Savings pool from OFW inflows eyed for infra projects

While remittances from overseas Filipino workers (OFWs) are raising the savings rate in the country, this vast pool of savings is a resource "that should be tapped for infrastructure and social development projects," Socioeconomic Planning Secretary Romulo L. Neri said.

In the past few years the country has seen a significant hike in OFW inflows. "This is due in large part to the changing profile of the migrant workers, as more professionals are being deployed. In particular, more nurses and caregivers are working abroad to attend to the elderly across Europe, the Americas, and Asia," he said.

He noted that inflows rose by 25 percent last year reaching $10.7 billion, which is equivalent to around half the national budget for the year. For the first five months of 2006, OFW inflows amounted to $4.9 billion, 14.8 percent higher than the same period last year. The sustained inflows are reflected in the current account surplus, a healthy balance of payments, and record gross international reserves.

The ratio of gross national savings to gross domestic product (GDP) was 23 percent in 2000. It rose to 29.6 percent in 2004 and 30 percent in 2005. Gross national savings include net inflows from abroad.

"As it is, OFW families tend to use their money to buy condominium units, vehicles and appliances, or to put them in time-deposit accounts," said Neri, who is also director general of the National Economic and Development Authority (NEDA).

"OFW organizations have been inquiring about possible investment opportunities for their members. Hence, I suggest that the government tap this source of capital instead of borrowing from abroad," the NEDA chief pointed out.

"This form of financing will further shift the nation’s credit exposure from foreign to local-denominated debt paper. It is up to the monetary authorities to choose the proper instruments most suitable for tapping the OFW funds," he said.

Neri noted that the money should support the priorities of the updated Medium-Term Public Investment Program (MTPIP). As unveiled in the President’s State of the Nation Address on the super regions, the MTPIP is focused on core infrastructure to open up the vast agricultural areas in Mindanao, connect the whole of Visayas to roll-on roll-off (RORO) ports, and construct highways to connect the rest of Luzon to the rapidly growing areas around Metro Manila.