Khilendra Paudel: Government role key to boosting remittance

Nepal’s economy heavily relies on remittances for foreign currencies, which is equivalent to more than 20 percent of its GDP. However, the remittance inflow decreased by nearly six percent in the first six months of the fiscal year 2021/22, according to a recent Nepal Rastra Bank report. This remittance contraction was observed despite an increase in the number of people going abroad for jobs following an improvement in the Covid-19 situation. Priyanjali Karn of ApEx talked to Khilendra Paudel, the CEO of IME, Nepal’s first remittance company, to know about the current remittance situation.  

What role does remittance play in the economic wellbeing of Nepal?

The signing of the Treaty of Sugauli in 1816 ignited the trend of Nepali people migrating to foreign countries for employment, and this continues still. At present, approximately 3.5m Nepalis are working abroad, which accounts for almost 14 percent of the total Nepali population. The hard-earned money that migrant population sends back to their families is a major contributor to Nepal’s foreign currency earnings. The country receives about Rs 900bn in remittances through formal channels. This is about 25 percent of our gross domestic product (GDP). So remittance is one of the major factors that helps maintain the macroeconomic stability and the overall well-being of the country. 

How do you think we can promote formal channels of remittance?

There is an undeniable need to formalize the channels through which remittances enter the country. For this, the role of government is pivotal. Policies in relation to economic growth, interest rate, and exchange rate policies are crucial determinants of remittance inflows. To encourage the inflow of remittances through formal channels, introduction of special incentive packages for the migrant population can serve as a mode of encouragement. This method is currently being practiced by some of the SAARC countries like Sri Lanka, Bangladesh, and Pakistan, whose economies, like Nepal’s, heavily depend on remittances. 

Despite their contribution to the country’s economy, many workers are still being swindled and exploited. What do you think should be done to guarantee the safety of migrant workers?

Ensuring the safety and security of Nepali people migrating abroad for employment has to be the highly prioritized by the concerned government bodies. Entering into a bilateral labor agreement with the countries of destination indeed plays an important role in assuring the wellbeing and security of workers. Nepal has labor pacts with just nine of the 109 major destination countries, namely the State of Qatar, the United Arab Emirates, the Republic of Korea, the Kingdom of Bahrain, Japan, the Hashemite Kingdom of Jordan, Malaysia and Mauritius. Thus, entering into labor agreements with other major destination countries can be the first step toward safe migration. 

How has IME been responsible and accountable to the workers and contributed to the incoming remittances?

For the past 20 years, IME Limited has been serving the migrant workers involved in foreign employment by facilitating them to send back their hard-earned money to their families in the safest, credible, and secure way. No matter the hardship of the situation, IME has always made an effort to make remittance services affordable and accessible. Where IME stands today is solely because of the reliable service we have been offering to the Nepali migrant workers. As a pioneer in formalizing the remittance channel, today, IME takes pride in bringing in remittance money from more than 100 countries.

IME is not just a remittance company but also a conglomerate of businesses. One key area where the group works is capital market. Why do you think Nepal should focus on connecting remittances to the capital market?

We are well aware of public enthusiasm for the IPO (initial public offering) and share market. This can be one of the best opportunities for Nepal to leverage the interest of the public by connecting remittances to the capital market. Allocating a quota for the migrant population can promote formal channels as well as encourage investment in productive sectors.