"As the world’s third largest recipient of remittances, we stand to benefit considerably from increased dollar inflows once transactions costs (for remittances) are reduced significantly," Roxas, chairman of the Senate committee on economic affairs, stressed.
"Simply put, any reduction in transactions costs will mean more income for the country and more earnings for more Filipino households," Roxas added.
Roxas, citing a recent International Monetary Fund (IMF) study, described as "a bit steep" the average 13.5-percent transaction cost for remittances to the Philippines, although it is about the same level as Tunisia, Sri Lanka and Serbia and Montenegro.
"We have one of the highest transaction costs (for remittances), next to Bangladesh at 16 percent, Turkey and Bosnia and Herzegovina at 15 percent and Morocco at 14 percent," Roxas pointed out.
A separate study by the US State Department showed that global transaction costs range anywhere from $15 to $26 for a typical $200-remittance.
The Bangko Sentral ng Pilipinas expects OFW remittances to hit $10 billion this year, up 17 percent from last year’s $8.5 billion. From January to February this year, remittances already reached $1.7 billion, 17 percent higher than the same period last year.
Roxas said the Philippines should get the help of the US in bringing down remittance charges. He said the US government also wants to reduce transaction costs to encourage more remittances through banks and dampen transfers via informal or cash-based channels, which might be misused by criminal syndicates, including terrorist groups and drug traffickers.
The Philippines is the third largest recipient of remittances, after India and Mexico. Egypt and Turkey are the fourth and fifth largest recipients, respectively. The main sources of remittances are the US, Saudi Arabia, Switzerland, Germany and France. In all, 90 developing countries got some $126-billion worth of remittances in 2004, according to the IMF.
Economists have attributed the Philippine economy’s resilience to remittances, which continue to rev up consumer spending in a big way, apart from providing dollars needed to refinance the mounting national government debt.
Remittances this year are seen to account for almost 60 percent of the country’s gross international reserves of $17 billion.