Personal remittances for Jan.-Oct. 2016 reach US$24.4B

The BSP main headquarters on Roxas Boulevard. REUTERS FILE PHOTO means BUSINESS

MANILA - Personal remittances from overseas Filipinos (OFs) for the first 10 months of the year reached US$24.4 billion, equivalent to a 3.9 percent growth year-on-year, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced Thursday.

Personal remittances from land-based workers with work contracts of one year or more amounted to US$19.0 billion while those from sea-based and land-based workers with work contracts of less than one year (excluding their expenditures abroad) totaled US$5.1 billion. Personal remittances in October at US$2.3 billion, however, were 2.8 percent lower than the level posted in the same month last year.

Meanwhile, cash remittances from OFs coursed through banks rose by 4.0 percent year-on-year in January to October 2016 to US$22.1 billion. In particular, remittances from land-based workers in the first 10 months increased by 6.3 percent, compensating for the 3.7-percent decline in sea-based workers’ remittances.

Total cash remittances in October alone fell by 3.0 percent year-on-year to US$2.1 billion as remittances from sea-based workers declined by 11.1 percent while those from land-based workers slid by 0.6 percent.

Stiffer competition in the supply of seafarers, particularly from East Asia and Eastern Europe, has contributed to the declining trend in sea-based remittances. The top countries that contributed to the decline in total cash remittances in October were Saudi Arabia, Singapore, Hong Kong, Italy, Malaysia, the Netherlands, and the United Kingdom (UK).

The lower US dollar value of remittances in October may also be partly due to the depreciation of major host countries’ currencies vis-à-vis the US dollar, such as the pound sterling and the euro. Remittances from the UK dropped by 5.9 percent in October even as the volume of remittances in original currency (pound sterling) increased by 16.5 percent. The case of Italy, Germany, Greece, and the Netherlands, however, is different, as remittances in both US dollar equivalent and original currency recorded declines in October.

Cash remittances coming from the United States (US), Saudi Arabia, United Arab Emirates (UAE), Singapore, the UK, Japan, Qatar, Kuwait, Hong Kong, and Germany comprise more than 80 percent of the total cash remittances in the first ten months of 2016.2

BSP defines personal remittances as the sum of:

• net compensation of employees (i.e., gross earnings of overseas Filipino (OF) workers with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries);

• personal transfers (i.e., all current transfers in cash or in kind by OF workers with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines), and

• capital transfers between households (i.e., the provision of resources for capital formation purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return).

There are some limitations on the remittance data by source. A common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the U.S. Also remittances coursed through money transfer operators (MTOs) cannot be disaggregated by actual country source and are lodged under the country where the main offices of the MTOs are located, which, in many cases, is in the US. Therefore, the US would show up to be the main source of OF remittances because banks attribute the origin of funds to the most immediate source.