Countries around Asia and the Pacific are looking at ways to increase the benefits of the money sent home to families from overseas workers while avoiding the social and economic repercussions.

Remittances, or the money sent home by overseas workers to help support their families, have a huge impact on the poor.

“Throughout the world, there are an estimated 96 million migrant workers, of which 28 million are from the Asia and Pacific region,” noted Mayumi Ozaki, an ADB financial sector specialist, in a recent blog post.

“Corresponding to the growth of the number of migrant workers, remittance inflows to developing countries have grown dramatically - estimated at $435 billion in 2014. In 2013, remittances were more than three times larger than official development assistance, and in many countries, significantly exceeded foreign direct investments.”

Remittances flow directly into the hands of the people who need it most and are often spent on household education and health expenses, as well as small businesses. Healthier and better educated people benefit the society and economy as a whole. Countries with large, reliable streams of remittances such as the Philippines often see the incoming funds reflected in increased growth of their gross domestic product.

Remittances have their downside as well. Studies have linked a high level of remittance income to a decline in the manufacturing sector and weakening export sector. Remittances also make countries more vulnerable to global and regional economic crises, and more dependent upon international migration patterns. When not channeled through the formal financial system, remittances cause a large amount of money to flow into the country unregulated, untaxed, or unmonitored. These informal channels can also be used for money laundering, terrorism, smuggling, and other illegal activities.

Migrant workers and their families are currently underserved by the formal financial sector in many parts of the region. The use of informal channels, such as sending money through friends and relatives, continues to be widespread partly because banks charge high remittance fees.

In an interview with, ADB Institute Dean Naoyuki Yoshino said that technological developments, such as mobile banking and e-banking, will reduce the cost of transferring money, even in small amounts, through formal channels, enabling migrant workers to send money easily and safely. He said there will be a need to regulate these new remittance services across Asia and the world.

On 18 March, people from around the region gathered at ADB in Manila, Philippines for the Forum on Promoting Remittances for Development Finance. Participants at the 2-day forum discussed how best to send remittances through formal channels and maximize their positive impact while minimizing the possible pitfalls.

“Remittances represent hard earned money by migrant workers. It is therefore important to channel remittances to improve the social and economic status of migrant workers and their households, as well as to contribute to the country’s development,” said ADB President Takehiko Nakao in his opening remarks at the forum.

ADB has worked extensively on the subject of remittances in Asia and the Pacific. It has worked to share knowledge with countries in the region about how to develop their financial sector to optimize remittances. ADB researchers have also examined how remittances are a common link between urban and rural poverty.

Some countries, including India, have taken remittance flow to the next level and have issued bonds and securitization to leverage earning power of their overseas citizens into investments at home. India has raised over $11 billion from diaspora bonds. These innovative instruments were a key point of discussion at ADB’s remittance forum.

In a video interview, Eric Guichard, founder and chief executive officer of Homestrings - an investment platform that facilitates diaspora investments, said that there is strong interest among overseas citizens of any nationality to contribute in the development of their countries of origin, especially for causes and projects that they believe in.

Remittances are just one aspect of the complex impact of migration on development. ADB’s social protection programs work to spread the benefits of remittances, and other social development measures, to the broadest number of people with a particular focus on helping the poorest and most vulnerable in society.