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ADB Philippines Study TA 4185 Enhancing the
Efficiency of Overseas Workers Remittances

• Session 3 Recent studies relating to remittance
  data quality and availability
• World Bank- IMF International Technical Meeting
  on Measuring Remittances, Washington DC
• 24 25 January 2005

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Objectives and Scope of Study

• The main objectives of the study were to
  review the flows of remittances to the
  Philippines, in particular from US and Singapore,
  and identify constraints in the policy,
  regulatory and institutional framework that
  hinder these flows. Proposals were developed to
  address the problems and constraints with the
  goal of
• - Increasing formal remittance volumes
• - Facilitating the shift from informal to
  formal channels and
• - Encouraging, where applicable, the use of
  remittance proceeds for sustainable poverty
  reduction.

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Remittances to the Philippines

• In 2003, Bangko Sentral ng Pilipinas (BSP)
  recorded 7.6 billion in remittances through
  formal channels. While 4.1 billion are recorded
  to have come from the US, some of these amounts
  may have emanated from other countries given the
  practice by receiving banks of attributing
  remittances to the most immediate source, which
  are US correspondent banks.
• Including money transfers made through
  unregulated channels, some estimate that total
  remittances could be double the amount through
  formal channels.

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Countries surveyed under TA 4185

• Market surveys and focused group discussions
  were conducted in the Philippines and two
  remitting countries to obtain a profile of
  Filipino remitters in those areas and their
  beneficiaries. Self-administered surveys were
  utilized for Singapore and US.
• Singapore Singapore has a mix of contract-based
  workers (domestic and professionals) numbering
  around 128,000.
• US The US has more than 2 million Filipinos
  including immigrants, high-income professionals,
  and ethnic Filipinos who have acquired US
  citizenship including a large number of irregular
  workers. The US survey was conducted in
  California.

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Survey Respondents

• 1,150 Overseas Filipino Workers (OFWs) in the
  Philippines for the Christmas holidays in 2003
  (nationwide survey covering all regions). 89
  contractual OFWs 5 immigrant 3 other country
  citizen 3 others
• 300 beneficiary households in the Philippines
• 200 respondents from Singapore (including 37 in
  Philippine survey). 85 contractual OFWs 11
  immigrant 4 other country citizen
• 434 respondents from US (including 71 in
  Philippine survey). Survey conducted in
  California in San Francisco, Sta. Clara, Alameda,
  and San Mateo. 69 contractual OFWs 27
  immigrant other country citizen 4

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Breakdown of Respondents in OFW Survey in
Philippines by Country

• Saudi Arabia 23.0
• Seafarers 13.9
• Japan 13.1
• Hong Kong, China 8.5
• US Canada 7.7
• UAE 6.1
• Taiwan, Peoples Republic of China 5.9
• Europe 5.2
• Other Southeast Asia (Malaysia, Brunei) 3.4
• Singapore 3.3
• Kuwait 2.8
• Other Middle East 2.9
• Other Asia 2.0
• Other Countries 2.2

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Stakeholders Interviewed

• In addition to remitters and beneficiaries,
  research included meetings and interviews with
• Philippine and foreign regulatory agencies
• International agencies and financial institutions
• Bank and non-bank financial institutions
  including microfinance institutions,
  cooperatives, NGOs, and overseas Filipino
  organizations

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Definition of Filipino Migrant Population

• The Filipino migrant population or the
  universe of Filipino remitters is divided into 3
  main types
• Permanent Immigrants who hold permanent
  residence or landed immigrant status in a foreign
  country, and whose stay does not depend on work
  contracts. Includes those who have acquired
  foreign citizenship.
• Temporary Stay overseas is based or determined
  by a formal or informal contract of employment.
  These overseas contract workers are collectively
  referred to as Overseas Filipino Workers (OFWs).
• Irregular Residents or workers overseas who do
  not possess valid passports or documents, or are
  without valid residency or work permits or who
  have overstayed.

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Profiles and Remittance Behavior of Survey
Respondents

• Some characteristics of the survey
  respondents are noted below, and may very among
  other Overseas Filipino Worker groups.
• 80 of survey respondents regularly remit through
  banks or other regulated channels.
• Speed, trustworthiness, reliability and efficient
  service were rated as most important factors in
  selecting remittance modes.
• 9 out of 10 respondents save in banks or through
  personal hoarding, with 70 maintaining bank
  accounts in the Philippines and 52 using
  automated teller machine (ATM) for payments or
  remittance.

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Profiles and Remittance Behavior of Survey
Respondents (continued)

• In Singapore, where more than half of respondents
  were in domestic work which typically paid low
  wages, 80 stated they were able to save, and
  almost half indicated that they keep their
  savings in Singapore banks.
• A large percentage of respondents, 41 in the
  nationwide Philippines survey and 49 in
  Singapore, had to borrow money to pay for
  recruitment expenses, and 19 said they borrow
  while working overseas.
• Average amount of remittance sent monthly is
  340. Monthly remittances ranged from 205 to
  524.
• Beneficiaries surveyed use remittances for food,
  utilities, household expenses, personal care and
  effects, communications, transportation,
  education and special occasions.

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Issues Raised for Measuring Remittances and
Challenges Ahead

• General issues raised in measuring remittances
  include
• Lack of common definitions for overseas worker
  population
• Lack of common methodologies of measurement
• Lack of common definitions for formal and
  informal
• Lack of data on transfers through informal
  channels
• Importance of field surveys to supplement and
  capture data not collected by central banks

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Issues Raised for Measuring Remittances and
Challenges Ahead (continued)

• Recognition of field study limitations and
  potential for target groups to give biased
  perspectives on OFWs and OFW behavior
• Importance in collecting data for permanent,
  temporary and irregular workers for a broader
  view of remittances/transfers and migrant
  population
• Better recording and disaggregation of data are
  important for enhancing information systems and
  improving the recording of remittance flows.
• Need for collaboration and cooperation among
  agencies and countries for a common framework for
  measuring remittances

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• Appendix Additional information from TA 4185
  on trends and potential developments that could
  impact future remittance data availability and
  quality

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Remittance Trends in the Philippines

• Competitive Market Formal remittance market
  between the Philippines and remitting countries
  is competitive and dominated by commercial banks.
• Decreasing Costs With the entry of more players
  and new technology-based products(e.g. cell
  phones, debit cards), remittance costs could be
  pushed lower, which should increase the formal
  sectors share of the remittance flows.
• Convergence Services offered by Philippine
  banks, licensed non-bank money transfer agencies,
  courier companies and ethnic stores acting as
  agents for banks have converged. The industry is
  characterized by partnerships, alliances or
  tie-ups, and revenue sharing among different
  players.
• Industry players have observed a reduction in the
  use of unregulated channels.

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Increasing Efficiency and Remittance Flows
through Formal Channels

• Some of the conclusions and recommendations
  included in TA 4185 based on the market survey
  and other industry research are
• Philippine Government should take bilateral
  initiatives to establish greater access to
  remitting countries financial markets for
  Philippine banks and banking products to
  encourage more remittances through the formal
  sector.

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Increasing Efficiency and Remittance Flows
through Formal Channels

• OFWs with irregular status lack access to banking
  and other formal remittance facilities, forcing
  them to use unregulated remittance facilities.
  Consideration could be given to accepting
  identity cards issued by Philippine consular
  officials as identification for opening US bank
  accounts.
• Since the Philippines is an archipelago with many
  underdeveloped areas, the door-to-door system for
  remittances will continue to be used unless
  problems of interconnectivity are addressed.

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Increasing Efficiency and Remittance Flows
through Formal Channels

• The emergence of cell phone based delivery system
  will compete with door-to-door system offered by
  banks.
• Non-bank money exchange and remittance agencies
  should be regulated and supervised for anti-money
  laundering compliance.
• Financial literacy programs conducted in
  Pre-Departure Orientation Seminars for OFWs
  should be extended to recipient families and
  rural communities where the majority of OFWs
  originate.

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Increasing Efficiency and Remittance Flows
through Formal Channels

• Electronically centralizing databases of agencies
  involved in the overseas deployment system could
  improve the exchange of vital information on
  migrant stocks and flows, upgrade communications
  between home agencies and overseas offices, and
  enhance the authentication of documents.

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Additional Information for TA 4185

• The complete technical assistance report and
  market study including survey questionnaires can
  be accessed on ADBs website at
• http//www.adb.org/Documents/TARs/PHI/
• tar-phi-4185.asp