BSP taps envoys for OFW program

By Estrella Torres

Reporter

DEPUTY governor Diwa GuInigundo of the Bangko Sentral ng Pilipinas (BSP) on Thursday urged the Philippine heads of posts to push for financial literacy of some 10 million overseas Filipino workers (OFWs) to enable them and the local economy to benefit more from annual remittances that posted a record high of US$12.76 billion in December 2006. At the same time, the central bank asked the Filipino diplomats to talk to their host countries on easing requirements to allow more remittance centers to be set up abroad, with commercial banks as spearhead, in order to help both the OFWs through lower transaction costs and the economy, through taxes imposed on the service charges. It turns out that while foreign banks have been pushing for liberalizing the Philippine banking system, Filipino banks have minimal presence abroad. The OFW remittances that grew from $6.05 billion in 2000 to $12.76 billion in 2006 have been driving the Philippine economy, though most of these monies were spent on consumption goods in past years. It was only in recent years that authorities noted an increasing “sophistication” in the way the workers and their families use both their earnings and savings. Besides spending on education, health care and real estate, the OFWs have been wooed by various government agencies to invest in retail bonds, equities, and other financial instruments offered by banks and other entities. “There is a need to improve the remittance environment by encouraging our OFWs and their families to increase savings and investments,” said Guinigundo at the second day of the policy consultations of the Philippine heads of posts at the Rennaissance Hotel in Makati City. He asked an audience of more than 100 Philippine ambassadors and consuls general to help the BSP in advocacy programs that promote financial literacy among the OFWs and their families. Guinigundo noted that the bulk of OFW spending goes to consumption goods like food and clothing. The next line of priorities include human resource capital like education and health care and physical capital like real estate. He said OFWs need to spend more on financial capital like savings in bonds and to explore business ventures like small and medium enterprises (SMEs). Meanwhile, the BSP head also urged the heads of posts to help facilitate the opening of new remittance centers through commercial banks so that the country can benefit more from taxes imposed on the service charges. He noted the need to increase Philippine banks’ presence abroad, especially in the Middle East countries where 57.8 percent of OFWs are working. In Japan, there are only two branches of the Philippine National Bank (PNB) and Metrobank while in Malaysia, Philippine banks have no branches or subsidiaries, said Guinigundo. He also said that in France, Equitable PCIBank is the only Philippine commercial bank operating. In Middle East countries, only branches of Equitable PCI are catering to millions of OFWs mostly domestic helpers. Guinigundo urged the heads of posts to, “engage in bilateral, regional or multilateral negotiations to liberalize market access and national treatment limitations on the provision of money transfer services in the host countries by Philippine banks”. He said the increase of commercial banks with remittance services would continuously decrease the service charges for OFWs on the principle of competition. The BSP noted that OFWs in the United Kingdom send the highest amount of remittance with $600 per transaction, followed by those in the US with $400 per transaction and in Singapore, US$200 per transaction.

 

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