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Weekly Press Release – 29.01.2009


This week’s update includes some official data that has been released by a number of central banks. This is quite fascinating and whilst it appears that the global financial crisis is affecting countries in different ways the undoubted trend in these figures is downward. This obviously makes for a challenging situation for RSPs so it is really encouraging that this press release also contains details of new partnerships that have been formed in order to help businesses grow in both existing and new markets.

No stories on technology developments this week which is somewhat of a change!

Have a good week.

Leon Isaacs, Managing Director, IAMTN

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9th March 2009, Shangri la Hotel

US Department of the Treasury
UAE Exchange
Altair Financial
Money Express
Western Union
Standard Chartered Bank


Cash remittances sent home by Armenians working abroad, a major driving force of Armenia’s economic growth, appear to have shrunk in the fourth quarter of last year amid the deepening financial crisis around the world.

The latest data from the Central Bank of Armenia (CBA) show the total value of non-commercial cash transfers processed by local banks rising by 26.2 percent year-on-year to almost 1.5 billion in January-November 2008. The figure is equivalent to almost 14 percent of Gross Domestic Product, highlighting its importance for Armenia’s economy and population. A comparable amount of money is thought to have entered the country through non-bank wire transfer systems and in cash.

The bank remittances soared by 45 percent before stock markets in the United States and elsewhere in the world began collapsing in late September. The meltdown has been particularly acute in Russia, home to hundreds of thousands of Armenian migrant workers and the main source of the remittances. The Russian economy has also been hit hard by recent months’ sharp fall in international oil prices.

According to the CBA, the remittances totalled $102.6 million in November 2008, down by more than 7 percent from the November 2007 level. The bank has yet to release remittance data for December.

The Armenian government is worried that decreased remittances would deepen the global downturn’s impact on Armenia’s economy and its growth rate, which slowed into single digits in the four quarter. “If economic growth in Russia slows, the incomes of our compatriots will decrease and so will their private remittances sent to Armenia,” Prime Minister Tigran Sarkisian said in October. “That could have a negative impact on our financial sector and the level of consumption in general because 80 percent of the remittances are channelled into consumption.”

The cash inflows have not only boosted consumer spending and thereby stimulated the economy but also allowed Armenia to finance its massive trade and current account deficits. The Armenian trade deficit was on course to pass the $3 billion mark in 2008.

LI: This market data is helpful in trying to quantify the effect of the current crisis on remittances. Without sounding all doom and gloom we should expect to see more of this.

2. Indonesia transfers expected to fall

JAKARTA, 26 January 2009 (IRIN) - The amount of money sent home by Indonesians working abroad is expected to decline this year due to the global economic slowdown triggered by the financial crisis, government officials and economists said.

About five million Indonesians work overseas, 65 percent in the domestic sector, mainly in Middle East countries, and sent approximately US$6 billion home in 2007, according to the National Agency for the Placement and Protection of Indonesian Workers.

The amount is equal to 1.6 percent of gross domestic product, making remittances Indonesia’s second-largest foreign exchange earner after oil and gas, said Mohammad Jumhur Hidayat, chairman of the agency.

The total amount of money sent to Indonesia could be as high as $11 billion annually as transactions worth more than five million rupiah (US$500) are not recorded as remittances by the central bank because they are considered business transactions, and some workers send money with friends or relatives, Hidayat said.

No figures were available for the whole of 2008, but as of April, $2.23 billion had been remitted, the agency said.

LI: Indonesia is not one of the countries that is discussed by the international community when it comes to remittances. However, the numbers are large in global terms and it would appear that this country is not immune from the global trend.

3. Cash remittances by Kenyans up 7 per cent
By Macharia Kamau and Reuters
Despite the global recession, remittances by Kenyans abroad, a key source of hard currency, grew 6.6 per cent to $611 million (Sh49 billion) last year, Central Bank has said.
However, the growth was much slower than the 41 per cent rise the previous year when the remittances stood at $573.6 million (Sh46 billion).
The increase was in spite of analysts predicting a drop in the amount remitted to the country due to the financial crisis that hit major world markets.
Kenyans living and working in North America and Western Europe, which were had hit by the crisis, account for much of the remittances.
The first four months of last year experienced a significant increase in remittances compared to a corresponding period in 2007, with the amount almost doubling in April from $38,000 in 2007 to $68,000 last year.
Analysts attributed the increase to Kenyan in the diaspora sympathising with their kin back home due to the post-election violence. “The post -election crisis might have prompted Kenyans living abroad to remit more,” said Kwame Owino, programme officer Institute of Economic Affairs.
He added that investment in Nairobi Stock Exchange (NSE) might have also been a factor to see increased remittances early in the year.
The effect of the financial crisis in major world markets is evident in the decline in remittances in the third quarter, which stood at $137 million (Sh10 billion) compared to $172 million (Sh14 billion) a similar period in 2007.
CBK statistics only capture money sent to Kenya through the official channels like money transfer services and has in the past said that significant amounts are also sent through unofficial channels such as hand delivery.

LI: This is a positive spin on the year overall. Note a good first half was followed by a poor last quarter – a picture that seems to be common throughout the world. There were some circumstances in Kenya that were specific to the country – particularly the post election challenges.

4.Monies sent holding up

REMITTANCES may be one of the few bright spots in the economic scheme of things in Barbados and other Caribbean countries as the region confronts a slowdown in tourism, a fall-off in foreign direct investment and a drop in commodity prices.

That assessment came from economists and other key experts in the United States and international financial institutions in Washington who track remittances to the Caribbean and elsewhere.
Dr Richard Bernal, alternate executive director of the Inter-American Development Bank in Washington, said that despite the predictions of many experts, remittances to Jamaica, Barbados, Guyana and other countries in the area were holding their own.

“There is good news on the remittance front in the sense that everybody was projecting a very sharp decline in the remittances,” said Bernal, who until recently was the head of the Regional Negotiating Machinery.

“Remittances are one of the difficult things in economics to predict but in the case of the Caribbean, they have held up fairly well. The fact that they have held up to date isn’t a basis for projecting into the future. That would depend on the state of the countries from which Caribbean people send remittances.”

Remittances to Barbados, according to the World Bank, were estimated at US$1 billion in recent years. Since the turn of the century, that is between 2000 and 2007, remittances from workers, compensation of employees and migrants’ transfers reached an estimated US$972 million. The bank had no figures for 2008.

However, US$169 million in “outward remittance flows” left Barbados during the same period.
Remittances to Jamaica, now the top source of foreign exchange, surpassed US$ 10 billion mark in those years. The Dominican Republic tops the region when it comes to remittances, followed by Jamaica, Haiti and Guyana in that order.

LI: This is interesting and reasonably positive data. Again, the predictions for the next few months are not as positive. However, it is encouraging to see that the much discussed ‘resilience of remittances’ appears to be fine.

5. Slump in remittances leaves its mark in Mexico
In 2008, remittances — Mexico’s biggest source of foreign income after oil — fell from $24 billion to $23 billion, the first drop since records began. Furthermore, this year the cash sent home is predicted to fall by another 15 percent, to some $20 billion, according to the Mexican Institute of Finance Executives, or IMEF.
“We can see the clear downward trend because the remittances got progressively worse throughout 2008,” said IMEF president Pedro Nunez. “By the end of the year, we were already talking about a drop of 11 percent per month.”

LI: This story has received a lot of coverage in the communities and confirms the previous predictions that had been received.

6. NBU permits operation of Meest money transfers system in Ukraine

The National Bank of Ukraine has allowed operation of the US Meest money transfers system in Ukraine, an NBU press release says.

The central bank has confirmed that the documents submitted by the system correspond to standards. On December 4, 2008, the NBU issued to the Meest system registration certificate #400. Meest has over 400 affiliates and representative offices in the US and Canada. Kredobank provides Meest money transfer services in Ukraine. Meest Corporation Inc. is the payments organization of the Meest system of money transfers. With the said permit, the total number of money transfer systems registered by the central bank rose to 29.

LI: Ukraine is a competitive market where exclusivity clauses in money transfer contracts are not permitted. Meest have a strong presence in North America and particularly in Canada. It will be interesting to watch for any medium term changes in the corridor.

Seylan Bank entered into an agreement with Banque D’Escompte in order to enable Sri Lankan diaspora living in France to make remittances back home on a regular basis.
Banque D’Escompte, established in 1932 is located in Paris and Strasbourg. However, the bank has arrangements with the French postal system having a presence in 17,000 locations throughout France. This would give Sri Lankans living anywhere in France the opportunity to conveniently make remittances to their loved ones in Sri Lanka.
Seylan Bank, through its 114 banking centres located island-wide would be in a unique position to satisfy the needs of such remitters.
Remittances could be made to Foreign Currency Accounts or Sri Lanka Rupee Accounts, as decided by the remitter.
In addition, payments could be made on identification and also delivered at the doorstep in Colombo and suburbs within 24 hours. Accounts maintained with other banks could be credited within 48 hours.
Banque D’Escompte would also issue regular remitters a “Money Transfer Card” which would have the details of the remitters and beneficiaries to enable fund transfers any time any day of the year through the Automated Teller Machines located at their branches.
The application procedure to open NRFC Accounts with Seylan Bank would be expedited at a special desk at Head Office of Banque D’Escompte. These documents would be transmitted by the quickest channel to Seylan Bank who would open the NRFC Accounts and inform the accountholder by return mail.
As such, the agreement between the two banks has initiated a holistic approach towards harnessing the earnings of Sri Lankan expatriates, in order to boost the country’s Foreign Currency resources and hassle-free remittances to their dependants. Both banks have plans to put in place additional facilities as the remittance service picks up in the near future.

LI: This story is interesting for a number of reasons but most importantly that another French bank has developed a remittance service. Traditionally the French Banks have not been as enthusiastic at offering remittance services as those in some other markets. It will be fascinating to see if this initiative is the start of a trend.

8. Hokkaido Bank to begin speedy rouble remittance to Far Eastern Russia

Hokkaido Bank, a core banking arm of Hokuhoku Financial Group Inc., said Thursday it will shortly start a speedy rouble-denominated remittance service to the Russian Far East on the basis of a recent agreement with major Russian bank VTB.

The arrangement with Russia’s second-largest commercial bank, owned 75 percent by the Russian government, is designed to speed up remittances to Japanese corporate clients planning to set up business bases in the area, according to the Sapporo-based regional bank.
Hokkaido Bank has already concluded an agreement concerning transactions with VTB’s branch in the Far Eastern port city of Khabarovsk, it said.
Under the deal, Hokkaido Bank has opened an account for depositing the Russian currency at the Khabarovsk branch. The bank intends to start the remittance service by the end of March, it said.
In addition, the bank and VTB plan to introduce customers to each other, swap investment-related information and push personnel exchanges, with the Japanese bank expediting cooperation with the Khabarovsk branch and two other VTB business bases in the Russian Far East, it said.
VTB, formerly known as Vneshtorgbank, runs a network of 190 branches.

LI: Whilst this tie up is for business transactions it may well herald an opportunity for person-to-person remittances in this corridor.

9.Foreign remittances to touch US $8 billion, NA told

ISLAMABAD, Jan 23 (APP): Minister for Labour, Manpower and Overseas Pakistanis Syed Khurshid Shah Friday told National Assembly that efforts are underway to increase the remittances of overseas Pakistanis from current US $6.3 billion to US $ 8 billion.

Replying to a question, the minister told the Lower House that in 2007, about 280,000 workforce was sent abroad while the number has mounted to 430,000 this year, which, he said is ‘no doubt a remarkable achievement of democratic government.”
He said the labour ministry has written a letter to the Ministry of Finance to give equal status to the foreign investors and the overseas Pakistanis as they also contribute remarkably in the national economy.

Shah said the labour ministry has proposed the finance ministry to categorize the overseas Pakistani investors and they should be given silver card for investing $5,000, golden card for $10,000, diamond card for above $10,000, while a platinum card should be given for investing $100,000.
He told the House that on basis of these cards, the overseas investors would be given concession in customs duties, PIA fares and immigration facilities.

The minister told the House that the overseas Pakistanis do not invest through labour ministry rather they can do so through ministry of investment, urging the government to give them the status of investors.

LI: Following the item that we ran last week this provides more colour on the types of incentives being given to encourage more remittances.


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