Thursday, July 16, 2009

Remittances hit record high in May; growth still slow

MANILA - Money sent home by overseas Filipino workers (OFW) reached a record high in May, but the pace of growth is still slow as the world economy reels from the crisis. Data from the Bangko Sentral ng Pilipinas (BSP) showed that remittances grew 3.7% to $1.48 billion in May, the highest since March 2009. The latest figure brings the country's total remittance inflows to $6.98 billion for the first 5 months of the year, a 2.8% growth from $6.79 billion reached in the same period in 2008. "The stream of remittances from overseas Filipinos continued to show signs of strength despite lingering global economic fragilities, providing some basis for cautious optimism regarding steady remittance levels for 2009," BSP Governor Amando Tetangco said in a statement. The country's major sources of remittances for the 5-month period were the United States, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany. The BSP attributed the rise in remittance inflows to the steady demand for professional and skilled workers and the expanded access of OFWs and their beneficiaries to a wide range of financial products and services offered by banks and other financial institutions. Aside from this, it would be noted that May is traditionally a strong month for remittances, as this is the month when parents pay the tuition fees of their children and other beneficiaries. The government continues to give assurances that jobs overseas remain available to absorb Filipinos looking for employment. Aside from hiring agreements it signed with Qatar, Saudi Arabia, Canada, Australia, Japan, and South Korea, the government said it remains focused on job generation programs to help displaced workers find alternative jobs amid the economic downturn. Consumption

Local companies watch the pace of remittance growth for their own business and investment strategies. Fastfood giant Jollibee Foods Corp., for instance, has expressed concern that the slow rise in remittances for the past months may impact the company's sales this year. This has led Jollibee to forge a partnership with money transfer firm iRemit for a food remittance delivery service, allowing them to profit directly from remittances as OFWs will use their earnings to send meals to family members and beneficiaries in the Philippines. Real estate firms, however, remained confident that the slowing pace of remittances has not made much of an impact on their profits. Residential units have been one of the choice investment outlets of OFWs for the past years. "There's a very small impact, if any. [The slowdown in remittance growth] is compensated by the exchange rate," Subdivision and Housing Developers Inc. (SHDA) Chairman Eduardo Alunan told in an interview last month, not citing figures. SHDA is one of the country's largest organizations of property developers with 200 members, including real estate giants Ayala Land Inc., Robinsons Land Corp., Megaworld Corp., and Vista Land and Lifescapes Inc.

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