Press Release
December 9, 2008

As BSP sees slowdown in remittance growth

Senator Edgardo J. 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 are fair and reasonable, this he said amid BSP projections of slower growth in remittances.

"The cost of transmitting remittances in the Philippines is relatively high, compared to other countries like India and those in Latin America[1], Lowering this high cost of remittance will mitigate the adverse impact of the global financial crisis to the income of OFWs and their families." said Angara who chairs the Senate Committee on Banks, Financial Institutions and Currencies.

He added, "Placing remittance firms in the country under the supervision of the BSP would allow the latter to regulate the remittance fees charged by these firms, and make sure that they are fair and reasonable. Through this, we can show a gesture of concern to our OFWs especially during this though times of financial crisis."

For 2008, OFW total remittances are seen to hit at least $16.6 Billion. Of this amount $16 Billion would likely be coursed through the banking system.

Preliminary BSP estimates for 2009, however, expected a slowdown in the growth of overseas remittances to six percent (6%) from ten to eleven percent (10 - 11%) growth projected for this year.

Latest BSP report shows that OFW remittances surged at a 16.94 percent year-on-year in September from 10.36 percent in August. September 2008 remittances amounted to $1.3 billion with nine-month overseas inflows totaling $12.3 billion or 17.1-percent higher from last year.

According World Bank studies, reducing remittance fees is likely to increase annual remittance flows to developing countries.

"During this time of financial difficulty, we must seek all possible options to extend assistance to our OFWs. One of these options is to increase their spending power through lower remittance costs. On the other hand, we may see that in the long-run the Philippine economy is most likely to benefit from this increased consumer spending," Angara added.

Angara recently filed a bill seeking to amend the BSP charter. Through the amendments the Central Bank can use transparency mechanisms that can give it more teeth to supervise formal and informal remittance firms. This in turn shall protect OFWs from usurious practices in money transfer. (30)

[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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