Nepal´s foreign remittance prospects bright
Surya B. Prasai
November 14, 2010
Though the Nepal Government has been slow in responding to the ever increasing demand of able Nepali hands in foreign lands for more than two decades, Nepal ranked GDP wise among the top five countries in terms of remittance contribution in 2010. The World Bank´s new report entitled Migration and Remittance Factbook 2011 states Nepal´s share of remittance amounted to 23 percent. Nepali laborers have been forming the backbone of East Asian labor importing economies since the early Eighties, the steady stream of illegal recruitment now replaced by formal recruitment channels and labor contracts. The outbound stream to the Middle East destinations has been considered more profitable though.
Country rank wise, Nepal is second to Bangladesh and remained fairly isolated from the global economic downturn of 2009 given Nepali laborers are working in the majority in booming East Asian and Middle East destinations which checked the recession impact with growing industrial or oil exports. Though Nepal´s labor growth in foreign employment seems to have slowed down to single digit from double digits in recent, years, there has been a strong surge of rural Nepalis seeking foreign employment, due to the civil conflict that took place between 1996-2006. The Nepali Congress led governments, more than any other, has been contributive to the promotion of foreign employment in the past two decades, seeking the formalization of labor contracts and also linking Nepali foreign policy interests to growth in surge. It might be interesting to note that Nepali foreign laborers are highly regarded and placed primarily where the U.S. and India have a noted strategic influence zone, such as the Middle East and certain East Asian countries. However nearly 74% of Nepali foreign laborers work in the non-skilled sector there.
Formal remittance inflow to Nepal in 2010 reached US $ 3.5 billion, though it is estimated nearly one third more could have been generated through the Hundi system which still remains strong in Nepal, India, Pakistan and Bangladesh. The remittance surge must be considered impressive going by 2009 figures of US$ 2.98 billion. The Second Living Standard Survey of Nepal suggested remittance inflow as a major contributor behind the decline in people living below the poverty line from 42 percent to 31 percent. However, independent Nepali analysts and foreign donor agencies still put Nepali poverty, or those living below $2 a day, at 55% of the population. This again can be linked directly to the negative growth indicators that prevailed during the Nepali civil conflict. Countries like Tajikistan, Tonga, Lesotho and Moldova are still ranked ahead of Nepal in remittance contribution to GDP, but Nepal is closing in with more tertiary skilled labor placement particularly in the U.S., Japan, China, South Korea, Thailand, and Malaysia.
So where does Nepal stand in the global ebb and inflow of migrant remittances? Of the US$ 440 billion in-flow that took place in 2010 to labor receiving countries, Nepal accounted for just less than one percent. But it is a significant 1 percentage nonetheless, opening new horizons for Nepali Non Residents to invest back in their country in a more formalized and legal manner. The dual nationality accord extended to NRNs recently is a positive step forward in this direction; however, there must also be economic concessions and special investment based duty free zone privileges made to NRNs so they may contribute more directly to the Nepali economy in new productive investment sectors such as fisheries, tourism and culture development, investment banking, housing and the ever burgeoning civil aviation and ground transportation sector.
Similarly, the NRNs must be encouraged by the Nepal Government and its embassies abroad to invest back home, since Nepal is in the golden zone of economic growth, sandwiched between China, the world´s number two economy, and India within the top ten. The Nepal Government needs to think seriously on this issue and act fast rapidly in forming a special politically neutral commission or board to promote Nepali overseas employment with inclusion of the overseas employment agencies, the Ministry of Foreign Affairs, Ministry of Home Affairs and the Ministry of Labor. The NRN Association should provide its guiding expertise to such a committee of the whole.
Nepal already has its labor force represented legally and illegally in some of the top labor receiving countries, which includes the US, Saudi Arabia, Switzerland, Russia and Germany. Worldwide, the top labor sending countries in 2010 were India, China, Mexico, the Philippines and France most of which placed highly skilled labor. The majority of Nepali labor exports today comprise the non-skilled sector.
Nepal´s foreign labor prospects are indeed bright given its geo-strategic placement and time tested observations among host countries of Nepalis generally being honest, hardworking and diligent. In fact, Nepal can learn a lot from the Philippines when it comes to promoting foreign employment. In the early Eighties, there used to be a motto in the Philippine Overseas Employment Agency (POEA) ´Able Hands in Foreign Lands´ for a government considered promoting foreign labor in quite a few ingenious ways that other Asian countries found difficult to emulate. The POEA made sure each Filipino worker fitted the job profile, was skilled, put to the language test before they left, and also had culturally adaptable knowledge so they could absorb quickly in the labor force of receiving countries.
In 2008, the Nepal Government reported on its overseas employment promotion that the number of countries seeking Nepali able hands had doubled, while the quality of workers remained stagnant, education and skills-wise. Nepal´s overseas employment promoters got to be honest with themselves. Nepal cannot continue generating a pool of unskilled workers at lower end jobs for foreign countries; that market will soon be oversaturated with too many poor Nepali and least developed country souls eking out a ´just-so´ quality of life! This would be in stark contrast to the QOL, for instance, what a Pakistani, Indian or Filipino worker enjoys because these countries have worked steadily towards hosting employment skills in better earning sectors requiring education.
One should note, a major workshop on Labor Migration Poverty Alleviation and Foreign Employment conducted in August, 2007 in Kathmandu by one of Nepal´s most well known, persuasive and foresighted intellectual thinkers, Professor Sridhar Kumar Khatri, stated that Nepal´s economy had good prospects and enough reasons to survive if it promoted foreign labor through systematic labor export, which would have to be tailored to host country changing requirements. Thereby, the labor export ´returns´ would be seen through direct foreign migrant remittance earnings channeled back to Nepal in a couple of years. This is precisely the end game scenario now – a fact come true! In fact, the then Minister of Finance Dr. Ram Sharan Mahat, congratulated Professor Khatri for his broad insight and also indicated that a liberal passport and immigration and emigration policy would help promote such foreign remittance flows from these countries besides opening new vistas for Nepali democracy. The lattermost part of that promise has yet to be fulfilled by the major political parties of Nepal and reflects directly on the current politically torn leadership of Nepal. However, Prime Minister Nepal has been more open to working with the NRN community and supporting their cause than his predecessors at Singha Durbar.
What about the future? It would be contributive if Nepali universities also ran courses on foreign employment, made it compulsory teaching a second foreign language and also conducted intensive training courses on various labor skills required, ranging from nursing to restaurant management, elderly care to crane operation (which kills more than four dozen Nepalis each year!) as part of a general vocational training curricula added to existing university course structures. Today, Nepal permits its citizens to work in 112 countries around the world which is quite impressive! What better boon could there be than doubling or tripling foreign labor remittance every few years and a well resourced pool of Nepalis ready to fill in the quickly building foreign job quota? It would make Nepal´s name more well known internationally and probably help contain the current rural poverty index! It would be highly suggestible, therefore, that organizations such as ILO, IOM, USAID, EU, the World Bank and the ADB, which have contributed generously to Nepali economic growth in the past decades, despite faltering political progress on the peace and national reconciliation platform, look into this aspect of Nepali economic development so as to promote a desired Nepali national skills bank to match the honesty, hard work and diligence of Nepali workers currently serving abroad and those wishing to go abroad for work.
Country rank wise, Nepal is second to Bangladesh and remained fairly isolated from the global economic downturn of 2009 given Nepali laborers are working in the majority in booming East Asian and Middle East destinations which checked the recession impact with growing industrial or oil exports. Though Nepal´s labor growth in foreign employment seems to have slowed down to single digit from double digits in recent, years, there has been a strong surge of rural Nepalis seeking foreign employment, due to the civil conflict that took place between 1996-2006. The Nepali Congress led governments, more than any other, has been contributive to the promotion of foreign employment in the past two decades, seeking the formalization of labor contracts and also linking Nepali foreign policy interests to growth in surge. It might be interesting to note that Nepali foreign laborers are highly regarded and placed primarily where the U.S. and India have a noted strategic influence zone, such as the Middle East and certain East Asian countries. However nearly 74% of Nepali foreign laborers work in the non-skilled sector there.
Formal remittance inflow to Nepal in 2010 reached US $ 3.5 billion, though it is estimated nearly one third more could have been generated through the Hundi system which still remains strong in Nepal, India, Pakistan and Bangladesh. The remittance surge must be considered impressive going by 2009 figures of US$ 2.98 billion. The Second Living Standard Survey of Nepal suggested remittance inflow as a major contributor behind the decline in people living below the poverty line from 42 percent to 31 percent. However, independent Nepali analysts and foreign donor agencies still put Nepali poverty, or those living below $2 a day, at 55% of the population. This again can be linked directly to the negative growth indicators that prevailed during the Nepali civil conflict. Countries like Tajikistan, Tonga, Lesotho and Moldova are still ranked ahead of Nepal in remittance contribution to GDP, but Nepal is closing in with more tertiary skilled labor placement particularly in the U.S., Japan, China, South Korea, Thailand, and Malaysia.
So where does Nepal stand in the global ebb and inflow of migrant remittances? Of the US$ 440 billion in-flow that took place in 2010 to labor receiving countries, Nepal accounted for just less than one percent. But it is a significant 1 percentage nonetheless, opening new horizons for Nepali Non Residents to invest back in their country in a more formalized and legal manner. The dual nationality accord extended to NRNs recently is a positive step forward in this direction; however, there must also be economic concessions and special investment based duty free zone privileges made to NRNs so they may contribute more directly to the Nepali economy in new productive investment sectors such as fisheries, tourism and culture development, investment banking, housing and the ever burgeoning civil aviation and ground transportation sector.
Similarly, the NRNs must be encouraged by the Nepal Government and its embassies abroad to invest back home, since Nepal is in the golden zone of economic growth, sandwiched between China, the world´s number two economy, and India within the top ten. The Nepal Government needs to think seriously on this issue and act fast rapidly in forming a special politically neutral commission or board to promote Nepali overseas employment with inclusion of the overseas employment agencies, the Ministry of Foreign Affairs, Ministry of Home Affairs and the Ministry of Labor. The NRN Association should provide its guiding expertise to such a committee of the whole.
Nepal already has its labor force represented legally and illegally in some of the top labor receiving countries, which includes the US, Saudi Arabia, Switzerland, Russia and Germany. Worldwide, the top labor sending countries in 2010 were India, China, Mexico, the Philippines and France most of which placed highly skilled labor. The majority of Nepali labor exports today comprise the non-skilled sector.
Nepal´s foreign labor prospects are indeed bright given its geo-strategic placement and time tested observations among host countries of Nepalis generally being honest, hardworking and diligent. In fact, Nepal can learn a lot from the Philippines when it comes to promoting foreign employment. In the early Eighties, there used to be a motto in the Philippine Overseas Employment Agency (POEA) ´Able Hands in Foreign Lands´ for a government considered promoting foreign labor in quite a few ingenious ways that other Asian countries found difficult to emulate. The POEA made sure each Filipino worker fitted the job profile, was skilled, put to the language test before they left, and also had culturally adaptable knowledge so they could absorb quickly in the labor force of receiving countries.
In 2008, the Nepal Government reported on its overseas employment promotion that the number of countries seeking Nepali able hands had doubled, while the quality of workers remained stagnant, education and skills-wise. Nepal´s overseas employment promoters got to be honest with themselves. Nepal cannot continue generating a pool of unskilled workers at lower end jobs for foreign countries; that market will soon be oversaturated with too many poor Nepali and least developed country souls eking out a ´just-so´ quality of life! This would be in stark contrast to the QOL, for instance, what a Pakistani, Indian or Filipino worker enjoys because these countries have worked steadily towards hosting employment skills in better earning sectors requiring education.
One should note, a major workshop on Labor Migration Poverty Alleviation and Foreign Employment conducted in August, 2007 in Kathmandu by one of Nepal´s most well known, persuasive and foresighted intellectual thinkers, Professor Sridhar Kumar Khatri, stated that Nepal´s economy had good prospects and enough reasons to survive if it promoted foreign labor through systematic labor export, which would have to be tailored to host country changing requirements. Thereby, the labor export ´returns´ would be seen through direct foreign migrant remittance earnings channeled back to Nepal in a couple of years. This is precisely the end game scenario now – a fact come true! In fact, the then Minister of Finance Dr. Ram Sharan Mahat, congratulated Professor Khatri for his broad insight and also indicated that a liberal passport and immigration and emigration policy would help promote such foreign remittance flows from these countries besides opening new vistas for Nepali democracy. The lattermost part of that promise has yet to be fulfilled by the major political parties of Nepal and reflects directly on the current politically torn leadership of Nepal. However, Prime Minister Nepal has been more open to working with the NRN community and supporting their cause than his predecessors at Singha Durbar.
What about the future? It would be contributive if Nepali universities also ran courses on foreign employment, made it compulsory teaching a second foreign language and also conducted intensive training courses on various labor skills required, ranging from nursing to restaurant management, elderly care to crane operation (which kills more than four dozen Nepalis each year!) as part of a general vocational training curricula added to existing university course structures. Today, Nepal permits its citizens to work in 112 countries around the world which is quite impressive! What better boon could there be than doubling or tripling foreign labor remittance every few years and a well resourced pool of Nepalis ready to fill in the quickly building foreign job quota? It would make Nepal´s name more well known internationally and probably help contain the current rural poverty index! It would be highly suggestible, therefore, that organizations such as ILO, IOM, USAID, EU, the World Bank and the ADB, which have contributed generously to Nepali economic growth in the past decades, despite faltering political progress on the peace and national reconciliation platform, look into this aspect of Nepali economic development so as to promote a desired Nepali national skills bank to match the honesty, hard work and diligence of Nepali workers currently serving abroad and those wishing to go abroad for work.
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