KARACHI, June 16: Expatriate Pakistanis sent back home $3.473 billion in eleven months to May 2004, according to data released by the State Bank on Wednesday. In a year-ago period they had sent $3.704 billion.

This $231 million or 6.2 per cent fall in workers remittances is quite nominal. But what is disturbing is the fact that remittances from the United Arab Emirates declined to $546 million in July-May 2003-04 from $770 million in July-May 2002-03.

This fall of 29 per cent or $224 million cannot be attributed solely to a decline in panic-transfers of money in the wake of September 11, 2001 terror attacks on the US has stopped. It can also not be attributed fully to the intensified checks imposed by the authorities on the outflow of foreign exchange from the UAE.

"What explains this big fall in the remittances from the UAE is that Pakistanis living there have restarted using unofficial channels of money transfer," said head of an exchange company who refused to be quoted.

The State Bank sources also confirmed this. They said that some of the exchange companies were also encouraging foreign exchange inflow through unofficial channels from the UAE.

The sources said two exchange companies were recently found mis-declaring the amount of foreign exchange they were bringing in from the UAE. It could not be learnt immediately what action the central bank has taken against them.

Executives of exchange companies say what encourages the UAE- based Pakistanis to use Hundi/Hawala for sending foreign exchange back home is not only a higher exchange rate but also the swift pace of delivery.

They say that the rupee-equivalent amount of the foreign exchange remitted from the UAE through Hundi/Hawala operators reach the doorsteps of the beneficiaries in Pakistan within one day-in some cases within hours.

On the contrary the foreign exchange sent back home through banks still take several days to reach the beneficiaries. Hundi/Hawala operators do have strong links with the exchange companies some of which were even found involved in smuggling of foreign exchange from Pakistan in the near past.

Currency smuggling creates an artificial shortage of dollars in Pakistan thereby making the US unit dearer in the open market. That in turn attracts overseas Pakistanis to use unofficial means for remitting their money back home.

The SBP data shows that workers remittances from the US, Saudi Arabia, Kuwait and Japan also fell slightly in eleven months to May 2004 from a year-ago period. The remittances from the US and Saudi Arabia declined to $1.1 billion and $516 million from $1.3 billion and $527 million respectively.

Similarly the remittances from Kuwait and Japan declined to $160 million and $5 million from $210 million and $7.5 million respectively.

RISING TREND: Workers remittances from the United Kingdom, Oman, Qatar, Norway, Germany, Canada and Bahrain witnessed a rising trend during July-May 2003-04 over the same period of last fiscal year.