Press Release
May 14, 2008

Ensure delivery of services and benefits to OFWs
Villar: Freezing of 5K OFW loans ironic amid billion peso anomalies

Senate President Manny Villar today said it is unfortunate that government decided to suspend its loan program for departing overseas Filipino workers in the face of ongoing investigations on multi-million dollar worth of anomalous transactions in government.

"If government can bend the rules so it can spend billions of pesos for the questionable deals, then why has it suddenly become so strict with 5,000-peso loans of OFWs? " he said.

With an average 3,000 OFWs leaving the country every day, OWWA collects a billion pesos a year, "yet despite its assets surging from P2.2 billion in 1995 to P8.6 billion to 2005, OWWA spent only 3 percent of its fund balance on services," Villar said.

"While OWWA's mandate includes ensuring capital build-up and fund viability, it must guarantee that its delivery of welfare services and benefits is not sacrificed nor should be it at the expense of accountability," Villar said.

Villar filed a resolution in the Senate urging the Senate Committee on Labor, Employment and Human Resources Development to conduct an inquiry into the suspension of the predeparture loan (PDL) program of the Overseas Workers Welfare Administration (OWWA).

Villar said the PDL program "is a mandate of the law," as it is one of the provisions of the Migrant Workers and Overseas Filipinos Act of 1995.

The said law created the P100-million Migrant Workers Loan Guarantee Fund, from which a departing OFW can borrow from P5,000 up to P40,000 -payable in a year at 7.5 percent interest- for his fare, placement fees, clothing and pocket money.

"This is some sort of cash advance, to protect the OFW from loan sharks, or prevent him from pawning the family carabao, so his family has something to tide them over with until the first remittance arrives," Villar said.

Citing a low repayment rate of 29 percent, OWWA froze all PDLs in June 2006, but Villar said a recent report showed a higher repayment rate of 65 percent which could still be improved if the OWWA can impose a better collection system.

"Besides, the P100 million fund is insured from defaults, so OWWA is not entirely left holding an empty bag," he said.

Villar said the OWWA can also absorb "past due accounts" as it got a "windfall" from the peso depreciation when it continued using a P56- $1 exchange rate for the mandatory $25 "membership fee" that each departing OFW has to pay to OWWA even when the peso had improved to P51 to dollar last year .

In filing Proposed Resolution No. 392, Villar said transparency in the management of the OWWA Fund derived from the hard-won earnings of OFWs is significant in order to come up with legislation that will ensure effective delivery of welfare services and benefits to OFWs.

"The larger context is that OFWs remitted , just through banking channels alone, $14 .45 billion last year, 13 percent over 2006's $12.8 billion, accounting for 10 percent of the GDP, and fueling the biggest GDP in 31 years of 7.3 percent," he said.

"If only for this, we should retain the PDL program, to show our appreciation to them. If we grant incentives to electronic exports, then why not to the 'human kind'? They are not high-risk lenders. Better that we help them than let 5-6 lenders prey on them, "he said.

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