- Gulf countries may continue to contribute over 50pc of remittances into Pakistan
- Inflows from the diaspora of US witnessed growth of 47pc
Interview with Syed Ali Raza Bukhari — National Investment Trust Limited
PAGE: Tell me something about yourself, please:
Syed Ali Raza Bukhari: Prior to joining National Investment Trust Limited in 2018, I have had the opportunity to set up and successfully manage a Pakistan Stock Exchange Member Brokerage firm, bringing it up as a boutique institutional trading platform. I have also been associated with the asset management industry for quite some time now, spreading my 17 years of specialized financial services experience into a diversified landscape of multiple professional domains like marketing/sales, advisory, distribution, specialized product development, stock brokerage and operations. I have also had the honor to have represented our financial markets on myriad investment forums in Pakistan with a couple in UAE and China, alike.
PAGE: How would you comment on Roshan Digital Accounts?
Syed Ali Raza Bukhari: Roshan Digital Account (RDA) is a major initiative of State Bank of Pakistan, in collaboration with commercial banks operating in Pakistan. These accounts provide innovative banking solutions for millions of Non Resident Pakistanis (NRPs), including Non-Resident Pakistan Origin Card (POC) holders, seeking to undertake banking, payment and investment activities in Pakistan. Based on SBP data, as of March 2022, total no. of Roshan Digital Account holders have reached the figure of 388,494. Up by around 66,000 new accounts since December 2021 and around 206,000 added accounts since June 2021. As of March 2022, RDA has received 3,922 million USD cumulatively, from Roshan Digital Account Holders. Up from 3,160 million USD in December 2021 and from 1,562 million USD in June 2021, cumulatively. 68% of remittances are invested in NPCs, conventional and Islamic modes combined. All these figures depict healthy signs of our diaspora’s growing need of RDA for their banking and investment requirements in Pakistan.
PAGE: What is your perspective about the remittances sent by the Pakistani diaspora residing in Gulf countries?
Syed Ali Raza Bukhari: As per SBP’s data of March 2022, remittances received are 2,810 million USD with average monthly receipts of 2,550 million USD since July 2021. Total remittances received in FY22 (July-March) are 22,952 million USD as compared to 21,437 million USD in FY21, same period. FY22 has posted 7% growth on YoY basis which has subdued from 26% growth in FY21.
Out of all these inbound remittances, Saudi Arabia and UAE alone have contributed 5,810 million USD and 4,284 million USD respectively in FY22 with 2,666 million USD to have been remitted by other GCC countries. It shows 25% inflows from Saudi Arabia, 19% inflows from UAE and 12% from other GCC countries, totaling to 56% from Gulf countries alone. As of March 2022, even though slight reduction has been witnessed in the inflows from the diaspora of UAE, vis-à-vis same period last year, inflows from other GCC countries have also witnessed dampening growth trend from that of last year i.e. FY21.
Based on post Covid economic activities, overall, the diaspora residing in Gulf countries may continue to contribute more than 50% of remittances with much possibilities of an upward trajectory onwards.
PAGE: How helpful are the Pakistani diaspora living in the USA and Europe in terms of remittances?
Syed Ali Raza Bukhari: Out of all these inbound remittances, USA and UK have contributed 2,211 million USD and 3,187 million USD respectively in FY22 with 2,504 million USD to have been remitted by EU countries. It shows 10% inflows from US, 14% inflows from UK and 11% from other EU countries, totaling to 34% from US, UK and EU countries in FY22 (July-Mar). As of March 2022, there has been subtle increase of 21% in the inflows from the diaspora of US, vis-à-vis same period last year that witnessed growth of 47%. Inflows from UK and other EU countries have also witnessed subdued growth from that of last year i.e. FY21. We believe that based on post Covid economic activities, overall, the diaspora residing in the US, UK and EU countries may continue to contribute around 1/3rd of inward remittances for Pakistan and may only trail upwards ahead as is witnessed from our yesteryears.
PAGE: Pakistan is beset by twin deficits. Remittances are crucial for the economy. Could you give your views on it?
Syed Ali Raza Bukhari: Yes, twin deficits have always been point of concern and debate for all the economic forums. Even though the fiscal pressure may completely be a functionary aspect of the tax machinery, the external front of an economy may not be that simple to envisage. Current Account balance may or may not be detrimental for the economy altogether, depending on what streams of inflows and outflows contribute to this head. However, it becomes an imminent threat when any economy falls prey to long-term negative balance of trade without enhancing economic production. As of February 2022 we have been running a provisional deficit of 12,099 million USD as compared to a surplus of 994 million USD, same period last year. Imports of goods and services alone stand at 55 billion USD vis-à-vis exports standing at 25 billion USD as of Feb 2022. Whereas in same period last year, imports and exports stood at 37 billion USD and 20 billion USD, respectively. Worker’s remittance serves as the most significant part in netting off of the bloating deficit. As of Feb 2022, remittances have contributed to the tune of 21 billion USD to post a running provisional balance (net deficit) of 12 billion USD so far.
PAGE: How would you comment on the exchange companies operating in Pakistan?
Syed Ali Raza Bukhari: I think exchange companies run in an organized setup with stringent code of governance implemented by the State Bank of Pakistan to monitor activities and keep close eyes on all exchange related activities. There is a detailed code of conduct for the authorized money changers as well where all do’s and don’ts are categorically spelled out. I feel there is a huge responsibility on all the participants of foreign exchange business, especially the authorized money changers, to promulgate and maintain adequate elasticity in foreign currency activities.
Data has been taken from SBP website