The season of remittances

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By Atty. Ignacio R. Bunye

Speaking Out

Sunday, December 22, 2013

DECEMBER is always an exciting time for Filipinos. While employees get their bonuses, families of overseas Filipino workers await remittances from their loved ones abroad, who are usually more generous during this time of the year.

Statistics from the Bangko Sentral ng Pilipinas (BSP) shows that cash inflow from overseas Filipinos (OFs) in the past two decades tends to spike every December. This influx of foreign exchange is usually followed by the rise in consumer spending as households prepare for their Christmas celebrations.

Since 2003, there were only two times when the remittance rate wasn’t highest in December - in 2005 and in 2008.

In 2012, cash remittances from OFs in December reached US$1,974,528.00, the highest recorded for a month in that year. This year, there’s a huge possibility that we will even go beyond that at the rate we have been going during the past 10 months.

The BSP announced last Monday that personal remittances from OFs crossed the US$ 2 billion mark in October, the seventh consecutive month it did this year. The US$ 2.3 billion that we received that month is also the highest posted in 2013.

So far, we have accumulated US$ 20.5 billion worth of personal remittances for the period January to October 2013. Converted to peso, that’s already P912 billion, roughly three times the Php 361 billion needed for the post-Yolanda rehabilitation, as estimated by the National Economic and Development Authority.

The government has always acknowledged the great contribution of remittances in our economy, and its impact is felt not just every December but all year round. This is why Filipinos working overseas are called modern-day heroes.

The salaries and wages they earn abroad and send here make up 11 percent of our economy. Through their hard-earned “padala,” they are able to stabilize our currency and also trigger economic activity as their families use the money to consume goods and services, start businesses, or make investments.

Who are these modern-day heroes? According to a survey done by the Philippine Overseas Employment Authority (POEA) last year, we had about 2.2 million Overseas Filipino workers (OFWs) with work between April to September 2012.

Among the occupation groups, the laborers and unskilled workers (31.3%) were highest in number but the professionals (12.4%) sent higher remittance, which amounted to as much as Php24.8 billion.

Eighty percent of OFWs are in Asia, with Saudi Arabia as the most preferred destination. Of all the remittances that year, 70 percent came from this group, while the rest came from Europe (12.8%), North and South America (10.6%), Australia (3.2%), and Africa (3.1%).

This year, our OFWs are performing better remittance-wise due to the sustained demand for skilled and professional Filipino manpower overseas. New data shows a 5.5 percent increase in remittances from land-based workers with long-term contracts for the first ten months of the year. Sea-based workers and land-based workers with short-term contracts have also transferred money more frequently by 7.5 percent.

The BSP, recognizing the contribution of OFWs in our economy, has gone beyond just monitoring their remittance activity. It has created an interactive portal that enables safe, and immediate transfer and settlement using the BSP’s PhilPaSS. This system developed by the IT Sub-sector of BSP utilizes PhilPaSS to conduct electronic settlement of overseas Filipino (OF) remittances. What happens is that the cash is received by overseas branches or correspondent banks and partner remittances agencies abroad of participating commercial banks, government-owned banks, and thrift banks then this is credited to beneficiary accounts maintained with other banks in the Philippines.

The development of PhilPaSS is part of the advocacy of the BSP to encourage the use of formal channels, like banks, in transferring money to the Philippines to avoid remittance fraud and mishandling.

Making it easier, cheaper and safer for OFWs to remit their hard-earned income to their loved ones in the Philippines is the least that BSP can do for our modern-day heroes.

Note: My book, Central Banking for Every Juan and Maria is now available in main branches of Fully Booked, Power Books, National Book Store, and University of the Philippines Press.


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