With the continued deployment and employment of Filipinos in jobs abroad, it’s no wonder that remittances continue to rise. This year, the Bangko Sentral ng Pilipinas said that this figure will likely rise by another five percent to $23.6 billion, an assurance that remittances will be a strong pillar in the country’s economic growth for the next couple of years.
Money repatriated by 11 million working Filipinos abroad last year was already at $22.5 billion, making the Philippines the third biggest recipient of recorded money remittances in the world, next only to India and China.
No wonder then that so much attention has been given by our lawmakers and government executives on what to do with all this money. Some are worth a try, albeit with some refinements; others just need to be junked outright.
Lousy bills
An example of a lousy bill is one that had been filed early this year mandating Filipinos working abroad to send money back to the Philippines, otherwise they would not get their passports renewed. With the groundswell of opposition from the millions of overseas Filipino workers (OFWs), this would likely not flourish at all.
Another bill seeks an additional fee of $50 for every Filipino worker that gets an overseas job to be deposited to the Overseas Workers Welfare Administration (OWWA) Emergency Repatriation Fund to be paid for by the recruitment agency or employer.
While this is not a direct expense of the OFW, organized groups representing our migrant workers are aiming their protest against the OWWA, which they say has not been transparent about the use of its collected funds, now estimated to be at about P13 billion.
Remittance investments programs
There are other government initiatives that seem to be bearing fruit, and one of this is that of the BSP for OFWs. While its avowed broad goal is primarily to enhance transparency and promote competition in the market to drive down remittance charges, the central bank is also doing its share in encouraging OFWs to wisely spend and invest their earnings.
A BSP survey conducted recently showed that 46.6 percent of remittance-dependent households said that they put a portion of their remittances to savings during the second quarter of the year, a bit higher than the 45.4 percent in the first quarter.
Those families who actually set aside part of the remittances they received for investments also grew to 9.1 percent from eight percent. The numbers are still small, but the BSP says this is a big change already from 2007, when only 2.3 percent positively responded to the investment question.
Last year, the central bank partnered with the Commission on Filipinos Overseas (CFO) to promote investments and entrepreneurship among overseas-based Filipinos and their families. Both initiated also the establishment of the Remittances for Development Council to conduct programs on entrepreneurship and investments.
While the BSP is doing its share in protecting remittances largely through lectures and seminars, the private sector has also taken up the cause, either by holding free investment seminars in countries where there is a large population base of OFWs or by simply giving tips through the Internet.
Laws to encourage savings and investments
The current campaign to encourage OFWs – and even their families here in the Philippines – to save and invest is focused on changing mindsets. Given the number of Filipinos scattered across the globe, this partly explains why the progress of this program has been slow.
Would it not be better for our lawmakers to come up with more meaningful laws that will encourage savings and investments of remittance earnings? This way, OFWs who are returning back to the country can look forward to a more secure future.
It would be nice to have OFWs who leave for jobs abroad fill up a financial planner where they are encouraged to prioritize savings for the future. According to a survey conducted by the BSP, OFWs and their families are still appropriating most of the remittances to food, education, and medical expenses. This is basically spending for today’s needs, and neglecting to put aside money for the future.
In fact, about half of OFWs said that debt payments comprise a substantial amount of whatever remittances they send home. And after a contract term is completed, they will have to borrow money again to pay for fees that come with a new employment contract.
Part of the financial plan which departing OFW and his/her family will fill up would be an expenditure budget plan that includes estimated allocated amounts for savings and investments. When an OFW signs up for re-employment, there should be a “progress report” submitted on this financial plan.
Revisiting OWWA
Perhaps what the OWWA should expand its focus on us to long term financial planning by each and every OFW. This way, Filipinos will realize that their government is doing something for them in terms of securing their future, not just reacting to crises.
As an attached agency of the Department of Labor and Employment established in 1977, the OWWA has been largely criticized for being a bureaucracy that has fallen behind the needs of the times.
Its last biggest program was a P2-billion reintegration program with the Land Bank of the Philippines and the Development Bank of the Philippines for returning OFW members affected by employee retrenchments in their assigned country or war.
Eligible returning OFWs were given counseling on saving and financial management to help them manage and sustain their overseas earnings; skills training, retooling, and upgrading to promote their employability and competitiveness; employment facilitation services to help them in their job search, locally or overseas; and livelihood and enterprise development assistance for OFWs who want to set up businesses.
While there are complaints that this program had very limited success, there is already a template that can be expanded and used for all OFWs that will encourage savings and investing.
With this broader role, OWWA can truly claim that it is forward looking and not just crisis-reacting when looking after the welfare of each and every Filipino who goes abroad to work.
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