Where are the remittances of the Pakistani diaspora being spent?

Byline: Khalil Ahmed

Where should the remittances sent by the Pakistani diaspora be invested? Well, the prevalent assumption is that the major chunk of this wherewithal penetrates into the real estate sector rather than agriculture, domestic bonds, energy sector, infrastructure, local manufacturing of the imported constituents for the exportable products, domestic savings or SMEs,

Pakistan received $29.4billion remittances during the preceding fiscal year which was a record and helped in addressing the economic woes of the country in trying times. The momentum has maintained and the Pakistani diaspora have remitted $8 billion during the first quarter of the current fiscal year which is the only good news on the economic front, to be precise.

The recent over 10% depreciation of the local currency caused jitters in the economy when the greenback hit a new record trading at Rs.175 on October 27, 2021. It was a deja vu of August 2020 when dollar traded for Rs.168 in the wake of the flight of the hot money, so to speak. In the wake of Covid19 in March 2020, the so-called foreign investment or hot money amounting to $3.5billion in domestic bonds flew back to its origin within a couple of months causing perturbation and wreaking havoc in the currency market. How much amount has been invested by the Pakistani diaspora in the domestic bonds ever since the government allowed foreign investment in domestic bonds in July 2019? Are the Pakistani diaspora enamored with the domestic bonds where the returns of investment are rather lucrative?

Are the Pakistani diaspora keen to establish businesses in Pakistan with the remittances sent by them so that employment opportunities may be created and the underlying poverty may be tackled? The total number of registered companies in Pakistan are around 1,52,000 which may spike if the overseas Pakistanis establish their businesses in Pakistan. The Pakistani diaspora may get benefit in case they establish entities with their hard-earned wherewithal.

Pakistan needs dollars. It may be through remittances or foreign direct investment. FDI is generally considered the best source of foreign exchange as it creates jobs without increasing the debt burden. The situation of FDI is quite abysmal for preceding five years, to be precise. It was during...