DBP to launch OFW hedging facility

After opening a hedging facility for Philippine exporters seeking protection from a strong peso, the Development Bank of the Philippines (DBP) is introducing another facility that will serve the overseas Filipino workers (OFWs).

The government-owned financial institution said the hedge facility is designed not only to cushion the impact of the strong peso but also to offer a number of investment options.

The facility calls for a “forced” savings on OFWs where a portion of their remittance could be set aside on a monthly basis. It will then be placed in a fund that can be accessed as collateral in the event they decide to become entrepreneurs.

The basic concept of the OFW hedge facility is not only to allow migrant Filipinos a facility to send their remittances to beneficiaries but is also designed to offer small business opportunities.

DBP president and chief executive officer Rey G. David said overseas Filipinos should not only send remittances but also think long term. “The idea is for our OFWs to transcend.”

DBP is a relative latecomer in the remittance business among banking institutions although it is optimistic in cornering a bigger a piece of the market.

Remittances have been growing by double digits over the past few years, estimated to surpass the $14-billion level in 2007 from $12.6 billion in 2006.

Early last year, DBP established DBP Remittance Center HK Ltd. as its wholly-owned subsidiary to undertake both remittance and trade business in the Asia Pacific region.

It has likewise entered into an agreement with the Department of Labor and Employment and the Overseas Workers Welfare Administration to ensure the legality as well as the legitimacy of the OFWs.