06 January 2006

Remittance Economy

The Philippine peso has been appreciating significantly since 2006 stepped in. Yesterday, it closed at P52.43 to one US dollar. During the last day of trading in December, it stood at P53.07 to one US dollar.

There are 8 million Filipinos working overseas to earn money to send to their families and relatives here. The timing of the peso appreciation corresponds to the time when most of the overseas workers send money (much money I suspect) as Christmas gifts to their families.

Yesterday, Labor Secretary Patricia Sto. Tomas was quoted saying that the total number of overseas employment contracts processed for OFWs reached 981,337 from January 1 to December 31, 2005.

Hypothetically, if the already existing 8 million overseas workers sent an average of US $1,000 this Christmas, that would mean US $8 billion dollars in remittances, right? The IHT comments that this amount is larger than the value of the top five Philippine export products and the combined amount of foreign aid and foreign direct investment in 2004. Wow.

Our Central Bank predicts that total remittances for 2006 will reach US $ 11 billion dollars. If we consider those overseas workers who got work abroad the illegal way, I think the remittances could reach more than US $ 12 billion dollars.

More dollars coming in means a stronger peso for us. But if this is the only thing that keeps our economy going, is that a good thing too?

3 reactions:

bayibhyap said...

There are possibilities of this uniqueness of exporting skills overseas turning out to be positive. A few days ago I just read a story in the Malaysian papers about a Filipina handling the administration of a cruise ship single-handedly. And she was a pretty girl to boot. Her feats, like many others from unsung and anonymous heroes, raises the profile of the country and its citizens positively.

Urbano dela Cruz said...

I agree with bayibhyap - there are positives. I wouldn't boast about Susan Ralston but her trusted position in delay-rove-abramoffgate is a harbinger of expat pinoys quietly climbing up to positions of power.

One needs only to track the political fortunes of the Irish to see the direct line between the diaspora caused by the potato famine of the mid 19th century and the rise of the Kennedys.

Also, we have what WIRED magazine calls "the most distributed economy" in the world.

Dr. Emer said...

Thanks, Bayi and Urbano.

I agree with the advantages of exporting human resources. But I also think it is not enough to push this country forward. Exporting manufactured quality goods is a better alternative for me. In my opinion, families should stay whole and closely-knit in order to function well.