OFW FAMILIES SAVING MORE, BSP DATA SHOWS
MANILA, SEPTEMBER 14, 2008 (STAR) By Des Ferriols - While families of overseas Filipino workers still spend their remittances primarily on food and education, monetary authorities have noted that more money is now being set aside for savings and investments.
The Bangko Sentral ng Pilipinas (BSP) said the percentage of OFW-supported households that allotted portions of remittances to savings remained high at 30.4 percent, from a low of 7.2 percent in the first quarter of 2007.
The results were derived from the BSP’s Consumer Expectations Survey (CES) covering the third-quarter period this year.
Data from the BSP also indicated that the percentage of households that set aside funds for investments increased from three percent in the second quarter to 7.4 percent in the third quarter.
According to the BSP, the shift was likely the result of growing pessimism over the country’s economic prospects which compelled families to save and invest rather than spend on consumables.
The BSP said most households spent their remittances primarily on food and other household needs such as education, medical expenses and debt payments.
Based on the results of the latest CES, officials said the number of households who indicated that they allot part of their remittances for various types of financial investments had doubled.
These financial investments include savings, other financial investments and purchase of house which is normally the first investment made by families once a household member starts working abroad.
But the CES results revealed that the number of households that used their remittances for house purchases declined to 12.4 percent in the third quarter from 14.3 percent in the second quarter.
According to the BSP’s third quarter CES, the utilization pattern of remittances was similar for households in the National Capital Region and areas outside the capital.
Remittances have been coming into the country at record levels, reaching a monthly average of over $1 billion. In the first six months of the year alone, remittances totaled $8.2 billion.
The massive inflow of remittances from OFWs should be mobilized for investments but the BSP bucked the idea of creating specialized investment instruments with special tax perks.
Remittances have been fueling the country’s economic growth and heavily financing the government’s domestic borrowing but monetary officials said OFWs and their families should be encouraged to invest their money.
The Philippines is now the third biggest recipient of workers’ remittances, now equivalent to over 11 percent of gross domestic product.
“It’s an offshoot of the combination of two factors: the lack of opportunities at home and the demand for labor offshore,” the BSP said. “Remittances are likely to remain strong due to the continued expansion in the global economy and the aging population in some advanced nations.”
So far, however, the BSP said OFW investments have focused on housing development because homeownership is usually the first objective of OFWs and their families.
After acquiring a house, however, the BSP said longer term investment options should be made available to OFWs who would continue generating income from abroad.
Overseas workers sent $1.5 billion home in June, the highest ever recorded since 1989; bringing the total remittance level to $8.2 billion for the first six months of the year.
Since 1989, the BSP said it began classifying foreign exchange (FX) inflows from overseas workers as a separate category in the BSP FX statistical monitoring system.
Remittances have been consistently going over the $1-billion level for nearly a year and the June inflows brought the six-month remittance level higher by 17.2 percent compared with last year’s first semester total.
BSP Governor Amando M. Tetangco Jr. said the sustained rise in the number of deployed Filipino workers was behind the robust remittance inflows.
Chief News Editor: Sol Jose Vanzi
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