1st OFW bank for 'world's greatest workers'

First posted 04:26am (Mla time) Mar 31, 2006
By Christine Avendano
Inquirer

Editor's Note: Published on page A1 of the Mar. 31, 2006 issue of the Philippine Daily Inquirer

PRESIDENT Gloria Macapagal-Arroyo yesterday announced plans to establish the first OFW bank as part of government efforts to help overseas Filipino workers remit their earnings conveniently through postal systems here and abroad, and at lower service rates.

The President said the "newest service" was an offering to "our new heroes and greatest workers in the world," who sent a record high of $11 billion in remittances to the country last year.

"So that we can help our OFWs in saving and sending their money back home, we will make the Philippine Postal Savings Bank (PPSB) an OFW bank," she said during a roundtable discussion with government officials in Malacañang.

The government-run PPSB will be renamed Philippine Overseas Postal Bank, according to its president Rolando Macasaet. The new OFW bank will be operational in three to six months, he said.

Ms Arroyo said the Overseas Workers Welfare Administration (OWWA) would invest P1 billion in the modernization of the PPSB facilities.

Macasaet proposed the establishment of the OFW bank at Tuesday's Cabinet meeting and this was "approved by Cabinet members," the President said.

The new bank will receive remittances sent by OFWs through postal offices abroad. It will send the money to their loved ones through automated teller machines (ATMs) that it will put up in the 2,000 post offices throughout the country.

In December 2004, the Commission on Filipinos Overseas estimated the total number of OFWs at 4.9 million, including 3.6 million on temporary employment and 1.3 million working without legal documents.

'Novel' idea

Macasaet told reporters that the bank's creation was a "novel concept," noting that OFWs currently remit their money through the existing banking system, such as through the Philippine National Bank and Allied Bank, or informal channels.

"So instead of going, say, to a branch of a certain bank, all they have to do is go [to a post office abroad], remit the money and send it here, and we receive it and we have 2,000 post offices here," he said.

"We will be radically different because we will be using the post offices abroad and we'll be using the post offices here," Macasaet said.

He said he planned to talk to Postmaster General Dario Rama so that the new OFW bank could have access to the post offices nationwide.

Negotiations will also be made with postal offices abroad, particularly in the United States, the Middle East and the European Union, to facilitate the remittances of the Filipino workers, he said.

Last year, Macasaet said the OFWs in the United States sent the biggest amount of remittances at $6 billion, followed by those in the Middle East ($1.4 billion), Europe ($1.4 billion) and Asia ($1.1 billion).

Informal channels

Through the new bank, he said, the government intended to corner 20 percent of the amount that the OFWs normally send home through informal channels. Remittances sent this way amount to $2 billion, he said.

Macasaet said the OFW bank would offer lower service fees, charging 20 to 30 percent less than what the existing banking system collected. At present, banks charge between $5 and $20 per remittance.

The new bank will also offer better foreign exchange rates compared to other banks, he said.

"When an OFW sends money, the rate is $51. They (banks) give you only P49; we'll probably give them a little more," he said.

Macasaet said the OFW bank would offer other services, such as free e-mail services in the post offices here for the families of migrant workers.

For a "minimal" fee, the families can get in touch with their loved ones through the Voice Over Internet Protocol, a new technology where they can talk with their relatives via the Internet.

Legal requirements

Right now, Macasaet said he was completing the legal requirements to set up the OFW bank. These include securing approval from the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission.

It will be the first time for the PPSB to venture into a project involving OFW remittances since the bank mainly deals with micro-financing and rural lending.

18 branches nationwide

PPSB has 18 branches nationwide. Last year, it earned P30 million, the same amount it made in 2004, Macasaet said.

Asked whether the new OFW bank intended to replace Philippine National Bank and other banks here, Macasaet said it would actually "complement the banks."

"We should have a bank for our new heroes, that is the objective of the President," he told reporters.

The President said the sacrifices, problems and perils faced by the OFWs abroad did not escape the notice and concern of the government.

For this reason, she said, the government intends to help them from the time they leave the country up to the time they return home.

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