Daily Times

I still vividly recall the circumstances that Pakistan faced in 1999 when the West decided to put a financial squeeze on us post-nuclear detonation and the ill-considered freezing of Foreign Currency Accounts by the Nawaz Sharif regime.

Along with two of my younger colleagues, I decided to help the Government of General Musharraf and undertook visits to the Philippines, Sri Lanka, and Bangladesh, a group of countries who had almost similar economic conditions as Pakistan with numerous expats working abroad. We returned with a trove of data and made a formal presentation in the year 2000 to the then Finance Minister Shaukat Aziz and SBP Governor Dr. Ishrat Hussain at the State Bank Building in Karachi.

At the time, the total inward remittances received through official channels during 1999 were less than US$1 Billion; an alarmingly low number. In order to have a shock and awe effect on the audience whilst highlighting the plight of our inward remittances, I presented the FY1999 data in a very simple format as shown in Table-1

After these numbers were presented, the attendees were informed that Pakistan should be receiving at least US$7.5 Billion per annum based upon Philippines’ example. The response to my assertion was one of disbelief and amusement to some extent. However, my position was vindicated shortly thereafter, due to 9/11 related measures undertaken by the West in general and by the US in particular.

At the end of my presentation, I had made yet another statement as follows: “If these proposals are put into effect, then I will make you another presentation whereby I will prove to you that Pakistanis living in Pakistan have stashed well over US$200 Billion abroad.” Once again, no one bothered asking me to justify these numbers.

I would also like to reiterate that by now this figure should be close to US$400 Billion, if not more, all of which was transferred out of Pakistan during the past few decades, with this practice continuing till date.

Is it not a matter of concern for the Overseas Pakistanis Foundation (OPF) that while most of the blue collar workers are part of their data, white collar expat workers and Pakistani entrepreneurs working abroad are almost completely absent in their data bank?

The remittances in Philippines during FY2017-18 were US$28 Billion. Based on these numbers, Pakistan’s inward remittances should be at least US$31-34 Billion per annum, given the fair assumption that our expats are on average at least are more affluent than overseas Filipino workers. It seems like no one in Islamabad truly understands this potential and how to exploit it.

I also wonder as to why banks should be paid two rupees per dollar of every inward remittance. They should have been told to put their act together and follow the example of Philippines where banks are fully geared up to deposit funds in the accounts of beneficiaries within 24 hours. The two rupees per dollar should preferably be paid as an incentive on the additional remittances received compared to the previous year’s number.

Another factor requiring serious debate is why what is absolutely legal for exchange companies to handle is considered illegal for commercial banks to undertake. Looking at the history of the past decade or two, exchange companies were allowed to operate under license from the regulatory authorities and yet we continue to learn about incidents whereby funds were illegally transferred abroad through these companies, a factor which keeps the FIA very busy.

Latest Data of Inward Remittances (FY2018) in Table-2

One must keep in mind that in all those countries where there is a dearth of availability of foreign currency (such as US Dollars and Pound Sterling) in the open market, the delta between official and unofficial exchange rates is very large. In this regard one may look at countries like Iran, Nigeria, as well as others in Africa and Latin America.

There is a need to debate on the role of overseas Pakistanis. They are a highly glorified class of people who are praised in flowery words by every politician. While we appreciate their staying away from their loved ones to make a living, it is a matter of principle that remittances made by them into their country are properly paid for in rupees by the State Bank of Pakistan through scheduled banks. Every dollar sent through a bank is the only legal method whereas every other method should be considered illegal.

It is my considered view that either the whole process of inward remittances, may it be the legal kind or the illegal, is being managed by some mafia or cartel, or the authorities are totally unaware of its actual potential. The latter explanation seems more plausible.

I have tried to generate a debate on this important subject whilst anticipating to attract some attention from the pertinent quarters to this critical issue. Please do keep in mind that it is exactly this US$12 Billion delta between what our official inward remittances should be and what they actually are, for which the holder of the highest office in our country, the Prime Minister himself, is having to personally make efforts to bridge by reaching out to our allies in the Middle East and China. Thus, I will continue to repeat my story time and again through every medium of communication until I am heard.

The writer is a former Co-Chairman of Bank Alfalah Executive Committee, Board Member of Alfalah Insurance, Warid&Wateen Telecom Email: pshahid@me.com

Published in Daily Times, November  9^th 2018.