Gov’t urged to link lower US remittance fees to new RP-US free trade agreement

Should Manila decide to work out a possible new free-trade agreement with Washington, Cebu Rep. Eduardo Gullas said the Philippine government should also consider getting from the US a side deal – an executive-level action plan that would pave the way for reduced US bank charges on Philippine-bound remittances of Filipino workers in the US.

"This is one way of putting lower remittance charges on the agenda of RP-US relations," said Gullas, who has been pushing for lower remittance fees.

"We believe an executive-level RP-US action plan to soften remittance charges by as much as 50 percent is absolutely doable, if (the Philippine) government works hard enough for it," Gullas said.

Bangko Sentral ng Pilipinas (BSP) records show that of the $8.5 billion sent home by overseas Filipino workers (OFWs) in 2004, about 57 percent or $4.8 billion came from the US.

This year, the National Economic Development Authority (NEDA) sees OFW remittances hitting $10 billion to $12 billion, of which between $5.7 billion to $6.8 billion would come from US.

OFWs pay anywhere from $15 to $26 in transfer fees for a typical $200-remittance, according to a US State Department study.

A separate International Monetary Fund (IMF) survey pegged at 13.5 percent the average transaction cost of remittances to the Philippines.

"This implies that US-based Filipino workers alone will pay between $770 million to $918 million in remittance charges this year. And a 50-percent cut in fees will mean $385 million to $459 million in cost-savings for hundreds of thousands of workers and their families here," Gullas said.

"The surest and simplest way to maximize the economic benefits of remittances is for government to push for cheaper remittance fees. This way, the struggling families of our migrant workers will actually have more money to spend for consumption, or to save and invest here," Gullas pointed out.

In March, US Assistant Trade Representative Barbara Weisel urged the Philippines to sign a bilateral free-trade agreement with Washington to boost the Philippine economy and keep it globally competitive.

In July, the Philippine government commissioned the state-supported think-thank, the Philippine Institute for Development Studies, to look into the impact and prospects of such an agreement on the general economy and on specific industries.

Gullas said Mexico and the US previously forged an executive-level action plan to spur economic development in Mexico, and the deal included lower transfer fees on the home-bound remittances of migrant Mexican workers in the US.