Haider al lawati –
The countries in the region still represent a significant proportion of the total annual remittances estimated at 26.8 per cent of overall global remittances, according to the Arab Monetary Fund data 2018.
The value of remittances from GCC countries amounted to $119 billion in 2018, down just 1.64 per cent compared with 2017. These funds do not just include all amounts sent through approved official channels such as banks and currency exchange companies.
It also includes those carried by passengers as they travel home, in addition to the quantities of gold transferred through different channels without being monitored by authorities concerned.
The region is classified as one with the highest remittance rates by the expatriate labour in all economic sectors. Some experts believe that the value of these funds sent through non-approved channels ranges between 30 per cent and 40 per cent of bank-approved transfers.
Statistics indicate most funds and remittances sent from the GCC are headed to India, accounting for an estimated 55 per cent of the total funds. India ranks top among countries where remittances are received.
It is believed some companies operate illegally by transferring funds abroad in return for a small fee, which contributes to high value of funds transferred abroad informally.
Due to a lack of legislation that attracts investments to the region and the decline in real estate, and stock and securities prices, expatriates continue to search for the best means of remittance outside the GCC.
Governments in the Gulf recently refuted any intention to impose government fees on remittances made by expats through official channels.
No one denies that expatriates in any part of the world migrate to earn as much money as they can to support their families, and that imposing any kind of fees, albeit small, on their remittances may make some of them to return to their home countries or help spread illegal remittance channels.
For example, in some GCC countries like UAE, Qatar and Kuwait, there are eight expats for every two citizens despite existing legislation on employing labour for specified jobs only.
This is proof of imbalance of official systems in all GCC countries that allow access to a large number of workers, some of whom are still on the streets with no work.
Figures released by the GCC Statistics Centre show that the GCC total population is 53 million. Over 20 million expats work in the region, representing 69.3 per cent of the total labour force. Ninety per cent of these work in private sector, increasing their annual remittances.
Experts predict the introduction of new taxes by some GCC countries and increased tariffs on fuel prices and services provided by governments will impact expat remittances in the region.
This is the result of the heavy reliance by GCC countries on oil revenues, which have fallen significantly over the past years, leading to deficits in their annual fiscal budgets, while remittances account for nearly 8.2 per cent of the GDP at current prices across the region.
Data indicates that KSA ranks first in the region and second after the US in the volume of foreign remittances with $38.9 billion, followed by the UAE with $32.7 billion, Kuwait $15.3 billion, Qatar $12 billion, Oman $10.27 billion and Bahrain $2.4 billion.
Moderation of economic growth in the region will cause a decline in oil prices, which will inevitably lead to a decline in remittance outflows in the coming years, especially since all GCC countries are planning to replace expats with citizens in some professions.
This is achieved through gradual phasing out of such employment, thus reducing pressure on balance of payments for GCC countries.