24 July, 2014 / Ramazan 25, 1435

Workers’ remittances build a new city

Published Feb 23, 2009 12:00am

MANY recipient nations in Asia including India, China and Bangladesh have reported decline in workers’ remittances this year because of large-scale layoffs and pay-cuts in the West and the Middle East.

The flow of remittances in Pakistan, however, has increased by 18 per cent over the first seven months of the current fiscal.

The State Bank of Pakistan said last week that workers’ remittances from overseas Pakistanis rose to $4.28 billion during July-January. Officials expect the total annual receipt to reach $7 billion by the end of the current fiscal.

In a report in November 2008, the World Bank had included Pakistan in the list of nations that it anticipated would be the worst hit in 2009 and 2010 by the trend of falling workers’ remittances.

How did the country manage to dodge the impact of global recession on overseas workers’ income and its transfer home? Has the workers’ migration increased significantly last year to justify the rise in amount of capital repatriated? Or are the immigrants tempted to invest more in the home country?

It is hard to tell why remittances are soaring in the absence of credible data and research. The most plausible explanation, however, is that the total inflow might have fallen in Pakistan like elsewhere but the percentage of transfers made through formal channels has increased, creating an impression that transfers have registered a rise.

There is a strong possibility that more overseas workers prefer official channels for money transfers. They seem to prefer formal route because of strict scrutiny of bank accounts abroad.

If this is the case, then the actual flow of remittances is much more than what was reported or understood to be. This would imply bigger role and higher weightage of remittances in the economy. Little wonder that its impact, on recipient families and the regions where they are located, is more dramatic than expected.

The fact that people of Mirpur in Azad Kashmir constitute a big chunk of Pakistani community in Britain has often been reported. There are some studies elaborating the trends that made them peculiar. Some reports by British journalists and researchers shed light on their choice of trades and professions in the UK and other sociological aspects of their behaviour as a well-knit community. However, not many people can imagine the difference that their migration to UK made for their hometown.

A day’s trip to Mirpur last week introduced me to a town that is distinct from the rest of Pakistan. Adjacent to Gujrat, just four hours drive from Lahore and next to Mangla Dam, Mirpur’s economy seems to be more integrated to Britain than it is to Pakistan. The prosperity in the town far exceeds the level of noticeable local economic activity, giving an impression that it is primarily based on savings made by Mirpuri earners overseas.

The quality of life for the majority appeared much superior here than in any other city. The city is cleaner, quieter and more prosperous. Besides, prosperity looks broad-based. There is not a single mud house or shanty township (kutchy abbadi) in Mirpur, a common sight in other cities.

All 100,000 families, residing in the city, have direct or indirect international exposure. “At least one member of every family has traveled abroad”, it is believed in town.

The construction of Mangla Dam converted the old Mirpur town into a big artificial lake. Mirpur that was developed by the dislocated 50,000 people, is situated on the bank of the lake equipped with all modern amenities including telephone and telegraph networks. There are schools, colleges, hospitals, restaurants, hotels and multi-storey shopping malls like in any modern city. Nearly all private banks have their presence in the city.

Many families own cars. The value of property is as high as in posh localities of largest five cities. The price of a 500 square yard residential plot was said to be in the range of Rs10-20 million, depending on its location.

The visibility of women in the city is low pointing to conservative social structure. Many young men from the area are studying abroad. Girls from comparatively progressive families were reported to be studying in Lahore and other cities, residing in hostels.

There is also an industrial area with textile, ghee, garments, engineering, cosmetic and other units. For the development work at Mangla and the new Mirpur city--- a giant private housing project-- the labour had to be brought in by contractors from outside Mirpur.

Trees have been planted by a few private companies (as social service) but for some reason agriculture has not been developed. Perhaps, the cost could be high because of the topography of the land that is generally hilly.

There was vehicular traffic but public transport was scanty though a few wagons were spotted on well-laid out roads. “Many expats visiting Mirpur drive rented vehicles. Besides, people prefer to rent vans to pick and drop their dear ones to and from international airport in Lahore”, ex-president of Federation of Pakistan Chamber of Commerce and Industry Chaudhry Saeed told Dawn, explaining the pattern of transportation.

He said the city had quietly been transformed by migrants to the UK who maintained strong links with their land and families. “There are investment opportunities all over Pakistan and globally for those living abroad but we prefer to plough our savings back into our businesses in Mirpur. The margin might not be very big but it is good enough to ensure reasonable growth”, Saeed said whose extended family controls sizeable business in Mirpur.

It could be true for enterprising few like Saeed but the investment seems to be predominantly in housing. Many big houses were vacant as their owners were away.

The equivalent of Mirpur in India is Jullundhar and Sylhet in Bangladesh. They have better developed local economy to become self-reliant with not just high consumption but matching production levels. Especially people of Jallundhar are said to have invested heavily in modern high yielding agricultural machinery that has gone a long way in improving the productivity and efficiency of the local economy.

According to sources, Mirpuris control one-third of total liquid assets estimated at $60 billion held by Pakistanis abroad.

There are indications that despite growth in formal transfers of remittances over the last few years, substantial amounts still flow through informal channels. Concerted effort by the government to attract money sitting abroad may prove to be a big boon. It will have a multiplier effect if it could be channelised into gainful pursuits, particularly to diversify production base.

Over the last three decades remittances have proved to be the most consistent and dependable source of foreign exchange inflows which currently exceed the annual foreign investment inflows and bilateral official assistance. Unlike other capital inflows, remittances are stable and directly benefit the poor.

The current utilisation of capital inflows needs to be improved through capacity building and investment advisory services in places like Mirpur.

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