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The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas OFW Remittances in the Philippines.

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Presentation on theme: "The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas OFW Remittances in the Philippines."— Presentation transcript:

1 The Government of the Republic of the Philippines Bangko Sentral ng Pilipinas OFW Remittances in the Philippines

2 2 Bangko Sentral ng Pilipinas Ease foreign exchange liquidity constraintsEase foreign exchange liquidity constraints Increase disposable income and expenditures which lead to higher GDPIncrease disposable income and expenditures which lead to higher GDP Contribute to savings and investmentsContribute to savings and investments Importance of OFW Remittances

3 3 Bangko Sentral ng Pilipinas OFW remittances remains to be a major source of foreign exchange OFW remittances remains to be a major source of foreign exchange US$ billion Growth Rate (%) Importance of OFW Remittances 10.7

4 4 Bangko Sentral ng Pilipinas Remittances as percent of: GDPXGSFDIGIRDSB Total Cash Remittances (US$M) (Jan-Sep)916.8(Jan-Nov) (Jan-Sep)10.7 Importance of OFW Remittances

5 5 Bangko Sentral ng Pilipinas Profile of OFWs

6 6 Bangko Sentral ng Pilipinas STOCK of OFWs Stock of OFWs averaged 4.8 million over the last four years. Stock of OFWs averaged 4.8 million over the last four years. in million

7 7 Bangko Sentral ng Pilipinas About 95% of OFWs are land-based workers. About 95% of OFWs are land-based workers. STOCK of OFWs in million

8 8 Bangko Sentral ng Pilipinas Over the last five years, OFWs deployed are highly skilled Filipino workers. Over the last five years, OFWs deployed are highly skilled Filipino workers. OFW DEPLOYMENT by Skill in thousand

9 9 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 Concepts/Compilation Methodology

10 10 Bangko Sentral ng Pilipinas BOP Classification Starting 2004: OFW transactions are measured and classified using the one-year residency rule in accordance with the IMFs BPM5. 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) Concepts/Compilation Methodology

11 11 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. Concepts/Compilation Methodology

12 12 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 Concepts/Compilation Methodology

13 13 Bangko Sentral ng Pilipinas Modes of OFW Remittances Mode% to Total Average Cash Banks Informal Channels Non-Cash ( In-kind) Total100.0 Remittance Channels Source: Survey on Overseas Filipinos (SOF), NSO

14 14 Bangko Sentral ng Pilipinas Concept of residence Seabased workers - residents Seabased workers - residents Landbased workers Landbased workers o Entertainers normally with a 6-month employment contract – residents o All others generally having a 2-year employment contract – non-residents Estimation Methodologies: CURRENT

15 15 Bangko Sentral ng Pilipinas Income Account: Compensation of Employees (CE) CE Income : CE Seabased + CE Entertainers Seabased workers CE Seabased = [Stock of workers t=0 x ave. salary per worker t=0 ] + [no. of deployed t=1 x ave. salary per worker t=1 ] – [no. of workers with finished contract x ave. salary per worker] Estimation Methodologies: CURRENT

16 16 Bangko Sentral ng Pilipinas Entertainers / Performing Artists CE Entertainers = [Stock of workers t=0 x ave. salary per worker t=0 ] + [no. of deployed t=1 x ave. salary per worker t=1 ] – [no. of workers with finished contract x ave. salary per worker] Estimation Methodologies: CURRENT

17 17 Bangko Sentral ng Pilipinas Stock of OFWs Based on benchmark numbers per category established by the Task Force Based on benchmark numbers per category established by the Task Force Monthly updating based on a moving total: Monthly updating based on a moving total: Stock t=1 = Stock t=0 + number of deployed t=1 – Stock t=1 = Stock t=0 + number of deployed t=1 – number of workers with finished contract number of workers with finished contract

18 18 Bangko Sentral ng Pilipinas Workers remittances Residual of total remittances in cash and in kind 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) Estimation Methodologies: CURRENT

19 19 Bangko Sentral ng Pilipinas Current Transfers: Workers Remittances (other Land-based OFWs) = Non-residents Cash Remittances + 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) Estimation Methodologies: CURRENT

20 20 Bangko Sentral ng Pilipinas Need to harmonize definition of residence with population statistics / national income account /employment Need to harmonize definition of residence with population statistics / national income account /employment Past system of monitoring headcount of migrant workers has limitations: 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 Need to improve design of Survey of Filipinos Overseas Need to improve design of Survey of Filipinos Overseas Need to improve remittance estimates by source country Need to improve remittance estimates by source country Statistical Issues

21 21 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 Concepts/Compilation Methodology

22 22 Bangko Sentral ng Pilipinas Web:www.bsp.gov.ph

23 23 Bangko Sentral ng Pilipinas The SOF is a nationwide survey that seeks to gather information on Filipino citizens who left for abroad during the last five years.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)It is a rider survey to the October round of the Labor Force Survey (LFS) Survey on Overseas Filipinos

24 24 Bangko Sentral ng Pilipinas Objectives To provide data on overseas Filipinos (OFs) particularly the overseas contract workers (OFWs) and their contribution to the economyTo 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 characteristicsTo 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 remittancesTo provide estimates on the amount of cash and in kind transfers received by the families and mode of remittances Survey on Overseas Filipinos

25 25 Bangko Sentral ng Pilipinas The SOF is an annual survey and is a rider to the Qtr4 Labor Force Survey (LFS)The SOF is an annual survey and is a rider to the Qtr4 Labor Force Survey (LFS) The sample households of the SOF are the same as that of the LFSThe 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 five- year periodOnly the sample households that responded YES to the question, Is there a family who left abroad at anytime during the last five- year period Survey on Overseas Filipinos

26 26 Bangko Sentral ng Pilipinas The SOF contains: Socio-economic characteristics (i.e., sex, age, marital status, highest educational attainment, and occupation)Socio-economic characteristics (i.e., sex, age, marital status, highest educational attainment, and occupation) Place of work abroadPlace of work abroad Remittances (Cash and in-kind)Remittances (Cash and in-kind) Mode of remittances (i.e., banks, friends/co- workers, others)Mode of remittances (i.e., banks, friends/co- workers, others) Survey on Overseas Filipinos

27 27 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. Survey on Overseas Filipinos

28 28 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. Survey on Overseas Filipinos

29 29 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. Survey on Overseas Filipinos

30 30 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. Survey on Overseas Filipinos

31 31 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. Survey on Overseas Filipinos

32 32 Bangko Sentral ng Pilipinas OFW-related Travel Import Travel Import = CE Res OFWs - Total Remittances 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) Estimation Methodologies: CURRENT

33 33 Bangko Sentral ng Pilipinas OFW-related Travel Export Travel Export = Number of OFWs on visit 1/ x ave. per capita expenditure 2/ 1/ Source: POEA, OFW Deployment (Rehires) 2/ Source: National Accounts, Personal Consumption Expenditure (current prices) Estimation Methodologies: CURRENT


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