Move can shift focus from spending to investing
THE BANGKO Sentral ng Pilipinas has urged the national government to offer this year as much as $1 billion in retail treasury bonds (RTBs) to overseas Filipino workers and their beneficiaries.
In a report to Malacanang on initiatives to improve the environment for offshore workers, the BSP said it had taken steps together with the Department of Finance and the Bureau of the Treasury (BTr) “to finalize the proposed issuance of RTBs for OFWs.”
“This is aimed at encouraging them and their beneficiaries to channel their remittances to investment instruments,” the BSP reported.
The proposed issuance, targeted within the year but not necessarily in one single sale, aims to divert more OFW inflows for economic development while giving OFW households lucrative investment outlets.
“These savings and investments will help prepare OFWs for future reintegration into the Philippine economy and help provide additional funding for government requirements, including for infrastructure development,” the report said.
The offering size proposed by the BSP was based on the assumption that OFWs could set aside about 10 percent of their earnings for investments.
The issuance of RTBs also helps the BSP’s monetary policy as a way of siphoning off strong inflows from OFWs.
“For their part, commercial banks have offered OFWs specialized investment products and services related to insurance, pension and real estate,” the BSP said. “Direct payment schemes of banks are also available for the added convenience of the OFWs’ beneficiaries.”
In line with its major advocacy programs, the BSP is conducting financial literacy campaigns (FLCs) for OFWs and their beneficiaries together with the Overseas Workers Welfare Administration.
“The FLCs emphasize the importance of saving and inform the participants of alternative opportunities for their remittances such as placements in financial instruments and investments in business ventures,” the BSP reported.
Based on a survey of four rural banks and one cooperative bank in the three regions where the BSP conducted FLCs, microfinance loans attributed to OFWs have risen in their areas, particularly in Tuguegarao, Cagayan.
Microfinance is the provision of small, unsecured loans to the poor to help them start their own businesses.
OFW remittances coursed through the banking system surged to $11.4 billion in the first 11 months of 2006 from $6.1 billion in 2000. These remittances boosted the supply of foreign exchange, helping stabilize the exchange rate and provided valuable support to economic growth, particularly through strong personal consumption expenditures.