1. ILDEFONSO F. BAGASAO Economic Resource Center for Overseas Filipinos www.ercof.org / dbagasao.ercof@gmail.com Overseas Filipinos’ Remittances and Rural Development 2007 International Forum on Remittances 18-19 October 2007 – Washington D.C. * Organized by IFAD and IDB

2. Current global remittance environment Migrants worldwide: 200 million (UN Statistics Division) Officially-recorded remittances exceed US$232 billion in 2005 (50 more if informal money transfers were included) Countries with highest recorded remittances (in US$ billion) in 2005 alone: India (US$21.7), China (US#21.3), Mexico (US$18.1), France (US$12.7), Philippines (US$11.6) 1995-2004 (IMF data): India (US$130.42), France (US$90.38), Mexico (US$89.76), China (US$80.89), Philippines (US$72.97)

3. What guides us in leveraging remittances for dev’t Remittances and international migration must only complement local/homeland development efforts, and not substitute for sound local development policies (World Bank, 2006; ADB, 2006) Migrants’ associations are not development- oriented by nature, and should not be pushed into development activities (Manuel Orozco) Development for whom—National dev’t? Human dev’t? The contributions of migrants to the development of origin and receiving countries are real and must be recognized and enhanced through protection of their rights

4. Relevant Philippine situationers International migration and remittances Highest origin country of migrants in Asia, second highest worldwide (over 8.2 million overseas citizens in 193 countries) 5 th highest recipient of remittance inflows Some 44 percent of Filipino households depend on remittances Overseas Filipinos sent US$12.7 billion in 2006 (10 times more than the transfers from official development aid, and 18 times more than net foreign direct investments)

5. Relevant Philippine situationers Rural areas / rural development As of the year 2000, some 5.1 million families (or 30.8 million Filipinos) were still considered poor. Relative to total number of poor families, rural families account for 70.9 percent (Philippine progress report on the MDGs, 2003) Agriculture sector contributes roughly 20 percent of country’s GDP and 40 percent of total employment. The large majority—roughly 61 percent—of the poor comes from the agricultural sector (Arsenio Balisacan, 2003)

6. The Philippines Rural areas / rural development Two-thirds of overseas Filipino workers (3.8 million) and permanent residents (3.5 million) come from the rural areas (ADB, 2005; Commission on Filipinos Overseas, 2007) Less arable land Solutions lie in the increase in agricultural productivity, through increased use of technology and rural infrastructure; basic health services; and increased capacity building for microfinance and other grassroots financial institutions who serve the poor

7. Remittances and rural fiscal economy issues Lack of inter-connectivity and resources Limited links with Filipino remitters abroad Savings accounts treated as payroll Some emerging efforts Rural banks’ services targeting overseas Filipinos in hometown rural areas Cooperatives using technology- based remittance channels (e.g. National Confederation of Cooperatives)

8. Ercof Philippines: A profile - NGO focused on socio economic programs and advocacies for Filipino migrants and their families. - Registered as nonprofit with Philippine SEC, with focal organizations or networked in the Benelux, Switzerland, Denmark, Italy, Japan, Singapore, and the US. - Resource organization for the Philippines’ Central Bank and Department of Foreign Affairs, as well as the ILO and IOM on migrant economic matters. - Awareness raising and advocacies through roadshows, interventions with migrant families, federations and Overseas Filipino associations, and presentations in national and international forums.

9. Pilot programs to link remittances to rural dev’t Migrant time deposits in microfinance rural banks - Deposits are insured by the Philippine Deposit Insurance Corp. up to 250k - Rural banks are supervised by the Philippine Central Bank) - 8.5 to 10% p.a. if deposits are locked in for 5 years, and exempt from tax on interest; cheaper source of capital for MFI’s which borrow from wholesalers at 13% p.a.)

10. Pilot programs to link remittances to rural dev’t Facilitating dairy cow investments - Migrants invest in dairy cows which are dispersed to rural based dairy farmers. - Milk is purchased by a local dairy plant which sells milk to coffee shops in urban areas and also support school feeding programs through Rotary clubs. -Migrant Investors and Dairy farmers sign contract containing rights and obligations, and sharing of milk proceeds and off-springs -Long term support for Philippine dairy industry through savings on milk importation, and assurance of real fresh milk for the Filipino public

11. Pilot programs to link remittances to rural dev’t Financial literacy for overseas Filipinos and their families - Ercof is resource organization of Philippines’ Central Bank in financial literacy campaign; now on its 2nd year. - Legal Manual published to help migrants and families on Philippine- related legal problems.

12. Strategies to enhance pilot programs ERCOF signed an MOA with the Rural Bankers Association of the Philippines (RBAP) to link migrants and families with the products and services of more than 700 rural banks nationwide. - Products will include time deposits, micro-credit, guidance on purchase of agricultural property, remittances through SMS messaging, business and entrepreneurship mentoring, FCDU and trust accounts for qualified rural banks, and for certain rural banks, payment systems, educational, health and retirement plans.

13. Strategies to enhance pilot programs - In negotiation with other rural banks for microfinance time deposits program - Joint conduct by rural banks and Ercof of pre-departure orientation seminars for future migrants and their families, with heavier financial literacy content. - Currently in Negotiation of partnership with Philippine cooperatives

14. ERCOF Philippines Room 314 Philippine Social Science Center Building, Commonwealth Ave., Diliman, Quezon City 1103, PHILIPPINES 63-2-9203610 (tf) info@ercof.org dbagasao.ercof@gmail.com www.ercof.org