J. Albert Gamboa l 22 April 2022 l FINEX Folio at Business World
OVERSEAS Filipino workers (OFWs) sent home a total of $5.75 billion in the first two months of 2022, based on the latest data from the Bangko Sentral ng Pilipinas (BSP). This reflected a 1.9% growth over the corresponding level last year.
Land-based workers with contracts lasting more than one year comprised the bulk of senders, remitting $2.18 billion in January and February this year. Trailing behind were short-term land-based workers and seafarers, whose combined remittances reached $547 million during the same period in 2021.
OFWs in the United States accounted for the largest share in overall remittances at 41.6%. Year to date, the rest of the top 10 originating countries were Singapore, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, Canada, Taiwan, Qatar, and Malaysia.
These statistics have been validated by the experience of WorldRemit Ltd., a cross-border digital payments service headquartered in London. WorldRemit country director Earl Melivo said: “It’s just a continuation of last year, with the redeployment of OFWs caused by more and more host countries reopening their economies – particularly in the US, where it’s almost normal now.”
The Middle East, where about 60% of OFWs are deployed, was the most adversely affected region when the pandemic hit in 2020. The limited economic activities in other countries had a negative impact on the livelihood of nearly 10 million Filipinos working overseas.
But many of the Gulf states have started accepting OFWs again. There is also a continuing indication globally that major sending countries are opening up their economies and therefore requiring more foreign workers, including Filipinos.
Mr. Melivo estimates an increase of 5-6% in remittances this year on top of the 5.1% growth in 2021. He noted that even in 2020, despite the challenges posed by the severe lockdowns, Asia-Pacific countries such as Singapore, Taiwan, and South Korea increased their market in terms of total volume to the Philippines.
Compared with other recipient countries within the Southeast Asian region, the Philippines tops the list, followed by Indonesia. According to Mr. Melivo, our country is very much resilient because OFWs are sending money home regardless of their situation.
Digital money transfer companies have ensured that there is a continuous improvement in their services during the current pandemic. Traditional players that used to be offline have begun offering online remittance services as well.
For its part, WorldRemit offers one of the lowest costs to its customers – translating to lower fees and more money being sent back home. In the Philippines, it maintains thousands of cash pick-up locations serving far-flung areas and those without stable internet connectivity. It has directly partnered with more than 100 local banks, including the big unibanks, to ensure that its remittance services are reliable.
Aside from the banking system, WorldRemit also send money to mobile wallets that it launched in the first and second quarters or 2020 amidst the strictest lockdowns here. Its e-wallet business is currently the fastest-growing service by volume.
It seems that one of the few advantages arising from the pandemic is the acceleration of digital transformation in many industries. Mr. Melivo believes that the continuous shift toward digital send and receive remittance services will continue, along with other financial services.
With the BSP’s National Retail Payment System (NRPS) in place, financial institutions are reaping the benefits of almost instant transfers to other banks via the Instapay network. In fact, WorldRemit immediately took advantage of the NRPS facility by launching mobile wallet services that are ranked among the top three in the country. “Basically, it’s 24/7 sending to the Philippines because of the technology we have now,” Mr. Melivo shared, noting that fintech players have made a significant contribution to the level of OFW remittances over the past two years.
*****
J. Albert Gamboa is the chief finance officer of Asian Center for Legal Excellence and chairman of the FINEX Media Affairs Committee. The opinion expressed herein does not necessarily reflect the views of these institutions and BusinessWorld.