BSP CONSIDERS REAL-TIME REMITTANCES FROM OFWs
MANILA, SEPTEMBER 29, 2006 (STAR) By Des Ferriols - The Bangko Sentral ng Pilipinas (BSP) is considering the possibility of allowing remittances to go through the automated clearing house (ACH) system to allow real-time transfers from overseas Filipino workers (OFWs) to their beneficiaries at home.
The BSP revealed yesterday it is studying whether it is financially feasible for banks to course OFW remittances through the ACH system.
"Our first concern is whether it will make financial sense," said BSP Governor Amando M. Tetangco Jr. "If so, it will be faster and cheaper for OFWs because it removes a lot of the friction cost."
The ACH is usually a domestic electronic fund transfer system that moves funds from the off-shore source to the local banking system and onto the local network.
Instead of waiting days for OFW families in the rural areas to get access to remittances sent to them, their access would be in real-time and the cost would be much lower, often about 50 percent cheaper.
According to Tetangco, the BSP has so far not found any legal impediment to allowing OFW remittances to go through the ACH system.
Tetangco said other countries already allow remittances to go through this system, such as Mexico which also has a large community of overseas workers.
"It will just be a matter of determining whether it will make financial sense for banks or they wonít do it," he said.
Banks are already in a cut-throat competition over the remittance business, launching aggressive marketing ploys to lure OFWs and secure market share in the $12-billion business.
In July alone, OFW remittances coursed through commercial banks breached the $1-billion mark for the third consecutive month, bringing the seven-month total to $7 billion.
The July surge brought the average growth rate to 15.8 percent from January and monetary officials have expressed optimism that total remittances can easily breach the $11.9-billion projection for the whole 2006.
The BSP attributed the surge in OFW remittances to the combined impact of rising demand for Filipino workers and increased access to commercial banks and private remittance agentsí services.
The Arroyo administration has been aggressively supporting the continued export of Filipino labor that otherwise could not be absorbed by the local economy.
Preliminary data from the Philippine Overseas Employment Administration (POEA) on new hires and rehires showed that in July 2006, total deployment of overseas workers grew by 43.1 percent to 102,105, boosted by higher demand for both seabased and landbased OFWs.
The BSP said OFW remittances during the first seven months of the year continued to come from the USA, Saudi Arabia, Italy, United Kingdom, Japan, Hong Kong, and United Arab Emirates.
The BSP also said there was a "remarkable" improvement in remittances from other countries such as Canada (190.7 percent), Taiwan (53.3 percent) and Singapore (22.7 percent).
The BSP and OFWs have also migrated away from informal remittance channels, preferring to take advantage of competitive rates offered by banks and the tie-ups between institutions such as foreign money transfer agents and non-bank channels which made it easy to send money home to their families.
According to BSP, however, the enhanced electronic banking services offered by banks have also made inroads in the remittance business.
"With these, the projected OFW remittance level for the full year 2006 of $11.9 billion is attainable," the BSP said in its report.
Chief News Editor: Sol Jose Vanzi
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