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Personal Remittances Post Stronger Growth in March 2014; First Quarter Level Reaches US$6.1 Billion

05.15.2014

Personal remittances from overseas Filipinos (OFs) rose by 6.9 percent year-on-year to US$2.1 billion in March 2014, higher than the 6.0 percent growth posted in February. This brought personal remittances for the first quarter of 2014 to US$6.1 billion, up by 6.6 percent relative to the level recorded in the same period a year ago, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today.1  The steady increase in personal remittances during the first three months of the year was driven by strong growth in remittance flows from both land-based workers with long-term contracts (4.5 percent) and sea-based and land-based workers with short-term contracts (10.9 percent).

Similarly, cash remittances from OFs coursed through banks increased robustly by 6.5 percent year-on-year to US$1.9 billion in March 2014. On a cumulative basis, cash remittances for the first quarter of the year rose to US$5.5 billion, 6.0 percent higher than the level posted in the comparable period last year. Cash remittances from both land-based (US$4.1 billion) and sea-based (US$1.4 million) workers grew by 4.5 percent and 10.9 percent year-on-year, respectively, during the January-March 2014 period. The major sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, and Hong Kong.2

Robust cash transfers in the first quarter of 2014 were supported by the sustained demand for skilled Filipino manpower. Preliminary data from the Philippine Overseas Employment Administration (POEA) indicated that in January-March 2014, approved job orders totaled 239,022, of which 24.5 percent were processed job orders intended for service, production, and professional, technical and related workers in Saudi Arabia, the United Arab Emirates, Taiwan, Kuwait, and Qatar.

Likewise, the continued expansion of the network of banks and non-bank service providers and innovations in financial products in the remittance market have facilitated the wider capture of fund transfers through formal channels. As of end-March 2014, commercial banks’ established tie-ups, remittance centers, correspondent banks and branches/representative offices abroad reached 4,771 from 4,750 in the comparable period last year.

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1 The BSP started to release data on personal remittances in June 2012.  As defined in the Balance of Payments Manual, 6th Edition (BPM6), personal remittances 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., the provision of resources for capital purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return).
2 There are some limitations on the remittance data by source. A common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the U.S. Meanwhile, remittances coursed through money couriers cannot be disaggregated by actual country source and are lodged under the country where the main offices are located, which, in many cases is in Canada. Therefore, the U.S. and Canada would show up to be the main sources of OF remittances because banks attribute the origin of funds to the most immediate source.  

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