Migrant remittances have proved a lifeline for Pakistan’s economy. They have played a non-negligible role in improving employment, lowering the level and severity of poverty, and increasing foreign exchange reserves thereby financing the current account deficit. Other foreign flows, mainly foreign direct investment, and foreign aid are volatile and greatly depend on the economic state and the diplomatic relationship with the sending country. However, one thing which remains aconstant bright star is the support of about 7 million strong Diaspora in the form of remittances, which serve as an economic bridge for the country. Remittances to Pakistan have grown significantly and consider the second largest source after country’s exports. In fact, if remittances through informal sources are included, the inflows exceed the country’s annual export receipts. In FY2018, recorded remittances were reported to be 19.2976 billion USD. As per country wise remittances, the Middle Eastern countries may still be the top remitter region, primarily the Saudi Arabia account 437.48 USD in millions, followed by United Arab Emirate, and western countries the United States, and the United Kingdom. Malaysia emerges a new destination for Pakistani sent about 133. 96 USD millions in the respective year. Overseas Pakistanis comprise almost 3 percent of the country’s population; They either reside as temporary workers with moderately skilled pre-dominantly stay in the Middle Eastern countries followed by East Asian countries (Malaysia on the top) and some Western countries. Majority of these migrants are rural based and has the lower socio-economic background. Therefore they send, a small but frequent amount of money to support the families. The second type of diaspora is typically skilled or permanent resident at the sending country. To keep a strong connection with an origin country, they send remittances to the relatives, or philanthropic remittances to support their countryman in time of hardship or interested to invest. In light of these diverse types of diaspora, their motive to remit, and the choice between formal or informal could be different. Remittances to Pakistan have grown significantly and are the second largest source of foreign income after exports Recently, the ruling PTI-led government sturdily recognises the importance of remittances in national development.Despite numerous efforts, challenges and way forwards still remain. Remittances costs are high in comparison to the informal channel, and there are many barriers to access affordable formal remittance channels. I have a five proposals that might be using an attempt to redirect remittances to officialchannels. First, compared to the informal transaction, it is perceived that the cost of sending remittances through the formal channel is likely to be high, especially when the amount sent is small. Due to strict regulatory issues, both bottom and top remitter are more likely to send remittances through an informal channel. It is recommended that the government should ensure that the cost of sending remittances is brought lower. According to a World Bank report, the global average cost of sending money has remained nearly stagnant, standing at 7.1 percent in the first quarter of 2018. The government should strengthen efforts to reduce the use of the informal remittance channels, which so often underestimate the amount of remittances. According to different empirical estimates, more than half of remittances to developing countries sent to via informal channel pre-dominantly Hundi in the Pakistani context. The experience of the Pakistani Remittances Initiative a joint initiative of State Bank of Pakistan, Ministry of Overseas Pakistanis and Ministry of Finance launched in 2009, seems to be a step in the right direction. However, still, the government’s needs effort to ensure cost-effective, offer competative exchange rate, easy to transfer with less documentation and easy access to banks. Second, there is currently around 13,000 outlets of the Pakistan Post network across the country vitally use as a primary channel through which domestic remittances are sent to rural areas. About 85 percent of the post office branches is located at small and medium-sized towns and rural areas, where more than 60 per cent of the population lives. Therefore, when considering foreign remittance markets, the postal services are mainly overlooked. The government ought to complement the services of the postal choice in financial inclusion policies. Third, an aggressive marketing campaign must be launched, about the procedure, and the importance of remittances sending through formal channels. The government must utilise the social media, advertisement on TV, and more importantly, the brochure with this informations must be distributed at the different airport within a country. The government needs to set up a special counter at the airports with the assistance of Ministry of Overseas Pakistanis. Firstly, the staff may brief the migrants about sending remittances through banks, MTO’s, tell about the Pakistan remittances initiative. The likelihood of receiving remittances through official channels would be increased, if migrant workers are assisted in opening bank accounts. What is more, on return to Pakistan, they may fill out the questionnaire, about the problem and issues regarding the transfer through the formal channel, and in what way it could be improved. As the majority of these migrants has the lower socio-economic background, giving a gift as a goodwill sign to be more encouraged. Fourth,the government make it mandatory for the people to have at least bank account at a time of renewal of passport or attestation of certificates from the foreign office or applying for visa issuance. This will not just increase remittances through the formal channel but could be used as an instrument for financial inclusion. And finally, to support and encourage the rural recipients’ to invest in different SME’s. The considerable share of remittances received by families mostly used for consumption, and the rest used for investment mainly in real estate, and not for entrepreneurial development. As a significant share of migrants is rural based with an unfavourable business climate available to them. For instance faces issues like energy insecurity, corruption, and delays in the process at concerned government offices, political uncertainty, less informed about possible investment opportunities, which may be the reasons of lower productive investment. The new government seems to be interested and actively involved in the real economic activity, devising a conducive policy for easing business particularly in the rural areas should be helpful for raising capital from remittances, this would also ease the labour market burden in the major cities. The writer is a Senior Research Economist, Pakistan Institute of Development Economics and PhD Economics, George August University Goettingen, Germany. He can be reached at Junaid.ahmed@pide.org.pk Published in Daily Times, October 7th 2018.