Personal remittances from overseas Filipinos (OFs) reached US$7.2 billion in the first quarter of 2016, higher by 4.3 percent compared to the level posted in the same period last year, 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 the continued remittance inflows from land-based OF workers with work contracts of one year or more, amounting to US$5.6 billion, and compensation of sea-based workers and land-based workers with short-term contracts (excluding their expenditures abroad), which reached US$1.6 billion. In March 2016 alone, personal remittances amounted to US$2.7 billion, 1.4 percent higher than the year-ago level.
Meanwhile, cash remittances from OFs coursed through banks in March 2016 amounted to US$2.4 billion, posting a growth of 1.5 percent year-on-year. On a cumulative basis, cash remittances for the first quarter rose to US$6.6 billion, 4.4 percent higher than the level recorded in the comparable period in 2015. Cash remittances from both land-based (US$5.1 billion) and sea-based (US$1.4 billion) workers grew by 5.3 percent and 1.5 percent year-on-year, respectively. More than three-fourths of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, Singapore, Hong Kong, the United Kingdom, Japan, Qatar, and Kuwait. 2
The steady demand for OF workers remained a key driver to the growth of remittance inflows. Preliminary report from the Philippine Overseas Employment Administration (POEA) indicated that total processed contracts reached 2.3 million in 2015, of which 1.2 million were deployed in the same year. Further, a total of 585,688 contracts were processed in the first quarter of 2016, of which 452,722 were for land-based workers.
Likewise, the initiatives of banks and non-bank remittance service providers to expand their international and domestic market coverage through tie-ups abroad and innovations in financial products in the remittance market have facilitated the broader capture of remittances through formal channels. As of end-March 2016, commercial banks’ established tie-ups, remittance centers, correspondent banks and branches/representative offices abroad reached 5,524 from 4,840 in the comparable period last year.
1 The BSP started to release data on personal remittances in June 2012. As defined in the Balance of Payments and International Investment Position 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. Also remittances coursed through money transfer operators (MTOs) cannot be disaggregated by actual country source and are lodged under the country where the main offices of the MTOs are located, which, in many cases, is in the U.S. Therefore, the U.S. would show up to be the main source of OF remittances because banks attribute the origin of funds to the most immediate source.