A COMPREHENSIVE financial literacy program for families of overseas Filipino workers (OFWs) is needed as numerous money transfer agencies and informal channels hinder savings and investments in productive activities, experts said at a forum yesterday.
“Informal channels and money transfer agencies (MTAs) decrease overseas Filipinos’ savings and investment opportunities in the country,” said Golda Myra R. Roma, director for policy planning and research at the Commission on Filipinos Overseas (CFO) at the Multi-Stakeholdersí Forum on Channeling Collective Remittances for Development yesterday.
Ms. Roma presented the highlights of a focused group discussion initiated by the CFO last February, which had 17 individuals from banks, remittance companies, money transfer companies, local government units, families of OFWs, and members of the academe.
“Cash pick-up and other instant money remittance encourage consumption,” Ms. Roma pointed out.
Remittances from some 10 million Filipinos overseas prop up the peso and drive consumption. Last year, remittances grew by 8.2% to $18.76 billion.
Ms. Roma said the government should start financial literacy programs for OFWs to channel remittances into activities that support economic growth.
A bank executive agreed. “Through financial literacy programs, [we should] promote savings and financial discipline and channel remittances through savings accounts,” said Raul Marcelo D.L. Dimayuga, Bank of the Philippine Islands senior vice president and global remittance group head said.
“Families receiving money abroad will have the chance to save and invest part of their remittances.”
At the same forum, University of the Philippines economist Ernesto M. Pernia noted that most OFWs come from richer regions, thus these regions receive more remittances than poorer regions.
“Bulk of the remittances go to richer regions, and poorer regions [get smaller shares] which contributes to worsening regional imbalance or inequality,” he said.
“Going out of the country is an expensive undertaking, Filipinos planning to go abroad need initial capital,” Mr. Pernia added.
Southern Tagalog, Central Luzon and Metro Manila are the biggest sources of OFWs, accounting for 16.4%, 14.7%, and 13.9% of the total respectively, data from the 2009 Survey on Overseas Filipinos showed.
Mr. Pernia said there should be a concrete development plan for the regions. “The government should give more attention to poorer regions in order to uplift their economic position,” Mr. Pernia said.
Meanwhile, Rolando G. Tungpalan, deputy director-general at the National Economic Development Authority (NEDA), said the government was looking at a 7% rise in remittances from Filipinos working abroad, the same as the Bangko Sentral ng Pilipinas’ (BSP) lowered forecast amid unrest in the Middle East and North Africa.
He said the 7% target was attainable. “I believe that the share of remittances from other countries is still larger than what we are getting from those who are working in MENA region,” Mr. Tungpalan said.
Citigroup has lowered its growth forecast for remittances to 4.8% from 6-6.5%. Yesterday, ATR KimEng Securities, Inc. economist Luz L. Lorenzo said growth could even slow down to 3%.
“I don’t think we’ll be able to deploy as many Filipinos as before because of what’s happening in Japan and in the Middle East,” she said.
In 2010, remittances from the Middle East reached $2.96 billion, 15.79% of the total $18.76 billion. In February, the central bank said in a press release on the 2010 remittance data that the major remittance sources last year were the United States, Canada, Saudi Arabia, the United Kingdom, Japan, the United Arab Emirates, Singapore, Italy, Germany and Norway.
“[The BSP] was right to lower the projection. [The 7% target] is sustainable,” Rizal Commercial Banking Corporation Senior Vice-President Marcelo E. Ayes said.
“Although emerging markets are doing good, advanced economies like the US and EU are slowing down. There are also unfolding events in Syria and Bahrain; there are still threats in the Middle East. It may get worse,” Mr. Ayes noted.
“We will not reach double-digit growth or close to double-digit growth for remittances,” he added.
For his part, Mr. Pernia said prolonged unrest could eventually hit remittances.
“If political disturbances will persist in MENA, definitely we will see lower remittances from OFWs. More and more Filipinos might go back here in the Philippines because of the situation,” Mr. Pernia said.
The CFO’s Ms. Roma told BusinessWorld at the sidelines of the Ortigas forum that the 2007-2008 global financial crisis had shown that OFW remittances were resilient.
“At first, we were looking at a lower remittance or a flat remittance this year. However, our study showed that Filipinos were still able to send the same amount of money or even more despite problems overseas,” Ms. Roma said.
“Even during the financial crisis, inflows of money in the Philippines from Filipinos working abroad were still there,” she added. -- Daniel Anne Nepomuceno-Rodriguez
Ms. Roma presented the highlights of a focused group discussion initiated by the CFO last February, which had 17 individuals from banks, remittance companies, money transfer companies, local government units, families of OFWs, and members of the academe.
“Cash pick-up and other instant money remittance encourage consumption,” Ms. Roma pointed out.
Remittances from some 10 million Filipinos overseas prop up the peso and drive consumption. Last year, remittances grew by 8.2% to $18.76 billion.
Ms. Roma said the government should start financial literacy programs for OFWs to channel remittances into activities that support economic growth.
A bank executive agreed. “Through financial literacy programs, [we should] promote savings and financial discipline and channel remittances through savings accounts,” said Raul Marcelo D.L. Dimayuga, Bank of the Philippine Islands senior vice president and global remittance group head said.
“Families receiving money abroad will have the chance to save and invest part of their remittances.”
At the same forum, University of the Philippines economist Ernesto M. Pernia noted that most OFWs come from richer regions, thus these regions receive more remittances than poorer regions.
“Bulk of the remittances go to richer regions, and poorer regions [get smaller shares] which contributes to worsening regional imbalance or inequality,” he said.
“Going out of the country is an expensive undertaking, Filipinos planning to go abroad need initial capital,” Mr. Pernia added.
Southern Tagalog, Central Luzon and Metro Manila are the biggest sources of OFWs, accounting for 16.4%, 14.7%, and 13.9% of the total respectively, data from the 2009 Survey on Overseas Filipinos showed.
Mr. Pernia said there should be a concrete development plan for the regions. “The government should give more attention to poorer regions in order to uplift their economic position,” Mr. Pernia said.
Meanwhile, Rolando G. Tungpalan, deputy director-general at the National Economic Development Authority (NEDA), said the government was looking at a 7% rise in remittances from Filipinos working abroad, the same as the Bangko Sentral ng Pilipinas’ (BSP) lowered forecast amid unrest in the Middle East and North Africa.
He said the 7% target was attainable. “I believe that the share of remittances from other countries is still larger than what we are getting from those who are working in MENA region,” Mr. Tungpalan said.
Citigroup has lowered its growth forecast for remittances to 4.8% from 6-6.5%. Yesterday, ATR KimEng Securities, Inc. economist Luz L. Lorenzo said growth could even slow down to 3%.
“I don’t think we’ll be able to deploy as many Filipinos as before because of what’s happening in Japan and in the Middle East,” she said.
In 2010, remittances from the Middle East reached $2.96 billion, 15.79% of the total $18.76 billion. In February, the central bank said in a press release on the 2010 remittance data that the major remittance sources last year were the United States, Canada, Saudi Arabia, the United Kingdom, Japan, the United Arab Emirates, Singapore, Italy, Germany and Norway.
“[The BSP] was right to lower the projection. [The 7% target] is sustainable,” Rizal Commercial Banking Corporation Senior Vice-President Marcelo E. Ayes said.
“Although emerging markets are doing good, advanced economies like the US and EU are slowing down. There are also unfolding events in Syria and Bahrain; there are still threats in the Middle East. It may get worse,” Mr. Ayes noted.
“We will not reach double-digit growth or close to double-digit growth for remittances,” he added.
For his part, Mr. Pernia said prolonged unrest could eventually hit remittances.
“If political disturbances will persist in MENA, definitely we will see lower remittances from OFWs. More and more Filipinos might go back here in the Philippines because of the situation,” Mr. Pernia said.
The CFO’s Ms. Roma told BusinessWorld at the sidelines of the Ortigas forum that the 2007-2008 global financial crisis had shown that OFW remittances were resilient.
“At first, we were looking at a lower remittance or a flat remittance this year. However, our study showed that Filipinos were still able to send the same amount of money or even more despite problems overseas,” Ms. Roma said.
“Even during the financial crisis, inflows of money in the Philippines from Filipinos working abroad were still there,” she added. -- Daniel Anne Nepomuceno-Rodriguez
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