How do OFW families spend remittance money?

MANILA, Philippines—A study recently released by the Asian Development Bank (ADB) provides an informative and substantially probing picture of how families of overseas Filipino workers spend their remittance money.

The study, entitled “Remittances and Household Behavior in the Philippines,” was conducted and written by Filipino Alvin Ang, Indian Shikha Jha, and Indonesian Guntur Sugiyarto based on their analysis of data from the 2000, 2003, and 2006 Family Income and Expenditures Survey (FIES) reports of the National Statistics Office (NSO).

The authors noted that some 18.05 percent of all Filipino households received cash from abroad in the year 2000, and this rose to 20.72 percent in 2003 and then to 23.3 percent in 2006.

From the data, the authors observed that more families of OFWs were spending less on food and more on health, with the percentage share of expenditures of migrant households on food down slightly from 44.9 percent in 2000 to 43.3 percent in 2006, while expenditures on health increased from 2.3 percent in 2000 to 3 percent.

Allocations for durables, they said, were found to be steady at 2.2 percent from 2000 to 2006, while fairly stable were those for education (4.5 percent in 2000 to 4.4 percent in 2006), and for housing operations (2.0 percent in 2000 to 2.1 percent in 2006).

They noted though that spending of OFW families for transportation and communication (including cellphone expenses) increased from 6.2 percent in 2000 to 7.2 percent in 2006.

The Bangko Sentral ng Pilipinas (BSP) has reported that remittance inflows to the Philippines in 2009 reached $17.348 billion, equivalent to some 11-12 percent of the gross domestic product, with the country being the third biggest recipient of workers’ remittances.

In its 2008 and 2009 reports, the BSP noted increasing savings and investments by OFW families largely in banks, other financial instruments and real estate—an observation regarded as a big improvement from earlier reports describing OFW families as using a large part of their money on “unproductive expenses.”

According to the BSP, the percentage of households that allotted portions of remittances to savings increased to 40 percent in the first quarter of 2009, compared with only 35.8 percent in the fourth quarter 2008 survey.

The bank added that there was also a slight increase in the number of OFW families that set aside money for investments, from 4.7 percent in the previous quarter to 5.9 percent in 2009.

BSP Deputy Governor Diwa Guinigundo has said, “In a sense, the greater proportion of remittances recipients’ saving and investing is good for the economy because the multiplier effects can be significant in the future…. savings and investments increase the pool of resources available to both households and corporate borrowers for their credit needs. That helps sustain economic activity.”

The billions of dollars of annual OFW remittances have greatly contributed to our country’s economy and have actually been credited for “saving” it in many instances already, especially during hard times.

It is best for the government as well as the private sector to expand their service to the OFWs and their families in terms of assisting them on how to make the most benefits out of their hard-earned money. –Jun Burgos, INQUIRER.net