Remittance inflow to Bangladesh from outside the Gulf Cooperation Council countries, especially the US, crashed in fiscal 2016-17 mainly due to uncertainty over migration policy aimed at Muslims amid a spurt in militant activities.
Bangladesh receives the third highest remittance from the US, but the inflows dropped 30.15 percent year-on-year to $1.69 billion in the last fiscal year, according to central bank statistics.
“There is an uncertainty over the US's ensuing migrant policy, especially regarding Muslims,” said Zahid Hussain, lead economist of the World Bank's Dhaka office.
He said due to uncertainty over their job security, the expatriate Bangladeshis in the US may send home less money.
Even the green card-holders, meaning those who have the right to reside permanently in the US, are afraid of leaving the country to visit Bangladesh lest they are not allowed back in, said the economist.
“In times of such uncertainty, depositing money in their bank accounts brings them comfort,” he added.
Remittance from the US normally comes through legal channel, but due to the large divergence between formal and informal rates in the foreign exchange market, there might have been a rising tendency to send money home through hundi, said Zaid Bakht, former research director of the Bangladesh Institute of Development Studies.
The inflows in 2016-17 have been the lowest in six years -- a development that can be viewed as a dark cloud over an otherwise buoyant economy.
Migrant workers sent home $12.77 billion last fiscal year, down 14.47 percent year-on-year, according to data from the central bank.
The slump was due to persistent weaknesses in the GCC economies, where the majority of the migrant workers reside, as a result of the low oil prices, according to the economists and multilateral development agencies.
Not only Bangladesh, remittance inflow to other developing countries has also fallen.
However, in case of Bangladesh, remittance inflow from Malaysia, Singapore and the UK also declined last year.
These countries are among the top 10 countries for remittance for Bangladesh. Remittance from the UK declined 4.4 percent, from Malaysia 17.42 percent and from Singapore 22.48 percent.
In Malaysia and Singapore, there have been allegations of militant activities against expatriate Bangladeshis, according to Bakht.
He said employers in those countries might be wary of taking on Bangladeshi workers, which could explain the decline in remittance from them.
However, bankers said remittance slumped due to the exchange rate fluctuations. Among the Middle Eastern countries, large sums of remittance come from Saudi Arabia, the UAE, Kuwait and Oman.
Inflows from Saudi Arabia slumped 23 percent and from the UAE 22.79 percent. The fall was about $3 million to $4 million from Kuwait and Oman respectively.
Remittance from Qatar, which faces regional isolation in a diplomatic dispute with its Gulf neighbours, increased 32.4 percent to $576 million. Remittance is a major source of foreign currency for Bangladesh and the declining trend since 2015-16 has progressively become a matter of concern for the government.
The International Monetary Fund last month cited the declining remittance as a risk factor to the economy.
Over the last 10 years, remittance accounted for 8.5 percent of the country's gross domestic product on average, close to eight times the foreign direct investment flow into Bangladesh, according to the IMF.