Remittance from Malaysia rising

Remittances have played a crucial role for the balance of payment position of the country especially when exports have remained under duress. Recently, inflows from Malaysia have helped lift the monthly remittances, emerging as one the major sources of remittances. Dissemination of remittance figures from Malaysia started only in July 2018; however, SBP’s second quarterly report shows that remittance from Malaysia increased by over 57 percent year-on-year in 1HFY19 – the highest growth in the six-month period followed by USA and UK.

The illustration shows that since July 2018, remittance from Malaysia have persistently contributed to around 7 percent of the total inflows form overseas Pakistanis up till February 2019. However, the central bank’s latest quarterly report highlights that these foreign exchange inflows from Malaysia have been growing since 2013. Malaysia has definitely emerged as a potential country for Pakistani migrant workers in recent years. As per the details in ‘Analysis of Manpower Export 2018’ by Bureau of Emigration and Overseas Employment, Malaysia accounted for 2.58 percent of the total emigrations in 2018; and while the migrant workers export declined in some key destinations like UAE and Saudi Arabia, increasing trend for Pakistanis proceeding to Malaysia for employment was witnessed in 2018 (growth of 38 percent YoY).

Malaysia is an important labour market for South Asian countries where workers from Bangladesh are in majority followed by India and Pakistan in that order. And the jobs occupied by people from these countries are usually in the low paying category. However, the central bank in its report points out that due to workforce shortage faced by Malaysia in sectors like manufacturing, construction and agriculture, the authorities raised local as well as foreign wages back in 2013, which could be a factor in the surge in remittance from Pakistanis living in Malaysia as labour migration has remained elevated since then. This can also be seen from the illustration that shows emigrants registered for employment in Malaysia.

Remittances from Malaysia are expected to increase in the coming months. Though remittances were not a focus in Malaysia’s Mahathir Mohamad’s recent visit to the country, Pakistan had recently launched its first-ever blockchain remittance service in Malaysia, as Telenor Microfinance Bank joined forces with Valyou, a fintech company in Malaysia to boost the speed and efficiency of remittances from Malaysia to Pakistan.

However, increasing efforts on the manpower export front as well with well trained workers could further ensure a sustained increase of remittance inflows from Malaysia.