MANILA, Philippines – A survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed that more and more beneficiaries of overseas Filipino workers (OFWs) are turning to savings and investments as the central bank stepped up its advocacy on the productive use of remittances.
Rosabel Guerrero, director of the BSP’s Department of Economic Statistics (DES), said the central bank’s advocacy on the productive use of remittances from overseas Filipinos are now bearing fruit as more beneficiaries are learning to save and invest more.
“We have to educate OFW beneficiaries to channel remittances to more productive uses. We have put that advocacy on top of our agenda,” Guerrero stressed.
She pointed out that results of the BSP’s 2nd Quarter Consumer Expectations Survey (CES) showed that the percentage of households of OFWs that set aside money for savings has increased to 44% in the second quarter of the year compared to only 7.2% in the first quarter of 2007 when the first survey was conducted.
On the other hand, she added that percentage of households that used part of their remittance for investments reached 6.8% in the second quarter of the year from 2.3% four years earlier.
According to her, the savings and investments of OFW households would help them survive the impact of temporary developments such as the political tensions in the Middle East and North African (MENA) states as well as the disasters in Japan.
Guerrero said bulk of OFW households or 97.2% used remittances for food while more than two-thirds of households surveyed or 69.4% allocated their remittances for education.
Data also showed that 59.6% of the respondents used remittances for medical payments and 46.4% for debt payments.
Furthermore, the percentage that apportioned part of their remittances to purchase consumer durables, car or motor vehicles as well as houses and lots likewise increased.
The BSP has been encouraging beneficiaries of remittances from their loved ones working overseas to save and invest regularly to improve the financial condition of the Philippine economy.
BSP Governor Amando Tetangco Jr. earlier told participants of a policy forum on Overseas Filipinos – Diaspora Remittance for Development that there is a need to harness remittances from migrant and overseas Filipinos for economic and social development.
“While consumption generates economic growth, it is the allocation of remittances to savings and investments that will improve the financial condition of households and that of the entire economy in the long term,” Tetangco stressed.
According to him, there is a need to establish a roadmap that would encourage OFW households to expand from pure consumption to include savings and investing regularly.
The BSP chief pointed out that the central bank has been working on a number of activities to mobilize remittances to fund productive activities and maximize the development potential of remittances.
For one, he said the BSP has encouraged and authorized commercial banks to offer specialized investment products and services to OFWs such as the mutlicurrency retail treasury bonds allowing OFWs to invest in bond instruments for as low as $100 or 100 Euros.
In 2008, he explained that the Land Bank of the Philippines and the Development Bank of the Philippines were authorized to promote hedging instruments and long-term negotiable certificate of deposits.
Furthermore, the BSP has conducted 48 financial lectures across the country for about 6,000 dependents of OFWs for the past five years.
It has also conducted 14 financial lectires abroad for nearly 2,000 OFWs in Hong Kong, Singapore, South Korea, Japan, Saudi Arabia, Bahrain, Qatar, Italy, and the United Kingdom.
OFW remittances went up by 8.2% to a new record level of $18.8 billion last year and contributed about 10 percent of the country’s domestic output as measured by the gross domestic product (GDP).
The BSP has lowered the growth target for overseas Filipino workers’ (OFW) remittances to 7% or $20.1 billion instead of 8% or $20.1 billion this year from 8.2% to a record $18.76 billion last year due to the political tensions in the MENA region as well as the disaster in Japan.
The growth is expected to further slowdown to 5% or $21.1 billion next year.
The World Bank estimates remittance flows across countries have grown by almost two-fold in the past seven years to $414 billion about 76% of which went to developing countries including the Philippines.
OFW remittances have grown at an annual average of 14.2% over the last six years due to the strong demand for skilled Filipinos abroad.