternative Development Model".  Also see introductory remarks made by Ambassador Milton Nathaniel Barnes and statement delivered by Ambassador Paulette Bethel.

"Ambassador Nathaniel Barnes,
Excellencies,
Dear Colleagues,
Ladies and Gentlemen,

I welcome this opportunity to speak on an issue which has great relevance for countries whose economies are largely dependent on external assistance be it foreign aid or foreign direct investment. I owe special thanks to my dear colleague, Ambassador Nathaniel Barnes for allowing me this opportunity.

High dependence on foreign aid only perpetuates a country’s dependence on external assistance. It sets in motion a vicious cycle of dependence. The cost of debt servicing together with the cost associated with externally imposed conditionalities and structural adjustments tend to make the situation even more difficult in the long run. We meet here today, to discuss alternatives to traditional models of development by thinking “outside the box”.

The proposed “Alternative Development Model” which is the subject-matter in our discussion today, merits serious consideration. Under the Model the Diaspora is asked to play a more active role in the economic development of the parent country through new and innovative forms of investment. While having greater advantage over traditional FDI, such expatriate induced investments would impact on poverty alleviation through generation of employment opportunities and empowerment of women.

Ladies and gentlemen,

From time immemorial, trans-border movement of people have indeed enriched civilization through cross fertilization of cultural heritage and technological know how. The development of host countries have indeed benefited from cheap labours, skills and foreign brains. In comparison, the phenomenon of remittance, i.e capital inflow from expatriates is fairly new.

In my country, Bangladesh, remittances today, contributed more than 10 per cent to the country’s GDP which is more than 5 times of foreign assistance. It remains the largest source of foreign exchange earning.

According to latest estimate, the total figure is 5 million. Here in the United States alone, there is around 0.45 million Bangladeshi expatriates, of which around 0.25 million live in the tri-states of New York, New Jersey and Connecticut. Today, Bangladesh is among the top 10 recipient countries of workers' remittances. Last year, the amount of remittance sent by expatriate Bangladeshis has exceeded 6.5 billion US dollar. The surveys indeed indicate that Bangladeshi expatriates living in the USA and the UK tend to save more abroad. A possible explanation for this is that the Diaspora in these Western countries is more attached to their country of residence than the short-term unskilled or semi-skilled labour migrants in the Middle eastern countries. They establish a family, a social network, a business, etc. The future of these families lies in the destination country and consequently they remit less of their income home.

Bangladesh has a large expatriate community about 5 million, living in countries of the Middle East and the South East Asia as well as in the UK and in the USA. Sending more than US $6.5 billion. Most of them are not even aware of the contributions they have been making to the national economy.

What do migrants’ families use remittances for?
Roughly, earnings of migrants can either be consumed, invested or saved in the country of present residence, or remitted to the home country and subsequently consumed, saved or invested.

Like in many other developing countries, most surveys indicate that in Bangladesh, the majority of remittances are used for consumption. Investment in business or traditional productive uses and in savings is rather small, but remittances are also seen as important financial means for investment in human capital (i.e. education), housing and land purchase.

But we are aware that for the sustained economic growth of a country, the expatriate community can be a key stakeholder in foreign direct investment both as a catalytic agent as well as in the form of direct entrepreneurship. This eventually reduces the dependency on ODA and FDI and thus creates a better prospect of economic emancipation at national level.

It goes without saying that the potentials of the Diaspora, the expatriates, can and must be harnessed for the development of the country of their origin.

Generally, speaking migrant workers and expatriate Bangladeshis however, often lack the knowledge to make profitable investments in Bangladesh. Whatever investment is made, it is largely done in trade, transport and other services sector which are already crowded by suppliers, thus pushing the profits to very low levels.

There is thus a need to set up structural mechanisms in facilitating meaningful partnership between the country of origin and the expatriate community.

To provide more emphasis to the overseas employment sector, the Ministry of Expatriates’ Welfare and Overseas Employment was set up in December 2001. The main functions of the Ministry are to ensure welfare of the expatriate workers and enhancement of the overseas employment as well as to enhance the flow of remittance. In specific Bangladesh embassies abroad, the Labour Wings are tasked to encourage the expatriates to invest back home.

At our national level, for example, various steps have been taken in the first place, to simplify the remittance/ monetary transaction system. The expatriates are encouraged to make use of official banking systems to remit money home. These include reduction in the commissions or banking charges on remittances, improved banks' efficiency. All remittances are tax free, if sent through banking channels.

Some of our National Banks have extended their corresponding branches abroad to facilitate remittance of money for the Bangladeshi Expatriates. There are also private “exchange houses” set up by Expatriate Bangladeshis.

We do however, recognize the need to further improve the services by banks and exchange houses and overall creation of investment-friendly environment to encourage NRBs to remit more in the country specifically for the purpose of gainful investment.

Tapping into non-resident remittances by facilitating investment

A number of actions and policies are aimed at attracting investment by nonresidents.

Launching bonds and investment schemes of banks

Bangladesh Bank has launched various bonds to attract foreign exchange from migrants and expatriates.  The Wage Earner Development Bond (1986) purchased by expatriates are tax-free. Such bonds can be purchased by an expatriate at Bangladeshi banks and embassies abroad.

Promoting investment in Bangladesh and offering assistance

Initiatives are also taken by the private sector to encourage investment in Bangladesh. These initiatives are particularly apparent in Sylhet due to the strong link with the expatriate community. One example is the Investors Forum Sylhet Bangladesh.

Our experience with the first ever Non-Resident-Bangladeshi (NRB) Conference held in our capital, Dhaka in December 2007 was quite encouraging. The Conference aimed at establishing a network between the national policy-makers and private investors living in Bangladesh and the expatriate Bangladeshis. Non-Resident Bangladeshis (NRBs) expressed their eagerness to make available their expertise and investment in national capacity building in areas of manpower training and skill development; education and transportation system. Four separate seminars were held on issues of upgrading the skill of Bangladeshi workforce to international standard, developing a sustainable transportation system, improvement of education and creating a congenial environment for investment.

Encouraging investment by Bangladeshi Expatriates:

Government has liberalized investment policy for Expatriate Bangladeshis.

The government offered a generous incentive package to the NRBs in attracting investments from them in the fields of textile industry, pharmaceuticals, leather and leather goods, ceramics and frozen foods sector. The incentive package included pre-investment information and counseling service, faster immigration facilities at airport, registration /approval of foreign, joint-venture and local project, facilitating utility connections (electricity, gas, water & sewerage, telecom etc.), assistance in obtaining industrial plots, approving remittance of royalty, technical know-how and technical assistance fees, facilitating import of capital machinery & raw materials, and approving foreign loan suppliers' credit etc.

Important Non-Resident Bangladeshi (INRB):

It is obvious that remittances of Expatriate Bangladeshis are contributing significantly to increase the foreign exchange reserve of Bangladesh. Government of Bangladesh has decided to select some Important Non-Resident Bangladeshi (lNRB) to honour them as recognition for contributing to the national economy. Any Expatriate Bangladeshis who will invest US $0.5 million (half million) capital in the industrial sector will be eligible for an INRB. Notably, investment in agricultural processing industrial sector by the Expatriate Bangladeshi was tax free till 30 June, 2005.

Ladies and gentlemen,

Our experience showed that the expatriate Bangladeshi community given their long stay abroad is better placed in establishing network with potential foreign investors who would be interested in investing in their country of origin.  Notably, as envisaged in the “Alternative Development Model” under discussion today, the “ tripartite partnership” of the government of the country of origin, a core group of investors from the Diaspora and a select group of foreign investment institutions or investors with FDI experience can be a viable development policy option for countries like Bangladesh, Liberia or others placed in similar milieu. To this “tripartite arrangement”, we can also add another component of “local entrepreneurs”. Our experience shows that in certain sectors like agriculture and fisheries, the local entrepreneurs given their comparative advantage in the  acquaintance with the local environ, can play a key role in strengthening the private-public sector investment collaboration.

Similarly, in supporting public-private partnership, Joint stock Company or Diaspora Investment Fund could be formed with majority shareholding by expatriate and the  government owning minority stakes.

In Bangladesh, the recent NRB Conference has created a new sense of enthusiasm among the expatriates to participate in the country’s development through investment.

The Conference predicted that 10 billion US dollar investment by expatriate Bangladeshis could revamp Bangladesh economy. We are hopeful that the Bangladeshi Diaspora would continue to come forward with new investments and technical assistances. At the policy level, the Bangladesh Government will continue to encourage more investments from the expatriate community. However, we yet do not have an Expatriate Bangladeshi Database.  Nonetheless, in the USA, a network of young and talented professionals from among the Bangladeshi Diaspora (NYBAP) is doing a great job in liasing with western investment and financial institutions to invest in joint venture projects in Bangladesh. The Bangladeshi expatriates can act to strengthen Bangladesh’s capabilities in negotiating and participating in the world economy. In addition, skilled/educated expatriates, having obtained productive values through their professional/occupational experiences, can add to the needed quantity and quality of human capital in back home.

In the final analysis, the significance of expatriates matters very little for their home country’s development unless an effective expatriate reconnection is actualized.  The reconnection strategy involves a systematic process through which expatriates can be reintegrated into the socio-economic and political life of their homeland. For an effective expatriate reconnection, two factors are important. One is a set of mutual benefit conditions and the second is a planning and policy framework for reconnection. It has to be a win-win situation both for the expatriates and the home country.

Ladies and gentlemen,

I have largely referred to our experience with the NRB Conference in showcasing that the “experience, expertise and capital funds” of the Diaspora can play an important role in the long term development of a developing country. New and innovative mechanisms must constantly be designed to attract and channel the largely untapped potentials of the Diaspora.

Finally, I would be grossly remised if I did not commend the Permanent Mission of Liberia for taking this very important initiative in engaging the diplomatic and corporate sectors in a development dialogue involving the Diaspora. In post-conflict country like Liberia, the role of Diaspora in peace-building and sustainable development becomes even more crucial.

I thank you for your attention."  

Photos & Editing by Gloria Starr Kins, MaximsNews Society & Diplomatic Editor

Labels: United Nations, U.N., Ismat Jahan, Bangladesh, Foreign Investment, Remittances, MaximsNews, Gloria Starr Kins

 

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