KUALA LUMPUR: The average cost of remitting funds in Johor Baru has dropped to around two per cent from above three per cent previously, thanks to Project Greenback 2.0 which was launched two years ago.
Assistant Bank Negara Malaysia governor Jessica Chew Cheng Lian said the use of authorised money services business (MSB) providers to conduct remittance transactions has increased by 21 per cent in value terms for the period January to October 2017.
Remittances by small and medium sized enterprises (SMEs) using more cost efficient formal MSB channels have more than doubled.
"Johor Baru can be proud of serving as a role model for promoting transparent, efficient and affordable remittance services that are contributing to more inclusive financial services for all individuals and businesses," she said at the handover ceremony which was held in Johor Baru.
BNM worked with World Bank to bring the Greenback Project to Johor Baru - the first champion city in Asia, and for providing technical support in the project’s design and implementation strategies.
Over 35,000 migrant workers and 3,700 SMEs were engaged to increase awareness and promote the use of formal remittance services through more than 40 education and outreach programmes organised over the last two years.
The project partners included the industry, associations and chambers of business, government agencies and embassies.
On the handover, Jessica said the journey for Greenback Johor Baru has just begun although the momentum has been created now.
"There are many more migrant workers and SME businesses to be reached.
"The industry must continue to innovate to continuously expand and improve their services and accessibility," she said, adding that collectively barriers to the use of formal remittance services must be identified.
Some lessons were learnt over the two years.
For small businesses, a key barrier was a lack of trust in non-bank channels while for migrant workers, going to a formal business premise was intimidating and discouraged some workers from approaching formal remittance channels.
"This insight allowed us to focus on new ways of allowing workers to conduct remittance without physically visiting an office, such as through mobile channels.
"Another solution that proved to be very effective was bringing MSB services to the workplace."
Today, there are 17 remittance service providers that have introduced digital remittance services, almost double the number only two years ago.
"The requirement for employers to pay foreign workers’ salaries through their local bank accounts starting next year will provide further impetus for the digitalisation of remittance services."
Collectively, we must continue to identify barriers to the use of formal remittance services and find new ways to reduce them, she said.
The project will be brought next to Kota Kinabalu where successful lessons from Johor Baru will be applied.
It will include a focus on supporting e-remittances given the large number of migrant workers staying in remote areas.