Here is the last of three excerpts on the study: “Enhancing the Efficiency of Overseas Workers Remittances”
Remittance Trends in the Philippines
- Competitive Market: Formal remittance market between the Philippines and remitting countries is competitive and dominated by commercial banks.
- Decreasing Costs: With the entry of more players and new technology-based products(e.g. cell phones, debit cards), remittance costs could be pushed lower, which should increase the formal sectorâ€™s share of the remittance flows.
- Convergence: Services offered by Philippine banks, licensed non-bank money transfer agencies, courier companies and ethnic stores acting as agents for banks have converged. The industry is characterized by partnerships, alliances or tie-ups, and revenue sharing among different players.
- Industry players have observed a reduction in the use of unregulated channels.
Increasing Efficiency and Remittance Flows through Formal Channels
Some of the conclusions and recommendations included in TA 4185 based on the market survey and other industry research are:
- Philippine Government should take bilateral initiatives to establish greater access to remitting countries financial markets for Philippine banks and banking products to encourage more remittances through the formal sector.
- OFWs with irregular status lack access to banking and other formal remittance facilities, forcing them to use unregulated remittance facilities. Consideration could be given to accepting identity cards issued by Philippine consular officials as identification for opening US bank accounts.
- Since the Philippines is an archipelago with many underdeveloped areas, the door-to-door system for remittances will continue to be used unless problems of interconnectivity are addressed.
- The emergence of cell phone based delivery system will compete with door-to-door system offered by banks.
- Non-bank money exchange and remittance agencies should be regulated and supervised for anti-money laundering compliance.
- Financial literacy programs conducted in Pre-Departure Orientation Seminars for OFWs should be extended to recipient families and rural communities where the majority of OFWs originate.
- Electronically centralizing databases of agencies involved in the overseas deployment system could improve the exchange of vital information on migrant stocks and flows, upgrade communications between home agencies and overseas offices, and enhance the authentication of documents.
Source: Worldbank.org Resources
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