$3B in OFW remittances eludes banks
Thursday, October 27, 2005
As much as $3 billion in cash sent home by overseas Filipino workers is still coursed through non-bank channels such as couriers, Governor Amando Tetangco of the Bangko Sentral ng Pilipinas (BSP, the central bank) said Wednesday, citing findings of a government study.
Banks are expected to capture $10.3 billion in OFW remittances this year and will likely capture a bigger proportion as the money inflows continue expanding in the years ahead, Tetangco said.
“As we are able to improve remittance systems and able to use technology, we’ll see more and more portions of these remittances into the banking channel,” he told a forum of foreign correspondents.
The OFW money that elude banks still benefits the economy as a whole, Tetangco noted. “It still goes into the country, still goes to consumption and other uses in the economy.”
“That’s why in the BoP [balance of payments], we try to capture some of that by assuming there’s another 20 percent that is being coursed through non-banks,” he said.” That’s a conservative estimate, because the survey shows it’s somewhere between 25 and 30 percent.”
The Department of Labor and Employment did the study on OFW remittances, together with consular offices abroad.
To encourage use of banks in sending OFW incomes home, the BSP is asking banks “to come up with products that OFWs can use, for those who don’t have the time or inclination to go into business,” Tetangco said.
He said the central bank was also studying ways to link OFW inflows with microfinance. “The $10 billion is a big account and we have a lot of people in the countryside that are potential entrepreneurs,” he noted.
“Looking forward, we see that there’s still potential for further expansion in the industry, for a number of reasons,” Tetangco said. “One, there is increasing demand especially from countries whose populations are aging,” Tetangco said.