By McPherse Thompson, Staff Reporter
Aloun N'Dombet Assamba - Contributed
WITH AN inflow of US$23 billion in remittances to Latin America and the Caribbean last year, Jamaica's State Minister for Industry, Commerce and Technology, Senator Aloun N'Dombet Assamba has challenged the region to examine why migrants have chosen not to invest in their home countries.
Underscoring the importance of remittances in promoting economic development, she said the region's objective should be that of addressing the argument that migrants and recipients did not invest in their home countries either because there were few investment opportunities or fear of losing their hard earned currency due to inflation or political instability.
In the final analysis, she said, the effects of migrants' remittances on development would probably be determined by many of the same factors that shape the decisions of foreign investors.
Speaking at a regional conference sponsored by the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) at the Hilton Hotel in New Kingston yesterday, Senator Assamba said that among those factors were a stable political environment, sensible macroeconomic policies, adequate investment in human capital, and the availability of institutional mechanisms for investment in activities with attractive rates of return.
The conference, organised around the theme "Remittances as a Development Tool in the Caribbean", was convened against the background of the growing importance of the phenomenon to the region. According to data released at the conference, about US$959 million was remitted to Jamaica in 2001.
Senator Assamba said there was also need to examine how the region could more effectively employ remittances in national economic development, "making sure to involve our large transnational community." In addition, she said, "we need to look at ways of improving efficiency and reducing the cost of transfers, as well as greater use of migrant capital in productive investment projects."
Another challenge was that of increasing the flow of remittances into official channels in a manner similar to countries such as the Phillipines, China and Korea, whose migrants were required to remit a portion of their earnings. "We need to explore these and other models to see how we can improve the flow of remittances into official channels," she said.
Noting also the cost to send back money from abroad, Senator Assamba said "we must eliminate any potential obstacles that would prevent migrants from sending their savings back home. Migrants may be more likely to remit into savings accounts if they have (US) dollar denominated accounts, receive higher than normal interest rates, better exchange rates, tax and customs exemptions, low interest loans, access to credit and technical support, assistance for small business development, and coverage of rural areas."
She also suggested that it would be safer and could be used more productively if the money being remitted entered the banking system before being spent. "For instance, additional funds entering the banking system would allow banks to increase the number of loans, thus stimulating business," she added.
The Government Senator said a partnership could also be created between banks and wire transfer companies so that, rather than "keeping remittances at home under a mattress, the funds could earn interest and remain physically secure before being spent."
Another strategy that needed exploration was the creation of national and regional remittances banks to link migration and development, she said. As was suggested during the conference, Senator Assamba said migrants could deposit their remittances in the banks, which would transfer the requested percentage to the migrants' families. The remainder of the funds would stay in the bank and be used as leverage for international and regional funds for development projects.
