Business Mirror - By: Cai U. Ordinario | December 1, 2011

AMID the growing uncertainty caused by the European debt crisis, remittances from overseas Filipino workers (OFWs) worldwide are expected to remain resilient and reach as much as $23 billion by the end of the year, according to the latest Migration and Development Brief released by the World Bank on Thursday.

This would make the Philippines the world’s fourth-largest remittance-receiving country in the world, the report said.

The top three countries this year, according to the World Bank, are India, with remittances expected to reach $58 billion; China, $57 billion; and Mexico, $24 billion.

“Despite the global economic crisis that has impacted on private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of 8 percent in 2011,” World Bank Development Prospects Group Director Hans Timmer said. “Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.”

Total remittances sent home by some 8 million or 10 million overseas Filipinos from January to September this year have so far totaled $14.8 billion, or an increase of 7.1 percent from the same period last year, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

BSP officials are optimistic these will be at least 7 percent higher than last year, to more or less $20 billion by the end of 2011.

An e-mail sent to Timmer, who is based in Washington, D.C., on the discrepancy was not answered as of press time.

The World Bank said remittance flows to developing countries like the Philippines are expected to total $351 billion this year.

Despite the global uncertainties, the bank expects global remittances to stay on a growth path and, by 2014, reach $515 billion.

Of that, around $441 billion will flow to developing countries and some $127 billion will be directed to countries in East Asia and the Pacific, where two of the world’s biggest remittance recipient countries are located—China and the Philippines.

The bank expects continued growth in global remittance flows going forward, by 7.3 percent to $437 billion in 2012; 7.9 percent or $473 billion in 2013; and 8.4 percent or $515 billion in 2014.

However, the bank said there are some downside risks to the outlook for international remittance and migration flows.

For the Philippines, this includes the “indigenization” programs being considered by some countries like Saudi Arabia.

The kingdom, where many OFWs are located, has implemented a “Saudization” policy that encourages the employment of Saudi nationals in the private sector.

“There are also concerns about the minimum wages and the welfare of female domestic workers who account for a large share of OFWs in Saudi Arabia. While the indigenization may not affect remittances in the near term, they highlight the importance of destination-country policy changes for the future sustainability of remittance flows to developing countries,” the brief stated.

Globally, these risks include the persistent unemployment in Europe and the US, which may affect employment prospects of existing migrants and hardening political attitudes toward new immigration.

Risks also include the volatile exchange rates; the uncertainty of the direction of oil prices also presents further risks to the outlook for remittances.

More recently, some of the Gulf Cooperation Council countries, which are critically dependent on migrant workers, were considering tighter quotas for migrant workers to protect jobs for their own citizens.

However, the bank noted that domestic helpers from the Philippines and Sri Lanka have been exempt from the indigenization policy.

“Such policies may impact remittance flows to developing countries in the longer term,” report co-author and World Bank’s Migration and Remittances Unit Manager Dilip Ratha said. “But in the medium-term the risk of disruption to these flows is relatively low.”

Meanwhile, the bank said remittance flows would receive a further boost if the global development community achieved the agreed objective of reducing global average remittance costs by 5 percentage points in five years, or the “5 by 5” objective of the G-8 and the G-20.

Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011 due to increasing competition in large-volume remittance corridors such as UK-Nigeria and UAE-India. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a lifeline to the poor.

“In addition to streamlining regulations governing remittance- service providers, there is a pressing need to improve data on remittance-market size at the national and bilateral corridor level,” Ratha said. “That will stimulate market competition and also help in more accurate monitoring of progress toward the ‘5 by 5’ objective.”


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