KARACHI: Bearish trend dominated the Pakistan Stock Exchange on Monday, as the benchmark KSE-100 index dropped by more than 800 points to reach 42,264.54 points.
The first day of the week saw investors inclined towards the selling trend.
Financial analyst Muhammad Sohail said that the political situation, constant decrease in foreign exchange reserves and current account deficit, which has reached one billion dollars, made investors cautious.
Last week, the index reached 43,044.12 points, seeing a decline of -2.38 per cent.
Remittances: heavy reliance on GCC nations is imprudent
The remittances’ market is undergoing a transformation as politico-economic conditions of host countries continue to change.
Reliance on GCC nations (Saudi Arabia, UAE, Kuwait, Oman, Qatar and Bahrain) for attracting the bulk of remittances is not misplaced given the size and quality of Pakistani workforce employed there.
Combined inflow of remittances from these six countries stood at $12.1bn, or about 63pc of the total $19.3 billion.
But to keep relying on GCC nations without being mindful of changing ground realities is imprudent.
Saudi Arabia, from where we get 28pc of total remittances, is transforming, both politically and economically.
The UAE, responsible for 22pc of total remittances, is welcoming more labour from India, not solely due to economic reasons but also to deepen its relationship with New Delhi, analysts say.
The recent involvement of Pakistan in Qatar’s rift with the rest of the GCC nations has backfired politically.
Besides, in all GCC countries the ongoing drive for diversification of economies to reduce dependence on oil and localisation of jobs has changed the dynamics of the expatriate labour market. The UAE, in fact, has already emerged as a nation focused on technology and innovation-driven economy.
“We, therefore, cannot and should not count on the GCC region for continued growth in our remittances if fresh export of the workforce is not according to their specific requirement and if Pakistan does not remain as much a favourite as it should be in the changing regional political environment,” says a senior central banker.
In late April this year, Saudi Arabia’s Ministry of Labour and Social Welfare and General Authority of Transport signed a MoU in late April this year to localise 200,000 jobs in the car rental and transport sector.
This, according to promoters of overseas jobs in Saudi Arabia, is a serious blow to Pakistani labour employed there in the transport sector and one big reason for a recent decline in export of Pakistani labour to the kingdom.
From July, Saudi Arabia has also imposed a tax of 100 riyals per month on every non-earning member of expatriates living in the kingdom. Whereas the government claims it is trying to get this tax relaxed for Pakistanis, so far nothing concrete has emerged.
In fact, some Pakistani families with one earning member and several others non-earning have already returned home and it is feared that this trend might continue.
The number of Pakistanis going to the Kingdom for jobs has already gone down for a host of economic and political reasons and it is feared that the levy of the said tax could only serve as another impediment to labour export.
Manpower export to Saudi Arabia between Jan-June this year fell to about 13,000 workers per month from well over 38,000 per month in 2016, an analysis of data released by Bureau of Emigration and Overseas Employment reveals.
This means in the long run our remittances from Saudi Arabia may start falling quite rapidly unless we are able to export to the kingdom high-quality workforce that can find jobs in those sectors of the Saudi economy like ICT, management, finance, marketing and development of allied industries.
Following the Saudis, the UAE is also fast localising jobs and in its bid to become a knowledge-based economy now requires expatriate manpower of superior quality. Can Pakistan count on it for a large chunk of its total remittances is anybody’s guess?
“And don’t forget that Pakistanis based in the UAE often have more opportunities for investment in the real estate and financial markets than in Pakistan,” points out the head of a forex company.
“Besides, our effort to curb the menace of illegal transfer of funds (through hundi or hawala), mostly originating in the UAE, has so far met with partial success.”
As for four other GCC nations i.e. Kuwait, Oman, Qatar and Bahrain (from where we get 12pc of our total remittances), we can work to ensure sustained growth in remittances, more so because Kuwait has recently lifted its years’ long ban on import of manpower from Pakistan.
“But in these countries, too, jobs for expatriates are becoming quite competitive with Indian and Bangladeshi workers offering their services at extremely cheap rates.”
Combined flow of remittances from the US and the UK equals to that from Saudi Arabia, or one fourth of our total. The US, under president Trump, is all set to provide more jobs to locals than expatriates. Besides, since 9/11, 2001 not many Pakistanis have been going to the US for jobs and remittances from there comes mostly from those settled there.
They send some money back home in Pakistan to support their extended families or to make investment in the real estate and other sectors.
Although export of Pakistani manpower continued to the UK even after 9/11, though with frequent disruptions, the troubles in the UK economy, particularly after Brexit, and the country’s policy to keep unemployment rates in check do not leave much room for optimism for us to continue exporting manpower there in a big way, analysts warn.
We should not hope for any immediate rise in remittances from these two countries at least in the near future, overseas job promoters in Pakistan agree.