Expatriates of the world, unite!

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Expatriates of the world, unite!

In the last fiscal year alone, overseas Pakistanis remitted over $11 billion, which accounts for almost 7 per cent of the national economy. On the other hand, total tax revenue generated in Pakistan accounts for 10 per cent of the GDP. Since expatriates contribute such huge sums to their motherland, it may be prudent to formalise expatriates’ role in securing Pakistan’s faltered economy.

One can propose reserved seats for expatriates in Pakistan’s Senate or the Parliament, or permanent representation in the Planning Commission or the State Bank to secure their sustained contributions to the economy. If this proposition seems farfetched, then expatriates may consider launching a development bank or a credit union to gain more control over remittances to Pakistan, which are expected to hit $14 billion next year.

Remittances pouring into Pakistan far exceed the social sector spending by the federal government. In the recent federal budget, the development expenditure is approximated at $5.2 billion, which is again much less than the $11 billion in remittances. Furthermore, remittances are an order of magnitude higher than what Pakistan receives in aid from development banks and donors for social sector spending.

Despite the remarkable contribution to social spending in Pakistan, expatriates have no real representation on any political and economic platform in Pakistan. Imagine for a second that the $2.5 billion in remittances contributed last year by 1.2 million Pakistani workers in UAE were in fact collected as part of a tax levied on overseas Pakistani workers. Shouldn’t the government then consider giving representation to the million Pakistani workers in UAE the same way it gives representation to the million taxpayers (and millions of tax evaders) who reside in Pakistan. After all, no taxation without representation was the slogan behind the American revolution.

I can already see people objecting to the propositions I have laid out above. One may argue that remittances are not taxes, but in fact are funds provided by the expatriate workers to their families back home for altruistic motivations. This may be true. But first let us review how remittances are used by the recipients.

While the government is severely constrained in its ability to assist the needy, the expatriates subsidise the maintenance of a broken social safety net in Pakistan. In most instances, remittances pay for rents, medicines, grocery bills, marriage expenses and other similar needs of low-income households who are unlikely to receive any meaningful support from the government. Similarly, remittances pay for tuition fees for children who would not be educated otherwise because of missing or inadequate public sector schools. The remittances therefore plug the gap in social spending in Pakistan.

Pakistanis have empowered thousands of bureaucrats and legislators at the federal, provincial, and municipal levels to disburse $5.2 billion in social spending. If one were to factor in overheads (wages, rents, fuel purchases, etc.), the services reaching the needy may value much less than $5 billion. On the other hand, $11 billion in remittances do reach the intended recipients with very little overhead. Shouldn’t we then consider empowering the stakeholders (the expatriates) whose social spending in Pakistan exceed that of the public sector social spending by the federal government.

It is unlikely that Pakistan’s political and military elite will allow expatriates any formal role in decision-making. Denying expatriates the recognition they deserve, however, will be a big mistake. Other countries with much smaller expatriate contributions have done more to recognise contributions of their respective expatriate communities.

Consider India where Non-resident Indians (NRIs) are courted by the federal and state governments. This is being done despite the fact that remittances account for merely 4 per cent of the Indian GDP whereas tax revenue accounts for 18 per cent of the Indian economy. In Lebanon, remittances contribute more than what the government collects in taxes while in Philippines remittances rival the total tax revenue.

Expatriates of the world, unite! | Blog | DAWN.COM