Taking the wealth home
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Taking the wealth home
KAI RYSSDAL: U.N. Secretary General weighed in on the immigration debate this week. Wrote a piece for the Wall Street Journal.Called…In Praise of Immigration. So we know how he feels about it. But we noticed this little nugget. The money migrants send back home hit 232 billion dollars last year. Remittances is the economic term. And they’re a big economic boost for developing countries. Like Pakistan. Where remittances have shot up since September 11th. From Islamabad, Miranda Kennedy reports.
[SOUND: Door opening, walking. . . ]
YOUSEF HUSSEIN: Basically, that’s the back entrance, dining room . . . That’s where they are doing the sofa. . .
MIRANDA KENNEDY: Yousef Hussein is showing me around his large, comfortable house in a quiet Islamabad neighborhood. He recently moved his family back to Pakistan after 17 years in Denver.
HUSSEIN: I sold my house in the US, liquidated my stock market account in the US, I brought it here and invested it here. A country like Pakistan is like a young child. It’s gaining a foot in a year kind of thing. There’s so much opportunities for growth here.
Yousef is part of a wave of ex-pat Pakistanis who are taking those opportunities and moving themselves — or at least their investments — back home. In the last several years, Pakistani remittances have ballooned from around a billion dollars a year to almost $5 billion. But it’s not just because of Pakistan’s rosy economic outlook. It’s also because of 9/11.
[SOUND: Walking up stairs . . . ]
HUSSEIN: She’s seeing the house . . . this is my wife Fata.
FATA:“Hi, nice meeting you.”
Yousef’s wife, Fata, says she loved living in Denver — until the September 11th attacks.
FATA: After 9/11 it was like feeling that we don’t belong here, actually. I mean, these people will not accept us. That is the feeling I got. I was roaming around in a Mercedes but I was looking here and there, scared for my life.
Nothing violent happened to anyone they knew, but the Husseins had other concerns. They started hearing news reports about the FBI freezing Pakistani, Afghan and Saudi bank accounts in the US. Not only suspected charities’, but individuals’, too. John Wall, head of the World Bank in Pakistan, says Pakistanis are sending their money back home because they don’t want to have to deal with the hassle of that kind of scrutiny.
JOHN WALL: They were faster than almost anyone to realize that the anti-money laundering rules and regulations through the banking system, and the scrutiny of transfers, particularly to places like Pakistan, could be a threat to them because they could be frozen, or god knows what.
Many returning Pakistanis have sought alternative investments. Yousef Hussein says he’s not a gambler, but he recently pulled his money off the Nasdaq and put it onto the volatile and high-performing Karachi stock exchange. He also bought three properties in Islamabad and watched them double in value.
HUSSEIN: It’s a no-brainer. Do you want to invest in a house in Denver which is one of the fast growth markets in the US, which is appreciating maybe at 5-10 percent a year, or do you want to invest in real estate in Islamabad which is appreciating at 50 percent a year.
And its not just real estate. Even Pakistani savings accounts are earning 10 times the return of US accounts. That means many Pakistanis are benefiting from the new flow of remittances. Banks are so flush with cash that they’re handing out loans and credit to anyone who asks.
In Islamabad, I’m Miranda Kennedy for Marketplace.
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