OFW beneficiaries shift from savings to investments

MANILA, Philippines – More beneficiaries of overseas Filipino workers (OFWs) are shifting to investments and other major purchases such as the acquisition of motor vehicles, a ranking official of the Bangko Sentral ng Pilipinas (BSP) said.

BSP Deputy Governor Diwa Guinigundo said the central bank’s second quarter 2010 Consumer Expectations Survey (CES) showed that the percentage of households with family members aborad that allocated portions of their remittances to investments increased to 7.2 percent in the second quarter from 5.8 percent in the first quarter of the year.

Guinigundo said the percentage of those who used the money sent home by their relatives abroad to purchase motor vehicles such as cars also went up by 7.7 percent in the second quarter from the first quarter’s 6.6 percent.

On the other hand, he pointed out that the percentage of households that allocated portions of their remittances to savings declined to 38 percent in the second quarter from 50.4 percent in the first quarter while those that used the money to purchase consumer durables or appliances also went down to 27 percent from 30 percent.

“This means that more beneficiaries of remittances are opting to invest their money instead of saving,” Guinigundo stressed.

Of the total 5,706 household respondents of the survey conducted between April 5 to April 16, the BSP said about 570 households with relatives abroad received remittances.

The BSP said OFW households continue to utilize their remittances primarily for food, education, medical expenses, debt payments, and savings in the second quarter of the year.

However, the survey showed that those that apportioned their remittances for food declined to 96.3 percent in the second quarter from 97 percent from the first quarter while those that allocated the money for education retreated to 64.2 percent from 69.5 percent and those that used the money to pay loans fell to 43.3 percent from 48.5 percent.

Furthermore, the number of OFW households that used their remittances to amortizations or full payment for houses purchased declined to 11.9 percent in the second quarter from 15 percent in the first quarter.

Last year, remittances went up by 5.4 percent to a new record level of $17.348 billion from $16.426 billion the previous year and exceeded the revised four-percent growth forecast set by the central bank.

Major sources of remittances last year included the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany.

The BSP recently upgraded its growth forecast for the amount of money sent home by overseas Filipinos to eight percent instead of six percent due to the strong demand for Filipino skilled workers.

This early OFW remittances grew seven percent to $4.339 billion in the first quarter of the year from $4.057 billion in the same period last year on the back of strong demand for professional and skilled Filipino workers as well as improving global employment opportunities.

The bulk or about 81 percent of the total remittances reported by local banks from January to March came from the US, Canada, Saudi Arabia, the United Kingdom, Japan, Singapore, Italy, and the United Arab Emirates. –Lawrence Agcaoili (The Philippine Star)