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June 17, 2013

Remittances Play Significant Role in Philippines

by Simone Orendain

Contributions from Filipinos abroad came to nearly 10 percent of the Philippine economy last year.  The figure is based on remittances, which hit a high of $21 billion in 2012.  But the popular notion that contract workers sent that much back home is only partly true.  Money from émigrés also plays a significant role. Many feel obligated to remit money back into the Philippine economy from overseas.

Cultural notion

At the Commission on Filipinos Overseas, which tracks Filipinos who emigrate to other countries, Rodrigo Garcia does policy research.  He said in the Philippines, sending money back home is driven by a cultural notion.  

“It is assumed especially by your extended family that once you’re there you have to give something.  Well, that’s the case there.  You have to give something or else those loved ones of yours will think- not less of you- but they will think something’s wrong with them," said Garcia. "That you have forgotten them.”

Garcia said of the more than nine million Filipinos overseas, slightly more than half have emigrated.  And he said their remittance pattern is more sporadic than that of contract workers, who tend to send money home every month.

Investment

Jaime Flores fits the émigré profile.  He is an American citizen who has been living in Chicago for more than 40 years. Flores was a Certified Public Accountant in the Philippines and when he was vacationing in the U.S. he decided to get a work visa.  He got a permanent job in Chicago and has since sent occasional monetary gifts to family members.  Today the retiree sends birthday money - about $100 each - to his siblings and his mother.

“And then in Christmas I send them $400 [each].  It’s just a token gift," Flores stated. "It’s not to sustain them because they are able to sustain themselves.”

While the Philippine government does not track what the remittances pay for, there is anecdotal evidence from major real estate firms that money from émigrés also goes toward property investments.

Flores said a number of his Filipino American friends have invested in condominiums in Manila.  Others have had houses built so they could live in the Philippines during America's winter months.  

Retirement

Jaime David’s entire family - including his parents and siblings - lives in the United States.  But David said he looks forward to spending part of his retirement in the Philippines, and he has built up a nest egg (monetary reserve) for this.  He owns rental properties in Manila and a nearby province.  The more than $1,000 he collects in rent goes into a local bank account.  

“We keep it there.  So that when we go home, we have money to spend there.  I don’t bring too much money from here,” said David.

Figures from the Philippines Central Bank show overwhelmingly that remittances come from the United States, leading researchers to believe they came from émigrés.  But the Central Bank recently said that a number of banks, particularly in the Middle East, clear remittances through their headquarters in the U.S.  More than two million contract workers are based in the Middle East.  

According to Garcia, on average those workers send $300 to $500 monthly to their immediate families.  That is more than half of their monthly wages.

Obligation

Contract worker Gil Lebria’s remittances have been a matter of survival for his family.  Over a period of 13 years, the 38-year-old logistics officer worked in six different countries - mostly in the Middle East.  His last job in Libya was cut short in 2011 by civil unrest.  

For most of that time, Lebria said he had trouble with contracts that employers would switch or negate.  As a result his salary would be delayed for months at a time, but he still had to send money back home. “I always borrow money from another Filipino who’s working in another company to sustain my family," he explained. "Because my family always needs the money for daily financials.”

Migrante International, the Philippines largest migrant worker advocacy group, said Lebria’s case is not uncommon.  Mic Catuira Catuira is a caseworker. He said a majority of Filipinos who go abroad for work have people at home depending on them.  
“It’s nearly impossible for Filipinos to disregard the needs of their family.  Most of them would sacrifice having to take out loans with high interest, like it could go as high as 30 percent,” said Catuira.

Even with bad luck on contracts, Lebria said he is applying for work this time as a butcher, which is a skilled labor position in high demand in Canada and Australia - countries that offer paths to permanent residency.