Year after year so far, remittances by working Filipinos and migrant relatives abroad continue to rise to record levels. This has, without doubt, played an immensely important role in the Philippines’ economic growth over the last two decades.
Last year, money sent by Filipinos working or residing abroad to their relatives in the Philippines through accredited channels of the Banko Sentral ng Pilipinas reached $2.7 billion, an increase of 4.9 percent over the previous year despite the many issues of slower world economic growth and political tensions in the Middle East.
Remittances continue to be the second biggest source of foreign currency for the country, next only to the export of goods and services. With 10 percent of the population working abroad, the money sent home is well spent on food, household expenses, and education of dependent families.
For decades, the Philippine government has treated remittances as some bureaucratic service that has to do with tracking and reporting on a monthly, quarterly and yearly basis, while economists take out their calculators to measure the impact that this steady inflow of funds on the overall economy.
Without doubt, remittances have contributed to improving Filipinos’ higher purchasing power and have stemmed the rise of the country’s poverty levels, improved our gross international reserve levels, and helped strengthen the peso vis-à-vis most world currencies.
The government has been, at best, a go-between in the traffic of millions of Filipinos going to and coming in from the countries that provide jobs. Its designated agencies, with its crippled state of funding and manpower, tries its best to provide the most basic services to overseas working Filipinos, including legal advice and support in overseas court cases.
In recent years, recognizing the huge amount of the monies regularly sent home and its immense potential to further improve the lives of Filipinos, non-government organizations have initiated campaigns that would help OFWs and their dependents maximize such overseas earnings.
Even the central bank, in a limited capacity, came up with a financial literacy program designed to introduce to Filipinos working abroad the many other ways by which they can make better use of their earnings after paying for their families’ basic needs.
So far, though, there has been no snowballing of these initiatives. Remittances continue to pay for food, clothing, utilities, education, and shelter, the latter perhaps the most visible asset literally on the ground that an OFW can boast of.
Still, $30 billion a year is not something that should be left to fritter away without apportioning a part of it for investments to help grow the economy. Thus, a more concerted effort should be made to find better use to this that would not just accelerate the improvement of the lives of dependents, but catalyze other sectors in society.
President Duterte may have approved an increase of P400 million to an assistance fund to OFWs, making it P1 billion, but this – aside from the money still falling short in providing the proper and appropriate kind of assistance to our countrymen working abroad – is not what really matters.
We are talking here about interventions or catalysts that make much bigger impact, such as well-crafted laws that will institutionalize the role of migrant workers’ earnings in securing the country’s future. Let our esteemed lawmakers put on their creative minds to come up with some brilliant program.
Harnessing even a fraction, say 5 percent, of the annual remittances of OFWs for the government’s Build, Build, Build initiative through bond offerings or similar financial instruments would certainly kill two birds with one stone.
For OFWs, this would be an opportunity to save and make better use of their earnings and take part in ushering in the promised “golden age of infrastructure.” For the government, it could raise some funds other than soft loans from foreign institutions like the World Bank or Asian Development Bank.
Channeling OFW earnings to nationbuilding
But let’s not confine this resource to infrastructure building. Other important tasks need to be tended, including strengthening the micro, small and medium enterprise (MSME) sector, establishing and building downstream linkages in the many manufacturing companies that are currently foreign-owned, and reinvigorating our agriculture sector.
The economy is growing at a pace that many of our neighboring countries are envious of. For the Philippines, this means that there will be a high demand for new import-substitution businesses that will support further economic growth.
When in the past we were content to import food products, it is now time to look at growing these ourselves so that more Filipinos would have jobs, and the country would reap the benefits of local production, instead of ceding these to another country.
The Department of Trade and Industry (DTI) has a manufacturing revival program where it has looked at some 200 industries with a view to making them globally competitive. We have seen what this has done to the auto industry.
Apart from now locally producing more cars, such as the Mitsubishi Mirage, there is now a push to strengthen more local auto parts suppliers. There’s a big opportunity also in setting up electric vehicle manufacturing facilities that foreign companies have little interest yet.
We may not be seeing locally made garments or footwear soon, having lost these industries to China and Thailand whose economies were surging while ours was stagnating in the late 1900s, but with time and good effort by government, we can reclaim them.
This too would be the case in many industries, especially related to food and, yes, rice. Just as millions of Filipinos have braved the travel to work in other countries to feed their families, they will realize that contributing directly to nation building is better, especially when they can see their children growing up close, and not just through Skype.
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