OFW remittances up 2.5% to $3.32B

Overseas Filipino worker (OFW) remittances picked up in July to $3.32 billion, the Bangko Sentral ng Pilipinas reported on Friday.

Overall or personal remittances grew by 2.5 percent to $3.32 billion from $3.24 billion a year earlier, with cash sent home via banks alone totaling $2.99 billion, 2.6 percent higher compared to the $2.92 billion recorded in July last year.

The rise in personal remittances was attributed to land-based OFWs with contracts of a year or more and sea- and land-based workers with contracts of less than one year.

Year to date, overall remittances totaled $20.91 billion, 2.9 percent higher than the year-earlier $20.33 billion.

Cash remittances, meanwhile, also grew by 2.9 percent to $18.79 billion from $18.26 billion during the seven-month period.

July's 2.5-percent growth in personal remittances improved from June's 2.2 percent and the year-earlier 2.3 percent.

The year-to-date expansion, however, slowed from 3.0 percent a month earlier but was still slightly higher than the 2.7 percent posted as of end-July last year.

The cash remittance growth of 2.6 percent, meanwhile, improved from June's 2.1 percent and the 2.3 percent last year.

Year-to-date growth was unchanged from June but rose from 2.8 percent in January-July 2022.

The cumulative growth in cash remittances was traced to flows from the United States, Singapore, Saudi Arabia and the United Arab Emirates (UAE).

The US accounted for the biggest share (41.3 percent) of overall remittances for the seven-month period, followed by Singapore (6.9 percent), Saudi Arabia (5.9 percent) and Japan (5.0 percent).

Other countries that contributed to overall remittances were the United Kingdom (4.8 percent), the UAE (4.1 percent), Canada (3.5 percent), Qatar (2.8 percent), Korea (2.7 percent) and Taiwan (2.7 percent).

Commenting on the results, China Banking Corp. chief economist Domini Velasquez said the year-to-date moderation was the result of slowing economic activities, particularly in Europe and the US.

"On the other hand, remittances from Asia would continue to outperform the rest of the world led by Asean (Association of Southeast Asian Nations), Hong Kong and the Middle East in the near term," she added.

"Increasing domestic inflation and a relatively depreciated currency could induce more remittances in the next few months," Velasquez continued.

Source: Manila Times

Financial Products and Services Consumer Protection Act (Republic Act No. 11765)

The Financial Products and Services Consumer Protection Act (Republic Act No. 11765) seeks to ensure that appropriate mechanisms are in place to protect the interest of the consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices.

These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. (Section 2, Republic Act. No. 11765))

The Financial Products and Services Consumer Protection Act (Republic Act No. 11765) seeks to ensure that appropriate mechanisms are in place to protect the interest of the consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices. These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. (Section 2, Financial Products and Services Consumer Protection Act)

The law applies to all financial products or services offered or marketed by any financial service provider.

Financial product or service

“Financial product or service” refers to financial products or services which are developed or marketed by a financial service provider which may include, but are not limited to, savings, deposits, credit, insurance, pre-need and health maintenance organization (HMO) products, securities, investments, payments, remittances and other similar products and services. This also includes digital financial products or services which pertain to the broad range of financial services accessed and delivered through digital channels. (Section 3, par. c, Financial Products and Services Consumer Protection Act)

Financial Service Providers

Financial service provider refers to any person which provides financial products or services that are under the jurisdiction of financial regulators.

The law says:

“Financial service provider refers to a person, natural or juridical, which provides financial products or services that are under the jurisdiction of financial regulators as defined in this Act. This term shall include Investment Advisers as defined under Section 7 of this Act.” (Section 3, par. e, Financial Products and Services Consumer Protection Act)

The term “investment adviser” shall mean any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of investment products or as to the advisability of investing in, purchasing, or selling investment products, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning investment products. (Section 7, par. c, Financial Products and Services Consumer Protection Act)

The following entities are not considered as financial service providers:

(a) Trust Department/Unit of Banks;

(b) Stand-alone Trust Entities;

(c) Lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;

(d) Insurance agent whose performance of such services is solely incidental to the practice of his profession;

(e) Any investment banker or broker dealer whose performance of such services is solely incidental to the conduct of his business as such investment banker or broker dealer and who receives no special compensation therefor;

(f) The publisher of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; and

(g) Such other persons as the SEC may designate by rules and regulations, or appropriate order. (Section 7, par. c, Financial Products and Services Consumer Protection Act)

Under the law, financial service providers (FSPs) shall continuously evaluate their financial products or services to ensure that they are appropriately targeted to the needs, understanding and capacity of both their markets and their clients.

To do this, the FSPs shall have a set of written procedures for determining whether a particular financial product or service is suitable and affordable for their clients (Section 8, par. b [1], Financial Products and Services Consumer Protection Act).

FSPs must also ensure that they adopt disclosure principles in their communications and their contracts with financial consumers, including the use of clear and concise language to ensure that all information concerning the financial product or service is understood by their target clients. FSPs are legally responsible for the all statements made in the marketing and sales materials that they product relative to their financial products and services. (Section 8, par. c, Financial Products and Services Consumer Protection Act).

Source: Alburo Law

June remittances hit 6-month high

Money by overseas Filipino workers (OFWs) rose to a six-month high in June, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances coursed through banks rose by 2.1% to $2.81 billion in June, from $2.75 billion in the same month in 2022.

The June cash remittance inflows are at the highest level since the $3.16 billion in December 2022.

However, the 2.1% annual growth in cash remittances was the slowest in 13 months or since the 1.8% rise seen in May 2022.

“The expansion in cash remittances in June 2023 was due to the growth in receipts from land- and sea-based workers,” the BSP said.

Remittances from land-based workers jumped by 2.1% year on year to $2.29 billion in June, while money sent by sea-based workers increased by 1.9% to $524 million.

For the first six months of 2023, cash remittances rose by 2.9% to $15.79 billion, from $15.35 billion in the comparable period last year.

Security Bank Corp. Chief Economist Robert Dan J. Roces said improved economic conditions in host countries led to more job opportunities and better wages for OFWs.

“Increased demand for labor in host countries boosted OFW employment and remittances… Positive fluctuations in exchange rates increased remittance values in Philippine peso terms,” he said.

The peso closed at P55.20 against the dollar on June 30, appreciating by 95 centavos or 1.7% from its P56.15 close on May 31.

However, the slower growth rate in June may be attributed to base effects, with a high-remittance month in the previous year made growth seem slower, Mr. Roces said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said OFWs may have sent more money back home to support their families amid rising prices.

Headline inflation eased to 5.4% in June from 6.1% both in May 2023 and June 2022, the slowest in 14 months. Still, it marked the 15th straight month of inflation exceeding the BSP’s 2-4% target band.

BSP data showed cash remittances in the January-to-June period were driven mainly by higher inflows from the United States, Singapore, and United Arab Emirates (UAE).

By country, the US accounted for the biggest share (41.1%) of total remittances during the six-month period.

The US, along with Singapore, Saudi Arabia, Japan, the United Kingdom, the UAE, Canada, Korea, Qatar, and Taiwan, accounted for 79.7% of total cash remittances in the first semester.

Meanwhile, BSP data showed personal remittances, which included inflows in kind, rose by 2.2% to $3.13 billion in June from the $3.06 billion posted in the same month last year.

This brought personal remittances 3% higher to $17.59 billion in the first half of the year from $17.09 billion a year ago.

“The outlook remains uncertain due to evolving global conditions and offshore market movements which affect the peso,” Mr. Roces said. “However, economic recovery and stability in host countries will influence remittance trends.”

Mr. Ricafort said he expects OFWs to continue sending more cash to their families, especially as school reopens.

“Risk of an economic slowdown in the US partly due to aggressive Fed rate hikes… would still be a drag for OFW remittances especially if there would be job losses,” Mr. Ricafort said, but added this may be offset by the economic reopening in China.

The central bank expects remittances to grow by 3% this year.

Source: Business World