Down the drain?
Down the drain?
Updated 01:41am (Mla time) Nov 21, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the November 21, 2004 issue of the Philippine Daily Inquirer
LAST year, the Bangko Sentral recorded over $7.6 billion in remittances from Filipinos working overseas. If remittances coursed through informal channels are included, many economists believe, the total may even be double that amount. But a recently released Asian Development Bank study revealed that much of that money must have had a less-than-lasting effect on the economy.
In a sense, this finding is counter-perceptual: Who has not returned to the province to see an all-concrete house, built by an overseas contract worker's money, rising in the middle of one's hometown? But those houses stand out not only because they are made of cement; they stand out because they are all too few.
The ADB study, titled "Enhancing the efficiency of overseas workers remittances," found that much of the remittance inflow paid for consumables. A key paragraph (warning: economic jargon ahead!) reached a discouraging conclusion: "Beneficiary household decision makers allocated their remittance income to food, utilities and other expenses for household operations, personal care and effects, communications and transportation. In terms of value, however, monetary allocations were highest for food consumed at homes and education. It is noted, however, that aside from household expenses, allocations for fiestas and expenses for special occasions were also observed."
In other words, and with the exception of school-related expenses, the bulk of remittances went to daily necessities and the occasional fiesta splurge. (We must include cellular phones as a necessity, because for families separated by thousands of miles, cell phones actually represent an improvement in the quality of life.)
So far, so understandable. The reason many Filipinos (as much as 10 percent of the entire population) leave to work abroad-the reason, for instance, why teachers with master's degrees accept assignments as maids in Hong Kong or caregivers in Israel-is poverty. They leave precisely to help the families they left behind pay for the daily necessities: to put food on the table, to have enough money to ride the bus, to pay for water and electricity, to buy soap.
What, we may well ask, is wrong with that?
Only that OFW families invariably find themselves running hard merely to stay in place. The social costs of working abroad are severe; an OFW family that neglects to send the children to school or build a better home bit by bit or fund a small business may end up with the fancy component system with the latest sub-woofers, but not much else. In other words, they go through the emotional upheaval of migration, only to find that at the end of it they are back where they started-still looking for the money to pay for daily necessities.
On one level, it is the responsibility of the overseas worker to build a nest's egg, either by saving some of the money or investing it, say in the children's education, real estate, or a family business. The business community or other parts of civil society may have a role in encouraging the OFW to plan for his future, but the responsibility is his.
On another level, however, it is the responsibility of the government to put the billions of dollars in remittances to more productive use.
Consider the following, from the first paragraph of the study: "Migrant remittances represent the most direct, immediate and far-reaching benefit to migrants and their countries of origin. They are a more constant source of income to developing countries than official development assistance, foreign direct investment and other private flows."
The government's work is thus cut out for it. It must encourage more remittances to go legal and flow through the formal banking system. It must strengthen the link between development in the provinces, where two-thirds of all workers come from, and countryside financial institutions, such as rural banks and cooperatives. It must accept the challenge of foreign banks to securitize the remittance inflow to fund development projects or support microfinance institutions.
Only thus will more all-concrete houses rise in the countryside.
Updated 01:41am (Mla time) Nov 21, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the November 21, 2004 issue of the Philippine Daily Inquirer
LAST year, the Bangko Sentral recorded over $7.6 billion in remittances from Filipinos working overseas. If remittances coursed through informal channels are included, many economists believe, the total may even be double that amount. But a recently released Asian Development Bank study revealed that much of that money must have had a less-than-lasting effect on the economy.
In a sense, this finding is counter-perceptual: Who has not returned to the province to see an all-concrete house, built by an overseas contract worker's money, rising in the middle of one's hometown? But those houses stand out not only because they are made of cement; they stand out because they are all too few.
The ADB study, titled "Enhancing the efficiency of overseas workers remittances," found that much of the remittance inflow paid for consumables. A key paragraph (warning: economic jargon ahead!) reached a discouraging conclusion: "Beneficiary household decision makers allocated their remittance income to food, utilities and other expenses for household operations, personal care and effects, communications and transportation. In terms of value, however, monetary allocations were highest for food consumed at homes and education. It is noted, however, that aside from household expenses, allocations for fiestas and expenses for special occasions were also observed."
In other words, and with the exception of school-related expenses, the bulk of remittances went to daily necessities and the occasional fiesta splurge. (We must include cellular phones as a necessity, because for families separated by thousands of miles, cell phones actually represent an improvement in the quality of life.)
So far, so understandable. The reason many Filipinos (as much as 10 percent of the entire population) leave to work abroad-the reason, for instance, why teachers with master's degrees accept assignments as maids in Hong Kong or caregivers in Israel-is poverty. They leave precisely to help the families they left behind pay for the daily necessities: to put food on the table, to have enough money to ride the bus, to pay for water and electricity, to buy soap.
What, we may well ask, is wrong with that?
Only that OFW families invariably find themselves running hard merely to stay in place. The social costs of working abroad are severe; an OFW family that neglects to send the children to school or build a better home bit by bit or fund a small business may end up with the fancy component system with the latest sub-woofers, but not much else. In other words, they go through the emotional upheaval of migration, only to find that at the end of it they are back where they started-still looking for the money to pay for daily necessities.
On one level, it is the responsibility of the overseas worker to build a nest's egg, either by saving some of the money or investing it, say in the children's education, real estate, or a family business. The business community or other parts of civil society may have a role in encouraging the OFW to plan for his future, but the responsibility is his.
On another level, however, it is the responsibility of the government to put the billions of dollars in remittances to more productive use.
Consider the following, from the first paragraph of the study: "Migrant remittances represent the most direct, immediate and far-reaching benefit to migrants and their countries of origin. They are a more constant source of income to developing countries than official development assistance, foreign direct investment and other private flows."
The government's work is thus cut out for it. It must encourage more remittances to go legal and flow through the formal banking system. It must strengthen the link between development in the provinces, where two-thirds of all workers come from, and countryside financial institutions, such as rural banks and cooperatives. It must accept the challenge of foreign banks to securitize the remittance inflow to fund development projects or support microfinance institutions.
Only thus will more all-concrete houses rise in the countryside.
posted by Dante at 1:41 AM
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