Press Release
November 30, 2007

Angara pushes for lower remittance costs

Senator Edgardo Angara today suggested that remittance firms in the country be regulated under the Bangko Sentral ng Pilipinas (BSP), in order to ensure that the remittance costs they charge are fair and reasonable.

This suggestion comes in light of the strong peso, which has been decreasing the value of OFW income while its nominal value remains the same.

"The cost of transmitting remittances in the Philippines is relatively high, compared to other countries like India and those in Latin America[1]," said Senator Angara.

Lowering this high cost of remittance, according to Senator Angara, will mitigate the adverse impact of the strong peso to the income of OFWs and their families.

"I have already suggested placing remittance firms in the country under the supervision of the central bank," said the senator and Chair of the Senate Committee on Banks and Financial Institutions.

"Placing remittance firms under the central bank would allow the latter to regulate the remittance fees charged by these firms, and make sure that they are fair and reasonable," said Senator Angara.

"This is one of the options to mitigate the adverse impact of the strong peso to the income of our OFWs. But we should keep of thinking of more options. It is high time we show a gesture of concern to our OFWs, whose remittances power our economy, and amount to more than double our Official Development Aids (ODAs) from other countries," asserted Senator Angara.

According to Marilou Uy, World Bank director for financial sector operations and policy, reducing remittance fees is likely to increase annual remittance flows to developing countries.

Aside from regulating remittance firms to lower the cost of remittance, Senator Angara has also suggested giving a preferential exchange rate to OFWs earning in US dollars as a temporary mitigating measure to the strong peso.

"Perhaps, as a temporary mitigating measure, we can apply a two-tiered exchange rate, with an additional peso or so rate of exchange for OFWs earning in dollars," the senator said.

In the new BSP charter that Senator Angara authored, the Central Bank can use transparency mechanisms that give it more teeth to supervise formal and informal remittance firms. This in turn shall protect OFWs from usurious practices in money transfer.

Senator Angara's Personal Equity and Retirement Act (PERA), which aims to provide voluntary pension fund for OFWs, has recently been passed by the Senate.


[1] Sending $100 through Moneygram and Western Union to the Philippines from the US exacts above 14 percent in fees, while the average remittance fee ranges at 10% of the remittance.

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