Lower remittance charges

Instead of begging for more US development aid, the Philippine government should push for lower money transfer charges, which would essentially allow more remittances from migrant Filipino workers to flow into the Philippine economy.

Overseas Filipino workers (OFWs) and their families here could save up to $1.1 billion, or P52.8 billion annually if current money transfer fees that average 13.5 percent per transaction are cut in half.

For instance, the second largest US bank, Wells Fargo & Co., collects $20 for every bank-to-bank remittance to the Philippines. Assuming a Filipino worker in California sends money home at least once a month, at $20 for every transfer, over 12 months he or she would have spent a total of $240 (or P11,520 at $1:P48) in remittance charges alone. This is already equivalent to a whole month’s pay for a minimum wage earner here.

OFW remittances have already plunged by $385 million in the five months to May this year compared to a year ago. On account of the deep recession in America, the cash wired home by migrant Filipino workers in the US fell by almost 12 percent to $2.896 billion in the five months to May this year compared to $3.281 billion in the same five-month period in 2008.

In 2008, some 48 percent or $7.825 billion of all the cash sent home through banks by all OFWs around the world came from the US.

Almost 80 percent of all global remittances actually go through American banks. Whether the OFW is based in the Middle East or in Asia, chances are he or she will be transacting directly or indirectly with an American multinational bank when making a money transfer.

Annual remittances from OFWs have steadily grown from just $105 million in 1975 to a whopping $16.426 billion in 2008, making the Philippines the world’s fourth-biggest collector of money from migrant workers.

Western Hemisphere leaders themselves at the Special Summit of the Americas in Monterey, Mexico, in January 2004, had called for the cost of remittances to be cut in half. This call was echoed by the finance and central bank chiefs of the Group of Seven (the US, the United Kingdom, Canada, France, Germany, Italy and Japan), who also declared in April 2004 that, “on remittances, we will continue to work on our initiatives to reduce barriers that raise the cost of sending them and integrate remittance services in the formal financial sector.” –Ernesto F. Herrera, Manila Times

ernestboyherrera@yahoo.com