EXPATRIATES TO BUILD BETTER PAKISTAN
Its time for the expatriates to play their due role to help Pakistan become a economic power
By Syed M. Aslam
Dec 11 - 17, 2000
They supported their national economies when it needed them the most. They had been instrumental in turning around their respective economies from position of weakness to position of strength. Without their patriotic zeal their national economies would not have achieved what they have achieved. They are the expatriates.
Many countries around the globe owe their economic development on an all out will and support of the expatriate communities who fuelled in the much needed financial help. The examples are many.
A huge population of Pakistani expatriates, some 4 million according to an estimate, can play a similarly pivotal role to help build a new economic order in the country, particularly in the face of economic sanctions imposed on it in defiance to exercise its nuclear option in May 1998. Ironically, the decision which caused an irreparable damage to the credibility of the government as a honest trustee also came on those fateful days- the decision to freeze the foreign currency accounts. The country still keeps reeling from the erosion of trust by the ad hoc decision made on that fateful day — and hard currency withdrawals are not permitted from these accounts only in Rupees.
The mistrust has also resulted in sharp decline in the workers remittances — cash which declined from $ 1,252.45 million in 1991-92 to $ 875.55 million in 1998-99 as well as encashment and profit of foreign exchange and foreign currency bearer certificates which shrunk from $ 215 million to $ 185 million during the same period. Workers remittances as a whole declined by half from $ 1,467 million in 1991-92 to $ 1,060 million in 1998-99.
Despite the sharp decline, Saudi Arabia still contributes the biggest share of workers remittances followed by UAE, Kuwait, the US and the UK. These five countries among themselves contribute over 80 per cent to the workers remittances. However, huge funds are also transferred through much used hundi system which don't get reported. Hundi is a system popular both in Pakistan and India which allows expatriates to send funds reliably, quickly and at a premium price to their families back home. It is simple to work and is easily accessible in countries which have large or even medium Pakistani populations. It works like this — you give cash to a person whom you know personally or are being introduced by a friend, he instructs his contact here in the country and instruct him to deliver the equivalent of foreign currency at the mutually agreed rate to the address given by you. Hundi has been refined to a fast, efficient and reliable system over the years which competes with banks and offers best rates and door-to-door service. The bad thing is that it deprives the country of huge amounts of much needed foreign exchange for the benefit of a handful of individuals.
The central bank's, State Bank of Pakistan, Annual Report 1999-2000 make an interest reading which regards to the decline in workers remittances. It reads, in part, "The declining flow of workers remittances deserves special attention . . . the bulk of these inflows into Pakistan come from the Gulf region. However, these inflows began tapering off during FY 98 and have continued this downward trend.
"Excluding inflows from Kuwait (which experienced lumpy inflows as part of the special compensation for those impacted by the Kuwait war), cash remittances from the Gulf region fell from US $ 791.0 million in FY98 to only US $ 546.7 million in FY00. This fall goes against the perceived sense of buoyancy in the Gulf region following the increase in the international price of oil.
"Another disturbing trend is the corresponding fall in remittances from the US and Europe. Although the Hundi system also operates in these countries, anecdotal evidence suggests that the premium given to remitters is not high, since the network in these countries is smaller and less efficient than the Hundi network in the Gulf. A partial explanation could be increased emigration to the West, as expatriate workers may have opted to settle abroad given relatively lenient emigration laws in the West for skilled workers."
The least the expatriates can do for their country is to ensure the transfer of their remittances through legal channels be it bank drafts, cheques or otherwise. Hundi deprives the country of a huge amount of foreign exchange and the practice can only be brought under control with the help of expatriates which should put the larger interest of the country in front of the short term monetary gain which it offers.
Pakistani expatriates form cluster of communities in many countries of the world today in all types of sizes — huge in the UK, visible in the US, etc. A large skilled and semi-skilled work force is working in many countries in the Middle East. Years of migration to North America and Europe has resulted in the creation of a sizeable communities of Pakistani expatriates which mainly include educated, technical and skilled workers. The demand for hi-tech Information Technology jobs in the US in particular and elsewhere in general has absorbed thousands of top notch IT professionals in last couple of years and the trend is expected to continue in the near future.
Pakistani expatriates can be divided into two basic categories — those who are working on a working visas and those who have migrated for good with their immediate families but still have relatives in the country. Despite differences the two groups of expatriates are playing a vital role in the economy of the country by pumping in foreign exchange as well as return-home trips.
The successive governments attracted the investment from these expatriates in a number of ways including housing schemes, etc. However, the mismanagement and the bureaucratic hurdles at every step of the way discouraged many to stay away and not to invest any money within the country. There are numerous cases where expatriates permanently settled in North America were forced to close their businesses as they were unable to put up with corruption at all levels.
The expatriates are sitting on billions of dollars collectively and many of them have made it extremely good in the foreign lands with huge funds which can be used for the benefit of the country through investment in their particular field of interest of expertise. However, attempts to mobilise these funds will require a solid guarantee that the foreign currency accounts escapade will not happen again and a number of other such measures.
The importance of consistent policies which remain untouched irrespective of governments could hardly be overstated to provide legal cover to the investment, be it foreign, local or from the expatriates. An atmosphere, free of rampant bureaucratic hurdles, should be removed to attract the much needed investment, particularly from the expatriates who with their first-hand knowledge and their roots here in the country are in the best position to make immense collective and individual investments in the country.
Measures to ensure equitable and safe return on investments is also a must to attract the expatriate funds. Informed sources say that overseas Pakistani professionals and entrepreneurs have founded consortium to offer government $ 10 billion towards the country's debt retirement. The offer, however, is conditional to legal cover and return on investment at the going market rates. A similar contribution to the tune of $ 5 billion has been made by Malaysian expatriates.
A part of expatriate population is also in a position to help invest in hi-tech projects due to its exposure to latest developments in the developed countries where they have been settled for decades. The induction of such world-class expertise in recent years which has given Pakistan a name in the global markets for an altogether different reason is just one example. The situation should be exploited to its fullest by offering meaningful job placements which offer attractive remuneration locally.
Recently the Ministry of Science and Technology has announced recruiting highly qualified teaching faculty from overseas to impart the best possible education to train world-class IT professionals. The salary of the members of this highly-paid faculty would be subsidised by the government. The expatriates can help play a due role in the prosperity of the country in the contemporary world of today thanks to the policy of the sitting government. However, much more remains to be done to attract the investment of the expatriates in terms of cash as well as professional expertise to give local economy the badly-needed boost amidst international economic sanctions aimed at punishing the people for the military government which had to assume power due to failure of the politicians.
The government has decided to privatise 49 public companies including fertiliser plants, nationalised banks, utility companies and the national flag carrier airline, PIA. The administrative head, Chief Executive General Pervez Musharraf, has said that the national interests and security would not be comprised by the privatisation of these entities. What better way to sell these vital public companies to the expatriates to safeguard the national and security interests.
The expatriates should avail this opportunity to retain these public sector enterprises of immense importance either collectively or individually as the case may be provided they would be able to match the offer from foreign buyers. This would not only provide them an opportunity to keep their roots intact with the country they belong but also to serve the country while still making an equitable return on their investments. The time to act is now.
The massive emigration of hi-tech professionals to the West combined with the flow of workers, 80,500 of whom went abroad for employment in 1999 should be seen as a blessing in disguise for a country experiencing a nagging high unemployment rate. The phenomenon not only provides jobs but also helps in increasing the volume of foreign currency flow in the form of foreign remittances. Certainly, the need to explore new markets as well as expanding the existing markets for Pakistani workers overseas can hardly be over-emphasised.
The fragrance of the native soil, the memories of childhood and youth and all that's associated with it remain etched in one's memory forever. The resident Pakistanis are playing their part to meet the challenges of today. Isn't it time for the expatriates to play their due role to help Pakistan become a economic power after exercising its nuclear option in the face of aggressive Indian designs when it conducted nuclear explosions on May 11 and 13, 1998?
* Encashment and profit in Pak. Rs of Foreign Exchange Bearer Certificates and Foreign Currency Bearer Certificates
** July '99-March 2000
Source: Economic Survey 1999-2000, Government of Pakistan
Country-wise Workers' Remittances
(US $ million)
Other than Gulf Region
Source: State Bank Annual Report 1999-2000