OFW remittances in peril
By Iris Gonzales, The Philippine Star
Posted at 07/20/2015 8:39 AM | Updated as of 07/20/2015 10:26 AM
http://www.abs-cbnnews.com/global-filipino/07/20/15/ofw-remittances-peril
MANILA – Alarmed over the move by developed countries to shut down remittance firms due to suspicions that these are being used to funnel funds to terrorists, the Philippine remittance industry is appealing to the Aquino administration and multilateral agencies to intervene.
Since last year, at least four countries – the United States, Australia, New Zealand and United Kingdom, which have large population of overseas Filipino workers (OFWs) – have shut down remittance firms, supposedly to fight terrorists.
Specifically, the banks in these countries are closing the accounts of money transfer operators, restricting the flow of remittance from these nations.
Two of the country’s biggest remittance organizations – the Association of Bank Remittance Officers, Inc. (Abroi) and the Association of Private Remittance Services Companies Inc. (Appraise) have banded together to jointly ask the Bangko Sentral ng Pilipinas (BSP) as well as the World Bank and the Asian Development Bank to formally appeal to these developed countries which have shut down their respective remittance business.
I-Remit, a listed remittance company which is part of Appraise, said the industry is appealing to authorities to initiate government-to-government discussions.
“We’re hoping for government-to-government discussions on how to help make remittance flow easier with the situation,” I-remit chairman and chief executive officer Bansan Choa said on Friday.
In 2014, the cash remittances of OFWs amounted to $24.3 billion, increasing by 5.9 percent from the $22.9 billion of money transfers. The increase in remittances is still mainly due to continuous deployment of Filipino workers in various countries abroad.
This year, however, the cash transfers of overseas workers experienced a slowdown in the first two months at one half percent in January and 2.4 percent in February. It was only in March and April that the growth rate recovered to 5.5 and 5.4 percent, respectively.
I-Remit said the slowdown is a sign that Filipinos abroad are now remitting in lesser amounts and less frequently.
This may be attributed to the move by big foreign banks in some countries to close the accounts of both bank-owned and independent money transfer companies, effectively denying them access to banking services and the use of international fund transfer facilities.
“Thus, Filipinos have to rely on the services of banks that charge higher fees which will lessen the amount sent to their families. Because of the higher bank charges, they also tend to send less frequently to save on cost,” said Harris Jacildo, I-Remit president and chief operating officer.
Former senator Manny Villar, known for helping OFWs, was among the first to call the country’s attention to the problem in August last year.
He said the possible disruption on the flow of remittances should serve as another reminder that the government cannot and should not consider labor export as a permanent fixture of the economy.
“The government should intensify efforts to generate decent jobs here, such as more long-term investments in manufacturing and other industries,” Villar said.
Choa said BSP Governor Amando Tetangco Jr. has raised the issue to the World Bank, which has long recognized the important role of remittances in an economy.
In an October 2013 report, Kaushik Basu, senior vice president and chief economist of the World Bank, said remittances “act as a major counter-balance when capital flows weaken, as what happened in the wake of the US Fed announcing its intention to rein in its liquidity injection program.”
“Also, when a nation’s currency weakens, inward remittances rise and, as such, they act as an automatic stabilizer,” Basu added.
Choa said the problem is not only affecting the Philippine remittance industry but the whole international money transfer sector as well.