Bangko Sentral ng Pilipinas data on Filipino international remittances received for the whole year of 2017 amounted to $28.06 billion.
This inflow is a substantial contribution to the country’s dollar earnings, providing a substantial prop to the national economy.
It turns out the Philippines today ranks as the third largest generator of international worker’s remittances, behind only India and China. Recently, it surpassed Mexico by a margin to become the third largest remittance receiver country. This information is from the World Bank’s data on immigrant remittances that it analyzes.
Where remittances come from. The remittances of 2017 grew by 4.2 percent compared to the level of the previous year.
In 2010, total OFW remittances amounted to $18.8 billion. The volume of remittances of 2017 exceeds the remittances of 2010 by an amount equal to $9.3 billion. A simple average over the seven-year period is a 7.1 percent annual growth rate(!).
As a percent of total remittances in 2017, the bulk of OFW remittances come from the Middle East (27.8 percent of total remittances). Remittances from Asia (mainly East and Southeast Asia) account for 18.8 percent of total remittances received. European countries sent 13.5 percent of the total.
Remittances coming from the Americas constitute 36.7 percent of total, the bulk of which were attributed to the US. But this source of remittances is suspect, as discussed below, on data caveats.
Country sources of remittances. I summarize the countries which are the sources of high remittances from Filipino migrant workers.
Middle East. The Middle East continues to be the major source of remittances. Saudi Arabia is the biggest employer of OFW workers by far for a long period of time.
But the United Arab Emirates has been closing the gap. Though not as large in 2010, remittances from UAE in 2017 has surged slightly ahead of Saudi Arabia.
Qatar has been rising as a source. It is the third largest source of remittances from the Middle East, but it is still less than half in terms of remittances compared to either Saudi Arabia or the UAE.
Since 2010, Kuwait was one of the fastest source of growing remittances, sending in 2017 $0.8 billion of remittances. With the recent move of the government to ban future Filipino deployment of workers, this country would slide greatly if that policy continues.
Asia. The growth of remittances from some of the industrial countries of East Asia is growing in importance. Japan and Singapore are the highest sources of remittances. Remittances from Hong Kong, Taiwan and South Korea have been rapidly growing.
Europe. The most important source of remittances is the United Kingdom. Germany comes next, as well as the Netherlands and France. Italy, which used to be an important source of remittances is less important today.
As a whole, OFW remittances from Europe have suffered a relative decline compared to the strong growth of worker migration to the Middle East and Asia from 2010 to 2017.
An important caveat on data. It is important to heed a warning about the “distortion” on details concerning country sources of remittances.
The BSP gives us this warning. It collects and tallies the data on remittances. It is the principal government agency that estimates the country’s balance of payments.
In general, we can accept the total data that it reports as generally accurate. But the exact country sources of data is subject to big errors.
In an important footnote explaining the collection of remittances data, here is what the BSP tells us on the nature of the collection of the statistics: “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 mostly located in the US. On the other hand, remittances coursed through money couriers cannot be disaggregated into their actual country source and are lodged under the country where the main offices are located, which, in many cases is in the US. Therefore, the US would show up to be the main sources of OFW remittances because banks attribute the origin of funds to the most immediate source. (I supplied the emphasis).”
Only the BSP can disentangle this information further for us. It has the means to review this process much more effectively through analytical study or surveys of sources.
On the other hand, we have to recognize that the remittance business is also undergoing, too, a technological and business revolution. The remittance business at the retail level has been undergoing a kind of sea change.
The data recorded from 2010 to 2017 for the United States as source of transmission might, in fact, reflect part of the phenomenon. In 2010, remittances from the US accounted for 41.9 percent of total OFW remittances. But in 2017, this is only 33.6 percent.
Competition among international banks and the growth of micro-payments technologies utilizing smartphones is part of the equation.
It is also important to note that traditionally, there are a lot of Filipinos who live in the US and who, occasionally, send substantial remittances homeward to their families.
In addition to the above, let me add that there are other important homeward remittances that are not strictly migrant remittances. There may be a lot of Filipinos with wealth and savings deposited in other parts of the world which get remitted home intermittently or regularly.
Some of these might be honest, well-earned money, while some might be considered dirty money.
Eventually, some of the moneys reach the country through remittances. A major sub-class of such remittances are the savings and pensions of people who have spent a large part of their lives working abroad, but who are not anymore earning any active income.
These are retired people who had worked abroad before and now reside in the country. They receive their pension incomes year-in, year-out from institutions located abroad.
Strictly speaking, these are not OFW remittances any more, but the incomes of those whose participation in the labor market was made in the past. Their pensions are from accumulations of savings earned during their productive years.
My email is: gpsicat@gmail.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/