The Bangko Sentral ng Pilipinas (BSP) will start releasing this month data on personal remittances that comprehensively capture transactions in remittances from overseas Filipinos, BSP Governor Amando M. Tetangco, Jr. announced today. This is in line with the refinement in the measure of remittances under the International Monetary Fund’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), which provides the framework for the compilation of the balance of payments (BOP).1
BPM6 provides guidance on the recording of cross-border transactions and positions according to a set of internationally-agreed guidelines. Changes under the BPM6 include, among others, the results of continuing review and improvement of the conceptual framework of remittances. It presents alternative approaches and data sources to measure remittances, as well as provides guidance in developing a statistical program for improving remittance data.
The BOP summarizes the economic transactions of residents with the rest of the world in a given period.
Personal remittances, as defined in BPM6, represent the sum of net compensation of employees (i.e., gross earnings of overseas Filipino (OF) workers with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries), personal transfers (i.e., all current transfers in cash or in kind by OF workers with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines), and capital transfers between households (i.e., transfers of fixed assets, financial assets, and liabilities that arise from the migration of individuals from one economy to another). Personal remittances, being broader in scope, would measure the total amount of remittance flows into the country, including cash and non-cash items that flow through both formal (via electronic wire) and informal channels (such as money or goods carried across borders).
The BSP has already worked back the data series on personal remittances from 2009 onwards. Estimates on personal remittances for 2005 - 2008 will be released in March 2013 when the BSP adopts BPM6 in its balance of payments compilation. Meanwhile, data on cash remittances coursed through banks will continue to be reported for comparability with previous data.
Developments for the Period January-April 2012
Personal remittances from OFs amounted to US$1.9 billion in April 2012, rising by 5.5 percent year-on-year. For the four-month period in 2012, personal remittances increased by 5.6 percent relative to the same period a year ago to reach US$7.3 billion. About three-fourths (74.7 percent) of the aggregate amount of personal remittances in January-April 2012 consisted of transfers from OF workers with work contracts of one year or more while nearly a fourth (23 percent) came from sea-based workers and land-based OF workers with short-term contracts.
Meanwhile, cash remittances from OFs coursed through banks reached US$1.7 billion in April 2012, higher by 5.3 percent compared to the level recorded in the same period last year. This brought the cumulative remittance level for the four-month period to US$6.5 billion. The 5.4 percent year-on-year increase in fund transfers in 2012 was supported by higher remittances from both sea-based (US$1.5 billion) and land-based (US$5 billion) workers which grew by 14.6 percent and 2.8 percent, respectively.
Remittance flows were sustained by the steady demand for Filipino workers abroad as well as the expanded access of overseas Filipinos and their beneficiaries to a diverse and innovative range of financial products and services offered by banks and other financial institutions.
Preliminary data obtained from the Philippine Overseas Employment Administration (POEA) indicated that workers classified as new hires with processed contracts and are awaiting deployment rose by 16.5 percent to 85,009 for the period January-February 2012 from 72,941 in the same period last year. Meanwhile, for the first five months of the year, approved job orders aggregated 334,945, of which about a third or 100,848 consisted of processed job orders for service, professional, technical, and production and related workers which are intended for deployment to Saudi Arabia, the UAE, Qatar, Kuwait, Taiwan, Singapore and Hong Kong.
Increased inflows of overseas Filipinos’ cash remittances were also made possible by the continued expansion of banks’ presence across the globe through tie-ups established by local financial institutions with foreign and local money transfer operators, mobile phone service operators and pawnshops. To date, there are about 4,732 bank branches, correspondent banks, remittance centers, tie-ups/agents providing remittance services compared to 4,575 entities in the same period last year.
The top ten country sources of cash remittances passing through formal channels were the U.S.A, Canada, Saudi Arabia, Japan, the U.K., UAE, Singapore, Italy, Germany, and Hong Kong.
1 The BOP summarizes the economic transactions of residents with the rest of the world in a given period.