BSP, not BAP, acts on high OFW fees

By Jun Vallecera
Reporter
Business Mirror
January 23, 2006

IN THE face of relatively small amounts of remittances to the Philippines and doubts about the figures advanced by a lawmaker on the fees charged by foreign banks, the Bankers Association of the Philippines (BAP) rejected calls for it to make some kind of representation with foreign counterparts to try to reduce supposedly excessive fees on remittances service.

NP Rep. Eduardo R. Gullas of Cebu had proposed a private sector or government effort to reduce what he believes is the high cost of remitting the earnings of Filipinos to their families here.

But even as the BAP thumbed down Gullas's call, the Bangko Sentral ng Pilipinas said the issue is under close scrutiny and it will soon announce its findings and recommendations.

BAP executive director Leonilo Koronel said the so-called excessive remittance fees is not something within the control of Philippine banks. He also doubted the accuracy of the figure of $1.6 billion in total fees advanced by Gullas as collected by banks abroad from Filipino workers this year.

In any case, Koronel said for the BAP or for even the BSP to petition Western banks to reduce the fees was totally out of the question. "We're rather small and our OFW remittances, though a big boost to the economy, is a mere drop in the bucket from the world perspective."

Koronel said if he were an OFW seeking to reduce the cost of remitting hard-earned dollars back to his family, he would save the money and remit it in one big lump sum rather than in small amounts, in order to maximize use of the average $20 remittance fee levied on each transaction.

"I would do that because banks really do not have control on how much fees the conduit banks would charge on each transaction," he added.

BSP governor Amando Tetangco Jr. said their research arm is evaluating the remittance process to try to find out what regulators could do to reduce remittance costs reportedly costing millions of OFWs some P85 billion in bank charges alone.

Tetangco said remittance costs typically depend on the kind of service an OFW wants from banks or from money transfer outlets. "Charges normally depend on the level of service required by the client. We are looking at factors behind the fees and there have been reductions in certain areas. Further reductions may still be possible."

He said what the workers could hope for from the current situation was for competition among banks to heighten further, so that costs to the hapless OFW would come down by a significant degree. "Costs could come down, particularly with greater competition in the business."