‘Informal’ OFW remittances P242 billion higher

Published on Wednesday, 14 November 2012 22:34

Written by Jun Vallecera | Reporter

The amount of migrant-worker remittances passing through informal channels tops those passing through the banks by a wide margin, estimated at some 30 percent to 40 percent by the Asian Bankers Association (Aba).

This was revealed at the conclusion of the meeting of Aba member-countries held at the Shangri-La Hotel on Tuesday, in which issues of common concern like the financial integration by 2020 were discussed, among other things.

World Bank data on the flow of remittances among the top four recipient countries in Asia, including the Philippines, total $178 billion.

At 40 percent, this translates to remittances not captured by the banks totaling $242 billion, which is roughly the nominal value of the entire economy of the Philippines.

Dilshan Rodrigo, committee chairman for policy advocacy at Aba, told reporters the amount involved is certainly not trivial and had been estimated to rank second only to the flow of foreign direct investments coming into the region.

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“The volume of remittances passing through the informal channels is ranked next only to foreign direct investments,” he said.

At the ABA discussions, Rodrigo said member-countries were encouraged to change their legal infrastructures so that more flows were coursed through the formal channels.

“Laws have to change because the volume in the informal channels is larger than that passing through the banks and the formal channels,” he said.

He also said the number of migrant workers collectively sending back to beneficiary families across the region total more or less 215 million.

In the Philippines some 10 million overseas Filipinos send back an average of $500 of their foreign earnings each month to beneficiary families.

Some $20.1 billion worth of foreign earnings were remitted back to the Philippines last year and the amount was seen to grow by another 7 percent this year.

The remittances help fuel domestic consumption and equal 10 percent of the economy measured as its gross domestic product.

According to the World Bank, Chinese migrant workers sent back home $54 billion worth of foreign currency earnings just last year while India had $62 billion.

Mexico, the third-biggest recipient of migrant worker remittances, had $24 billion while the Philippines has some $21 billion.