Growing OFW Savings
One heartening development concerning the Philippines’ unsung heroes—the millions of Filipinos working overseas—is that a recent survey has found many of them to be saving part of their earnings. This can reverse the familiar story line among many Filipinos who toiled for years abroad and came back with no investments or savings to speak of.
They have indeed come a very long way since the 1980s when the then Manila International Airport was swamped by boxes of big television sets and Marantz, Pioneer and Sansui hi-fi sound systems. There were, of course, the few who were wise enough to put their earnings in real investments such as houses and lots and small-scale businesses.
A recent survey by the Bangko Sentral ng Pilipinas shows that the proportion of OFWs who are saving money in banks instead of spending it all on basic and nonessential goods grew to 42.1 percent in the fourth quarter of 2014, from 39.7 percent in July to September. This is significantly higher than the 7 percent of OFW families that saved money in banks in 2007.
Apart from saving, there is also an increase in the number of OFW families that invested their cash in financial instruments to 6.8 percent from 6.3 percent in the previous quarter, and 2.3 percent in 2007 when the survey was first conducted. The survey, which is part of the BSP’s quarterly assessment of consumer expectations, asked OFW families to list down where their remittances are usually spent.
At an estimated $25 billion in 2014, money sent by the 10 million or so Filipinos overseas contributes much to the Philippine economy. Remittances are the economy’s biggest source of foreign currencies that local firms and the government need to transact with the rest of the world. Remittances also boost domestic consumption, which accounts for about two-thirds of gross domestic product. Last September, remittances rose to $2.11 billion, the highest single-month remittance since December of last year.
The government and the private sector are agreed on the need to help OFWs and their families become familiar with financial investments. Many Filipinos working abroad can return here for good only if their savings grow big enough for them to live comfortably.
Nongovernment organizations and even financial institutions have programs aimed at educating OFWs and their beneficiaries on investments. One project that could have helped change the behavior among OFWs is that launched in October 2013 that aims to teach them the value of saving and growing their hard-earned dollars. Through funding from the European Union and the Swiss Agency for Development and Cooperation, several agencies of the United Nations partnered with the Commission on Filipinos Overseas (CFO) for the three-year initiative to change the spending habits of remittance-dependent Filipino families through financial literacy training. Under the program, UN agencies and the CFO worked with local government units to institutionalize financial literacy programs and pass local legislation that could spur local development through migrant workers’ remittances.
This changing behavior among Filipinos working abroad indeed opens up a number of good possibilities for the OFWs and their families here. There are many options for them to make their savings grow. Reputable banks have financial advisers who can help them increase their savings, which will only be eaten up by inflation if kept in ordinary savings accounts. Mutual funds and other investment funds that earn more than bank savings rates are a good example.
Then there are those advisers who can help them chart a financial program for them—by putting part in financial investment instruments such as treasuries and corporate notes and part in real estate with big price appreciation prospects.
They just have to be careful. Vultures prey on the financially illiterate. Remember those pyramiding scams that victimized people mainly in the provinces, many of them dependents of OFWs? A timely word of advice to OFWs and their dependents here is that basic financial literacy is not that complicated. Many of the banks provide such financial advice for free. One simply has to visit a branch near them or, for the computer-savvy, go online for assistance.
OFWs and their dependents deserve to advance their economic lives. Financial literacy is the best starting point.