May 202008


The atypical overseas Pakistani worker has been the butt of several jokes in this country: from exhibiting conservatism that maybe more in common with the Taliban of Swat and Waziristan region than say Karachi, Lahore or Islamabad, to dressing up in clothes that may be dated back to the time they migrated from this country or to flashy Western clothes more reminiscent of a mafia style than that of a low level salaried employee, to speaking Minglish, a mixture of a regional Pakistani language with English that renders both incomprehensible to anyone not hailing from exactly the same background.

Such a stereotypical caricature undermines their importance to the Pakistan economy – an importance that has been fully recognised by our successive governments. The deceased former Federal Minister for Labour, Manpower and Overseas Pakistanis, Abdus Sattar Laleka, placed the relevance of overseas Pakistanis in a unique perspective: having 200,000 professionals and skilled workers overseas would be better for Pakistan than building four dams and two highways in different parts of the country, and that the money they send home would bring employment and relief to 500,000 families.

Many would disagree with him today: the energy crisis with the resultant load shedding has become the bane of our existence as has the rising price of food. However Laleka’s rationale, that it is preferable to send our workers abroad to earn the coveted and forever elusive foreign exchange, much more coveted now with the batch of economic managers this country has had for the past eight years, than to spend money on developing infrastructure that may enable us to provide employment for our people, does seem a bit far fetched.

But in Pakistan there is a general tendency to overstate one’s importance and what better way to do it for a politician than to give the greatest importance to one’s ministry.

In spite of such sentiments that have been fairly well entrenched amongst all our labour ministers, at least for as long as they did hold that portfolio, many overseas Pakistanis feel that in spite of the contribution of remittances to our GNP and balance of payment position successive Pakistani governments have simply not done enough to either increase overseas employment or to provide timely assistance to those who are already working abroad. Our governments have taken some action but most of these actions are on paper alone.

A Bureau of Emigration & Overseas Employment is operating as a centralised agency to ‘promote emigration of citizens of Pakistan, to control and regulate such emigration and to look after the interest and welfare of emigrants’. These functions are a direct quote from its website and reflect the overwhelming desire of all governments, but particularly ours, to ‘regulate’ whatever comes their way.

Many would accept that a government can play a critical role in enhancing emigration through negotiations with other governments and identifying fields of expertise where emigrants are needed by a prospective host country. This would enable the government to regulate the outflow of Pakistanis in search of jobs to only those who have secured employment legally; and protect prospective emigrants from the unscrupulous who carry on the illegal trade of humans across borders in the most appalling conditions with constant fear of deportation, upon discovery.

But the outflow will continue as long as there are no jobs in the country or very low paid jobs. To arrest this would require focusing on macro economic fundamentals as well as infrastructure and social sector development – efforts which one would have expected a sixty two year country to have embarked on by now.

Thus the illegal outflow of our citizens both outside and within the country, with tales of women being kidnapped in one part of the country to become brides in another, continues unabated. And one wonders if trade in child jockeys has truly been arrested. The Advisor to the Prime Minister on Interior, Rehman Malik, recently received some cash from the UAE government as compensation for the child jockeys.

The people are awaiting the setting up of a fund from this money by means of which the camel jockey children will be provided free education as well as other benefits till they reach the age of maturity.

The Bureau of Emigration is supported rightly by about 13 Community Welfare Attaches (CWAs) in countries with a concentration of Pakistani workers. Major functions of the CWAs are to promote overseas employment in the country of their accreditation, solve problems faced by overseas Pakistanis like non-implementation of service agreement and illegal termination of service. CWAs look after the welfare of the Pakistan community, deal with matters related to death compensation of deceased workers and motivate Overseas Pakistanis to send their remittances through banking channels.

However, such motivation is unlikely to prove effective if the exchange rate offered is considerably lower than the market rate and bank charges make remittance income through the banking system not feasible. It is no wonder that the Hawala system is alive and well in Pakistan.

Last week the State Bank of Pakistan reported that total remittances received (July-April) 2007 were $5319 million – an increase of $868.96 million over the corresponding period last year. This was a reflection, so maintained the State Bank, of continued confidence of overseas Pakistanis in the country’s economy. Many would lend credence to this analysis for after all, the State Bank hires enough high paid economists to undertake a good analysis on a routine basis.

As a common citizen, however, looking at the state of the economy one is at once struck with what is wrong rather than what is right today.

And some of us are likely to challenge the State Bank assertion: what if the overseas Pakistanis are sending money because with the rise in the value of the dollar vis-a-vis rupee this maybe the best time to purchase real estate for an overseas Pakistani? Or, indeed, what if the main consideration is the fact that with the significant rise in inflationary pressures more needs to be sent back home for their families to sustain their previous standard of living? What if it is to purchase the rising price of UPS and generators without which many may well die of heat?

Compared to the world total, our remittances are low. In 2001, according to the World Bank, remittance receipts from overseas workers amounted to US $72.3 billion across the globe, significantly higher than total official figures and representing an impressive 1.3 percent of world gross domestic product (GDP). Even the World Bank’s figure is almost certainly low.

The Multilateral Investment Fund at the Inter-American Development Bank estimates the amount of money sent last year to Latin America from the US at more than $32 billion alone. The top recipient of fund flows is India, with official totals of $10 billion in 2001, much of it from highly skilled workers. Much more may move back into India through the so-called Hawala market and is difficult to trace.

India accounted for 62.5 percent of the inflows to South Asia, while the Philippines accounted for 58 percent of remittances to East Asia and the Pacific in 2001. The Philippine President referred to the overseas Pakistanis as Overseas Filipino Investors – a more apt description of their contribution to the Philippine economy in terms of purchasing property in Philippines and creating businesses that would help job creation back home.

The Asian Development Bank estimated remittances at $1.6 million annually, while former Prime Minister and de facto Finance Minister Shaukat Aziz, believed the figure was actually $6 billion, of which $1.2 billion comes through official channels, $1.8 billion through State Bank purchases from open market and the rest from smuggling and capital flight.

There is no doubt that Pakistan’s lower performance vis-a-vis India can be attributed to the lower levels of skills here. There is always talk of setting up vocational schools and generally upgrading the skill level of our emigrants but with our governments focused on anything but education and skill development this has not happened.

On the other end of the spectrum is the United States which is the leader in remittance payments with foreigners sending back $28.4 billion followed by Saudi Arabia’s $15.1 billion. US is the source of 26.44 percent of remittance income for us in 2006-07 followed by Saudi Arabia (18.61 percent), UAE (15.14 percent) and UK (7.97 percent). And then one need not wonder the locations of the recent meetings of the erstwhile coalition partners or the influence exerted by these very same countries on our politics.

But what about money outflow that is attributed to those dabbling in our stock markets? The people of this country are more angered by the politicians and bureaucrats who have taken their money out of the country – money that they made while in office rather than by any activity that foreign speculators indulge in.

The exact amount of money outflow by our politicians/bureaucrats is not quantifiable though cases registered against some politicians did indicate the extent of money leaving the country. The NRO makes it impossible to guess at the outflow though an educated guess about total assets owned by our politicians abroad would be in billions of dollars.

Thus the skeptics point to one major difference between the leadership of this country/senior bureaucrats and the emigrants: the latter remit money back home while the former remit it to a foreign country. And that’s where the problem lies in this country; those who formulate policy do not have sufficient confidence in their own economic policies to keep money at home. One can only hope that our economic managers would stabilise the country’s macro economy to a state where it would be profitable to keep money within the country.

Courtesy: Business Recorder, 20/5/2008

 Posted by at 8:21 pm

Leave a Reply

en English
%d bloggers like this: