KOTA KINABALU: Kota Kinabalu is selected as the second champion city in Malaysia and third in Asia to launch the Greenback 2.0 project, with the aim to enable more people living and working in Sabah to remit money safely and at lower costs.
Project Greenback 2.0, a collaboration between Bank Negara Malaysia (BNM) and the World Bank, aims to increase efficiency and transparency in the remittance market and, ultimately, reduce the cost of sending remittances.
Community Development and Consumer Affairs Minister Datuk Jainab Ahmad Ayid said, it was high time a more formal and stringent regulatory control over the remittance of money from the state was introduced in Sabah, which relied mostly on foreign workers in many of our workforce requirements.
She said the handing over of Greenback project from Johor Bahru, the first champion city in Asia, to Kota Kinabalu at the end of November last year marked an important chapter for Sabah as Greenback would be a catalyst in bringing forward the importance of the city in the financial landscape of Malaysia.
“The Greenback approach must be lauded as it will eventually shift the illegal channel of transferring money by means of education and awareness campaign.
“The need to register our foreign employees’ needs to be emphasized upon and adhered to. Greenback will provide the mechanism for us to do so,” she said, when launching the initiative at Kota Kinabalu City Hall (DBKK) grounds here yesterday.
She said registration was not only beneficial to the State and employers but also to the employees as it would serve as the protection of having their salary paid and the benefit of using various financial products offered by financial institutions in Sabah.
In terms of technology application, Jainab believed that the Greenback initiative would be the game changer to create a conducive environment for technology development to encourage the use of digitized remittance products and services in Sabah.
“Greenback Kota Kinabalu 2.0 will also provide an avenue for us to set up a community of local and foreign technopreneurs, allowing seamless exchange of knowledge and experience. This is timely as Sabah is aiming at closing the digital gap through building high-skilled human capital in the field of technology,” she said.
She urged all relevant sectors to support the Greenback 2.0 initiative and to participate in the possible business activities that come about as the result of the project.
Meanwhile, BNM deputy governor Jessica Chew Cheng Lian said, the Greenback project aimed to help more people living and working in Sabah remit moneys for business or personal purposes, in safety and at lower costs.
She said Kota Kinabalu has a sizeable population of foreign workers who contributed to the state of Sabah, while supporting the livelihoods of their families back home.
“This, coupled with the higher remittance cost of 4.5 percent in Kota Kinabalu compared to other parts of Malaysia presents a unique opportunity to leverage on the Greenback project to support the financial needs and goals of foreign workers here in Sabah; to increase the development impact of remittances to our neighbouring countries and more importantly, to make remittances generally more efficient for businesses and the population of Sabah itself,” she explained.
Chew said the Greenback initiative in Kota Kinabalu would also focus on the wider use of technology to deliver remittance solutions in Sabah.
She said people in Sabah often needed to travel a great distance to send money home, which was a costly, cumbersome and at times, risky process, made even more challenging by the geography and remoteness of some parts of the State.
“Technology offers new possibilities to overcome these difficulties, while significantly improving user convenience,” she said.
Although remittances through electronic channels were not new, she said the take-up rate of electronic remittances had been relatively slow.
“In 2017, the share of electronic remittances accounted for only 12 percent of total remittances. This, in turn, has limited the potential to make remittance services much more efficient and accessible to our communities, including here in Sabah. We are therefore determined to double up our efforts to increase the use of electronic channels to send money,” she assured.
Last November, Chew said BNM had amended existing regulations to allow money service companies to complete customer verifications electronically without the need to visit a money service business (MSB) service, in effort to remove an existing hurdle for companies to support an end-to-end electronic process for performing remittance transactions.
She expected this change to create significant momentum for further growth in electronic remittances, particularly among foreign workers.
“Today, foreign workers in several parts of Malaysia may still face difficulties getting to a MSB office to complete the customer due diligence process. Yet, nine in ten foreign workers have smartphones and use them to access the internet. With technology, we can tap into these alternative access channels to enable e-remittances,” she said.
In addition, Chew said two important developments were coming together to encourage the use of electronic remittances.
The first is the initiative by the government to require employers of foreign workers to pay their salaries into bank accounts, and the second is the development of an interactive mobile application by the MSB industry that allows users to identify licenced MSB providers, compare services and communicate directly with MSB companies.
“The mobile app services is a powerful tool to further promote transparency and competition in the MSB industry, by providing customers with the information and facilities that will help them make smarter remittance choices,” she said.
She said Kota Kinabalu would be a test bed for these initiatives, serving as a model for envisioning an end-to-end digital remittance landscape in Malaysia.
Chew added that the MSB industry had facilitated RM20 billion in workers’ remittances and a further RM400 million in business remittances in 2017.
This represents a 43 percent and 300 percent increase respectively over values transacted in 2013, when significant reforms were introduced to strengthen standards and shore up trust and confidence in the industry, she said.
The event yesterday also saw the launching of Malaysian Association of Money Services Business’s mobile application.
Also present were Mayor Datuk Yeo Boon Hai and World Bank Group country manager for Malaysia, Faris Hadad-Zervos.