Central Bank of Philippines : Personal Remittances Sustain Growth in November 2015; Year-to-Date Level Reaches US$25.2 Billion

01.15.2016

Personal remittances from overseas Filipinos (OFs) amounted to US$2.4 billion in November 2015, representing a year-on-year growth of 3 percent. On a cumulative basis, personal remittances in January-November 2015 rose by 3.4 percent to US$25.2 billion, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today. The steady growth in personal remittances was supported by the sustained increase of remittances from land-based workers with work contracts of one year or more (by 4 percent) and from sea-based and land-based workers with work contracts of less than one year (by 2.5 percent).

Similarly, cash remittances from OFs coursed through banks grew by 3.2 percent year-on-year to US$2.2 billion in November 2015. For the first eleven months of the year, cash remittances reached US$22.8 billion, 3.6 percent higher than the US$22 billion recorded in the same period in 2014. Cash remittances from land-based and sea-based workers amounted to US$17.6 billion and US$5.2 billion, respectively. The bulk of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, Singapore, the United Kingdom, Japan, Canada, and Hong Kong. Combined remittances from these countries accounted for more than 79 percent of total cash remittances that were reported by banks.

The continued deployment of skilled OF workers remained a key driver of the growth in remittance inflows. Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that for the period January-November 2015, total job orders reached 771,635, of which 44 percent have been processed. These job orders were intended mainly for service, production, and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan, and Hong Kong. Likewise, the presence of banks and non-bank remittance service providers in foreign countries through tie-ups and remittance centers, as well as the introduction of innovations in their remittance products, provided support to the steady stream of remittance inflows during the period.

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The BSP started to release data on personal remittances in June 2012. As defined in the Balance of Payments Manual, 6th Edition (BPM6), personal remittances represent the sum of net compensation of employees (i.e., gross earnings of overseas Filipino (OF) workers with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries), personal transfers (i.e., all current transfers in cash or in kind by OF workers with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines), and capital transfers between households (i.e., the provision of resources for capital purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return).

There are some limitations on the remittance data by source. A common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the U.S. Furthermore, remittances coursed through money couriers cannot be disaggregated by actual country source and are lodged under the country where the main offices are located, which, in many cases, is in the U.S. Therefore, the U.S. would show as the major source of OF remittances because banks attribute the origin of funds to the most immediate source.