Remittances Should Be More Than a Numbers Game

In 2012, remittances to the Philippines reached $21 billion. Sources:, and

Remittances continue to play a major role in the Philippine economic outlook, but behind the numbers is a growing awareness in civil society and government of the need to deliberately harness this social phenomenon as an engine of development.

Remittances are already a fixture of the Philippine economy, and the country remains a major labor-sending country–with OFW deployment up 11 percent to over 1.4 million in 2012. Money transfers to the Philippines amounted to $21 billion in 2012, approximately 10 percent of GDP. Top sending countries include the United States, Canada, Saudi Arabia, United Kingdom, Japan, United Arab Emirates and Singapore. The United States accounted for nearly 30 percent of incoming remittances or $6.4 billion. Sea-based workers accounted for 23 percent or $4.8 billion.

Remittances contribute to the foreign exchange receipts of the national economy as well as current GDP growth rates–up 6.1 percent in 2012. Indeed, the present Philippine economic “window of opportunity” has been made possible in large part by the remittance phenomenon, a fact acknowledged in the “2011-2016 Philippine Development Plan.”

Direct But Limited Benefits

First and foremost, cash transfers directly provide for basic needs and consumer goods of OFW families back home, contributing to the wellbeing of an estimated 10 percent of the population. However, remittances do not necessarily lift all boats. According to the National Statistics Office, 85 percent of monetary and in-kind support from overseas benefits households in the two highest-income quintiles (i. e., families making P100,000 [$2,456]+ or P250,000 [$6,141]+ a year).

While this may reflect upward mobility among families of migrants, overall, poverty data over the last 25 years indicates that income inequality and relative poverty incidence remain virtually unchanged. By some accounts, there were as many poor people as a percentage of the total population in 1985 as in 2005.

Thus, while migration may be an economic game-changer for many families (albeit with social costs, i.e. children growing up without their parents, strained family and clan dynamics centered around money, etc.), for the nation, as a whole, migration may in fact widen disparities. For policymakers and migrant advocates, the question of migration and development is, therefore, not simply a numbers game. The challenge is finding ways for migration to raise all boats by spurring productivity and innovation, rather than merely enabling consumption for a minority.

Remittances do not necessarily lift all boats–85 percent of monetary and in-kind support from overseas benefits mainly families making P100,000 [$2,456]+ or P250,000 [$6,141]+ a year.

A host of third-party stakeholders also have an interest in remittances, including financial institutions, the private sector and the government. Twenty years ago, many banks were reluctant to serve the burgeoning overseas Filipino community. But today, according to the National Statistics Office, 72 percent of incoming remittances pass through bank channels rather than the informal padala (delivery through friends and relatives) system. Top remittance players include I-Remit, LBC, Western Union, Xoom and Philippine National Bank. The multiplier effects of family remittances can be widely seen in the retail sector, on construction and real estate, and on private education.

A Closer Look

At long last, the various stakeholders are taking a closer look at the long-term economic potentials of the remittance phenomenon. The last few years have witnessed a remarkable convergence among government, the private sector and NGOs on the challenge. Begun in November 2011, the Remittance for Development Council (ReDC), co-convened by the Commission on Filipino Overseas (CFO) and the Bangko Sentral ng Pilipinas, is one such example of convergence. These quarterly meetings of remittance stakeholders recognize the importance of partnerships. The Council recommends policy and regulatory changes to the remittance environment in order to harness remittances for development.

Local governments are also incorporating partnerships with migrant families into their regional planning. Ilocos Norte and Taguig City, for example, are introducing NGO-based models of migrant savings and alternative investment at the municipal and provincial levels. It’s an effort to scale up successful initiatives for the benefit of a wider locality.

The recently concluded Second Global Summit of Filipinos in the Diaspora, hosted by the CFO, likewise tried to forge meaningful linkages for development among migrant families and other stakeholders. The two-day event held in Manila on February 24-26, 2013 featured plenaries and workshops on themes such as tourism, investment, entrepreneurship, balik-turo (return-to-teach), philanthropy, and arts and culture.

These events recognize that migrant communities are crucial players in Philippine development, not simply because of their remittance practice, but because of a wide range of skills, networks, insights and resources–the fruits of their overseas experience.

Melissa Gibson

Melissa Gibson

Melissa Gibson is the Philippine director of the Transnational Institute for Grassroots Research and Action (TIGRA).