Remittances to Asia

Over half of the migrant workers in the world come from countries in Asia, making remittances of funds earned overseas to developing Asian countries an important element of their economies.  Countries like Singapore, the Philippines, South Korea, Hong Kong, and Thailand regularly see citizens moving abroad to earn money and send a good portion of that money home to support their families.

There are essentially two types of migrant workers.  First, there are people who move to developed nations and seek labor when they arrive.  Many of these workers become permanent citizens and stay in these foreign countries for extended periods of time.

The second type of worker is a contract worker who agrees to work abroad for a specified period of time.  There are several regions and industries that commonly recruit contract migrant workers.  From Asia, many of these workers end up in the Middle East.

Tracking remittances to Asia is difficult, as it is estimated that less than half of these remittances go through traditional money transferring methods.  It is estimated that the number of remittances going through channels that can be tracked will increase as methods are developed to make the remittance process easier, developments that have already arrived and are being used with greater frequency.

Asian governments know what an important element of economic growth remittances can be.  In the 1990’s, remittances accounted for over 5% of the Philippines Gross Domestic Product.  During the year 2000, the government in the Philippines encouraged migrant workers living abroad to remit even more to help save their struggling economy.

Some economists fear that countries like the Philippines are relying too much on remittances instead of growing their economy organically and working to attract foreign investment.  While remittances are generally stimulating for an economy, they can also stunt economic growth if relied upon too heavily.

One of the reasons that many Asians use non-traditional methods to send money home is that some Asian governments have attempted to regulate and impose taxes on remittances.  South Korea, for instance, forced migrant workers to remit at least 80% of the money being sent home through the national banking system.

Other countries have tried to adopt similar rules, but have been met with great resistance.  Another reason that traditional methods are not always used for remittances is that the infrastructure to receive money transfers is not in place in many rural areas of developing nations.

The most important lesson that Asian governments can learn in order to maximize the positive impact of remittances is to make it as easy as possible for citizens working abroad to send money home.  Remittances should not be relied on as a sole source of economic growth, but should be coupled with sound planning for internal, organic growth.

Training and education should be provided for migrant workers who return to their home country with money to help them make wise decisions in managing those funds.  Finally, ensuring a government free of corruption will help to increase the use of traditional remittance methods and instill confidence in the financial system in these developing nations.  www.atmcash.com