Villar presses for repatriation

May 15, 2008

As the voices of protest and demands for repatriation get stronger, Senate President Manny Villar has also shown solidarity towards the Overseas Filipino Workers (OFWs) and is pushing for the establishment of a P1 billion fund to provide for early repatriation and adequate assistance to Filipinos in distress. Villar said that adequate measures should be taken to ensure the welfare of millions of OFWs who are living away from home. He said that the constitution, the Labor Code, the migrant workers act and several other executive orders are intended to safeguard the interests of the OFWs but despite this the OFWs continue to live in distress. He further added that the reports of maltreatments, harassments and abductions have swelled in the recent past and the Philippine embassies and consulates have been home to several such distressed OFWs. He made an important point when he said that the funding for repatriation and assistance are intended only for legal OFWs and not for all. He called out for a change in this to protect every OFW. Villar has filed Senate Bill 2231, that seeks to cover both documented and undocumented OFWs in the assistance program of the government. It also adds a special mechanism to reduce the plight of the OFWs by creating a P1 billion Special Fund which can be used for repatriation, medical expenses and migration fees for overstaying Filipinos. A welcome gesture for sure!


Business guide for the OFWs

May 14, 2008

The Commission on Filipinos Overseas (CFO) has developed a compilation called the Investment and Business Guide for Overseas Filipinos which is aimed at helping the overseas Filipino workers (OFWs) to learn about the abundant business opportunities that they can avail for a better future. This would not only help the Filipinos to turn towards investment but would also make the Philippines, an investor friendly country. The idea is to serve those OFWs who have earned a considerable amount away from home and are looking at the prospects of returning and investing in their native land. The Commission for this purpose has identified major investment areas that gaining ground in the country, these include, development of tourism, leisure facilities, investing in franchise among others. Also on the list are export and agribusiness, oil industry, asset and property management, etc. for those thinking of investing in the rural or semi urban regions the compilation includes information that would help the OFWs to choose from a wide ranging variety.


As for those who are not too sure about the whole investment business but are keen on investing their money back home, the compilation is a boon as it not only gives afar ranging idea about investment but also focuses on various aspects such as, application for licenses, registration, and accreditation of specific business entities.

Dirty money

May 13, 2008

The latest data issued by AMLC reveals that of the 18,269 suspicious transactions the Anti Money Laundering Council flagged for the last years, none of these are linked to the formal or informal flows of earnings by the OFWs. In recent times, cases of frauds and irregular transactions have been quite rampant. The data however puts the OFWs in a safe position as they appear compliant to the money laundering regulations.


According to World Bank ranking, remittance flow to the Philippines is the world’s third largest. As the remittances become the backbone of the Philippine economy, it becomes increasingly important to monitor the remittance flow. It has however become quite difficult to keep a vigil eye on this since the whole business of money transfer is no longer controlled by the banking institutions. Technology is playing a big part and the need to develop new technology to find solution to the problem has got intense. Mobile remittance in way reduces chances of frauds as the statements are widely available and the money is not carried in person.


But as the OFWs get kudos for discouraging the whole concept of dirty money, news of a man admitting to transferring around US $15 million to bank accounts owned by co-conspirators in the Philippines comes as a bolt. As they say one rotten apple spoils the barrel!

Investment worries for the OFWs

May 12, 2008

The Overseas Filipino Workers (OFWs) have often found themselves supporting their families by saving some money and planning for a better future. In the present day however the OFWs are concentrating on finding ways that would help them to utilise their hard earned money properly. Most OFWs are now trying to explore ways by which their money can be invested in their own country where they would return once they have the means to support their families. But the lack of awareness on the subject has left them clueless. The OFWs are unsure about the future of their savings and investments. They often find themselves wondering whether investing in a particular sector would reap more benefits or whether saving their money would be the right decision.


Experts believe buying a residential property is the best that the OFWs can do to save their money and acquire an asset that would benefit them in the long run. Property, they say could be a hedge against inflation. Considering the rise in the demand for better investment solutions several property development companies and consultants are now venturing into the arena and catering to the demands of OFWs living in countries like the UAE, US and Japan. The OFWs too have been taking full advantage of the situation and are availing the facilities provided by them.

Measures taken by the Philippine government

May 8, 2008


In wake of the sudden changes that have rocked the entire Philippine economy, the government has now decided to take some preventive steps to put brakes on the speculations that are doing the rounds that the economy is going to stagnate if the US economy does not recover soon. The high prices of essential commodities including rice which is a staple diet brought a lot of criticism for the government which failed to gauge the magnanimity of the problem. But all’s not lost and the government is now trying to make up for the loss that it suffered in the recent past.


The government recently launched Certificates of Deposits (CDs) and is now looking into retail treasury bonds. Philippine Consul General Domingo Nolasco has said that the government is seriously looking at encouraging the Overseas Filippino Workers (OFWs) to invest in the housing sector. The Central Bank has also initiated a financial literacy campaign to promote OFW investments.


But it is still not clear whether these initiatives would fetch results because the steps have been proposed and not implemented. Once they are put into practice it would be interesting to see whether they actually help the economy or not. The recent hedge funds for instance met with a lot of criticism because they seemed to be targeting just the business houses and the remittance firms and not the common OFW who has to bear the brunt of the economic pressures that are brewing across the globe.


May 7, 2008

G cashIt is indeed interesting to see how the remittance business has evolved over the years and an array of facilities has come to aid this thriving industry. G-Cash is again a success story in itself which has become a trendsetter of sorts. Launched in 2004 the service has now grown quite stupendously and there are around 5000 retail outlets and more than 500 G Cash partners across India.


Initially when it started out there were just three anchor services, international and domestic remittance, P2P transfers and payments for retail purchases. G Cash brought in a series of revolution and enabled the subscribers to be m-Commerce enabled. The best part about it has been the facility that the non card holders avail from it. It enables its subscribers who may not have a card or bank account to get benefits from the service. By doing so it has attracted a lot of subscribers who could not avail a lot of facilities before.


Again unlike SMART which operated jointly with BDO, Globe keeps a record of all transactions and arranges settlement between the retailers and the G-Cash customers. Needless to say it ahs gain a lot of popularity and is a preferred choice any given day. It is valid in countries like India and Philippines which receive high volumes of remittances every year.

Remittance in Salvador

May 7, 2008

Countries like Peru, Chile and El Salvador are still dependant on the money that comes from the migrants living abroad. El Salvador in particular has been the first lower-middle-income country to receive a grant from the United States’ foreign aid program which is aimed at helping the financially weaker nations. For the millions of Salvadoran immigrants living in the States any change in the United States’ policy with regards to their native country has been viewed quite acutely to brace themselves up for the potential repercussions.


The Salvadoran immigrants like their Philippine and Indian counterparts too want to be a part of their economy’s growth. But despite remitting a large amount of money each year the situation has not really changes much. The country continues to live in poverty and the immigrants fear the possibility of emergence of a trend that would depend on the immigrants for the development of their homeland. The scenario is quite ironic in the sense that Salvadorans off late have stopped seeking work and started depending completely on the remittance that they receive from their relatives living abroad. As a result, Salvador now imports workers from neighbouring countries. These people quite understandably don’t realise the threat of recession and have not yet woken up from their slumber. Consumerism too has become a cause of worry with Salvadoran immigrants increasingly exhausting themselves to buy expensive goods for the lure of the brands.


Today El Salvador is the largest per capita recipient of remittances in Central America and has the lowest economic growth among the Central American countries. World Bank has been suggesting measure such as, providing incentives for investment and developing human capital to combat the adversary. It would be really interesting to see how the recession affects the country now.

Peso vs. Dollar

May 6, 2008

Philippines has traditionally been a consumption-led economy. It has depended on Foreign Direct Investments (FDI) and remittances sent by the OFWs to meet its needs. As the economists around the world predict doomsday for America, the world watches silently the sudden turnarounds of events which are threatening countries like Philippines.


If we take the twin case of peso-dollar exchange rate and the remittance from overseas workers it gets quite apparent that the impending economic slowdown is going to cripple the economy. The peso unlike the Indian rupee has not been appreciating as much. The Central Bank of the country has said that it is allowing market conditions to prevail. In other words it is following the wait and watch strategy. The income of the OFWs is not elastic to combat the situation which has resulted in the sharp increase in the prices of almost everything. The peso lost around 30 per cent of its value against the dollar last year and with economies of several Asian countries like Japan, Singapore, Taiwan, Hong Kong and so on facing economic slowdown the situation is evidently acting against the Philippine economy.


The bankers are predicting that the peso dollar exchange rate will reach P38 which is an alarming piece of news itself. The scenario calls to mind the Asian Crisis of 1997 which sent shock waves across Asia. Philippines at that point of time took much longer to recover as compared to its neighbouring countries which also suffered loss. The scene is not going to be too different this time around which is quite worrisome.  

Productizing Remittances: The way ahead

May 5, 2008

Globalisation has turned the world into a global village thereby simplifying the problems of demand and supply mechanism which gave rise to extreme poverty in the developing countries in the last century. Today the economies are well aware of the benefits that can be reaped through a mutually beneficial set up to suit both the developed and the developing countries. Consequently, the developing countries have provided the manpower required by the developed countries while the developing countries have boosted these weaker economies by the virtue of the purchasing power that their currencies have. Such an arrangement has helped the weaker economies particularly, the Asian and south American countries to spend the remittances on improving their infrastructure. In today’s times when the supposedly powerful dollar is losing its sheen due to the recession problem the focus has shifted towards formulating an approach that would provide value to money. Productising of remittances is one such approach which is aimed at cutting costs and increasing the purchasing power of the remittance.


This approach is aided by the innovative services offered by the intermediary businesses which come up with some new offers for the remitters. Under such an arrangement the remitter gets to buy products and services of his country either for himself or for his family members and friends. This is a rather simplified approach since instead of just sending cash the sender gets to instantly buy the products or services he wishes to buy with that money. So if an OFW wants to build a house in Manila for his family he would be able to send building materials instead of cash.


This system is gaining a lot of popularity and becoming a hit with the migrants since the cost of money transfer is virtually eliminated and the waste and misuse of money considerably lowered.



Better banking solutions for better remitting

May 2, 2008

Statistics show that most migrants in the US belong to the lower strata of the economy having limited means and a family to support. These migrants hope to have a better life in the developed countries. They transfer money to their families by accessing their bank facilities but sometimes the whole exercise of remittance becomes so pricy that many find it difficult to avail the facilities.


As we turn the world into a global village and encourage the influx of migrant labourers in the developing countries the need to systematise the technological aspects and enabling the migrants to take full advantage of the facilities available becomes important. It is therefore, important to develop cheaper technologies to cut the costs of account-to-account transactions. In this regard, the financial institutions like small banks, credit unions and micro finance institutions have to play an important role. This would help in transforming the remittance clients into clients of financial services. If the financial institutions in countries from where remittances are made and the ones which receive them work in unison the whole remittance business would benefit.


One thing that needs special mention is that most remittance recipients belong to the lower strata of the society. These people have limited financial knowledge and are mostly unaware of the investment opportunities they can have by using their money to invest in various sectors- thereby enabling the economy to become stronger. The financial institutions should focus on this and spread awareness.


As the global economy wakes up to a dawn of economic independence it becomes exceedingly important to educate the masses of the assets that need to be build to support the economy. In the next blog I’ll talk more on the potential the remittances have and the ways by which the government and the financial institutions can benefit from the whole remittance business.