An article on Inquirer.Net highlighted a sectors’ advocacy for an OFW Bank.
The main idea is for the government to provide banking and communications services at competitive rates favorable to OFWs. By offering competitive rates, the OFW bank is expected to influence the existing remittance-services market, thus lowering the remittance rates of existing private and commercial services. This intervention will be done through government institutions such as the Land Bank of the Philippines, Development Bank of the Philippines and the Philippine Postal Corporation.
Excerpts from “Recruiters back OFW bank” (Inquirer.Net):
MANILA, Philippines–The local recruitment industry is pushing for the creation of a special bank that will cater solely to the financial requirements of overseas Filipino workers (OFWs).
Jackson Gan, vice president of the Federated Association of Manpower Exporters (FAME), said it was high time for the OFWs to have their own bank that would serve their financial and investment needs.
He added, “Migrant Filipino workers need a financial organization that would enhance their investment potential, give proper advice for income-generating business enterprises, and be ready to help OFWs at all times.”
I’m personally skeptical of government trying to take on roles that took many years for the private sector (private companies) to learn. Frankly, would you entrust your money on the Philippine Postal Service? This is the same postal service that delivers postal mail from my sister in Australia with an envelope cut open and sealed back with scotch tape — naah, they didn’t find any cash inside, just photos.
True, the remittance industry in the Philippines could use some improvement in rates that are friendlier to OFWs. And this is not attained by the introduction of a government-run remittance service. A government-run remittance service will inevitably be “subsidized” by government funds (i.e. Filipinos taxes) and will have fees that will not be truly sustainable based on genuine market conditions. There is a cost in moving money, and the government cannot forever maintain low remittance fees and still be commercially viable — unless it chooses to continue the subsidy through Filipino’s taxes. It doesn’t make sense.
The remittance market’s natural course is for remittance costs to go down as the remittance industry improves its infrastructure, technology and network. Better that the government step back and allow private sector to take the natural course of market adjustments where over-priced remittance services will eventually adjust to the true-market price. A couple of archived articles discuss the OFW Bank pros and cons in more detail here:
- Thanks but no thanks (Business Mirror)
- Cabinet okays creation of bank for OFWs
- Recruiters back OFW Bank
- Recruitment industry calls for OFW Bank
- The Making of an OFW Bank
- Recruitment leader raises fear on OFW bank creation
- LBP, DBP eye creation of OFW Bank (2006)
- Creation of OFW bank long overdue (2006)
Will the OFW bank remain just a dream? What will make this OFW Bank more realistic, more effective?
“OFW Bank ba’ng ‘ka mo?”
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