Raghu Mandagolathur, a member of the CFA Institute, has laid out four solutions that Gulf countries should adopt if they want to reduce expatriates’ remittances, which surpassed $100 billion in 2014.
Mandagolathur says that members of the Gulf Cooperation Council (GCC) are required to generate further jobs, stimulate local investments, open the markets to foreign investors and improve infrastructure if they want to reduce expatriates’ remittances.
In 2014, expatriates in the GCC region transferred a massive $100bn to their home countries. This amount comprises 6.2 per cent of the total GDP of the GCC countries.
According to Mandagolathur, there are reasons that drive expatriates to send all of their savings to their home countries. These include restrictions on ownership and investments in the GCC states, rigid labour laws and the absence of taxes.
He adds that most expatriates in the region come from India, Egypt, the Philippines, Bangladesh, Pakistan, Indonesia, Sri Lanka and Yemen and they are more inclined to send funds to their home countries, which they have left in order to provide financial support to their families. He notes that the vast majority of these expatriates work in poor-paying jobs.
Additionally, the Gulf states place restraints on foreign ownership and investments, which limits the availability of areas that expats can invest in, the expert says.
He adds that there is a pressing need for the GCC states to stimulate local investments and offer products that would attract expatriate investments. By doing so, Mandagolathur asserts, the GCC states will be able to benefit from the savings of 25 million expatriates, who make up about 49 per cent of the region’s total population.
In remarks published by Al Bayan, he emphasises that the GCC countries should improve infrastructure – including airports, roads and railways – in order to provide constant advanced life patterns.
He also says that there is a need to generate jobs for citizens in order to slash unemployment and reduce the number of expatriates.