Former secretary of National Economic and Development Authority (NEDA) Cielito F. Habito said that the OFW money is the best source to introduce another dimension of capital market in the community-based level.
That's why he suggested that private sector players, together with LGUs can introduce a facility that will help the struggling businesses especially the micro and SME players to access capital resources.
"There are so much money coming from OFWs, this should be utilized properly. In fact, it is fueling the country's economy through personal consumption and expenditures. Some of this may be used as investment in capital market," Habito said during the Pearl 2 and BusinessWorld Forum on employment generation dubbed "Mobilizing SME Resources to Increase Employment" held at the Cebu City Marriott Hotel recently.
OFW money can be invested through floating bonds, to be organized by established organizations, such as private sector led group and the LGU.
He said there are a lot of ways to fully utilize the overflowing money coming from OFWs, this cannot only be deposited to banks, but this money can be used and invested via lending or credit facility instrument that can help SMEs expand their businesses.
Currently, banks are still hesitant to lend to businesses, more so, the micro and some SME players. Introducing an instrument in the community level could help the small business thrive amid the challenging economic landscape in the country.
He said the capital market in the Philippines is slowly changing. Large companies are shunning their dependence on banks to provide financial resources, but most big corporations are now opting to get financial aid through the capital market.
SMEs can also take advantage of the capital market option, if there is a facility available for them, Habito said.
Already in Luzon, this concept has been adopted, tapping the money from the OFW to float a bond organized by a private sector organization, and local government units.
This could be duplicated in other places, like in Cebu, Habito said. Most OFWs now, or the dollar earner Filipinos are looking for higher yield investments rather than those instruments offered by the banks which provides thinner interest rates return.
Getting together the OFW money through a three-year or five-year bond investment instrument could not only provide higher money yield for OFWs, but can also help the companies survive the crisis with available financial assistance.