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IT is
good of the President to direct Socioeconomic Planning
Secretary Romulo L. Neri to find ways to help millions
of overseas Filipino workers (OFWs) cope with the
increasingly painful impact of the strengthening peso on
their families’ pocketbooks.
Finally,
officials have seen the irony of the OFWs’ situation: as
recently pointed out in a front-page story in this
paper, the more dollars they remit home, the bigger the
gap that has to be filled in their families’ usual
budget—given that with the peso appreciating in the
flood of dollars, their dollar earnings here fetch an
increasingly lower peso equivalent.
A couple
of OFW dependents interviewed for that Associated Press
story said that in a matter of a few months, the
difference in the peso equivalent of the dollars sent
home by their OFW loved ones had reached P3,000 to
P5,000. To make up for that decline, some OFWs have thus
had to remit more, thus perpetuating the cycle.
We’re
talking here of about eight million overseas Filipinos
whose aggregate remittances as of April were up 26.08
percent to $4.681 billion.
The
President was presumably reacting to some comments that
the government was quick to react to the whining of
exporters hurt by the strengthening peso, even giving
them a hedging facility through the Development Bank of
the Philippines. Exporters have become increasingly
worried by the diminishing returns and declining
competitiveness of their business with the steady
appreciation of the local currency.
And yet,
in the same breath, those who noted the government’s
response to such exporters’ concerns had also pointedly
observed that it had overlooked the other economic
pillar that’s also bearing the brunt of the impact of a
strong peso—the OFWs.
Thus it
was that on Thursday, Secretary Neri recommended that
the Philippine Postal Corp. become a money and
communication center for OFWs via cheaper and new OFW-friendly
instruments and services that the state-owned bank would
offer.
“We have
recommended [to the President] to allow Postal Corp.,
which operates Postal Bank, make its more than 2,000
branches all over the country act as OFW centers and
lower cost of remittances,” Neri told our reporter in a
telephone interview.
As he
explains it, the cheaper products and services that
Postal Corp. is expected to provide to OFWs and their
families could trigger changes in the remittance
industry, i.e., private banks would be forced to make
their high transaction costs more competitive.
According to Mr. Neri, “The BSP has a web site where
OFWs can compare remittance rates among financial
institutions. These private banks, I think, will lower
their charges if Postal Corp. eventually competes with
them rate-wise.”
The
logic sounds simple enough. Unfortunately, government
investing in a postal bank, a proposal that had been
debated earlier by experts, may create more problems
than solve existing ones, or drain a particular sector
of relatively huge sums to try and influence a market
for which it is just not enough to influence anyway.
First of
all, the proposal for transforming the “moribund” postal
corporation branches into a network of OFW-oriented
banks would require so much more than the P1 billion
earlier targeted to be sourced from the Overseas Workers
Welfare Administration (OWWA). Certainly, a billion
pesos off OWWA’s coffers, for a bank supposedly meant to
help OFWs, will undercut the OWWA’s ability to cope with
the workers’ needs at present.
Unfortunately, while that P1 billion is a huge drain on
OWWA—assuming the proposal passes—it can never be enough
to influence the market now dominated by private banks,
the big players of which had planned their foray into
OFW banking for an average of five to seven years, and
invested heavily in terms of infrastructure, technology
and manpower.
Certainly there are other ways that bureaucrats can seek
to influence the banks to lower their transaction costs
other than the puny impact of a haphazardly transformed,
OFW-oriented state bank. In Secretary Neri’s view, some
of the country’s major banks and remittance companies
have found their remittance operations to be more
lucrative than their lending activities, and the “OFW
Bank” may compete with this.
Theoretically, that seems to make sense; the problem is
that we’re not talking just economic models here. We’re
talking of an actual government experience—nay,
misadventure—with banking, when it failed to cope with
the rapid changes that swept through the financial
industry in the past 30 years. Surely it doesn’t think
it can quite easily reverse that mistake with another
experiment, this time using the migrant workers’ trust
fund, for the ostensible purpose of helping the same
workers.
As
former President Fidel V. Ramos would say, do the
“complete staff work” first. |
