Contribution of Foreign Employment and Remittances to Nepalese Economy

1


Contribution of Foreign Employment and
Remittances to Nepalese Economy

Prof. Bijaya Shrestha, Ph.D.

This paper assesses the contribution of foreign employment and remittances to
Nepalese economy and also identifies the information needs and gaps. An attempt
is also made to assess the role of remittances in poverty reduction. At a time when
the country's major economic indicators are not favorable, the remittances have
played a vital role in maintaining macro economic stability and keeping the
economy afloat. Though remittances sent home by migrant workers is a boon to
the economy, the facilities are inadequate to back up the increasing trend of
migration. Inadequate information on foreign employment, lack of skill training
and lack of assurance of safe working environment and rights of the migrant
workers have obstructed foreign employment.
Formulation and effective implementation of pro poor migration policy is the
need of today. The government should play a proactive role to promote foreign
employment by inducting and adhering to the policy of economic diplomacy.
Replicating the best practice of the region has to be endorsed in our national
context for promotion and regularization of foreign employment, to encourage
official transfer of remittance and to streamline the asset and skill of the returnees
for the economic development of the country.


I. INTRODUCTION

Labor mobility has been an important and essential feature of economic and social
development throughout the human history. In 2006, migrant workers in the industrial
countries sent home more than $300 billion, nearly three times the $104 billion received
as foreign aid by the developing countries.
1
This figure exceeds the foreign direct
investment to developing countries which stands at $167 billion. Among the recipients,
India ranks at the top with the remittance inflow of $24.5 billion, followed by Mexico
($24.2 billion), China ($21 billion), Philippines ($14.6 billion) and Russia ($13.7 billion).
Labor migration for overseas employment has rapidly increased, particularly after
globalization. The Nepalese economy is increasingly becoming dependent on remittance
sent home by migrant workers. At a time when the country's major economic indicators

Professor, Central Department of Economics, Tribhuvan University, E-mail: shbijaya@wlink.com.np

1
This is taken from http:www.un-instraw.org/en/grd/.
ECONOMIC REVIEW
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do not display a good picture, remittances have played a vital role in keeping the
economy afloat. Instability and insecurity are crucial problems for the low economic
growth of 2.5 percent (Ministry of Finance, 2007a). The overseas migration and
remittances have been instrumental in poverty alleviation as well as for improving the
living standards of the people (Seddon et al., 1999 and Shrestha, 2004).
The objectives of the paper are to assess the contribution of foreign employment and
remittances to Nepalese economy and also to identify the information needs and gaps.
An attempt is also made to assess the role of remittances in poverty reduction. For this
purpose, data of Nepal Rastra Bank, Department of Labor and Employment Promotion
and National Planning Commission/Central Bureau of Statistics have been utilized. For
assessing the macro economic contribution of remittances, the paper has examined the
data covering the period 1990/91 to 2005/06.
The next section analyzes some data on the Nepalese working abroad as well as the
factors responsible for the large-scale out-migration. Section III examines the remittance
economy of Nepal followed by some constraints related to foreign employment and
remittances. Section V highlights the policies and programs pertaining to foreign
employment and remittances under the Three-Year Interim Plan as well a brief summary
of the Foreign Employment Act, 2007. Before concluding, the paper considers some
policy options.

II. NEPALESE WORKING ABROAD

The number of job aspirants in foreign land increased dramatically, especially after
the restoration of democracy. The Labor Act, 1985 came as a boon for facilitating foreign
employment and opening up avenues for the private sector. With the enactment of
Foreign Employment Act, 1985 and arrangement of distributing passport to the potential
migrant workers by the District Development Offices, accompanied by higher demand for
labor created by the oil boom in the Gulf, the Nepalese started to migrate beyond India,
particularly to the Gulf.
2

The total number of migrant workers (excluding those migrating to India) increased
to 940,824 in 2006/2007 from 1,926 in 1992/93 (Table 1). By the end of 2007, the total
number crossed one million. The official figures of those working abroad are felt to be
grossly underestimated (Graner and Seddon, 2004 and Gurung, 2002). The official
figures capture only those passing through formal procedures. In many cases, those who
travel abroad for other reasons (for instance, for study) may be involved in paid
employment.
The number of workers going abroad for employment has been steadily increasing as
per the data provided by the Department of Labor and Employment Promotion. In
2006/07, the number of workers going overseas for employment was 214,094 compared
to 2,159 in 1994/95.


2
Foreign Employment Act, 1985 identified the number of countries to which Nepalese were
encouraged to migrate for employment.
Contribution of Foreign Employment and Remittances to Nepalese Economy
3
TABLE 1: Number of Nepalese Workers Abroad

Year Number of Job Seekers
1994/95 2,159
1995/96 2,134
1996/97 3,259
1997/98 7,745
1998/99 27,796
1999/00 35,543
2000/01 55,025
2001/02 104,739
2002/03 105,055
2003/04 121,769
2004/05 139,696
2005/06 182,043
2006/07 214,094
Source: Department of Labor and Employment Promotion

The major factor contributing to large-scale out-migration from Nepal is higher
growth of labor force and limited employment opportunities outside the farm sector. The
3 percent annual growth of labor force is not matched by additional job creation;
moreover, the low salary structure in the economy, insecurity in the rural areas, and
higher demand for the labor in the industrialized Asian and Middle-east countries are the
other contributing factors. The Government's liberal policies, accompanied by
mushrooming growth of the manpower agencies have also played instrumental roles.
Currently, 700 manpower agencies are operating in Nepal. Furthermore, food scarcity,
distorted peace and social order are strong push factors for increasing out migration. The
poor people from the Mid West and Far West are migrating to India and those who can
manage the funds are migrating beyond India.
Figure 1 illustrates the major destinations of the Nepalese workers in 2006. Malaysia
(39.07 percent), Qatar (27.14 percent) Saudi Arabia (19.32 percent) and UAE (10.65
percent) constitute the major destinations.
Figure 1: Country wise Foreign Employment up to 2006
(in percent)
19.32
27.14
10.65
0.67
1.22
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39.07
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Source: Ministry of Finance (2007).
FIGURE 1: Destination of Migrant Workers up to 2006
(in percent)
ECONOMIC REVIEW
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Figure 2 shows a large shift in the destination of migrants in 2003/04 compared to
1995/96. The share of internal migration and migration to India decreased while the share
of overseas migration went up.
Figure 2: Migrant Workers by Destinations, 1995/96 and
2003/04
58
39
3
48
36
16
0
10
20
30
40
50
60
70
Nepal India Other Countries
Destinations
P
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r
c
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n
t
1995/96
2003/04

Source: NPC/CBS (2005).

For the poorest 20 percent of the population, the internal migration declined but India
remains the most popular destination for this group (CBS, 2005). For the richer
households, the proportion of the migrants working in India declined while it increased
for other countries.

III. REMITTANCE ECONOMY OF NEPAL

The official record shows a dramatic increment in the incoming remittance. It
increased considerably from Rs. 549.7 million in 1990/91 to about Rs. 97,688.5 million in
2005/06. Remittance soared, particularly after 2001/02 (Figure 3).
Figure 3: Remittances Sent by the Nepalese Migrant Workers, 1990/1991
to 2005/06 (in Rs. Million)
0
20000
40000
60000
80000
100000
120000
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Fiscal Years
R
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m
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t
a
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s

Note: The remittances data prior to 2000/01 include pensions but do not include estimated remittances.
Source: Ministry of Finance, Various Issues of Economic Survey.
FIGURE 2: Internal Migration, Migration to India and Overseas Migration
FIGURE 3: Remittances Sent by the Nepalese Migrant Workers
(in Rs. Million)
Contribution of Foreign Employment and Remittances to Nepalese Economy
5

Despite the huge trade deficit, the country is having surplus in the current account
because of the growing remittances. The share of remittances in the current account
receipts soared from 27.4 percent in 2000/01 to 33.6 percent in 2005/06 (Pant, 2006).
Even with the widening export import gap and with mounting burden of debt servicing, it
appears that remittance is saving the country from balance of payment crisis.
The increasing volume of remittances and its contribution to the national economy in
the recent years is reflected in the increasing remittance to GDP ratio (Figure 4). The
remittance to GDP ratio increased from 0.5 percent in 1990/91 to about 11 percent in
2004/05 and further to 16 percent in 2005/06 (Figure 4). This ratio is relatively high
compared to India and other South Asian countries.
Figure 4: Growth in Remittance GDP Ratio, 1990/91 to
2005/06, (in Percent)
0
5
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15
20
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Fiscal Years
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Source: Ministry of Finance.

Remittance has relaxed the foreign exchange constraint of the country. The share of
remittance in total foreign exchange increased quite considerably over the years from less
than 2 percent in 1991/92 to more than 60 percent in 2005/06 (Figure 5). Higher growth
of convertible currency reserves of the banking system in the recent years has allowed
NRB to build the official reserve to higher level reducing its vulnerability to external
shocks (Pant, 2006).
Figure 5: Remittance as % of Total Foreign Exchange
Earning, 1990/91 to 2005/06 (in Percent)
3
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Fiscal Year

P
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e

Source: Ministry of Finance.
FIGURE 4: Growth in Remittances to GDP Ratio
(in percent)
FIGURE 5: Remittance as % of Total Foreign Exchange Earning
(in percent)
ECONOMIC REVIEW
6
Remittances have surpassed the export as the top contributor in terms of foreign
exchange earning, particularly after 2000/01. Similarly, the share of travel receipts in the
total foreign exchange earning went down drastically with the rapid rise in the
remittances and slow growth of tourism industry.

Figure 6: Share of Merchandise Export, Remittances , Tourist Expences and Foreign
Aid in the Total Foreign Exchange Earning of the Country, 1990/91 to 2005/06
0
10
20
30
40
50
60
70
Y
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S
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i
n

P
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n
t
M.
Export
RMT
Tourist
Exp
F Aid

Source: Ministry of Finance, Economic Survey, Various Issues.

External debt is growing at a rapid tempo resulting in an alarming growth in debt
servicing. Nepal's present day challenge is the ever-increasing outstanding debt and
increasing burden of debt servicing. In 2005/06 a sum of Rs. 14 .3 billion was utilized for
meeting the principal repayment. Of this, 49.0 percent was for servicing the external debt
which was to be paid in terms of foreign exchange. External debt servicing increased by
17.4 percent compared to the previous year (Ministry of Finance, 2007). However, Nepal
has been able to handle debt servicing comfortably due to increased inflow of
remittances.
The ratio of remittances to saving, investment and saving investment gap is
increasing with higher rate of growth of remittances (Figure 7). This shows that Nepal's
dependency on foreign aid for filling the saving investment gap can be lessened to a
greater extent through strategic plans and programs for mainstreaming the incoming
remittance to financial system and for their productive use. In this respect replicating the
successful programs launched by labor exporting Asian countries such as Sri Lanka,
Bangladesh, India, Pakistan, Thailand, and Indonesia could be helpful.
FIGURE 6: Share of Merchandise Export, Remittances, Tourism Expenses and
Foreign Aid in the Total Foreign Exchange Earning of the Country
Contribution of Foreign Employment and Remittances to Nepalese Economy
7
Figure 8: Ratio of Remittance to Saving, Investment and Saving
Investment Gap, 2000/01 to 2005/06
0
50
100
150
200
250
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Fiscal Year
R
a
t
i
o
s

i
n

P
e
r
c
e
n
t
a
g
e
RMT as % of S RMT as % of I RMT as % of I-S

Source: Ministry of Finance (2007).

Remittances contribute substantially to maintain macro economic stability. It is one
of the six pillars of economy, the others being investment, trade, agriculture, water and
tourism. At the household level, it helps to smoothen consumption and investment in
human and physical capital. Remittances also generate benefits to the community, if they
are spent on locally produced goods and services, and helps poverty reduction since the
money is utilized for rural development. In Nepal's case, the penetration of the
remittances into the remote villages has helped in poverty alleviation. The IMF country
report states that in the absence of remittance, the present level of poverty would be 36 to
37 percent (IMF, 2006).
Poverty reducing and income distribution effects of remittance are significant
(Barhan and Bocher, 1998). Generally the recipients of the remittance in the poor
countries are often from the low-income households. It permits the households to increase
their consumption level, enables better health care, nutrition, housing and education
(NRB, 2001, World Bank, 2005). Migration and remittances influence the consumption
through different mechanisms such as via higher local wages, higher demand for the
services and locally produced goods, higher investment in family health and education.
During the period between 1995/96 and 2003/04, the average annual GDP growth
was slightly higher than the population growth. The poverty level decreased by 6
percentage points from 38 percent in 1995/06 to 32 percent in 2003/04.
Regional pattern of remittance helps to explain regional pattern of poverty trends.
Even though the proportion of households receiving remittance increased in all regions,
the actual amount of remittance has declined in the rural eastern hills of Nepal. And the
rural eastern hill is the only region where the poverty level increased between 1995/96
and 2003/04. The rest of the region experienced positive growth in remittance inflows,
and this was accompanied by the fall in poverty levels (Table 2).

FIGURE 7: Ratio of Remittance to Saving, Investment and Saving
Investment Gap
ECONOMIC REVIEW
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TABLE 2: Regional Patterns of Poverty and Remittances in Nepal
(Per person per year)


Poverty Levels
Amount of Remittance Among the Recipients
(1995/96 Rs. per Person per Year)
Region 1995/96 2003/04 1995/96 2003/04 % Change
Kathmandu 4.3 3.3 6269 13230 111
Other urban areas 31.6 13.0 2701 7754 187
Rural western hills 55.0 37.4 2832 4297 52
Rural eastern hills 36.1 42.9 3943 3818 -3
Rural western terai 46.1 38.1 1773 5540 212
Rural eastern terai 37.2 24.9 2668 5812 118

Source: CBS/NPC (2005).

An estimate based on data for 72 districts indicate that higher the increase in the
average amount of remittances in a district, the faster is the rate in the poverty reduction.
The regression analysis indicates that the increase in remittances accounts for 6.2 percent
decline in poverty (Lokshin et al, 2005). The study shows that the remittances from
abroad played a significant role in reducing poverty. The analysis concluded that if the
amount of remittances remained unchanged, the aggregate poverty rate would have
declined by 3.9 percentage point rather than 6.2 percentage points.
A cross country model relating growth, poverty and remittance predicts that on
average 10 percent increase in total remittance should reduce the poverty by 0.9 percent
(Maimbo and Adams, 2005). The model has used the data for Nepal and other South
Asian countries. The study found that the decline in poverty in response to increase in per
capita consumption expenditure is quite low in Nepal as compared to other countries.
This calls for a detailed investigation of the relationship between migration and
remittance and between remittance and poverty.
There are also other effects of foreign employment and remittance inflows. Besides
the positive impact, they create inequality in the distribution of income. During the period
between 1995-1996 to 2003-2004 the Gini Coefficient rose from 34.2 to 41.4, because the
growth was not equal across the groups and the regions. For example, though the
proportion of remittance receiving households increased in the lower quintile households
compared to higher quintile households, the per capita remittance increased at a higher
rate amongst the higher quintile households. The higher quintile groups have relatively
wider access to high paying foreign jobs (NPC/CBS, 2005).

Use of Remittance and Skills of Returned Migrants

The major portion of the remittance is used for meeting household use and to payback
loans borrowed earlier to go abroad (Seddon and et al 1999 and NRB, 2001).

A survey of
832 households in eight districts (which includes four districts of the Far Western
Development Region) of Nepal found that the majority of the families were dependent
on remittance money (Department of Women Development, 2003).
Contribution of Foreign Employment and Remittances to Nepalese Economy
9
The utilization of remittances for the improvement of the living standard is
documented by several studies (Ashwani, 1999, Wahidin, 1989, Seddon and et al, 1999
and Department of Women Development, 2003). Remittance are typically spent on land
and housing. These are safe investment for the households, but in macroeconomic terms,
they are non-productive assets, with no lasting impact on the countrys real income. Thus
while the remittances are beneficial at household and community level, they cannot help
long term development of the country without its strategic management.
The total saving out of remittance was about 8 percent which is very low compared to
other Asian countries (Amjad, 1989). The saving rate amongst the Nepalese workers is
lower as the majority of them are employed in low paying jobs and their marginal
propensity to consume is relatively higher. Only the small proportion of the migrants uses
the remittance directly for productive investment like agriculture, manufacturing and
trade. The major forms of investments are on education of the children, reinvestment of
the remittance for further migration and for lending money.
The resources and expertise of the returned migrants could also be a good resource
for countrys economic development. Nepal does not have authentic data on the
numerical dimension of the returned migrants. The study by Nepal Rastra Bank reveals
that 47 percent of the returned migrants had learned new skill while working abroad, but
only 16 percent had used the skill for income generating activities after their return (NRB,
2001).

IV. PROBLEMS RELATED TO FOREIGN EMPLOYMENT AND
REMITTANCES

Nepal is receiving billions of rupees sent by Nepalese workers from different parts of
the world. It could be many times higher even with the existing number of Nepalese
workers abroad if Nepal can strategically and systematically manage the foreign
employment process and remittance transfer. The Nepalese migrant workers face a host
of hurdles at the home country and their destinations (NRB, 2001, 2007, Bhattarai, 2005,
MoLT/UNIFEM, 2003, Ghimire, 1996, Gurung, 2002 and Pant, 2006). The major
problems are poor working conditions, lower wage level and rising cost of living in the
destination countries, fraud recruitment and lack of social protection. Another principal
challenge is migrating through illegal channels, thereby loosing the legal status in the
labor importing countries.
The international provisions are there to protect the right of the migrant workers. But
both the government and receiving countries do not seem to be sincere to the
implementation of the spirit of international provisions. Ratification of UN convention by
Nepal will create moral pressure on the labor receiving countries.
Bilateral agreement has not taken place even with some major labor importing
countries pertaining to the safety and welfare of the migrant workers. Another problem is
lack of working mechanism to address the issues related to international migration like
demand verification. Provision of labor attach in the potential labor receiving countries
is still lacking.


ECONOMIC REVIEW
10
V. CURRENT POLICIES AND STRATEGIES TO
ADDRESS THE CHALLENGES

The Three-Year Interim Plan

Based on the above discussion, it can be concluded that there are many challenges
ahead to make foreign employment safe, organized and more productive. The government
has announced strong commitment to institutionalize the foreign employment regime in
order to reap maximum benefit and for the protection of those working abroad. This is
reflected by various policies and programs under the Three-Year Interim Plan. For
effectively managing the foreign employment sector to ensure secured, decent and
productive employment opportunities, the Three-Year Interim Plan has adopted the
following policies and strategies (NPC, 2007):
Reforms in the existing legal and institutional provisions.
Activate diplomatic mechanism to protect the interest and right of the migrant
workers.
Establishment of Labor Commission and Labor Tribunal.
Separate institutional arrangement for the management of the issues related to the
internal labor administration and foreign employment.
Provision of legal, technical and practical training including pre-departure
training, based on the identification of international labor market.
Life and accidental insurance covering entire contract period for the workers
going abroad.
Labor agreement to be negotiated with the countries which receives Nepalese
workers beyond certain threshold.
Promotion of foreign employment opportunities for women, dalits, janajatis, and
other poor communities providing skill training and other facilities.
Productive use of remittances through the identification of appropriate
development.
Identification of potential destination countries, labor agreements with at least five
countries on priority basis and updating of information related to the foreign employment
are the major programs. Other programs include conducting studies on the effectiveness
of different targeted programs implemented for promotion of inclusive foreign
employment, feasibility study on the establishment of the Employment Bank and package
programs for productive use of remittances and the skill of the returned migrant workers.

VII. FOREIGN EMPLOYMENT ACT, 2007

The long waited new Foreign Employment Act was announced in 2007. The Act has
addressed the major issues relating to foreign employment. Many provisions are made
under the act for the protection of the right of the prospective workers (at home and
abroad) and promotion of their security and welfare, regularization and monitoring of
manpower agencies.
Contribution of Foreign Employment and Remittances to Nepalese Economy
11
Provision of quota for female, dalit, janjati and people from the remote areas,
compulsory life insurance for any type of deaths of the migrant workers in the labor
receiving countries and the provision of foreign employment welfare fund are important
aspects of the new Act. The new Act has removed all gender based discriminatory
clauses. The Act has also made the provision of Labor Desk in the national airport and
labor attaches in the countries where 5,000 or more Nepalese labors are working. As per
the Act, only the license holder can undertake foreign employment dealings, and the
government can regulate the manpower agencies. The worker must be sent through the
national airport only.
But the crucial question is how far will the provisions in Act be implemented in the
practical sense of the term and at what level of commitment. The government's sincerity
to address the issues of the labor migrants in the implementation level is found to be very
weak in terms of coordination capacity, labor diplomacy and allocation of resources (both
financial and human resources).

VIII. POLICY CONSIDERATION AND RESEARCH NEEDS

Based on the above discussion, this overview can be concluded by making a few
suggestions that would assist in the formulation of the policies regarding foreign
employment of the country.
The skill and the resources of the returned migrants are assets of the country which
can be used for development of the economy. The productive use of these skill and asset
would automatically result in their rehabilitation (Zachariah et. al., 2002). This requires
investigation into their numerical dimensions, skill and accumulated wealth, their
investment and saving behavior, and reasons for not utilizing their asset for productive
purposes.
Longitudinal macro economic and micro economic case studies of migrant
households' consumption could be conducted and analyzed to examine their short and
long run consumption behavior in order to explore the precise relationship between their
average and marginal propensities to consume. On that basis, one could estimate the
volume of potential saving and investment that could be generated from households
dependent on remittances to design appropriate financial packages (bonds, equity and
mutual funds) for their saving and investment needs. Fiscal and refinance policies further
could be tailored to support the effective use of remittances
A recent World Bank report has listed a variety of programs implemented by various
countries to promote formal transfer of remittances and to mainstream the remittances for
development programs (World Bank 2006). While making policy decisions, one should
consider the best practices of other countries, particularly the Asian countries (Akhtar,
2007 and Afsar, 2007). The schemes like business counseling, entrepreneurship
development program and concession on the import of the machineries and equipments
and supplementary loan to establish manufacturing establishment can be launched.
Identification of the development projects in which the returnees have assurance of
reasonable return could be a key to the success of the utilization of saving/expertise of the
returned migrants.
The government should give all possible incentives to encourage official transfer of
remittance. In this regard the lesson learned from other countries could serve as
ECONOMIC REVIEW
12
guidelines. For example in Sri Lanka and in the Philippines, no charge is levied on the
renewal of passport, if the application is attached with the voucher of bank transfer of
remittance (World Bank, 2006 and Mambo and et al, 2005).
Philippines and Mexico introduced pension plans for returned migrants. Loans are
also given to immigrant workers' families whose repayment could be made with the
remittance sent by the migrants abroad. Credit is provided to the migrant workers at the
time of departure, secured through solidarity groups.
Thailand offers investment schemes and business set up advisory services through a
foundation. India has given preferential access to capital goods and raw material imports
for recent returnees starting productive activities.
Implementing different support programs ensuring conducive environment for
returnees to invest their income and skill in productive purposes is just as important as
developing effective migration and effective remittance policies. Higher domestic
investment from remittance income can be facilitated through long term saving and
facilitating credit plans to finance small business start-ups.
Nepalese carpenters, masons and other artisans are not able to compete with those
coming from the Philippines, Thailand, South Korea, and India. There is an urgent need
to upgrade their technical competence. The Nepalese trade unions and FNCCI at all
district levels can operate training and counseling centers focusing on the rights and needs
of the workers and as per the demand in the potential labor importing countries.
Evidences indicate that the ultra poor do not migrate to overseas because of lack of
financial resources, information and social networks. It cannot be left to market forces
only. In such a scenario the government should undertake pro poor intervention to target
ultra poor to empower them through vocational education, financial support, skill training
for targeted market as well as language and cross-cultural skill to prepare them for jobs
abroad. In this regard the government has provided credit facilities and quota for the poor
and disadvantaged. However, the effectiveness of these provisions is yet to be
investigated.
Opening up of new missions in countries with substantial Nepalese workers,
equipping the missions with additional personnel, budget, and modern tools such as
satellite telephones and computerized database of Nepalese working in a particular
country and their home addresses, emergency funds for crisis/rescue operation, etc. are
urgently needed to meet the future challenges.
Lobbying for the safety and protection of the rights of Nepalese workers and their
better pay and working conditions is also crucial. Bilateral Labor Pact between Nepal and
Qatar which came into force from January 20, 2008 ensures better pay and lessens the
cost of migration to Qatar. It can be expected that this pact, if implemented with
commitment from both the governments, will ensure the rights and safety of large number
of Nepalese migrant workers in Qatar. The government should sign such types of
agreements with other major labor importing countries. The current plan seeks to
negotiate labor agreement with at least five labor importing countries on priority basis.
Contribution of Foreign Employment and Remittances to Nepalese Economy
13
Designing pro poor policies requires identification of the factors associated with
migration such as caste ethnicity, economic status, education/ training, age, sex, marital
status, occupation, household asset like land holding. It is also necessary to document the
information on the destination, types of work available abroad, average salary, and the
problems encountered in the process of migration.
Language barriers and lack of awareness on banking channels may hinder the migrant
workers from using the banking channels for transfer. Carefully designed financial
education program can help migrants to overcome the problem and use formal financial
institutions (World Bank, 2006 and NRB, 2007).

IX. CONCLUSION

In Nepal, remittances have emerged as one of the premier sources of foreign
exchange, and in recent years they have been an important avenue of support for family
members remaining at home. It has been already demonstrated that remittances sent by
the migrant workers is an effective tool for poverty reduction. Though foreign
employment is boon to the economy, the facilities are inadequate to back up the
increasing trend of migration. Inadequate information on jobs abroad, lack of skill
training, pre-departure preparation, lack of assurance of safe working environment and
right of the migrant workers are the other constraints for boosting foreign employment
and remittances.
The formulation and effective implementation of pro poor migration policy is the
need of today. The government should play proactive role to promote foreign
employment by inducting and adhering to the policy of economic diplomacy. Replicating
the best practice of the region has to be endorsed in the national context for promotion
and regularization of foreign employment, to encourage official transfer of remittance and
to streamline the asset and skill of the returnees for the economic development of the
country.

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