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Personal Remittances Growth Hits Six-Month High in June 2014; First Half Level Reaches US$12.7 Billion

08.15.2014

Personal remittances from overseas Filipinos (OFs) rose by 7.0 percent year-on-year—the highest recorded growth in six months—to US$2.3 billion in June 2014. This brought personal remittances for the first half of 2014 to US$12.7 billion, up by 6.2 percent than the level registered in the same period last year, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today.  The sustained growth in personal remittances during the January – June 2014 period was driven by increased remittance flows from both land-based workers with long-term contracts (by 4.8 percent) and sea-based and land-based workers with short-term contracts (by 8.8 percent).

Similarly, cash remittances from OFs coursed through banks grew by 5.9 percent year-on-year to US$2.0 billion in June 2014.  For the first half of the year, cash remittances reached US$11.4 billion, higher by 5.8 percent relative to the US$10.8 billion recorded in the comparable period in 2013. In particular, cash remittances from land-based and sea-based workers expanded by 4.8 percent (to US$8.7 billion) and 8.8 percent  (to US$2.7 billion), respectively, during the first six months of 2014.  The bulk of cash remittances (about 79 percent) during the January-June 2014 period were received from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Canada, and Hong Kong. 

Remittances remained robust on the back of stable demand for skilled Filipinos abroad. Latest data from the Philippine Overseas Employment Administration (POEA) showed that for the January-June 2014 period, 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. 

Meanwhile, the steady stream of remittances was supported by continuing 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 and other financial services to cater to the various needs of OFs and their beneficiaries. As of end-June 2014, commercial banks’ established tie-ups, remittance centers, correspondent banks, and branches/representative offices abroad rose by six percent to 4,675 from 4,409 in the same 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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