Indonesia received US$7.2 billion from around 6.5 million migrant workers overseas in 2012, the World Bank said in a recent report.
The figure was equal to about 1 percent of the nation’s gross domestic product, making Indonesia the third-largest recipient of remittances in Southeast Asia, the report said.
According to the recently released World Bank Migration and Development Brief, the Philippines was the top receiver of remittances in Southeast Asia at $24.45 billion, placing the nation behind India ($69.35 billion) and China ($60.24 billion) globally.
Vietnam, receiving $10 billion in remittances according to the report, was ranked second in the region and ninth in the world.
The report said that migrant workers from developing countries remitted a record $401 billion last year, up 5.3 percent from 2011.
If remittances to developed countries were added, overall global remittances topped $514 billion in 2012, up 239 percent from $132 billion in 2000, according to the report.
Meanwhile, nations in Southeast Asian received $47.96 billion in remittances from migrant workers in 2012, up 8.43 percent from $44.23 billion in 2011 but below the record $109 billion booked by South Asian nations in 2012, up 12.3 percent from 2011.
“Migration and remittances offer a vital lifeline for millions of people and can play a major role in an economy’s takeoff,” World Bank chief economist Kaushik Basu said while launching the Global Knowledge Partnership on Migration and Development (KNOMAD) initiative.
“They enable people to partake in the global labor market and create resources that can be leveraged for development and growth. But they are also a source of political contention, and for that very reason deserving of dispassionate analysis,” he said.
The KNOMAD initiative was established with the support of Germany and Switzerland as an international hub of knowledge and policy expertise on migration issues.
According to the United Nations, more than 215 million people live outside their nations of birth, and over 700 million people migrate within their home nations.
More than half of Indonesia’s 6.5 million migrant workers currently work in only two countries — Malaysia and Saudi Arabia, both legally and illegally. Most of the workers are ill-educated women who work as housemaids or as agricultural or factory workers.
However, the figures might underestimate the amount of remittances, considering that many migrant workers wait to bring their earnings home in cash.
“Not everybody sends money through banks,” Jumhur Hidayat, the head of the Indonesian Migrant Worker Placement and Protection Agency (BNP2TKI) told detik.com recently.
“Many workers bring money home along with them. So combined together, the official and unofficial remittances by Indonesian workers might reach Rp 120 trillion [US$12.36 billion],” he said.
In case of the Philippines, it has been estimated that 12.6 million overseas Filipino workers (OFW) remit around $24.45 billion unofficially every year, much higher than the official remittance figure of $7.2 billion for 6.5 million
Most Indonesian migrant workers are housemaids who receive lower salaries than their more highly skilled Philippines peers.
The Indonesians lack language and work skills, leaving them prone to exploitation and torture by unscrupulous employers and labor agencies. Indonesian migrant workers were also under educated, according to one official.
“Over 54.2 million people of Indonesia’s total workforce of 109 million are elementary school graduates, so you can imagine the quality of our human resources,” Dita Indah Sari, an adviser to Manpower and Transmigration Minister Muhaimin Iskandar, told tempo.co recently.
Due to a lack of skilled workers and professionals, Indonesian firms currently employ a large number of foreigners.
According to the Manpower and Transmigration Ministry, there were 118,777 foreigners working across the nation as of November 2012, most of whom worked in Jakarta (74,762 employees) West Java (13,046) and Banten (7,728).
The foreign workers were principally employed in the manufacturing, mining, energy, hospitality, trade, banking, insurance and other service sectors.
Indonesia, according to the World Bank’s Migration and Remittances Fact Book, experienced an outflow of $3.16 billion from these foreign workers in 2011, up from $2.84 billion in 2010.