Foreign Currency

On average, overseas Filipino workers (OFWs) are charged 10.57%  for every $100 that they remit. Bertiz wants this lowered to 5%. He argued that banks can still reduce remittance charges, noting that non-bank remittance centers are charging as low as 3% in fees.

“Reducing the cost of bank remittance services to 5% would mean some $1.5 billion or P80.1 billion in cost-savings and extra money in the pockets of our migrant workers and their families every year,” he stated.

Slashing remittance fees would help ease OFWs’ financial struggles brought about by rising prices at home.

The country’s inflation rate shot up to 5.2% while the peso hit the P53-to-$1 level in June. The latest inflation rate beat both government and market forecasts. The government’s inflation forecast was earlier set at 2% to 4% for 2018 to 2022. The inflation outlook for 2018 was later adjusted to 4% to 4.5%.

The higher prices of goods offset OFWs’ gains from the increasing peso value of their foreign currency earnings.

 

Remittance Numbers

2017 data from the Bangko Sentral ng Pilipinas (BSP) show that cash remittances coursed through banks amounted to $28.1 billion while $4.9 billion was coursed through non-bank remittance centers.

This shows that Filipinos still choose to remit money through banks. This despite the growing number of non-bank remittance centers, and the latter with fees as low as 3%.

Cash remittances increased by 4.3%, while personal remittances grew by 5.3% to $31.29billion, exceeding the government target of 4%.

Remittance from OFWs is the country’s 2nd most significant source of foreign exchange. This is topped only by revenues from the business process outsourcing (BPO) industry.

Last year’s personal remittances accounted for 10% of the country’s gross domestic product (GDP) and 8.3% of gross national income (GNI).

Most of the cash remittances for 2017 came from the US, UAE, Saudi Arabia, Singapore, Japan, the UK, Qatar, Kuwait, Germany, and Hong Kong. Combined remittances from these countries amounted to almost 80% of total cash remittances for the year.

The Philippines ranks as the world’s 3rd largest recipient of personal cash remittances, behind India and China.

 

Bill to Protect OFW Remittances

Meanwhile, Rep. Aurelio Gonzales Jr. of the 3rd District of Pampanga filed a bill to protect OFW remittances.

House Bill 4740 recognizes the vital contribution of OFWs to the economy through their foreign exchange remittances. It also notes that beneficiaries receive reduced amounts of remittances because of steep fees.

Given these realities, the bill seeks to end the imposition of high remittance fees by limiting the amount charged to OFWs. It provides for discounts on remittance fees and gives tax incentives to establishments giving discounts to OFWs. The bill encourages establishments to grant loans to OFWs and directs government agencies to provide financial education to OFWs and their families.

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