Labour migration to go costlier

Recruiting agencies decry proposal to scrap VAT exemption facility
The government’s move to revoke the VAT exemption facility for manpower exporters will ultimately hurt migrant workers, as it will increase the cost of going abroad for work, recruitment agents and migration analysts said yesterday.
“At a time when manpower export is suffering from the fallout of the global economic recession, such a move is an insult to injury,” said Ghulam Mustafa, president of Bangladesh Association of International Recruiting Agencies (Baira).
Finance Minister AMA Muhith proposed revocation of the VAT exemption facility for manpower exporters, travel agents, and a few other sectors, in his budget speech on Thursday.
Recruiting agents and analysts said the step will increase the cost of going abroad for jobs, at a time when the government is pursuing recruiting agents to lower recruitment fees.
The cost of going to Saudi Arabia or Malaysia, the two top foreign destinations for Bangladeshi migrant workers, is $3,000 on an average.
The observers said the move will end up encouraging manpower export through informal channels, instead of formal ones, making it more difficult for the government to organise the sector.
Waning demand for jobs abroad due to the economic recession has already gave rise to fears of remittance flow declining, the second biggest source of foreign currency after exports.
“Manpower export is dismal currently. The government should not pursue such a decision, as it is completely unacceptable,” said the Baira president.
“Whatever the government imposes, those will ultimately burden the migrant workers,” he added.
Dr Tasneem Siddiqui, an expert on migrant workers, said the government should not take any decision without discussions with the stakeholders.
Referring to the dominance of informal recruiters in the trade, she said the measure will encourage expansion of that.
“The sector needs to be organised to ensure transparency and accountability. The government should offer incentives rather than imposing the burden of taxes,” she added.
In a post-budget analysis, Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue, also criticised the move, saying it will negatively affect poor migrant workers.
The finance minister however also proposed formation of a Skill Development Fund of Tk 70 crore, for retention and expansion of the labour market abroad.
He said the fund will be used for research to explore new labour markets, for training prospective workers, and for re-training returnee workers who lost their jobs abroad.
“As remittance is an important contributor to the economy, the government has adopted various welfare programmes, such as setting up expatriate welfare desks at airports, and it plans to open an expatriate welfare bank,” the minister said.

Courtesy of The Daily Star