July 26 - Aug 1, 20

In the prevailing situation when the country has not been able to boost exports, remittances have emerged the key contributor in bridging the current account deficit. The massive inflow also helps in containing exchange rate volatility. However, it may not be wrong to say that Pakistan has not been able to realise the actual potential.

Many experts say remittances can go as high as $20 billion if financial institutions reduce service charges, avoid delays and are as hardworking as the hundiwalas. Accessing the banks and completing the formalities may not pose big hassle for the families living in the urban areas, but most of the rural population is still not being served by the commercial banks.

Some of the bankers categorically deny any discrimination among the accountholders but it is a fact that an illiterate account holder is a disliked entity, and who often falls victim to the cunning bankers notorious for running parallel banking. Such elements may not be very visible in urban areas but enjoy strong clout in the rural areas.

Bulk of the remittances is sent from Saudi Arabia and UAE by the workers mostly falling in the category of labor and their families living in the rural areas. Since agents (people who have arranged for the jobs) are very active in these areas they also undertake to deliver the money at the door step of the worker. Interesting thing is that these 'touts' get the amount in foreign exchange but deliver the amount to the siblings in Rupees and in a way become a facilitators for those who want to send foreign exchange abroad.

Lately the foreign investors in equities market have made a lot of investment. However, some of the experts refuse to accept this inflow as genuine investment of the foreign investors. They say that now any Pakistani can wear the cap of a foreign investor simply by paying two percent commission to the mediators. Large net worth investors are not vexed with probe into source of income. Therefore, locals also choose to reroute their investment and avoid too many questions being asked.


(Million Dollars)

UAE 2,038.57 1,688.59
Saudi Arabia 1,917.66 1,559.56
USA 1,771.19 1,735.87
GCC countries 1,237.87 1,202.65
UK 876.38 605.59
EU countries 252.22 247.66

Overseas Pakistanis have been creating record one after another over the years. They workers wrote a new chapter in country's history by remitting the highest-ever amount of over $8.9 billion during FY10 as against $7.8 billion received in FY09, registering a growth of 14 percent. Pakistan had received $6.451 billion during FY08.

Pakistan has been reported as a top nation, which has shown the highest growth in the world in remittances despite recent global financial crisis. The monthly average remittances in the period during FY10 was $742.16 million as compared to $650.95 million during FY09. They also sent home a record amount of $841.44 million during month of June 2010 alone, beating the previous record of $806.12 million received during month of September 2009.

State Bank of Pakistan (SBP) on behalf of Pakistan Remittance Initiative (PRI) has invited technical proposals from prospective bidders on or before August 9, 2010. The central bank, Ministry of Finance and Ministry of Overseas Pakistanis had undertaken this joint initiative with a view to facilitating the flow of remittances through formal channels. In this regards a number of steps have been taken, which have started to materialise and remittances through formal channels are showing considerable growth.

Among one of many steps that PRI is taking to enhance flow of remittances are envisioning, implementation and operation of a remittance hub for Pakistan which will ensure that all remittances are received, processed and disbursed in a timely and convenient manner making remittance hub medium of choice for all remitters to send remittance transactions.

Prospective bidder must be either principal manufacturer or an authorised international, local partner of working under a joint venture or may establish a consortium for project consisting of reputable firms with experience of relevant supplies, services with documented track of completing at least seven similar functional, technical characteristics and of a comparable scale. It should offer total, turn key solution to PRI and providing after sales technical support through maintenance, service level agreements, contracts at least 2-5 supplies.

The transaction reconciliation mechanism and complaint resolution mechanism should be part of required integrated system and must be compliant of ISO-27001 and other relevant standards of IT security to manage clearance process with all member banks. Interested bidder should have verifiable presence, office in Karachi and shall have to establish a project camp office for complete implementation till handover of the project.

A firm will be selected using two stage bidding process as prescribed under Rules 36(c) of Public Procurement Rules 2004 in accordance with PRI policies. After review and discussion with representatives of firms, Technical Proposals review meeting will be held on August 16, 2010 at SBP office in Karachi.

Pakistan hasn't realised the real potential. However, it is expected that the country would be able to get up to $15 billion through the official channel. However, this dream could only be realised when banks become more efficient and also reduce the service charges. Inward remittance has remained stronghold of a few banks, mainly because they have better outreach in the Middle East, Europe, and the US.