Welcome to this exciting occasion of launching Project Greenback 2.0 in Johor Bahru. I am very pleased to see many friends and colleagues representing diverse communities such as migrants, remittance service providers, plantation companies, small and medium enterprises (SMEs), and public authorities. Thank you for taking the time to join us to celebrate the launch of Project Greenback 2.0 Johor Bahru.
I would like to take this opportunity to thank Bank Negara Malaysia for our cooperation and collaboration on this joint effort to improve remittance markets and services through Project Greenback 2.0 in Johor Bahru. As Country Manager for Malaysia, we are extremely pleased with this joint work bringing expertise from both institutions.
At the courtesy of the Bank Negara Malaysia, the World Bank recently opened its office in Kuala Lumpur. Our partnership is becoming stronger. This joint project is a good example of our partnership.
I also thank the Mayor and his office for hosting Project Greenback in this city and joining the group of Champion cities together with Turin, Italy and Montreuil, France. Johor Bahru is the first Greenback champion city in Asia. We are looking for successful collaboration.
The World Bank Group is committed to ending extreme poverty and promoting shared prosperity by fostering income growth of the bottom 40 percent of the population in every country. International remittances play an important role in reducing poverty.
As you may be aware, the issue of remittances has become a key global development issue. The World Bank estimates that the recorded remittances flows to developing countries reached $435 billion in 2015 and is expected to surpass $453 billion in 2016. In some countries, the amount of remittances received can reach over 20 percent of their GDP. Therefore, remittances are very important for macroeconomic conditions of the countries as well as for many households.
Reducing the cost of sending remittances has also become an important global policy and development agenda. In 2009, the G8 established the cost reduction objective aimed at reducing the global average cost to 5 percent. Later, G20 adopted the same objective. This year, the United Nations’ Sustainable Development Goals included remittance cost reduction as one of the key indicators. Currently, the global average cost of sending remittances stands at 7.5 percent as of the third quarter of this year so our task is not completed yet.
The cost of sending remittances is an indicator of the condition of remittance markets and services. If a market has adequate conditions such as transparency and consumer protection, developed payment systems infrastructure, enabling legal and regulatory frameworks, competition, and governance and risk management, then the cost should go down.
The World Bank has taken a leading role in the global efforts towards reducing the cost of remittances. We have been advocating for reforms of remittance markets and services in order to achieve these market conditions. According to our Remittance Prices Worldwide database, more than 70 billion dollars were saved because of the cost reduction since 2009.
Remittance services, in particular cross-border payments and settlement systems, are important for SMEs. Often, access to foreign exchange settlement facilities could be expensive for SMEs since banks might not be able to provide services that are suited for SMEs’ needs.
Some of you might think Project Greenback isn't typically what the World Bank works on. Indeed, Project Greenback is very unique and different from how we usually work in many countries. But we are very passionate about the project since it is very close to our hearts. Project Greenback 2.0 aims at increasing efficiency in the market for remittances through an innovative approach to promote change inspired by the real needs of the ultimate beneficiaries of international money transfers: the migrants and their families at home.
Greenback focuses on problems and challenges that migrant workers and SMEs face on a day-to-day basis, analyzes them, and translates these problems into policies and scalable actions. The project takes collaborative approaches with different stakeholders. Close cooperation and partnership between migrant communities, remittance service providers, and public authorities is key for the achievement of the Project’s objectives.
I would like to share a bit of the history of Project Greenback. As the name of Greenback 2.0 illustrates, we had Greenback 1.0, which the World Bank introduced in 2010. The idea was to capture behavioral changes of migrants and service providers and changes in remittance markets in a documentary movie. We launched a movie focusing on Honduran migrants in the United States and Moroccan migrants in Italy.
Findings from the first Project Greenback were fascinating. On migrant family in Honduras actually crossed the border to El Salvador to pick up remittances because convenient services were not available in their neighborhood. In some cases, some agents of remittance service providers in a receiving country charged additional fees outside the agreement between senders and remittance service providers. Often, policy discussions on remittances heavily rely on aggregated data such as how much remittances are coming in countries. Such data are highly important, but the issues that migrants and their family face may not appear in data and can be neglected. This family’s story was lost in a sea of data.
Project Greenback is designed to understand the issues faced by consumers through surveys, face-to-face workshops, interviews, and other innovative engagements and to intervene with migrant communities, remittance service providers and other stakeholders in order to promote changes. In Turin, our first Greenback champion city, we have had city tours visiting remittance companies, financial education courses, sport events and other social and cultural events. Our video from Turin suggests that these interventions have made significant impacts on the lives of migrant workers and on remittance markets.
Also, the Greenback project in Johor Bahru will implement good practices and lessons learned from other Greenback projects. It will provide a unique opportunity to link up with a Greenback project in Lombok, Indonesia which the World Bank is currently preparing together with the central bank of Indonesia. There are many migrant workers from Lombok in Johor Bahru. The two Greenback projects here and in Lombok would make bigger impacts on migrants and their families as well as remittance services in the corridor.
The Greenback project welcomes new ideas and innovations in order to promote transparency and efficiency in the remittance markets. Today, we will introduce a mobile application called Pick Remit. This app enables remittance senders to compare remittance prices in a very transparent way. Here in Johor Bahru, many remittance service providers have joined the efforts to promote transparency. Together with engagements with migrant workers, we believe that more consumers will eventually choose regulated remittance services over illegal services.
In conclusion, I would like to reiterate the World Bank's commitment to improving remittance services, which will contribute to alleviating poverty and promoting shared prosperity. We are very thrilled with the partnership with migrant communities, remittance service providers and authorities. We look forward to major impacts in Johor Bahru as well as remittance receiving countries.