Indonesia Ranks 14th Among Remittance Recipients: World Bank i

Indonesian women receive training before they are sent to work overseas, mainly to Malaysia and Saudi Arabia. (JG Photo / Dhana Kencana)

By : Muhamad Al Azhari & Dion Bisara | on 11:33 AM January 02, 2016
Category : Business, Economy, Featured

Jakarta. Indonesia ranked 14th among the world's recipients of migrant remittances in 2015, with an estimated $10.5 billion sent from its workers living abroad, a report produced by the World Bank Group’s Global Knowledge Partnership on Migration and Development initiative.

Remittance flow to Indonesia increased 22 percent compared to 2014, when it stood at $8.55 billion.

The world's largest remittance recipients was India, receiving $72.2 billion, followed by China ($63.9 billion), Philippines ($29.7 billion), Mexico ($ 25.7 billion) and France ($ 24.6 billion).

Knomad is sponsored by a multidonor trust fund established by the World Bank. Contributors include Germany’s Federal Ministry of Economic Cooperation and Development (BMZ), Sweden’s Ministry of Justice, Migration and Asylum Policy and the Swiss Agency for Development and Cooperation (SDC).

The report, released in mid-December, presents a snapshot of the latest statistics on immigration, emigration as well as remittance flows for 214 countries and territories, according to the World Bank.

It updates similar report released in 2011, with some additional data that was collected from various sources, including national censuses, labor force surveys and population registers.

The United States was the biggest remittance source, with an estimated $56 billion in outward flows in 2014, followed by Saudi Arabia ($37 billion) and Russia ($33 billion).

“At more than three times the size of development aid, international migrants’ remittances provide a lifeline for millions of households in developing countries. In addition, migrants hold more than $500 billion in annual savings," said Dilip Ratha, lead economist and manager for migration and remittances at Knomad.

"Together, remittances and migrant savings offer a substantial source of financing for development projects that can improve lives and livelihoods in developing countries.”

The top 10 migrant destination countries were the United States, Saudi Arabia, Germany, Russia, United Arab Emirates (UAE), United Kingdom, France, Canada, Spain and Australia.

Meanwhile, India, Mexico, Russian Federation, China, Bangladesh, Pakistan, Philippines, Afghanistan, Ukraine and the United Kingdom are the top source of emigrants. Indonesia ranked 12 with 4.1 million emigrants recorded, according to 2013 data collected by Knomad researchers.

Remittance use in Indonesia

Indonesia's Agency for the Placement and Protection of Indonesian Migrant Workers, known as BNP2TKI, has said that the most pressing issue for Indonesian migrants is legal protection from abuses.

Considered as low skilled workers, many Indonesian migrant workers, especially those working as domestic helpers, have suffered abuses from their employers, resulting in a number of cases seeing criminal complaints made by victims. Financial literacy another notable problem faced by Indonesian migrant workers.

With regards to remittance sent by migrants, while it provided a much-needed buffer for the country's balance of payment amid decline in export revenue and torrenting capital outflow, the money has yet create lasting impact in local economy.

"Money sent by workers is generally used to meet daily needs and to fund education and the needs of children," said Silvia Mila Arini, a researcher at  Singapore-based think-tank Asia Research Institute.

More than a third of the remittances, 35 percent, she said are used to meet the daily needs and 26 percent of the money is spent on children education.

Only few households using the remittances for physical investments like purchase of agricultural land, livestock, agricultural tools and small-business, Silvia said.

This condition put many migrant's household at risk when the remittance stops, she said.

"To that end, migrants and their families should be encouraged to reduce its dependence on remittances. If now they receive a sizable remittances, they should be encouraged to invest in the productive sector of the economy," said Silvia.

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