ESSAY: Remittances Seen as ‘People Power Investment’ (Last of two parts)

Based on the ratio of diaspora saving to these four countries’ GDP and domestic savings, the Philippines stands out among the four countries with 13 percent of GDP and 84 percent of domestic savings.

If the US$21.1 billion estimate holds, the amount is bigger than the US$17.348 billion of cash remittances sent by some 8.5 million overseas Filipinos to the country in 2009.

The estimated Filipino diaspora savings is just above a third of the country’s 2010 gross international reserves (GIR) which stood at US$62.371 billion, Bangko Sentral ng Pilipinas data show.

However, in the BSP’s quarterly Consumer Expectations Survey, overseas Filipino workers (OFWs) allocating their remittances to investment cannot catch up with the rising number of OFWs who are saving.

As of CES’s end-2010 result, some 5.8 percent of OFWs set aside their remittances for investment while 43.7 percent of OFWs save their overseas earnings. In contrast, remittances for debt payments reached 49.8 percent in this same survey round of the CE Survey.

Some 2.8 percent of the survey’s OFW respondents within the National Capital Region use their remittances for investment, says fourth-quarter 2010 results. In contrast, 9.5 percent of respondents outside of NCR invest their remittances.

The Philippines, as a whole, has a low domestic savings rate of 15.6, says 2009 data coming from the Asian Development Bank.

The WB Migration and Remittances unit’s “Migration and Development Brief” estimated diaspora savings based on data of “bilateral migrant stocks for 2010” and “assumptions about migrant incomes.”

Ratha and Mohapatra’s estimates sought to determine the size of savings of overseas migrants to gauge the potential market for so-called “diaspora bonds.”

The Philippine government already tested such investment instrument when the Department of Finance floated “OFW bonds” last year, raising some US$346 million in funds. A fifth of those bonds were offered to retail buyers, i.e. OFWs or OFW relatives.

Given such potential, Ang thinks local governments must adjust their areas’ investment climate to accommodate the investment appetite of overseas townmates.

“The question is how ready rural birthplaces of overseas Filipinos are to become hubs of migrant investment should overseas townmates decide to park their money there.”

Ang’s research unit at the University of Santo Tomas is soon piloting a research tool to help overseas Filipinos from two fourth-class rural municipalities to determine investment opportunities in local communities.#