Tag Archives: Central Bank Governor Tetangco

Remittances: Our Nation’s Lifeblood

by Cynthia de Castro/AJPress
The past three decades have seen the most dramatic number of Filipinos migrating to other countries to work as overseas contract workers. There are now more than 11 million overseas Filipinos worldwide, equivalent to about 11% of the total population of the Philippines. These overseas Filipinos often work as doctors, nurses, accountants, IT professionals, engineers, architects, entertainers, technicians, teachers, military servicemen, students, caregivers, and domestic helpers. Many of them eventually become permanent residents of other countries.

Money sent by the overseas Filipinos back to the Philippines thru remittances has made a significant and considerable contribution to the Philippine economy. By providing a steady stream of dollars in the market, remittances have helped stabilize the peso and boost the economy through consumption and investments. Last year in 2007, the OFWs remitted around US $14.45 billion, up from $13 Billion in 2006 and more than $10 billion in 2005.

Because of the role that they play in propping up the economy through the money they send home, the migrant Filipino workers abroad have been referred to as the Philippines’ modern-day heroes.

The Philippine Central Bank announced a few days ago that remittances from Filipino workers overseas grew 24.6 percent in July to US$1.366 billion — the fourth month in a row that money sent home from abroad posted double-digit growth. The July inflows brought remittances for January to July 08 to US$9.608 billion, up 18.2 percent from the same period last year. The strong inflows boost the likelihood that remittances for 2008 will hit US$15.7 billion as projected.

The bulk of remittances from January to July 2008 came from the United States, Saudi Arabia, the United Kingdom, United Arab Emirates, Canada, Japan, Singapore and Hong Kong.

In a study by Stella P. Go (2002) who studies the behavior of the remittances of migratory workers, it shows that there is no direct relation between the quantity of remittances and the geographical concentration of these workers. For example, Saudi Arabia, which is the major destination of overseas workers, only represents 5.4 % of total remittances; the United States, to the contrary, which has less than 1% of the migrant Philippine workers is the origin of 42.5 % of total remittances to the Philippines.

Perhaps, Filipinos who immigrate to the US earn more or have more income left over to send abroad than those OFWs from Middle East and Asian countries.

Karamihan kasi ng mga immigrants dito sa US, nasa health care industry, at kumikita ng mas malaki kaysa sa mga OFWs sa ibang bansa. And the health care industry is not much affected by economic recession,” said John, a resident intern in an LA hospital.

How do the families of OFWs spend the remittances? According to a study by the United Nations (INSTRAW study 2008), remittances are used to cover first the households’ basic consumption (food, clothes, electricity, etc.), education and health. When remittances are sent regularly, they can also serve to pay a domestic worker or a person who will be in charge of dependent persons. For migrant parents, it is a priority to provide education to the children who remain in Philippines, while for migrant sons and daughters, to provide care for elderly parents is a priority in a context where public services are very poor.

When remittances are more than enough to pay the bills, the families invest for the future. In the same UN study, it was reported that after women succeed to cover basic consumption needs, education and health, they invest in a house or in land for agriculture. Men are inclined to invest in consumption goods, assets, or property. 

Without a doubt, the economic gains are the most tangible positive effect of labor migration for both the family and Philippine society. Foreign remittances have improved the quality of life for the average Filipino family. Within a short period of time, families and household have been able to buy appliances, improve their houses or buy new ones, finance the education of their children or siblings and for some, start a small business. Because of these economic gains of labor migration, thousands of Filipinos continue to leave the country everyday to work overseas.

The Central Bank sees the trend rising even higher in the coming months and years. For example, from January to July 2008, nearly 762,000 Filipinos left the country to work abroad, up by 28.2 percent than in the same period of 2007. “This reflected foreign employers’ preference for Filipino workers who remain competitive due to their skills and proficiency in the English language,” said the Central Bank.

Central Bank Governor Tetangco said workers’ deployment abroad may rise further as a result of the recently concluded arrangement among the 10 members of the Association of Southeast Asian Nations, including the Philippines, to standardize and regulate professional standards for accountants, dentists and medical workers. The arrangement will facilitate professionals’ mobility in the region, he added. Discussions continue between the Philippines and prospective employers in France, Canada, Australia, Saudi Arabia, Norway and Finland for possible deployment of more professionals from the nursing, information technology, and engineering fields, he said.

The remittance boom is partly a product of a period of very rapid global growth that increased both demand for Filipino migrant labor and the earnings of the huge Filipino community in the US, the largest single source of remittances. However, there are some fears that this rise in remittances from the US might not continue for long, specially with the looming US recession.

This was belied, however, by a Western Union agent interviewed by Asian Journal. “Our regular customers have not decreased their remittances to the Philippines,” said Fae, who works in a Western Union remittance agent store in Eagle Rock. “Many of the Filipinos who come here send money weekly or bi-monthly to their families. Even when the gas prices went up, the remittances were not affected,” she reported.

This is certainly good news for the Philippines. First, spurred by remittances, the peso’s increased value has raised people’s confidence in the currency and overseas Filipinos have begun to remit their earnings and savings, not just for basic necessities, but for investments as well. Secondly, the higher the peso, the more dollars have to be remitted to meet the school, food and other peso bills of families back in the Philippines. Thirdly, remittances are expected to continue to increase from the oil-rich states of the Gulf, the second largest source of money from abroad.  And fourthly, East Asian demand for Filipino labor remains high; so the exodus of OFWs, and with it, foreign remittances are expected to continue to grow even more considerably in the near future.  (www.asianjournal.com)

 

1 Comment

Filed under Uncategorized