Lower remittance costs for overseas Filipinos seen

WASHINGTON — Overseas Filipinos are likely to save between $500 million and $1 billion annually in remittance costs to the Philippines because of lower transaction rates under new Philippine-US cooperative mechanisms, the Philippine Embassy here said.

These mechanisms include a Cooperative Development Program between the Philippines and the World Council of Credit Unions which will connect Filipino credit unions to the international remittance network of WOCCU.

The cooperative program to be established with a recently approved $3.7-million grant from the US Agency for International Development, will enable Philippine credit unions to provide international remittance and shared branching and settlement services to their members.

Due to the wider reach of credit unions in the Philippines, particularly in remote areas where there are no banks, large communities will now have access to alternative remittance channels, said the Philippine Embassy said in a statement last Friday.

Discussions are currently going on with the US Federal Reserve for the Philippines to be connected to direct payment links and international automated clearing house services which will significantly lower the cost of electronic transfers from banks in the US for remittances and other payments to the Philippines, the statement said.

President Arroyo, expressing her appreciation to the US government for its help, said these initiatives will benefit millions of Filipinos overseas.

"Moreover, they will boost our economy which, in turn, will enable us to pursue more national development programs, especially in the countryside," she said.

President George W. Bush announced the project to facilitate the flow of remittances to the Philippines from the US and around the world during President Arroyo‘s state visit to Washington in May 2003.

A study of the Asian Development Bank said almost half of about $7 billion in remittances reported to the Bangko Sentral ng Pilipinas in 2002 came from the US and Canada.

However, the ADB contends that with the total number of overseas Filipino emigrants and workers estimated at 7.5 million and a reasonable conservative estimate of an average remittance of $200 ten times a year, these estimates would establish a total market size of $14 billion to $21 billion.