Land Bank extends support to the OFWs

In a move to help the Overseas Filipino Workers (OFWs) to remit money back home more conveniently, the Land Bank of the Philippines is now offering a high yield special deposit facility with an annual yield of 7% that would help the OFWs and their families to make more savings which in turn would help the OFWs once they come back to their country. In a statement issued by Land Bank President Gilda Pico said that the bank aims to issue around P2 billion worth of 5.5 year long term negotiable certificates of deposits, or LTNCDs and will be offered until May 16.

These LTNCDs will be offered in multiples of P20,000 but the maximum investment of P250,000 was set to ensure that the OFWs and their families stand to benefit more. This in a way is a win win situation for the OFWs who would be spending P13,699 to buy one unit of LTNCD and gain P20,000 after five and a half years. The LNTCD is indeed going to benefit the OFWs because not only is it free of the 20% withhold tax on interest on regular deposits, it also carries higher yields compared to the regular time deposits because it is subject to a lower reserve requirement of 2.0% under central bank regulations. Investors will be required to hold the security until maturity, unlike in time deposits, which can be pre terminated. Since, the LNTCD is negotiable, it can be used as collateral for bank loans or sold to another investor. Land Bank requires applicants to present documents to prove that they are OFWs or related to OFWs.

IOM comes up with a new project

The International Organisation of Migration (IOM) launched a P55 million project on remittance corridors in the Philippines and Indonesia. The project is aimed at improving research and inter regional information exchange on remittance corridors and national development in Southeast Asia and Europe. It will use three methods to establish remittance trends: research on remittance corridors, policy dialogues and pilot projects. The European Commission, through its AENEAS program, is funding IOM’s remittance project that seeks to identify links between migrant workers’ remittances and development. It is set for 18 months and is going to map remittance corridors for the Philippines from Italy, which has a population of 128,080 Filipino migrants. The research will be undertaken by the non-government group Economic Resource Center for Overseas Filipinos (ERCOF). It would also include remittances to Indonesia from the Netherlands and informal remittance flows from Malaysia to the Philippines and Indonesia.

Remittances came from permanent, temporary and undocumented Filipino workers, whose number reached 8.2 million in 2007. Filipino migrants can be found in 193 countries. But the growing concerns in terms of the remittance business are what the IOM is going to analyse. It will look at concerns like the high placement fees, expensive transfer costs, differences in the regulatory approaches and ways of strengthening financial literacy of the OFWs and their families.

OFW inflows jump 15% to $2.5 billion in 2 months

The Bangko Sentral ng Pilipinas (BSP) recently reported that the remittances made by the Overseas Filipino Workers (OFWs) back home rose by 15.5% to $2.5 billion in the first two months of the year from a year ago level. In February, the remittances rose to $1.3 bn or 16% higher than the figure recorded in the same month last year. The fact that the number of skilled workers living abroad has risen sharply is accounted as the possible reason behind this trend. Workers deployed in the first two months of the year rose 14.6% to 199,378.

Last year, the Philippine Overseas Employment Administration (POEA) reported an increase in the number of OFWs which comprised of a significant number of trained professionals, including, doctors, engineers and teachers. The trend as evident has continued in the first few months of this year as well. Another curious fact is that the number of both sea based workers and land based workers has also gone up. Another reason that can be attributed to this positive trend is the assistance provided by the local banks and other financial institutions working at the grass root level. These institutions have facilitated the increase in the volume of the remittances received by the families of the OFWs. As far as the source of these remittances is concerned, countries like the US, UAE, UK, Italy and Japan were the top countries where the OFWs are based at the moment.

OFWs dismiss OWWA claims

Days after the Overseas Workers Welfare Administration claimed that the orgainsation lost around P70 million in pre departure loans, a migrant workers’ group, Migrante International has shot back and accused the OWWA of covering up its failure in managing funds. John Leonard Monterona, Migrante-Middle East (Migrante-ME) regional coordinator said that the entire issue was yet another attempt to stop the welfare programs given to the Overseas Filipino Workers (OFWs). Previously, Labor secretary, Marianito Roque had said that he had decided to suspend the assistance after the OFWs failed to re pay the loans. Monterona believes Roque was forced to issue the statement after the lawmakers were about to investigate the alleged misuse of OWWA funds. He says the loans were suspended just after the OWWA Omnibus Policies was passed and implemented by the agency’s Governing Board. Migrante suspects that more hidden misuses and diversion of funds have been done or charged to OWWA fund. Monterona said that as the OWWA fund was perched at P10 billion mark it was prudent to consider lowering OFW membership fees at a time when prices of all commodities have gone up. He feels by lowering the OWWA membership fee and removing the unnecessary government fees the government can provide some relief to the OFWs and their families.

Bad news for departing Overseas Filipino Workers (OFWs)

As if the recent changes were not enough to give sleepless nights to the millions of Overseas Filipino Workers across the world, the Overseas Workers Welfare Administration (OWWA) has now come up with a decision that is going to compound the problems. Acting Labor Secretary Marianito Roque said that the OWWA would no longer give loans to departing OFWs. He said that the decision was taken after he found that most of the OFWs who availed the loan facility did not pay back which cost the organisation nearly P70 million. He further said that only 30 per cent of the people actually paid back. Additionally the low payment rate was also a problem, he said.

According to Roque, many OFWs declined to make the payments saying they could no longer pay their P40,000 loans. This expectedly brought severe financial losses which the organisation is no longer in a mood to bear. The OFWs also supposedly said that since they were paying $25 membership fee per employment contract, they claimed that the OWWA fund money is their money and so they don’t have to pay their loans. On an average, nearly 2,000 to 3,000 OFWs leave their country for foreign lands daily, which means OWWA collects around $75,000 or over P3 million membership fee daily.

The OFWs who are already facing financial woes at the moment are crying foul because with each passing day it is becoming more difficult for them.

Migrante protests tax duty

The Arroyo government is under fire again. This time it is the impending documentary stamp tax (DST) which has caused massive furore. Migrante, an alliance of overseas Filipino workers’ organisation is accusing the government of burdening the OFWs and their families by imposing this tax.

The tax which is in the eye of the storm is expected to be tabled soon and once that happens the OFWs fear that it will be imposed on all international transfers. Migrante fears that the imposition will be equivalent to 0.15% of the remitted amount. In a situation when most OFWs are earning anything between US $250 to US $400 monthly the tax would certainly break their backs.

Migrante says that the OFWs are already finding it diffcult to sustain in the times of economic crisis and soaring food prices and the government instead of taking corrective measures is doing little to help them. The mood is certainly not good and the Arroyo government needs to take notice.

Gulf inflation and the business of remittances

Once upon a time, the Gulf was known as the exotic land of mystery. As time passed by, the notion changed and the oil rich region came to be the land of opportunities. But with the problem of rising prices and weak currencies getting intense, the overseas workers are now seriously considering a life away from the Gulf.

The six Gulf Cooperation Council (GCC) states have been the major destinations for the migrant workers from countries like India, Philippines and Sri Lanka. The oil windfall is one of the reasons behind the popularity of this region. But as the Gulf reels under inflation, the remittances too have been going down and the tumbling dollar is making it difficult for the overseas workers to sustain themselves. For the Indian workers in particular the problem has meant a return back home, given the fact that the Indian rupee is surging against the dollar.

According to GulfTalent, the cost of housing amounted to 35 per cent and 31 per cent of household income in 2007 which is forcing a large number of expatriates to head back home. The problems are brewing and the air of uncertainty is engulfing the Gulf region. It won’t be long that one gets to know the magnitude of this problem and its implications on the overseas workers living in the Gulf.