Sep 112009

javed f3By Muhammad Javed

The learned Dr. Farooq Sattar the Minister for Overseas Pakistanis announcing a three phase strategy has highlighted the new scheme for quicker remittances.  The State Bank of Pakistan and Ministry of Finance will take part in its implementation. Chairman Senate Standing Committee Mr. Chatta is satisfied over it.

 Dr. Farooq Sattar is a truly educated person.  However it is also a fact that being a new as the Minister for this new Ministry/topic he is to depend upon what the bureaucracy under him wishes him to understand.  When I went abroad first in 1986 as an Overseas Pakistani, one day the then visiting Minister for Overseas Pakistanis in Saudi Arabia was telling the press that in order to facilitate the quick remittances the Government was “going to introduce” Pre-Printed Bank Drafts.  The Minister was ignorant that the Pre-Printing Bank Drafts were already in use since last many years then. 


In order to make remittances more attractive it was decided that the “banking charges would further be lowered”.  On fact of it it  looks very pleasing but it appears either the bureaucracy itself is ignorant of or wishes for some reason a most learned Minister to remain ignorant of that under the instructions of the Government of Pakistan the Pakistani Banks abroad already for the last about 10 years are not charging any service charge for any remittances. These banks are sending remittances free of charge through TT and the service is very quick.  When nothing is being charged how it can be further lowered?  A new Department has been proposed to ensure speedy delivery of remittances which attempt is just another bureaucratic style to create a department which will give high salaries seats to few but the practically there would be nothing.


In his recent Article well known Economist M. Aftab in his column “How to raise remittances” in Daily Post 6 September 009 while appreciates the “incentives” but mainly thrusts on the speedy and quick payment of remittances.  Dr. Ashfaq Khan in his article “Role of Remittances” appearing in Daily Business Recorder of 08 September 2009 is pleasantly surprised as to how during 2009 Pakistan in the back drop of world recession,  Pakistan is the major beneficiary in more remittances than previous years.  He finds it could be due to three reasons the main being that the Overseas Pakistanis having their savings abroad might have started diverting their monies to Pakistan or it could be due to exchange rates.  The unfortunate aspect is we depend more on academic theories rather than realities.  If exchange rate is the factor then how can learned Dr. Ashfaq term it as any sold “increase” to be joyed?  This more amount received is due to lower exchange rates and not due to any more remittances.  How can the remittances increase from the Middle East when salaries there have in labour class mostly been slashed and cost of living during the last three years sky rocked. This increase, if this really is an increase could only be that those who earlier siphoned out money through illegal channel in Dubai properties might be taking back or alternatively it is the same game under which businessmen approach OPs or their relatives to send bank drafts in their names so they can claim income tax exemption



The practical fact is remittances is a far away step whereas the very basic first step namely opening of a bank account in Pakistan by an Overseas Pakistani has been made rather difficult which in 80s, 90s was just a simple task.  When the naked facts prevailing on earth are not fully known, how something for improvement can be done?   If a doctor can not diagnose the cause of an ailment how can he prescribe medicine?  Two years back then as an Overseas Pakistani on visit to Pakistan I could not open an account with Mybank in Gulshan/Karachi because I could not explain the lady officer as to why I wished to have an account with them.  Right from SBP upto Finance Ministry and Shaukat Aziz I wrote what was this non sense but never got any response from any side.   


Under the proposed scheme perhaps the Western Union is to be approached for swift remittances.  In other words it is the same game under which eg. distribution of telephone bills through the area linemen who visits every day and is familiar with each subscriber was not acceptable only to benefit costly private courier services.  Through area linemen not only speedy and safe delivery of bills could had been implemented but also it mould had benefited the low paid lineman with a little extra money and Department would had saved too.  The Western Union or whichever other may be will not offer the service free cost of.  Their charge under some agreement could be specially reduced.  But it might be paid or subsidized by the Government.  Thus the Government can bear such an extra expense but can same expense use in much better way like giving Rs. 5/- on every Rs. 100 sent through legal channels.  This Rs. 5/- be taken as Rs. 2.50 from Community Welfare Fund lying with Ministry of Foreign Affairs and Rs. 2.50 from Overseas Pakistanis Foundation.  Both these funds are 100% contributions of Overseas Pakistanis own and nothing from the Government.  Thus one sending through legal channel a Rs. 100 would get Rs. 5/- extra from his own money.  This attraction is much alluring than any so called speeding remittances. This Rs. 5/- extra is a big attraction. It would work as bonus voucher scheme costing nothing  to the Government but even those who do not send regularly to their families in Pakistan would avail this income generating scheme by sending their savings kept abroad.  Today there is hardly any disparity between banking remittances rates and hundi hence hundi is not choice due to any rate preferences.  The hundi is opted where there is no banking and if banking is available due to traditions and customs of the area people keep their families away from banks due to many social reasons.  The Western Union or any such arrangements deliver cash.  At present very little this service in Pakistan is used compared to India, Philippines etc where circumstances are different.  In Pakistan when whole amount of remittances would be in one cash delivery or pick up it might face cases like phone snatching. Through speedy remittances or opening delivery points at each corner of every city, village will not eradicate undi fully.  After 9/11 an international financial conference was arranged by US or perhaps UN in Abu Dhabi sometime during 1994-95 also attended by Pakistan.  It was observed and agreed there that Hundi or Hawala is a necessary evil requirement of certain regions which can not be eradicated fully.  Hence it was decided that Hundi would remain but hundi operators would keep a register of transactions.  At that time it was disclosed that hundi operators in case of financial difficulties like non receipt of timely salary or in case of temporary unemployment, help regular customers by remitting the amount on loan basis which no Western Union or any other speedy system can do.  The only and only plausible solution is offering of “cash” incentive as proposed above and nothing in fancy lollypops like Gold Slivery Cards, VIP treatment at airports etc.  Sometime in 2000-2001 a high level State Bank of Pakistan came Dubai in search of loan.  The strict terms and conditions were being offered by international money lenders there.  Some Pakistani businessmen under the umbrella of the Pakistan Association Duabi approached this team offering that the country takes money from these businessmen on little less rate but this offer was not accepted.  By offering above Rs. 5/- extra the government can take OPs. Money treating it as a non repatriable loan but it will never let be done by concerned circle.  For the last 15 years I am struggling on this issue but not a single receipt of merely a word of thank have I ever received.  Dr. Farooq Sattar can you please at least consider this sensible option.  No, you will not be allowed.

 Posted by at 6:21 am

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