The UAE is a top destination for immigrants, with over 88 percent of its population made up of expats. According to the latest statistics from World Bank, UAE ranks second in the world in terms of percentage of immigrants, and fifth in terms of the actual number of immigrants (over 8 million).
And with a large expat population, it isn’t surprising that the UAE is one of the biggest contributors towards global remittances. According to World Bank’s Migration & Remittances Factbook 2016, the UAE ranks among the top ten countries which contribute the most towards outward remittances worldwide (almost USD 20 billion), which makes up about 5 percent of the UAE’s GDP.
Below are the top remittance corridors or routes from the UAE, based on the report:
|Remittance Corridors||Total Remittances (2015)|
|1||UAE to India||USD 13.2 billion|
|2||UAE to Pakistan||USD 5 billion|
|3||UAE to Philippines||USD 3.7 billion|
Why do expats remit money?
Favorable exchange rates
With the Dollar getting stronger in recent years, and with it the Dirham, remittances from the UAE are growing too. Here’s a look at how exchange rates for some of the most popularly remitted currencies have moved since the last three years alone.
|Current Exchange Rate*||Historical Exchange Rates|
|(equivalent to AED 1)||Apr 2015||Apr 2014||Apr 2013|
|Indian Rupee (INR)||18.08||17.06||16.43||14.80|
|Pakistani Rupee (PKR)||28.51||27.71||26.58||26.78|
|Philippine Peso (PHP)||12.56||12.08||12.14||11.21|
Take for example, the AED-INR exchange rate. The Dirham has been hovering at over 18 Indian Rupees since a few months now, which is 22 percent higher than April 2013. This has made remitting money back to their home country even more attractive for many Indians living and working in the UAE.
[Related: Where to exchange or remit your money]
To financially support families back home
Many expats leave their families in their home country when they come to work in the UAE. This is true especially in the case of blue-collar workers, who can’t afford to move their families to the UAE owing to the high cost of living. Such expats have families to support back home with some being the sole breadwinners. Therefore, they save a significant chunk of their salaries and remit the money to their families to help cover their basic expenses.
To earn higher interest rates on bank deposits
Usually expats who come from developing countries like India, Pakistan and Bangladesh, are also keen to remit money back to their home countries in order to take advantage of the high interest rates on term deposits held with local banks. For example, a 1-year fixed deposit can easily earn an interest rate of over 7 percent in India, a profit rate of over 5 percent in Pakistan, and 6 percent or higher in Bangladesh.
Lower cost of remitting money
According to World Bank statistics, the cost of remitting money from UAE to Pakistan is one of the lowest in the world (1.7 percent or approximately AED 13 if you were to remit AED 750), with remittances from UAE to India following closely at 2.8 percent, with the average being 3 percent for remitting money to anywhere outside the UAE.
Other reasons for remitting money from the UAE include easier inheritance management, building a retirement fund and more affordable real estate options to invest in.
* Exchange rates as of 12 April 2016