Rising dependence on OFW remittances alarming

[explorer]

my first post here in OFW section...

Think tank: Rising dependence on OFW remittances alarming

Workers’ money accounts for 10% of GDP
By Delfin Mallari Jr.
Southern Luzon Bureau
Last updated 06:50pm (Mla time) 01/18/2007

MANILA, Philippines -- The growing dependence of the country’s economy on the money sent home by overseas Filipino workers (OFWs) has become alarming, the head researcher of the think tank Ibon Foundation Inc. said.

Sonny Africa said the OFWs had become the government’s biggest source of precious dollars, remitting $11.4 billion from January to November last year.

What is alarming, he said, is that the remittances were equivalent to 10 percent of the country’s gross domestic product.

“The double digit mark makes the Philippines the most overseas remittance-dependent economy of any significant size in the world. This means that the economy continues to be kept afloat by the external and volatile OFW remittances, and not by a strong local economic capacity,” he said in a statement furnished the Philippine Daily Inquirer.

He added that the declines in domestic investment implied a diminishing capacity to expand production and warned of a slowdown in the near future.

Africa pointed to the glaring lack of decent jobs in the country as the main factor on the exodus of Filipinos seeking employment overseas.

According to an Ibon research, an estimated 3,000 Filipinos leave the country everyday to find jobs abroad.

“The sheer scarcity of jobs is already a sign that all is not well and that the economy lacks an internal dynamism that is able to productively harness and employ the Filipino workforce,” Africa said.

Ibon is an independent development institution established in 1978 and provides research, education, publications, information work and advocacy support on socioeconomic issues.

[CVT]

I agree with this. And, our government doesn't care. Jobs and factories, which have sent most of us through college are going out of our country and no one lifts a finger to stop the exodus.

The industry where I belong is constantly banging at Malacanang to rectify our known disadvantages vs. our Asian neighbors in order to keep foreign investment and possibly attract new businesses, but sadly they haven't acted on any of them.

Lastly, some Filipinos, from the lowliest labor to the highest Executives are really greedy and are in for "easy money", even in the private sector. A big corporation was almost closed some years ago because of this. But those who were left never learned. Now, it's impending...

I was once an OFW, so I know how hard it is to be far from your loved ones. I do not want to be in that situation again.

But then, do we have a choice?

Real sad. God, help our country!

:beam:

[zero]

the said report is true, that is why PGMA wants/pushing our next OFWs to be "the super maids of the world". she wants to upgrade the present $200 salary to $400 (kasama daw ito sa asean summit agreement?). the result, the prospective employers have to look/hire from other third world countries to be their maid. kaya ealy this week, nag-rally ang mga to be OFWs sa DOLE dahil wala na daw gusto mag-hire sa kanila. gagatasan pa daw sila ng TESDA (para sa bagong requirement) to have TESDA certificate bago pumunta sa POEA for deployment.

[badkuk]

once the remittances dry up, we're dead. sabi nga dun sa isang column, etong generation na nagmigrate ang nagreremit. once they realize that the country they're in offers a better deal, and then start a family of their own, ung susunod na generation will not bear any emotional ties to RP anymore....and they may not see the act of remitting money to relatives they don't even know as their responsibility

seeing a great number of population going out of the country, be it permanent or not, is not something any government should be proud of.

[niky]

Noooooo... that's not true... it's impossible! The Philippines dependent on OFW remittances? Of course not! That's only ten percent of our GDP...

Of course, those of us in the education sector have known the exodus was bad for quite a while. Note that more than half our college population is in nursing (number one export job), and it's almost impossible to keep good nursing faculty without offering them ridiculous sums of money, to keep them from leaving.

It's sad to look at our medical schools... there are so few new Medicine students that we might end up with a shortage of MDs within the next decade as older doctors retire and younger doctors take up nursing jobs in the US.

Most of my classmates in education in UP had only one thing on their minds... US jobs. About half of them are there already... makes sense... kahit graduate ka ng UP, you still get the same lousy stinking salary as anyone else teaching in the schools (I should know, my family owns one).

I'd like to see the pro-GMA guys go over this one...

One can only hope that local families receiving remittances will put the to good use, in business investments and the like, instead of wasting them on luxuries like some families do (and they end up being just as poor as they were when the breadwinner retires).

It should also be a government priority to create a better environment here for expat retirees, to encourage them to move back to the Philippines and spend their life savings here, instead of moving permanently there, digging up their roots and taking their wives, husbands, kids, parents, siblings, pets, etcetera and putting down new roots overseas.

[mazdamazda]

My rebuttal...

Rising dependence?

OFW Remittance was already 10% of the country's GDP during the start of the millenium.

OFW Remittance in the 1990s is around 15% of the GDP.

Well, we can't discount that OFWs contribute a considerable chunk to the nation's economy but it seems that we discount the advances made by those working locally (like our export industry that grew by 16% last year and is expected to the same this year).

Let me disect further the said article piece-by-piece:

Sonny Africa said the OFWs had become the government’s biggest source of precious dollars, remitting $11.4 billion from January to November last year.

Biggest? How about the $43 billion in exports from Jan to Nov?

“The double digit mark makes the Philippines the most overseas remittance-dependent economy of any significant size in the world. This means that the economy continues to be kept afloat by the external and volatile OFW remittances, and not by a strong local economic capacity,” he said in a statement furnished the Philippine Daily Inquirer.

Tonga is the most remittance-dependent country as 40% of the their GDP comes from remittances.

Indian foreign workers sends back close to $26 billion per annum (double the remittances of our OFWs).

Other developing countries (particularly in South America) has the same remittance-to-GDP percentage such as ours (10%).

He added that the declines in domestic investment implied a diminishing capacity to expand production and warned of a slowdown in the near future.

Decline? The BOI reports of a 17% increase in direct invesment for this year totalling P190 billion.

It seems like IBON should spend more time doing their research rather than spew out another litany of rehashed generalizations. :rofl:

===

I'd like to see the pro-GMA guys go over this one...

I am pro-Philippines and not pro-GMA or whatever. :nono:

[niky]

I am pro-Philippines and not pro-GMA or whatever. :nono:

Bwahaha... peace lang boss M2.

Good points re: investments and trending. Sabagay, we had that problem before the nursing boom in other courses. My apologies.

It's still a problem, though. We have a severe shortage of students in non-export programs, and a shortage of mentors in export programs.

[architect]

From the BOI website (http://www.boi.gov.ph/portal/page?_p..._schema=PORTAL)

Total Approved Foreign Direct Investments Q1 – Q3 06

BOI PhP36.76B
PEZA PhP39.07B
SBMA PhP68.42B
CDC PhP 7.80B

Total PhP152.045B

Note that direct investments include project cost or committed investments, thus actual investments for the period may be lower. It also does not take into account investments pulled out of the country.

As a matter of fact, the Emerging Market Monitor http://www.emergingmarketsmonitor.co...d-in-2006.html reported lower figures –

Net foreign direct investment (FDI) surged by 22.5% y-o-y to US$1.96bn in January-October 2006, a figure well above the central bank (BSP)'s projection of US$1.6bn for the whole of 2006. The BSP attributed the rise in FDI to greater confidence stemming from strong macroeconomic fundamentals, an improved fiscal position, declining inflation, and comfortable external payments position. In addition, the BSP also revealed that net foreign portfolio investments rose by 24% to US$2.6bn in 2006, from US$2.1bn in 2005. Portfolio inflows totalled US$7.97bn last year, whereas outflows amounted to US$5.30bn.

In addition, the Heritage Organization (a WSJ affiliate) reported the ff:
(http://www.heritage.org/research/fea...id=Philippines)

Exports: $42.8 billion
Primarily electronic equipment, machinery, transport equipment, garments, optical instruments, coconut products, fruits and nuts, copper products, chemicals

Imports: $50.5 billion
Primarily raw materials, machinery, equipment, fuels, vehicles, vehicle parts, plastic, chemicals, grains

Note that a lot of our exports are actually assembled from imported materials, with the local content primarily being assembly (or labor). Thus, the $42.8B figure alone is quite misleading. A more accurate scale can be derived by comparing import-export figures. Of course, the import figure includes importation for local consumption.

The good news is that even with the adjustments to indicate net and more accurate figures, the Philippines is actually experiencing economic growth. Still, it is always better to be prudent and examine the underlying fundamentals that serve as basis for the report lest we end up with a false sense of accomplishment.

[Horsepower]

Matagal nang dependent ang mga Pilipino sa OFWs kaya nga iba pinangungutang pa ang tuition ng mga anak na nag-aaral ng Nursing at Seaman.

[mazdamazda]

Bwahaha... peace lang boss M2.

Good points re: investments and trending. Sabagay, we had that problem before the nursing boom in other courses. My apologies.

It's still a problem, though. We have a severe shortage of students in non-export programs, and a shortage of mentors in export programs.

Kulang yata ako sa kape when I posted that reply. :twak:

Anyway, this current Nursing brouhaha will die down sometime around 2010 I believe. Some say that the new boom would be for jobs abroad would be PT (less work but with similar pay).