Lots of Filipino workers abroad are sending home more money this holiday season because they have relatives in the Visayas and other areas devastated by Yolanda. They are sending more money to help their loved ones get back on their feet and rebuild their lives.
We know the Americans have helped us immensely in our rescue and recovery efforts, but they could help us a lot more if American banks would reduce their remittance charges.
Some 48 percent of all the cash sent home through banks by all OFWs around the world come from the US Also, almost 80 percent of all global remittances actually go through American banks.
Whether the OFW is based in the Middle East or in Asia, chances are he or she will be transacting directly or indirectly with an American multinational bank when making a money transfer.
Instead of asking for more development aid or loans, President Aquino could personally ask US President Barack Obama to push for lower remittance charges, and the positive effect on recovery efforts would be greater.
Lower money transfer charges would essentially allow more remittances from migrant Filipino workers not only to help their relatives but also to flow into the Philippine economy, which is already reeling from successive calamities, including other strong typhoons that hit the country this year aside from Yolanda, like Labuyo, Maring and Santi, the earthquake in Bohol, and the hostilities in Zamboanga.
Buffer during dire times
OFW remittances have always served as a buffer during economic difficulties. Whether the government would care to admit it or not, a spike in remittances in the coming months would help compensate for the lack of economic activity in disaster-hit areas.
Overseas Filipino workers (OFWs) and their families here could save billions annually if current money transfer fees that average 9 percent per transaction (according to the Remittance Prices Worldwide database of The World Bank) are cut in half.
The World Bank, which monitors remittance costs through their database, said that globally remittance prices average 9 percent of the sum being transferred. But when migrants send $200 home, the transaction cost is an average of almost $18.
In some regions of the world, the charge may be lower, and in others it could be higher.
For instance, the second largest US bank, Wells Fargo & Co., collects $20 for every bank-to-bank remittance to the Philippines.
Assuming a Filipino worker in California sends money home at least once a month, at $20 for every transfer, over 12 months he or she would have spent a total of $240 (or P10,320 at $1:P43) in remittance charges alone. This is almost equivalent to a whole month’s pay for a minimum wage earner here.
This is definitely excessive, considering that in this day and age of modern technologies, seamless and cost-efficient money transfers are already possible through such platforms as the Internet and international mobile telephone short-messaging.
Annual remittances from OFWs have steadily grown from just $105 million in 1975 to a record $21.39 billion in 2012, an increase of 6.3 percent from $20.12 billion in 2011. It is expected to hit more than $26 billion by the end of 2013.
Again, imagine the savings if the remittance charges could be cut even by just a few percentage points.
We believe President Obama would be highly receptive to any appeals for increased US government pressure to bring down the excessive remittances fees imposed by American banks, especially at this time of need for millions of Filipinos affected by Yolanda and other calamities.
In pursuit of financial reforms
The Obama administration has been very aggressive in pursuing financial industry reforms that tend to benefits consumers, including the passage of new US legislation lowering credit card rates and charges, and strengthening protection for users.
Also, Western Hemisphere leaders themselves, at the Special Summit of the Americas in Monterey, Mexico, in January 2004, had called for the cost of remittances to be cut in half.
This call was echoed by the finance and central bank chiefs of the Group of Seven (the US, the United Kingdom, Canada, France, Germany, Italy and Japan), who also declared in April 2004 that, “on remittances, we will continue to work on our initiatives to reduce barriers that raise the cost of sending them and integrate remittance services in the formal financial sector.”
There is no harm in asking. Ask and we might receive.
Some banks already waived their charges for donations specifically meant for Yolanda victims. Lowering remittance charges would essentially be the same thing, but instead of begging for help, these banks would be helping Filipinos help themselves.