BNM to work with industry players on reducing remittance cost
Published on: Monday, November 30, 2015
JOHOR BAHARU: Bank Negara Malaysia (BNM) will work with industry players to reduce the cost of remittance services of non-bank and bank remittance providers by at least two per cent and four per cent respectively, through the Greenback 2.0 initiatives.Deputy Governor Datuk Muhammad Ibrahim said in Malaysia, the cost of remittance to the major corridors is still considered on the higher side, estimated at between four to seven per cent using non-bank remittance providers, and six to nine per cent for banks."We aim to work with the industry to further reduce the remittance cost by at least two and four per cent through both these channels respectively. This can be achieved with innovative business models, and the smart use of technology with the right people to drive business and process efficiencies," he said in his speech at the launch of the Greenback 2.0 Project here Sunday.
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Also present at the launch was World Bank Group Country Manager for Malaysia Faris H. Hadad-Zervos.Muhammad said it is estimated that lowering average remittance costs by at least three per cent could provide huge savings of over US20 billion annually for migrants and their families.He said financial technology has already made a significant impact on the remittance and payment landscape in more developed economies and eliminated much of the hidden remittance costs. "Leveraging on similar technologies can open up tremendous opportunities for banks and non-banks in Malaysia to penetrate new remittance channels, including mobile remittances, in our effort to enhance accessibility and reduce costs," he said.
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The selection of Johor Baharu as the fourth city in the world to be a testbed for innovative remittance strategies under the Greenback 2.0 Project, would provide a better environment for the industry as well as consumers, he said."We are hoping to roll out this Greenback 2.0 Project to the whole country in the future," he added.
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The Greenback initiative will focus on two specific outcomes – promoting more cost-effective remittance services, and empowering customers to make informed decisions.The two-year project will see Johor Baharu as the first city in Asia, the Middle East and Africa to join Washington D.C. (the US), Turin (Italy) and Montreuil (France) in adopting the Greenback 2.0 initiatives. According to BNM, outward remittances by non-bank remittance service providers in Johor alone amounted to RM2.93 billion in 2014, with total outward remittances nationwide by non-banks and banks at RM32 billion last year.There are over 22,000 small and medium enterpreneurs in Johor Baharu alone while migrant workers in Johor account for more than 300,000 workers. The Greenback 2.0 project is a collaborative effort between Bank Negara and the World Bank to promote transparency and competition in the remittance market as well as encourage the usage of formal channels for these services.Stay up-to-date by following Daily Express’s Telegram channel.
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