Indians around the world sent home $69 billion in 2017 while the total sent to the the Asia-Pacific region was $256 billion, according to a report.
China received remittances of $64 billion followed by Philippines ($33 billion), Pakistan ($20 billion), and Vietnam ($14 billion), according to the report ‘RemitSCOPE – Remittance markets and opportunities – Asia and the Pacific’.
About 70 per cent of the remittances sent to Asia and the Pacific came from outside the region with the 32% from Gulf States, 26 per cent from North America and 12 per cent fro Europe. By 2030, around $6 trillion in remittances are expected to be sent to developing countries and over half of these will be sent to the Asia Pacific regions.
An estimated 40% of the total value of remittances go to rural areas. This is important because poverty is highest in the rural areas. However, in the Asia- Pacific region, remittances to countries with a majority of rural populations is much higher such as Nepal (81 per cent), India (67 per cent), Vietnam (66 per cent), Bangladesh (65 per cent), Pakistan (61 per cent) and the Philippines (56 per cent). Remittances to rural areas are generally costlier due to expenses associated with offering access points in distant locations.
In the region, 400 million people, one out of every 10 people, are directly affected by remittances either as a sender or as a receiver.
“The promise of technological innovation in the remittance marketplace could bring about a fundamental transformation for hundreds of millions benefiting from these flows. But this transformative change has not yet happened,” senior remittance expert Pedro De Vasconcelos at International Fund for Agricultural Development (IFAD), which released the report, said according to newspaper reports.
In addition, De Vasconcelos pointed out that outdated regulatory barriers on both sending and receiving ends result in higher and less transparent costs for the 2 billion transactions a year – most amounting to just $200 to $300 each.
According to the report, cash-to-cash transactions remain by far the most common form of transfer. It is only recently that technology is beginning to move markets towards account-to-account transfers through digital operations. There are now more than one million payment locations through the region, reflecting a greater digitalisation of transactions.
“For digitalisation of transfers to happen, regulators and private sector companies need to work further together to harmonize legal and regulatory frameworks between countries and support the design of products driven by customer needs,” De Vasconcelos said.
In the region, families generally spent about 70 per cent of remittances to meet basic needs, such as food, clothing, healthcare and education. The remaining 30 percent, amounting to $77 billion, is either saved or invested in asset-building or income-generating activities, helping families to build livelihoods and their future, De Vasconcelos added.
The report said while financial inclusion has increased since 2011 with half of adults in the region having a bank account (excluding high-income economies) this does not represent the reality of the substantial majority of remittance receiving families where financial exclusion remains predominant.