The Government of the Bangko Sentral Pilipinas Republic
The Government of the Bangko Sentral Pilipinas Republic of theng Philippines OFW Remittances in the Philippines Bangko Sentral ng Pilipinas
Importance of OFW Remittances Bangko Sentral ng Pilipinas • Ease foreign exchange liquidity constraints • Increase disposable income and expenditures which lead to higher GDP • Contribute to savings and investments 2
Importance of OFW Remittances Bangko Sentral ng Pilipinas US$ billion Ø OFW remittances remains to be a major source of foreign exchange Growth Rate (%) 10. 7 3
Importance of OFW Remittances Bangko Sentral ng Pilipinas Remittances as percent of: Total Cash GDP XGS FDI GIR DSB Remittances (US$M) 1999 8. 9 17. 4 393. 9 45. 1 102. 5 6794 2000 8. 0 14. 7 449. 8 40. 2 99. 6 6050 2001 8. 5 17. 5 609. 8 38. 4 91. 9 6031 2002 9. 0 18. 4 384. 3 42. 1 92. 5 6886 2003 9. 6 19. 6 2183. 9 44. 4 95. 1 7578 2004 9. 9 20. 0 1823. 0 52. 7 118. 4 8550 2005 10. 9 57. 8 136. 6 (Jan-Sep) 10. 7 24. 4 916. 8 (Jan-Sep) (Jan-Nov) 4
Bangko Sentral ng Pilipinas Profile of OFWs 5
Bangko Sentral ng Pilipinas STOCK of OFWs in million ØStock of OFWs averaged 4. 8 million over the last four years. 6
Bangko Sentral ng Pilipinas STOCK of OFWs in million ØAbout 95% of OFWs are land -based workers. 7
Bangko Sentral ng Pilipinas OFW DEPLOYMENT by Skill in thousand Ø Over the last five years, OFWs deployed are highly skilled Filipino workers. 8
Concepts/Compilation Methodology Bangko Sentral ng Pilipinas BOP Classification Prior to 2004: 1. Compensation Income – covers cash remittances of salaries/earnings of sea-based and land-based OFWs passing thru the banking system. 2. Current Transfers – covers gifts/donations received by resident beneficiaries from migrant Filipinos 9
Concepts/Compilation Methodology Bangko Sentral ng Pilipinas BOP Classification Starting 2004: OFW transactions are measured and classified using the one-year residency rule in accordance with the IMF’s BPM 5. 1. Resident OFWs – those who work abroad for less than one year (e. g. , entertainers / performing artists and sea- based workers with short-term working contracts) 2. Non-resident OFWs – those who work abroad for a period of one year or more (e. g. , other land-based workers with long-term working contracts) 10
Concepts/Compilation Methodology Bangko Sentral ng Pilipinas BOP Classification 1. Compensation of Employees – covers remittances of resident OFWs 2. Workers’ Remittances – cover remittances of non-resident OFWs. 3. Other current transfers – cover gifts/donations of migrant Filipinos who permanently reside abroad. 11
Concepts/Compilation Methodology Bangko Sentral ng Pilipinas Measurement & Sources of Data 1. International Transactions Reporting System (ITRS) – based on bank reports to BSP on cash passing through banks and remittances through money transfer operators (MTOs) 2. NSO Survey on Overseas Filipinos (SOF) for estimates of cash passing through other channels and for remittances-in-kind 12
Modes of OFW Remittances Bangko Sentral ng Pilipinas Remittance Channels Mode % to Total 1995 2004 Average 1995 -2004 87. 4 95. 2 92. 0 Banks 67. 1 77. 2 69. 0 Informal Channels 20. 3 18. 0 23. 0 Non-Cash ( In-kind) 12. 6 4. 8 8. 0 100. 0 Cash Total Source: Survey on Overseas Filipinos (SOF), NSO 13
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT Concept of residence Ø Seabased workers - residents Ø Landbased workers o Entertainers normally with a employment contract – residents o All others generally having a employment contract – non-residents 6 -month 2 -year 14
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT Income Account: Compensation of Employees (CE) CEIncome: CESeabased + CEEntertainers Ø Seabased workers CESeabased= [Stock of workerst=0 x ave. salary per workert=0] + [no. of deployedt=1 x ave. salary per workert=1] – [no. of workers with finished contract x ave. salary per worker] 15
Bangko Sentral ng Pilipinas Stock of OFWs Ø Based on benchmark numbers per category established by the Task Force Ø Monthly updating based on a moving total: Stock t=1 = Stock t=0 + number of deployed t=1 – number of workers with finished contract 17
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT Workers’ remittances Residual of total remittances in cash 1/ and in kind 2/ 1/ FX rem thru banks x Raising factor using Results of 2002 SOF (1. 2 for 2004 and 1. 25 for 2003) 2/ Computed based on ratio of import in-kind to total cash remittances per 2002 SOF (estimated at 7 percent) 18
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT Current Transfers: Workers’ Remittances (other Land-based OFWs) = Non-residents’ Cash Remittances in-kind + 2/ 1/ FX rem thru banks x Raising factor using Results of 2002 SOF (1. 2 for 2004 and 1. 25 for 2003) 2/ Computed based on ratio of import in-kind to total cash remittances per 2002 SOF (estimated at 7 percent) 19
Bangko Sentral ng Pilipinas Statistical Issues Ø Need to harmonize definition of residence with population statistics / national income account /employment Ø Past system of monitoring headcount of migrant workers has limitations: o Difficulty of monitoring those with no valid work documents i. e. . , those counted as tourists upon departure o Upward bias in headcount due to: mobility of workers in landlock countries; returning workers with unexpired work contract and those frequently on vacation are not netted out in the stock estimates Ø Need to improve design of Survey of Filipinos Overseas Ø Need to improve remittance estimates by source country 20
Concepts/Compilation Methodology Bangko Sentral ng Pilipinas Initiatives to improve Monitoring of Remittances Estimate potential income of OFWs by: 1. Establishing a benchmark estimate of stock of OFWs 2. Gathering data on average salary per worker by skill category and by country 3. Review survey design of the SOF 21
Bangko Sentral ng Pilipinas Web: E-mail: www. bsp. gov. ph bspmail@bsp. gov. ph 22
Bangko Sentral ng Pilipinas Survey on Overseas Filipinos • The SOF is a nationwide survey that seeks to gather information on Filipino citizens who left for abroad during the last five years. • It is a rider survey to the October round of the Labor Force Survey (LFS) 23
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Objectives • To provide data on overseas Filipinos (OFs) particularly the overseas contract workers (OFWs) and their contribution to the economy • To obtain national estimates on the number of OFs including overseas workers and their socio -economic characteristics • To provide estimates on the amount of cash and in kind transfers received by the families and mode of remittances 24
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas • The SOF is an annual survey and is a rider to the Qtr 4 Labor Force Survey (LFS) • The sample households of the SOF are the same as that of the LFS • Only the sample households that responded “YES” to the question, “Is there a family who left abroad at anytime during the last fiveyear period” 25
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas The SOF contains: • Socio-economic characteristics (i. e. , sex, age, marital status, highest educational attainment, and occupation) • Place of work abroad • Remittances (Cash and in-kind) • Mode of remittances (i. e. , banks, friends/coworkers, others) 26
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Who are Overseas Filipinos? Filipinos whose departure occurred within the given five-year period such as: 1) Filipino overseas contract workers (OFW) who are presently and temporarily out of the country to fulfill an overseas contract for a specific length of time or who are presently at home on vacation but still has an existing contract to work abroad. 27
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Who are Overseas Filipinos? OFWs may be classified as: a) Land-based workers - hired directly by an employer abroad, through the assistance of the POEA or through a private and licensed recruitment agency. b) Sea-based workers - work for a shipping company abroad or manning any kind of international fishing/passenger/cargo vessels. 28
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Who are Overseas Filipinos? 2) Other Filipino workers abroad with valid working visa or work permits 3) Filipinos whose place of employment is outside the Philippines but whose employer is the Philippine government. 29
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Who are Overseas Filipinos? 4) Filipinos who are abroad on training, scholarships or any other similar purpose, even if they are known to be working abroad. 5) Filipinos working in other countries as consultants/advisors of international organizations. 30
Survey on Overseas Filipinos Bangko Sentral ng Pilipinas Who are Overseas Filipinos? 6) Filipino immigrants and residents in other countries. 7) Filipinos abroad who are holders of other types of non-immigrant visa such as tourist/visitor, student, medical and others. 31
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT OFW-related Travel Import = CERes OFWs- Total Remittances (banks + non-banks) = Cash Rem per Bank Report x Raising Factor * • Raising Factor using Results of 2002 SOF : 1. 2 (2004) and 1. 25 (2003) 32
Bangko Sentral ng Pilipinas Estimation Methodologies: CURRENT OFW-related Travel Export = Number of OFWs on visit expenditure 2/ 1/ x ave. per capita 1/ Source: POEA, OFW Deployment (Rehires) 2/ Source: National Accounts, Personal Consumption Expenditure (current prices) 33
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