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|28 December 2009
Philippine helps OFW cut cost on remittances
Having recently reduced the back end of a costly remittance trail for overseas Filipino workers, industry leaders now endeavor to cut costs further at the so-called front and mid points, Business Mirror online quoted the Association of Bank Remittance Officers Inc. (Abroi) as saying.
The plan should help boost remittance growth, seen to accelerate next year to 6 percent from an anticipated expansion of around 4 percent this year.
The Abroi would not say how much lower the overall remittance cost will be, saying only there are ongoing efforts to bring down the cost of sending money for up to 10 million overseas Filipino workers (OFWs) around the world.
According to the Abroi, remittance charges immediately apply the moment an OFW approaches a remittance center abroad in order to send his earnings to beneficiaries in the Philippines.
Further charges apply as the remittance center courses the money through a correspondent bank that then remits the money to Manila or wherever that money is sent.
Banks typically charge between $8 and $12 for sending money from the US for credit to a bank account in Manila, and between $10 and $12 if the remittance is credited to another bank.
So-called advice-and-pay remittances typically cost $12 if delivered within Metro Manila and $15 if outside Metro Manila. Such costs are a punishing burden on a sector whose collective purchasing power helps push the economy forward, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
The remittances, he added, account for up to 11 percent of local output measured as the gross domestic product.
“To help advance the welfare of overseas Filipinos, we will continue to work for a further reduction in bank remittances, even as we had just recently signed an agreement with Abroio that would reduce remittance fees from 100 peso to 550 peso per transaction to just 50 peso a transaction,” Tetangco said.
This pertains to the agreement where the BSP made available to remitting banks in the Philippines the services of its Real Time Gross Settlement System—also known as the Philippine Payments and Settlement System, or PhilPASS—permitting safe, reliable and quick settlement between parties and lowering costs overall.
Under the agreement, the BSP will charge the banks only 5 peso per transaction for the use of PhilPASS and, in return, the banks vowed to charge no more than 50 peso per transaction on clients.
Originally seen to contract by 20 percent or even 30 percent this year, OFW remittances proved resilient and grew by 4.5 percent in the first 10 months instead to $14.3 billion.
At 4-percent growth, OFW remittances should hit $17 billion by the end of the year.
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