The Market Monitor Minding the Nation's Business
By Riza Lozada
Remittances from overseas Filipino workers (OFWs) grew 4.7 percent in the first nine months to $20 billion after $2.6 billion in money transfers were recorded in September.
The September figure was up 6.3 percent from a year ago with cash remittances coursed through banks posting 6.7 percent growth to $2.4 billion.
BSP Governor Amando M. Tetangco, Jr. said land-based workers with work contracts of one year or more largely contributed to the remittances amounting to $17.2 billion for the first nine months this year.
The BSP derives its figures from “personal remittances representing the sum of net compensation of employees (i.e., gross earnings of OFWs with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries), personal transfers (i.e., all current transfers in cash or in kind by OFWs with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines), and capital transfers between households (i.e., the provision of resources for capital formation purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return).”
Last September, land-based workers remitted compensation which was 11.9 percent higher which according to the BSP compensated for a 10.5 percent decline in sea-based workers’ remittances.
“The declining remittances from sea-based workers may be attributed to stiffer competition in the supply of seafarers. A growing number of officers and ratings are recruited from East Asia (China and India) and Eastern Europe (Ukraine, Croatia, and Latvia),” according to BSP.
Compensation of sea-based and land-based workers with work contracts of less than one year (excluding their expenditures abroad) aggregated $4.6 billion.
The BSP said top sources of OFW remittances were the United States (US), United Arab Emirates (UAE), Japan, Qatar, Taiwan and Kuwait.
For 2016 until September, land-based workers’ cash remittances grew by 7.1 percent to reach $15.8 billion.
Meanwhile, cash remittances from sea-based workers declined slightly by 2.9 percent to $4.2 billion.
Cash remittances coming from the US, Saudi Arabia, UAE, Singapore, the United Kingdom (UK), Japan, Qatar, Kuwait, Hong Kong, and Germany comprise 80 percent of the total cash remittances in the first nine months of the year.
“There are some limitations on the remittance data by source. A common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the US,” it said.
“Also, remittances coursed through money transfer operators (MTOs) cannot be disaggregated by actual country source and are lodged under the country where the main offices of the MTOs are located, which, in many cases, is in the U.S. Therefore, the U.S. would show up to be the main source of OF remittances because banks attribute the origin of funds to the most immediate source,” the BSP said.