Bangladesh witnessed a record $35.56 billion in remittances from its expatriates in the past fiscal year, marking a 17.3 percent increase from the previous year. However, despite the substantial flow of $35 billion annually through the country, only a mere 5 percent of this amount has been retained as investment due to the lack of attractive investment opportunities in Bangladesh.
The expatriate bonds, including the Wage Earner Development Bond and two dollar bonds, have seen a total investment of around $1.75 billion as of mid-2021. These bonds, which are savings certificates, offer fixed rates predominantly in the local currency, are non-tradable, and cannot be held as assets overseas. The removal of the investment ceiling in December 2024 led to a surge in redemptions, with expatriates pulling out Tk 1,913 crore more than they invested in FY24 alone. The limited appeal of these savings certificates is evident in the dwindling number of expatriate investment accounts in the stock market.
In contrast, other countries like Israel and Nigeria have successfully tapped into diaspora investments by offering diaspora bonds that are registered with international regulators, priced at market rates, and earmarked for specific infrastructure projects. By adopting a similar approach, Bangladesh could potentially attract a significant portion of the remittances for long-term investments.
The writer, an investment banker and managing director at RetailBook, emphasizes the need for Bangladesh to introduce internationally issued diaspora bonds listed in major financial markets like the UK and US. By providing a transparent and market-friendly investment option, Bangladesh can bridge the trust deficit and encourage expatriates to channel their funds back into the country’s development projects. Ultimately, offering a viable investment instrument is key to retaining a portion of the substantial remittances flowing into Bangladesh annually.
