The South Asian Institute for Policy Analysis and Leadership (SAIPAL), a think tank, has suggested all government s to devise a separate policy to bring more remittances on a formal channel.

The SAIPAL study ‘Assessment of Remittances Policies and Programmes in Nepal’ stressed the need for initiatives such as financial literacy programme, advisory services to migrant workers, investment in government bond, promotion of micro-finance institutions and identifying remittance as an industry rather than service.   

“There is a need for developing a separate and coherent remittance policy integrated with foreign employment policy to attract remittance in the country,” said Devendra Prasad Shrestha, principal investigator of the study at a dissemination programme on Tuesday.

Addressing the programme, Nepal Rastra Bank (NRB) Governor Yuba Raj Khatiwada said that the government was putting in all its effort to bring in remittance through legal channel. “We have become successful to a large extent in bringing in the remittance through formal channel. While there has been a tremendous progress, there is still a lot of room for improvement,” said Khatiwada. “Financial institutions should reach out to new markets. Rather than overcrowding the same market, they should start filling the gaps.”

According to Khatiwada, three factors—  agriculture, remittance and social transfer policies—  play a fundamental role in the national economy and growth. Stressing the need to address venerability concerning foreign employment, Khatiwada urged the stakeholders to consider medium- to long-term effect of the remittance industry. United Nations Under Secretary-General Gyan Chandra Acharya said that remittance has played an important role in global economy and lessening the blow of economic crisis upon the LDCs. “Every LDC is today faced with more or less the same economic and social challenges. Remittance in LDCs has been increasing by around 10 percent annually and this is crucial in mitigating those challenges,” said Acharya, who also looks after the LDCs affairs at the UN.

International Migrant Remittances Observatory (IMRO) Director Eric ADJA stressed the need to bring remittance to productive sector. “Remittance is a private financial flow. The issue is how to go from personal to public good,” said Eric.

According to Prithvi Raj Legal, former vice chairman of National Planning Commission, around 79 percent of remittance has been used for the consumption purpose, four percent in education and four percent in the real-estate. “We are getting money but how to get it into the productive sector is the major challenge,” said Legal. IMRO is currently carrying out a pilot project titled ‘Assessment of Remittance Policies and Programmes’ in Nepal, Bangladesh, Lesotho and Haiti.

Published on: 8 May 2013 | The Kathmandu Post