Date:23/02/2005 URL: http://www.thehindubusinessline.com/2005/02/23/stories/2005022302410400.htm

Back NRIs account for chunk of UAE remittances

Vimala Vasan

Abu Dhabi , Feb. 22

INDIAN expatriates in the UAE accounted for a major share of the Dh 40 billion ($9.5 billion) remitted by 2.1 million expatriates last year, according to a statistical report released by the Abu Dhabi Chamber of Commerce and Industry.

The report, published in the Arabic daily Al Bayan, said expatriate workers from the Indian sub-continent and East Asia accounted for 45 per cent of the total official and unofficial remittances, while Arabs and Europeans transferred 25 and 10 per cent respectively.

The report warns that these remittances are putting pressure on the balance of payments and draining the national assets of foreign currencies.

To curb the flow of remittances, the report has recommended a series of measures including facilitating low income categories to bring their families from home by building low rent residential zones, framing sound financial, banking and investment policies to attract these huge funds to stock markets and other investment portfolios, opening up investment sectors and encouraging the expatriate workforce to set up joint ventures.

Sixty-five per cent of the expatriate workforce in the contracting and construction sectors, along with housemaids, transfer 70 per cent of their annual income to their home countries.

In recent years, the high costs of living in the Gulf countries have compelled many expatriates to send their families back home, resulting in a rise in remittances.

The report also stressed the need for effective mechanisms to regulate and supervise hawala transactions to reduce the risk of money laundering and terrorist financing.

Setting up public joint stock companies for expatriates and facilitating entry visa requirements for families of expatriates are among the other recommendations.

One foreign exchange house alone transfers Dh 10 billion to Asian countries. Of this, Dh 3 billion goes to India.

From 2000 to 2004, the remittances grew by 9.4 per cent, with unofficial transfers accounting for $5.4 billion or 57 per cent of the total $9.5 billion. A breakdown showed that the remittances accounted for 4.5 per cent of UAE's GDP of $90.7 billion in 2004.