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Right steps and RDA shape Pakistan to see increase in remittances

Right steps and RDA shape Pakistan to see increase in remittances

Interview with Sardar Shoukat Popalzai – President, Balochistan Economic Forum

Profile:

Sardar Shoukat Popalzai, President of the Balochistan Economic Forum, comes from the traditional Popalzai tribe. He gained his academic degree in International Relations with major in Diplomacy and Anti-Terrorism. He has been leading many Ministerial, Governmental and private business delegations to various countries and is also a member of several important advisory committees of prestigious government organizations and business representative bodies. Over the years, he has made presentations at numerous important conferences and high-level corporate briefings. He is recipient of awards from the USA, the Great Britain, France, the People’s Republic of China and Federal Republic of Germany.

The Balochistan Economic Forum has been designed to familiarize the national & International economic community with opportunities for Trade and Investment in the province of Balochistan. Since its inception, the Balochistan Economic Forum continues to be the main powerhouse behind integrating foreign investment and has completed 29 years of its meritorious services this year.

PAGE: Pakistan might receive around $30 billion remittances during the current financial year. What is your take on it?

Sardar Shoukat Popalzai: Surprisingly, Pakistan saw an increase in remittances even when other nations recorded a substantial decline in remittances. The government expects to receive around $28 billion remittances during the current financial year, up by around 22percent from $23 billion last financial year. This comes as initiatives launched by the government and central bank to facilitate overseas workers has started yielding positive results despite challenges posed by the Covid-19 pandemic.

Further increase in remittance I see also because of following:

  • The SBP initiative — Roshan Digital Account (RDA) — that allows Pakistanis working abroad to digitally open accounts. These accounts offer the overseas Pakistani workers the ease to bring and take out their money.
  • The remittances in Pakistan owed to restrictions on Hajj imposed by the Saudi government to curb virus spread. Having spent less money on Hajj, the workers abroad had more to send back to Pakistan.
  • The migrant Pakistani workers returning home after losing jobs in the host countries had contributed to the increased volume of remittances by bringing back their life savings.
  • The sustained increase in remittances also indicates that the restrictions on international travel have played a major role in making overseas workers turn to official banking channels for transferring money to their families.
  • The recent government curbs on hundi/hawala implemented to meet the requirements of the Financial Action Task Force to exit its so-called grey list have also helped the shift from informal channels to banking channels.
  • The seasonal factors such as Ramazan and Eid-ul-Fitr, also lead to a rise in remittances. The overseas Pakistani workers send more money to their families to meet expenses in the holy month of Ramazan and Eid festive.

PAGE: When the Covid-19 pandemic struck the entire world triggering a kind of global lockdown it was feared that Pakistan might encounter drop in the remittances sent home by the migrant workers. It is contrary in fact. Your views?

Sardar Shoukat Popalzai: When the Covid-19 health crisis struck the world forcing countries across the globe into lockdown to slow down the spread of the plague, multilateral lenders had forecast developing nations like Pakistan would see a significant drop in the remittances sent home by their migrant workers, hitting their economies hard. However, such forecasts have proved wrong, at least until now in the case of many countries, including Pakistan.

PAGE: How would you comment on the role of exchange companies and banks in terms of foreign remittances received by Pakistan in recent times?

Sardar Shoukat Popalzai: Established under the Foreign Exchange Regulation Act, 1947, Exchange Companies (ECs) have been actively playing their role in facilitating the foreign exchange transactions. ECs have been growing steadily with expanding network, improving profits and sufficient capital. The sector poses limited systemic risk due to its small size, low leverage, minimum degree of interconnectedness and relatively competitive structure; however, ECs do have reputational linkages with the banking sector. But still, around 30,000 illegal operators are active.

While, the Banks plays very important and crucial role in present times with their innovative approach, look at Roshan Digital Account — that allows Pakistanis working abroad to digitally open accounts. These accounts offer the overseas Pakistani workers the ease to bring and take out their money or invest in stocks and real estate without any hassle.

PAGE: Your views on the recent government curbs on hundi/hawala to meet the requirements of the Financial Action Task Force to exit its so-called grey list?

Sardar Shoukat Popalzai: Pakistan is optimistic that its amendments to anti-money laundering laws will not only contain the illegal practice, but also move to official channels remittance inflows that have been made through hundi and hawala operators. The amendments to anti-money laundering regulation are in accordance with Financial Action Task Force (FATF) recommendations. Under FATF action plan, the FIA (Federal Investigation Agency) is effectively taking action against hawala and hundi operators.

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