RemitScope 2018 focused on Asia and the Pacific region

asia-pacific-region
Overview

RemitSCOPE currently includes 50 countries or areas in the Asia and the Pacific region, which include 37 low- to middle-income countries and 13 high-income countries or areas. In addition, each country has been designated as either net remittance sending or net remittance receiving in accordance to its flows.5 In this respect, the classification is as follows:

  • Twenty-nine net remittance-receiving countries, with a combined population of more than 4 billion.
  • Twenty-one net remittance-sending countries or areas,with a combined population of more than 400 million.

This section provides general findings, analyses and insights about the Asia and the Pacific remittance market.

The regional section provides findings about the five subregions within Asia and the Pacific, namely: Central Asia, Eastern Asia, Southern Asia, South Eastern Asia and the Pacific.

The country section provides specific data about each country’s remittance market.

As this portal is regularly updated when new information becomes available, it is recommended that it is consulted on a regular basis to access the most updated information.

Asia and the Pacific countries by volume received/sent in 20171


1http://www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migration-remittances-data.

 

 

Net receiving countries and total amount received in 2017 (US$ million)
India – 68,968
China - 63,860
Philippines - 32,808
Pakistan - 19,665
Viet Nam - 13,781
Bangladesh - 13,469
Indonesia - 8,997
Sri Lanka - 7,190
Nepal - 6,947
Thailand - 6,729
Uzbekistan - 2,839
Kyrgyzstan - 2,486
Tajikistan - 2,220
Iran (Islamic Republic of) - 1,379
Myanmar - 723
New Caledonia - 642
Afghanistan - 410
Tonga - 402
Cambodia - 386
Mongolia - 269
Samoa - 143
Lao People's Democratic Republic - 124
Fiji - 86
Timor-Leste - 85
Marshall Islands - 29
Micronesia (Federated States of) - 24
Kiribati - 18
Tuvalu - 4
Net sending countries or areas and total amount sent in 2017 (US$ million)
Hong Kong SAR, China - 17,121
Australia - 16,888
Japan - 9,138
Malaysia - 6,187
Singapore - 6,176
Republic of Korea - 5,989
Kazakhstan - 2,892
New Zealand - 2,408
Macao SAR, China - 2,243
Brunei Darussalam - 782
French Polynesia - 639
Guam - 266
Turkmenistan - 202
Democratic People's Republic of Korea* - 201
Bhutan - 196
Maldives - 188
Solomon Islands - 92
Northern Mariana Islands - 85
American Samoa - 58
Papua New Guinea - 53
Vanuatu - 46
Palau - 18
* Data on remittances received are not available for the Democratic People's Republic of Korea
Key figures

Population and Migration

  • Overall, Asia and the Pacific is a region of scale, contrasts and extremes. It is the largest among five regions in the world, in terms of emigrants and the amount of remittances received.
  • In 2017, there were 80 million international migrants who sent US$256 billion in remittances (53 per cent of worldwide flows amounting to US$481 billion) to their countries of origin. These remittances touched an estimated 400 million individuals (equivalent to 10 per cent of the total regional population) as either senders or receivers.
  • About 70 per cent of remittances received are from outside the region, led by the Gulf States (32 per cent), North America (26 per cent) and Europe (12 per cent). This figure is expected to reduce over time as, increasingly, the majority of migrants (60 per cent) in Asia and the Pacific work in Hong Kong, Japan, Malaysia, Singapore, South Korea and Thailand. In contrast, the Russian Federation is a major destination for Central Asian countries’ migrant workers.

Remittances

  • India (US$69 billion), China (US$64 billion) and the Philippines (US$33 billion) are the three largest remittance-receiving countries in the world; Pakistan (US$20 billion) and Viet Nam (US$14 billion) are also in the top 10.
  • Thirty countries in Asia and the Pacific receive more than US$100 million annually. For 17 countries, remittances exceed 3 per cent of GDP. Countries with high reliance on remittances are predominantly rural.
  • Worldwide, an estimated 40 per cent of the total value of remittances goes to rural areas. Remittances to Asia and the Pacific, however, go disproportionately to countries with a majority rural population such as Sri Lanka (82 per cent), Nepal (81 per cent), India (67 per cent), Viet Nam (66 per cent), Bangladesh (65 per cent), Pakistan (61 per cent) and the Philippines (56 per cent). Thailand (48 per cent), Indonesia (46 per cent) and China (43 per cent) also have significant rural populations.
  • While remittances are three times ODA worldwide, they are more than 10 times ODA from all sources to the Asia and the Pacific region.

Graph 1: Top 10 remittance-reliant countries in 2016 (remittances as per cent of GDP)2


2 RemitSCOPE, 2018

Market

Given its enormous scale and scope, there is no single integrated remittance market in the Asia and the Pacific region, but, rather, many corridors that vary significantly in cost, coverage and convenience.

Costs
  • The transaction costs to send remittances to the entire region – at 6.86 per cent – are slightly below the world average of 7.13 per cent (first quarter of 2018), although there are significant sub-regional variations.
  • The costs of sending through long-established channels from the Russian Federation to Central Asia are among the lowest in the world (1.21 per cent); the highest are to the small Pacific Island states (8.9 per cent) and to China (8.26 per cent).
  • High-volume corridors are often substantially less expensive than low-volume corridors. Remittances to rural areas also generally remain costlier due to expenses associated with offering access points in distant locations.

 

 

Receiving countries: average cost to send US$200 (for which data were available)

Country Average cost to send US$200 to this country
Papua New Guinea18.1
Vanuatu16.7
Solomon Islands15.8
Cambodia15.1
Tuvalu11.6
Samoa11
China10.1
Thailand9.9
Myanmar9.6
Tonga9.5
Afghanistan9.4
Fiji8.5
Viet Nam8.3
Indonesia7.9
World average7.1
Asia and the Pacific average6.9
India5.3
Philippines5.2
Sri Lanka5.2
Singapore4.8
Pakistan4.8
Tajikistan4.7
Kyrgyzstan4.5
Nepal4.4
Bangladesh4.4
SDG 10.3 goal by 20303
Uzbekistan1.7
Kazakhstan1.3
Japan10.7
New Zealand9.6
Australia8.9
Republic of Korea4.8
Malaysia4.8

Largest migration corridors 20179

Country Average cost to send US$200 from this country
India – United Arab Emirates3.3
Bangladesh – India3.1
Kazakhstan – Russia2.6
China – United States of America2.4
Russia – Kazakhstan2.4
China – Hong Kong SAR, China2.3
India – United States of America2.3
India – Saudi Arabia2.2
Philippines – United States of America2
Remittance service providers (RSPs)
  • The region has multiple RSPs that operate as the lifeblood of the remittance market. Transfers take place through a network of more than 1 million payout locations, which continue to expand rapidly across the region, but remain overwhelmingly urban.
  • In the receiving markets, banks provide the largest distribution networks and are increasingly using retail, mobile operators and microfinance agent networks to ensure that funds are available close to receivers.
  • Post office locations are very important disbursement points in countries such as China, especially as they are well represented in rural areas.
  • In sending markets the majority of transactions take place at Money Transfer Operator locations, although there are increasing signs in countries such as Australia and Singapore of online services being used to originate payments.
  • The global companies, such as Western Union, MoneyGram and Ria, are strongly represented but face strong competition from some regional operators, such as IME Express. In certain corridors, often specialist providers, such as Klickex, dominate. In some of the high-volume corridors, such as Hong Kong or Japan to the Philippines, or transactions to India, local banks such as Philippines National Bank, Metro Bank and ICICI have focused operations.

Largest corridors 20168

Corridor Remittance flows estimate (US$ million)
United States of America – China16,141
Hong Kong, SAR, China – China15,548
United Arab Emirates – India13,823
United States of America – India11,715
United States of America – Philippines11,099
United States of America - Viet Nam7,735
Saudi Arabia - Pakistan5,781
United Arab Emirates - Pakistan5,670

Largest migration corridors 20179

Corridor Remittance flows estimate (US$ million)
Japan10.7
New Zealand9.6
Australia8.9
Republic of Korea4.8
Malaysia4.8
Transfer methods
  • Cash-to- cash remittances remain the most common form of transfer. However, a combination of regulatory changes, increased account ownership and the introduction of new technologies is beginning to move markets towards account-to-account transfers.
  • There are signs of increasing volumes being transferred to bank accounts and electronic wallets (e-wallets) in countries such as India and Pakistan.
  • Informal transactions continue to operate in many parts of Asia and the Pacific, particularly rural areas, and those with shared land borders, for example in the Mekong region. A number of governments, such as Pakistan, Philippines and Sri
    Lanka, have introduced comprehensive and successful programmes to move transactions into the formal sector.
  • Asia and the Pacific is leading the world in testing blockchain to improve back-office processes, including settlement between operators and identification requirements, although it is too early to determine the likely success of such initiatives.
Regulatory environment
  • In the Asia and the Pacific region, regulations framing remittance activities cover not just which types of institutions are able to offer services and the conditions under which they can operate (licensing requirements), but also anti-money laundering/counter-terrorist financing (AML/CFT) legislation and, in some countries, consumer protection legislation as well.
  • There is a clear correlation between countries with large volumes of remittances and those that have enabling environments that allow multiple entities to offer remittance services, thereby promoting competition in the private sector. Unnecessary regulatory and compliance requirements restrict formal remittance flows and contribute to higher prices.
  • Effective regulation must keep pace with market changes, especially with the constantly evolving technologies that are being applied to payments, and ensure that it is commensurate with the risks.
  • Overall, the full promise of technology is still to be realized, largely due to the failure to harmonize legal and regulatory frameworks between sending and receiving countries.
  • Regulations within Asia and the Pacific vary significantly among countries, depending on local circumstances and priorities. Countries are increasingly proactive on remittances and many understand the potential value they can bring.
  • There are examples of enlightened regulatory approaches, such as Malaysia and Pakistan, which have introduced initiatives to create and enhance competition, encourage formal remittances, lower costs and promote mobile-enabled remittances. Other examples are Nepal, Papua New Guinea and the Philippines, where microfinance institutions (MFIs), mobile network operators (MNOs) and other non-financial institutions’ outlets are all used as agents for paying out remittances.

Licensing requirements

  • Countries which are predominantly sending remittances, such as Australia, Japan, Malaysia and Singapore, generally have appropriate regulatory frameworks and have authorized several entities (banks, money transfer operators (MTOs), MNOs and MFIs) to offer remittance services.
  • Most receiving countries in Asia and the Pacific have developed, or are developing, a broad authorization approach which has enabled multiple types of operators to pay out.
  • All countries in the region allow banks to handle remittances, most allow MTOs to receive remittances (80 per cent) and 57 per cent allow the use of agents (which is particularly important for services to rural areas), while only about 25 per cent approve MNOs. India, the largest receiving country in the world, authorizes only three types of entities to pay out remittances. China, the Philippines, Pakistan and Bangladesh all authorize between four and six entities.

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

  • The capacity for countries, banks, MTOs, mobile network operators and others to be able to demonstrate that they meet local and global compliance (AML/CFT) regulatory requirements is vital to improve the de-risking environment and promote confidence more broadly.
  • There is a vast range of AML/CFT regulations in Asia and the Pacific, which vary from especially stringent to others where there are potential weaknesses or lack of coverage.
  • The reporting requirements are also varied. In Australia, for example, it is mandatory for every business to be registered with AUSTRAC and to report all their transactions electronically on a daily basis. Other countries have lesser reporting requirements and only insist on reporting suspicious transactions.
  • Indiscriminate de-risking practices of banks in many sending countries are becoming a threat to many MTOs, particularly those servicing small markets, such as the Pacific Islands.
  • Many new Fintech services and existing money transfer companies in countries such as Australia and New Zealand are simply not able to open or maintain a bank account despite various initiatives from governments, the International Monetary Fund (IMF) and many others. This is leading to consolidation, some firms closing and, hence, a reduction in competition.
  • Nonetheless, compliance standards more proportional to risks are being proposed in order to reduce the potential for large numbers of remittances to be driven into informal markets, which are difficult to track.
  • One of the keys to successful regulatory approaches is the effectiveness of supervision. This is an area where only quantitative data are available and, not surprisingly, the region has a broad range of mixed experiences.

Key regulatory statistics for entities authorized to engage in remittance services

Entities authorized to engage in remittance services Number of countries that authorize entities (out of total of 42 for which information was found)
Banks 40
MTOs 34
Use of agents 24
Digital currency 18
MNOs 11
Inclusive financial services

Linking remittances and financial inclusion is an untapped opportunity for both the private sector and the development agenda

  • In most remittance markets, the financial goals of remittance families and the commercial strategies of financial service providers rarely meet.
  • As a result, the potential to leverage remittances to promote financial inclusion and, in turn, generate more impact on economic growth and development is often lost.
  • Once regulated financial intermediaries recognize this untapped market, more families can have access to remittance channels paired with other financial services (savings, loans and insurance), so that the income from remittances and other sources can be transformed and invested in the local community, thus enhancing job opportunities and elevating overall productivity.

Financial inclusion and remittances in Asia and the Pacific

At the receiving end

  • In most receiving countries where remittances represent more than 5 per cent of GDP,less than one third of the adult population have an account in a regulated financial institution.
  • This is clearly a missed opportunity for the private sector to provide financial services to a niche with a higher propensity to save than the average and with better creditworthiness due to predictable inflows of remittances.

At the sending end

  • In contrast, the top six sending countries in the Asia and the Pacific region have a high level of account ownership among the adult population, ranging from 81 per cent (Malaysia) to 100 per cent (New Zealand).
  • However, for migrant workers the availability of financial services both in their host and home countries is essential. They have diverse needs that range from sending money, saving for emergencies or long-term purposes, or borrowing to accelerate housing projects or business activities at home.
  • However, they often have to use a combination of financial service providers scattered between home and host countries to meet their financial needs.

Financial inclusion and remittances in Asia and the Pacific

  • The most common remittance-linked financial product, targeted at migrants or their families, is a savings account. This is offered to migrants in Australia, New Zealand and Singapore, and to families in Nepal, Pakistan, Philippines, Sri Lanka and Tajikistan, among others.
  • Additional products such as foreign currency accounts and insurance products for migrants are available in about 15 per cent of the countries in Asia and the Pacific. Although many companies offering foreign employment are required to provide life insurance to migrant workers, insurance services for remittances senders are needed, with the ultimate beneficiary being the migrant’s family in the home country.
  • Credit products to migrant families are not widely available.

The transition to cash-light societies: opportunities and challenges ahead to foster financial inclusion with digital remittances

  • The growth of digital payment networks and services for person-to-person payments (domestic and international remittances) can be a major driver for financial inclusion.
  • The uptake of mobile money has been particularly significant in South Asia, which has shown the sharpest growth globally in mobile money account registrations rising by 47 per cent, from 160 million accounts in 2016 to 235 million in 2017.3
  • In Central Asia and South Eastern Asia, the distribution channels are still dominated by bank branches and automated teller machines (ATMs), with mobile money agent networks filling in the access gap in certain countries.4 The digitization of remittances could benefit both the public and the private sector by improving the traceability of flows and by creating a data-driven relationship between customers and providers. These in turn improve customer profiling, credit risk assessment and fraud detection.
  • While remittances, as frequent small transactions, could steadily bring business to e-wallets, their digital uptake remains slow and their blending with other digital financial services remains, by far, an untapped opportunity to foster financial inclusion. For instance, among the countries in which the adult population receiving domestic remittances is above 20 per cent and receiving more than US$2 billion in remittance transfers per year, the predominant pattern is still to receive cash or to cash out remittances instead of using accounts.

 


  • 3 GSMA State of the Industry Report on Mobile Money, 2017.
  • 4 As is the case of Afghanistan, where there are now more than six times as many mobile money agents as ATMs. Mobile money agents also exceed ATMs in countries such as Bangladesh, Myanmar, Pakistan and the Philippines (IMF, Financial Access Survey 2017).

Public-led financial literacy initiatives

  • Governments have a catalytic role to play to match demand for adapted financial services from migrant families and private-sector supply.
  • Publicly sponsored financial education programmes have proven to increase migrant workers’ capacity to choose the best-suited financial service and to meet long-term savings goals that match with their migration goals. This is critical in countries where the supply of financial services is fragmented, and financial literacy is low among migrant workers.
  • Financial education programmes directed to migrant workers in their country of origin during pre-departure orientation seminars are often followed by account opening and long-term savings.
  • Despite the proven benefits of financial education programmes, the largest remittance-receiving countries in the Asia and the Pacific region lack a comprehensive financial education programme that targets their migrant population.
  • Indonesia, Nepal, Pakistan, the Philippines and Sri Lanka, among others, have devoted significant resources to set up programmes that include: government migration agreements, pre-departure financial training for migrants, opening of specific migrant banks, and an enabling regulatory environment that offers price transparency.