ADB Structure

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The ADB Study On Enhancing the Efficiency Of
Filipino Overseas Workers Remittances
I.F. Bagasao ADB Lead Consultant APEC ARS
Conference 34 June 2004, Tokyo, Japan ADB
Institute
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Stocks of Overseas Filipinos
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Objectives of the Study on Flows of Remittances

• To possibly increase remittance volumes.
• Facilitate shift from informal to formal or
  regulated channels.
• Encourage the use of remittances for sustainable
  poverty reduction.

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Characteristics of Flows

• Outflows are 2,700 daily / almost 1 million
  annually.
• 197 Destination Economies Mostly in ME,
  Southasia and US.
• Landbased and Seabased Workers.
• Professionals and Service Workers.
• 65 to 70 of contract based are female.

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Remittance Characteristics

• Formal Flows of US7.6 million in 2003.
• Unregulated Flows consist of
• Sent through unregulated ethnic stores, mail,
  cargo boxes.
• Sent through friends.
• Cash brought home.
• Goods sent home.

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Remittance Players

• Philippine Banks.
• Philippine Money Transfer Agencies
• International Money Transfer Agencies
• Host Country Banks

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Remittance Trends

• Vibrant Competition due to long history of
  Philippine overseas deployment.
• Convergence of services through partnerships,
  alliances and revenue sharing.
• New Players and technology or card based
  remittance products
• Mobile Phones
• Internet based services
• Card Products
• Postal Office
• Entry of non traditional players (credit unions,
  coops)
• OFW E-cards

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Remittance Behaviour

• 80 are remitting through banking or regulated
  channels.
• 70 maintain bank accounts in the Philippines.
• 90 save.
• Average amount of remittance sent is US340.
• Use of remittances preponderant for food,
  utilities, personal care and dwelling related
  expenses.
• Majority are interested to help contribute to
  community development.
• From 41 to 49 incur debt to migrate.

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Barriers to Remittance Flows

• Anti-money laundering compliance.
• First Mile IssuesLicensing costs / restrictive
  laws in certain countries.
• The Unbanked on both first and last mile.
• Uneven Application of AML compliance.
• Funding problems to upgrade infrastructure
  affects local and international interconnectivity.

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Non Bank Related Factors

• Demand for Filipino workers.
• Financial burdens on OFWs.
• Inadequate financial orientation for departing
  workers.
• Workplace related (taxes and levies, abuses on
  employment terms).

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The Extra MileWhat can government, the private
sector and civil society do to enhance formal
remittance flows?

• Financial Literacy and Information Programs.
• Identify and support Best Practices on Remittance
  Leveraging of NGOs and LGUs.
• Strengthen rural based financial and economic
  organizations by improving interconnectivity.
• Organise and support initiatives of Filipino
  Associations Overseas.
• Study and institute proper incentives system.

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Bilateral Initiatives to help create efficient
and competitive international Remittance Channels

• Foster deeper understanding of first and last
  mile concerns.
• Dialogues thresh out problems and offer
  solutions.
• MOI between US and the Philippines.

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Education of Migrant Workers and Families on
sending and receiving issues in remittances

• Financial literacy and remittance orientation in
  predeparture.
• NGOs can help in financial literacy programs at
  village level.
• Money Transfer agencies could help in financial
  literacy and promoting bank transfer mechanisms.

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Implications for Multilaterals and Regional
Groupings

• Link emerging best practices on formal remittance
  flows and leveraging of remittances to
  development programs.
• Technical assistance and funding support for
  upgrading of banking technology and improve
  interconnectivity.
• Increase dialogues and include migration and
  remittance issues as regular discussion points in
  conferences and discussions.

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Conclusion
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Thank you.