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Personal Remittances Post Higher Growth in May; January - May Level Breaches US$10.0 Billion Mark

07.15.2014

Personal remittances from overseas Filipinos (OFs) rose by 5.5 percent year-on-year to US$2.2 billion in May 2014. This was higher than the 5.2 percent growth posted in April. On a cumulative basis, personal remittances exceeded the US$10.0 billion mark during the first five months of 2014, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today.  In particular, personal remittances reached US$10.4 billion in January – May 2014,   representing a 6.1 percent increase from the level posted in the comparable period last year. The sustained expansion in personal remittances during the first five months of 2014 was underpinned by the steady growth in remittance flows from both land-based workers with long-term contracts (higher by 5.0 percent) and sea-based and land-based workers with short-term contracts (up by 8.1 percent).

Likewise, cash remittances from OFs coursed through banks increased by 5.4 percent year-on-year to US$2.0 billion in May 2014.  This brought cash remittances for the period January – May 2014 to US$9.4 billion, higher by 5.7 percent relative to the US$8.9 billion recorded in the same period last year. In particular, cash remittances from land-based and sea-based workers expanded by 5.0 percent (to US$7.1 billion) and 8.1 percent (to US$2.3 billion), respectively, during the first five months of 2014.  The bulk of cash remittances (about 76 percent) during the period were received from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, and Hong Kong.2

The steady deployment of OF workers remained a key driver in the sustained growth in remittance flows. Preliminary reports by the Philippine Overseas Employment Administration (POEA) showed that for the period January-May 2014, approved job orders reached 371,097, of which 38.5 percent were processed job orders intended for service, production, and professional, technical and related employment in Saudi Arabia, the United Arab Emirates, Kuwait, Taiwan, and Qatar.

Moreover, the continued efforts of banks and non-bank remittance service providers to expand their international and domestic market coverage through tie-ups and establishment of remittance centers abroad as well as the introduction of innovations in their remittance products provided support to the robust growth of remittances during the period.

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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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