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Asking source of income hindering smooth growth of remittances process

Asking source of income hindering smooth growth of remittances process

Interview with Mr Khalid Tawab – Chairman, Tawab Group of Companies


Mr Khalid Tawab is Chairman of Tawab Group of Companies which is renowned named in the manufacturing of paper, board and steel. He has served as Senior Vice President and Vice President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce & Industry (KCCI). He is honorary Consul General of Mozambique since 1989. President of Pakistan awarded him Sitara-e-Imtiaz in 2009 in recognition of his outstanding public services. His company got FPCCI Exports Awards twice and once the International Asia Award due to highest exports. He is also philanthropist and trustee of Aiwan-e-Tijarat-o-Sanat Hospital.

PAKISTAN & GULF ECONOMIST sought views of Mr Khalid Tawab vis-a-vis the foreign remittances received by Pakistan during these trying times. The excerpts of the conversation are as follows:

Foreign remittance is a main source of foreign exchange earning that helps in improving the balance of payment and retiring external debt. It is fortunate for Pakistan that we received record high remittances in FY20 i.e. US$ 23.12 billion despite the fact that there was lockdown in all developed countries like USA, UK, Saudi Arabia, Spain, Germany, UAE etc. which are main source of remittances and almost six million Pakistanis are living in these countries. The rise in remittances is attributed to support the families and friend due to COVID-19.

During the COVID-19, Pakistan received record remittances due to supportive State Bank of Pakistan (SBP) policies like extension in reimbursement of TT Charges Scheme (Free Send Remittance Scheme) to small remitters by reducing threshold from US$ 200 to US$ 100, as well as, broadening the scope of incentive scheme for marketing scheme for financial institutions increased the incentives for sending remittances through regular channels. This scheme should continue after COVID-19 period. Moreover, SBP has to motivate financial institutions to use effective marketing campaigns with focus on digital channels for sending and receiving remittances to promote the use of legal channels that can contribute more in enhancing the remittances.


As remittances are main source of foreign exchange, it should be facilitated by giving incentives and SBP should not ask the remittances sender to declare the source of income. Moreover, secure, fast and cost-free procedure can also help in inflows of remittances through official channels.

In addition to Pakistan, the inflow of workers’ remittances also rose in India, China, Philippines and Bangladesh. Globally, India ranked top in receiving remittances followed by China and Philippines. In these countries, there is no limit per person for sending remittances while there is a tax on remittances amount more than US$ 15000. While in Pakistan, people are facing harsh questions from FBR on sending high amount of money through legal channel. This year, Pakistan received US$ 23 billion remittances via legal channels and almost US$15 billion through illegal channel like hawala/hundi. If government facilitates the remittances and don’t ask source of income and also reduce cost of sending remittances then remittances will be double in next few years.

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