Background

Remittance is a major source of external funding for developing nations. It has been an important source of migrant workers in countries suffering from labour shortage, and it also helps these countries in building up their foreign exchange reserve that help them to meet the balance of payments and help stabilize the value of the local currency against the US dollar. It is almost inflow from developed to developing countries have received great attention among academician and policymakers, because that transfers in form of remittances undertaken by migrant workers to their countries of origin increased substantially in the last decades. The data had reported by World Bank in 2012, remittances flows to developing countries have more than quadrupled since 2000. Global remittances, including those to high-income countries, are estimated to have reached $529 billion in 2012, compared to $132 billion in 2000. Developing countries is the largest share of remittances receiving. In year 2012, developing countries to receive it over 400 billion US dollar, an increase of 5.3% over the previous year and are expected to increase at an annual average rate of 8.8 percent in the next three years. They are also forecast to reach $468 billion in 2014 and $515 billion in 2015 of all flow to developing countries.

Remittances generally reduce the level and severity of poverty, typically leading to: higher human capital accumulation; greater health and education expenditures; better access to information and communication technologies; improved access to formal financial sector services; enhanced small business investment; more entrepreneurship; better preparedness for adverse shocks such as droughts, flooding, earthquakes and cyclones; and essentially reduced child labor. International labor organization had estimated that remittances sent home by migrants to developing countries are equivalent to more than three times the size of official development assistance and can have profound implications for development and human welfare. Remittances can contribute to lowering poverty and building human and financial capital for the poor. However the enormous amount of matter, amount of money that migrant workers sent home is only 13% of the income of such workers receive. This means that the income of the remaining 87% of migrant workers to remain in the host country. It is approximately 1 trillion, so that migrant workers have greatly helped boost the economy of the destination country.

Asian countries is the most important source of migrant workers, because most of countries are in the rank of top remittance recipients countries in the world (by the top recipients of officially recorded remittances in 2012) show that: India has become the largest recipient of global remittances, received $70 billion, and then China $66 billion, the Philippines $24 billion, Pakistan $14 billion, Bangladesh $14 billion, Vietnam $10 billion, and Lebanon $7 billion. However, as a share of GDP, remittances were larger in smaller and lower income countries; top recipients relative to GDP in Asian countries were Tajikistan (47%), Kyrgyz Republic (29%) and Nepal (22%).