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IN the late 1980’s, the dollar-peso exchange rate
stood at $1 to P30, more or less. Overseas Filipino workers (OFWs)
did not feel the pinch because the prices of prime commodities were
reasonably low at the time.
Today, the economic conditions
are far different. The dollar-peso rate has sharply gone down from
$1 to P56 in 2005 to $1 to P41 last year, with the prospects of the
peso still appreciating to P37-39 against the dollar at the start of
the New Year.
This has been hurting the OFWs.
Their dollar earnings have progressively been losing their peso
value but the prices of basic commodities have continued to soar.
Overseas workers will not mind
the peso going up as long as the costs of living return to their
levels in the 1980s. But this is next to impossible. The price of
crude in the world market has risen to unprecedented levels, driving
up the prices of basic goods and the costs of housing, education,
transportation, water and lighting services.
What is ironic is that the OFWs
themselves have contributed to the rise of the peso through their
yearly foreign exchange remittances of over $14 billion in the
past two years. Their earnings have helped increase the country’s
dollar supply, resulting in the weakening of the foreign currency.
In 2005 when the exchange rate
was $1 to P56, a $1,000 remittance by an overseas worker to his
family could fetch as high as P56,000. Today, at the exchange rate
of $1 to P40, a similar amount will have a value of only P40,000, or
a loss of P16,000 to the OFWs.
The problem is expected to get
worse when the dollar-exchange rate further goes down to $1 to P37
as the Bank of the Philippines sees it this year. There have been
dire predictions that the dollar could still go down to P35 or
lower.
There is no way to neutralize the
adverse effects of this growth phenomenon except for the OFWs to
spend less, save more and earn more. They can explore the
possibility of taking an additional job or of channeling their
savings to business ventures that can earn them additional income.
The government has taken measures
to help OFWs cushion the impact of the weakening dollar. For
instance, the Overseas Workers Welfare Administration (OWWA) has
come up with a loan program for overseas workers’ families to
start them on retail business. It grants P50,000 loans for grocery
business and up to P200,000 for livelihood projects at nine percent
interest.
The Bangko Sentral ng Pilipinas (BSP)
has its own program to help OFWs and their families “save and
invest in financial products.” It has suggested alternative uses
for their remittances, such as engaging in business. It has launched
a scholarship program for their dependents.
The OFWs need more government
support to restore the true worth of their hard-earned dollars.
Reducing the remittance fees is a big help since they are paying no
less than 10 percent for every remitted amount.
Banks and other remittance
agencies have been making money hand over fist by charging
exorbitant money transfer fees. They earned over $1.3 billion in
fees alone from a $13-billion remittance in 2006.
Another way of helping the OFWs
cope with the decline of the dollar is for the Philippine Overseas
Employment Administration (POEA) to upgrade their salary standards
for specific skills and professions. One example is increasing the
salary of domestic helpers from $200 to $400 as prescribed by the
Department of Labor and Employment last year.
Many of our overseas workers are
world-class but they are grossly underpaid, compared with the native
workers in their host countries. It is but proper for the government
to raise their minimum salaries through POEA-prescribed employment
contracts.
Wrong taxation focus
The government appears to be soft
on “sin” products, such as cigarettes and liquor, in levying
taxes. The World Health Organization (WHO) claims that the
Philippines has the lowest tax on cigarettes at $2.42 to $29.28 per
1000 sticks, compared to Singapore’s $192.56 and Brunei’s $39.3
for the same number of sticks.
The spirit of the “sin” tax
law is to raise the tax on cigarettes and liquor to reduce
consumption. But there is a great flaw in its enforcement.
On the other hand, the finance
department has been threatening to impose tax on text messaging.
This will hurt millions of cell phone users since the cost of text
messages will inexorably go up.
The Bureau of Internal Revenue
has a wrong focus on levying taxes. Up to now, the 12-percent
value-added tax (VAT) has not been removed from food and medicine
purchases by senior citizens. This has effectively reduced the 20
discount granted by law on such purchases by the elderly to only
eight percent.
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