Singapore is the highest wage paying state in the south Asia Region; there are Lacs of people come to Singapore for the job. It is one of the world’s expensive countries in the world. There are many neighbouring countries around Singapore from where people come to work because the wage rate in Singapore is higher than the neighbouring countries. Remittance has the impact on both sending and receiving countries and its economic growth. Here is how it affects the economic growth whenever you wire money to Indonesia from Singapore and vice versa.
Economic Growth of both Sender and Receiver country
The impact of money remittance is always positive on the country which is receiving the foreign currency, at the same time, it is also beneficial for the country from where the remittance is done. It is because the remittance is done by the people from the other countries who have come to Singapore to work, it makes the availability of the low-cost labour for the production. When the production level of the industry increases, the growth of the economy goes up. Singapore is one of the fastest growing and developed markets in Asian Region, and it also said to be the most expensive place in South Asia. People from the neighbouring countries come across to work and earn more money.
Employment options in both countries
This is again giving a dual opportunity for both the countries to be developed. The size of the remittance industry is increasing, and it is providing huge employment all around the world. When people send money from Singapore to Indonesia, they need to contact the services provider company; the people are facilitated by the employees of the company. When the money is transferred to the concerned account, now people again need to contact the representative of the company to receive money. This is how remittance industry is helping both Singapore and Indonesia, regarding increasing employment rate.
Increase in the market business
People go to other countries to earn more money for their loved ones but, they do not shift all the money from working country to the home country, there is a significant share of the earning which is spent there only. Relatively greater part of their earning is sent to their family. When they are spending a good amount of their earning there only, it is helping the economy to grow, and at the same time, some money is sent to their family which will be spent by them in their own country, again this is also helping the receiving county of remittances.
Impact on Currency Value
When we see in a shorter term, we found the impact of the remittance on the sender company is giving as it reduces the value of the currency of the originator country against the currency for which country, the amount is remitted. When the currency is sent outside the country where the currency will be converted into the local currency of the country, this boosts the currency of the receiving country against the sender country.
This becomes huge concern for the country who is importing some goods from the recipient country because in that case they are required to pay in the local currency of that country, which has a higher value due to remittance. But it is not a big concern for the country that does not have a bilateral trade relationship with each other.
It can be said that the remittance has the impact on both sending and receiving country mostly in a positive perspective.