REDUCING THE COST OF REDUCING THE COST OF REMITTANCES/CHANNELING REMITTANCES/CHANNELING

REMITTANCES FOR DEVELOPMENTREMITTANCES FOR DEVELOPMENT

Presentation of Secretary Imelda Nicolas, Chairperson

Commission on Filipinos Overseas

2nd ADBI-OECD Roundtable DiscussionJanuary 18 - 20, Tokyo, Japan

CFO 2010 Stock EstimatesCFO 2010 Stock Estimates

Top Remittance-Receiving Top Remittance-Receiving Countries, 2011 Estimates Countries, 2011 Estimates

(in billion US$)(in billion US$)

58.0 57.0

24.0 23.0

12.0 12.0 11.0 9.0 8.0 8.0

India China Mexico Philippines Pakistan Bangladesh Nigeria Vietnam Egypt Lebanon

Source: Migration and Development Brief, World Bank

33

Top Remittance-Receiving CountriesTop Remittance-Receiving Countries(in percent of GDP, 2010)

Source: Migration and Development Brief, World Bank

31.0 28.6 24.8 23.2 20.8 20.0 19.7 19.6 17.5 15.7 15.2 15.1 13.0 12.9 12.8 12.2 11.7 11.7 11.2 10.9 10.7 10.4 10.2

0102030405060

44

Volume of RemittancesVolume of Remittances

2005: US$ 10.0 B2006: US$ 13.0 B2007: US$ 14.4 B2008: US$ 15.9 B2009: US$ 17.4 B2010: US$ 18.8 B

Remittances have been resilient, providing Remittances have been resilient, providing cushion against external shockscushion against external shocks

Remittances up by 8.2% in 2010; 7.0% in the first ten months of 2011

Sustained remittances’ growth due to: Diversity of OFs’ skills and expertise New and expanded markets Expansion of bank and non-bank

services

Remittances have other benefits• Underpin private consumption• Raise savings• Increase investment in human

capital• Broaden middle-class segment

-30

-20

-10

0

10

20

30

40

0

5

10

15

20

25

80 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 J an-Oct 10

J an-Oct 11

Remittances (RHS)

Growth Rate (LHS)

Overseas Filipinos’ Remittances1980 – October 2011 (in billion US$)

Number of Banks’ Branches, Correspondent Banks, Number of Banks’ Branches, Correspondent Banks, Remittance Centers, and Tie-Ups with OF Remittance Remittance Centers, and Tie-Ups with OF Remittance 11

77

1 Data were based on reports of 8 commercial banks engaged in FX remittance transactions

Remittances by host country Remittances by host country (based on bank reports)(based on bank reports)

2000 2010

88

BSP Overseas Filipinos PortalBSP Overseas Filipinos Portal

99

www.bsp.gov.ph

Average cost of remittanceAverage cost of remittance

Source: Bangko Sentral ng Pilipinas

Survey of Remittance ChargesSurvey of Remittance Charges

1111

* Partial Report as of June 2011

Survey of Remittance ChargesSurvey of Remittance Charges

1212

* Partial Report as of June 2011

PESO REMITTANCEPESO REMITTANCE

CONSUMPTIONCONSUMPTION SAVINGSSAVINGS SMEs/MICROFINANCESMEs/MICROFINANCE

Bank instruments (TD/SD/Bank instruments (TD/SD/Mutual funds/UITF)Mutual funds/UITF)

P5,000 up P5,000 up

Savings in CooperativesSavings in CooperativesTD/SDTD/SD

P5,000 upP5,000 up

Treasury instrumentsTreasury instrumentsT-bills, T-notesT-bills, T-notesP100,000 upP100,000 up

Stock MarketStock Market

Insurance (life, non-life,Insurance (life, non-life,Education, pension)Education, pension) Real EstateReal Estate

OthersOthers

Agri-businessAgri-business

Retail businessRetail business

Lending businessLending business

OthersOthers

1313

Overseas Filipinos’ Remittances for Development (OF/RED) Project: “Building a Future Back Home”

A collaborative project between CFO-NEDA-UNDP-WESTERN UNION FOUNDATION

Key Success Factors of Key Success Factors of OF-RED Project OF-RED Project

• Key Idea: collective remittances could become a powerful driver of development with emphasis on investing in economic opportunities

• Key challenge: leadership. Organizational capacity building is required involving all relevant stakeholders

• Enabling public policy environment to encourage investment and participation

• Instil ownership and buy-in of project(s) by migrants, their families and communities served

Project Strategy of OF-RED Project Strategy of OF-RED

• Develop mechanisms to engage OF/Diaspora communities as transnational actors of local development by:

1)Designing and developing a model to create forward and backward linkages for product

development, value chains and improved market access

2) Identifying capacity diagnostics/policy & institutional options for leveraging remittances for

development3) Marketing of idea to migrants and families left behind

Continuation: Project StrategyContinuation: Project Strategy

4) Support development of policies that tap the potential of OF remittances for savings, investments, job creation, entrepreneurship that will contribute to local economic development

5) Identify gaps that hinder and incentives that support collective remittances for development

Establishment of Remittance for Establishment of Remittance for Development Council (Redc)Development Council (Redc)

• A Multi-Stakeholders’ Advisory and Policy Recommending Body/ Consultative Forum to Channel Remittances for Development

Functions of ReDCFunctions of ReDC

1) serve as forum for issues affecting and effecting OF remittances

2) collaborate w/ other groups for collection of data to support ReDC’s informed policy recommendation capability

3) recommend & advocate for remittance-related policies e.g. further reduce remittance charges and fees

4) collaborate with other groups to provide financial education to OF and their families

Secretary Imelda Nicolas Chairperson

Commission on Filipinos OverseasCitigold Center, 1345 Quirino Highway corner South

Superhighway, Manila, PhilippinesTelephone No: (632) 552-4701

Fax No: (632) 561-8332Email: imn103@aol.com

Website: www.cfo.gov.ph

Thank you!Thank you!