MONEY sent by overseas Filipino workers (OFWs) may not be sustainable in the long term unless adequate reforms are put in place, according to economists and legislators.

Sonny Africa, research head of independent think tank Ibon Foundation Inc., said OFW remittances are not sustainable due to rising competition from neighboring countries.

“The problem with remittances right now is that more and more countries are getting into the remittance bandwagon,” he said. “Perhaps not within the next two to three years but for sure within a decade.”

He shared this observation with the BusinessMirror Thursday on the sidelines of a forum on reducing fees for OFW remittances organized by Migrante International, a nongovernment unit.

A recent Ibon study—“OFW’s  Remittances and Philippine Underdevelopment”—shows than the Philippines ranks fourth among the top 20 remittance-receiving countries behind Mexico, China and India.

Developing countries like Indonesia, Pakistan and Vietnam were gaining on the Philippines as well. “At some point in the future, those remittances [by Filipino OFWs] will have to plateau,” Africa said.

Countries latching on to worldwide trends, such as remittance-powered growth, have a historical precedent, he added.

He cited the Ibon report which stated that the intensifying global effort, backed by the World Bank and the International Monetary Fund, to promote remittances as a pathway to development mirrors the export hype in the 1970s to 1980s. This caused a downward pressure on wages, salaries and benefits in host countries.

Africa pressed for more investments in key industries for sustainable growth such as in agriculture.

“Again it’s back to basics [which is to] get the domestic house back in order,” he said, adding that the government shouldn’t rely too much on remittances and cheap labor exports.

During the same event, Senator Mar Roxas cited 2007 figures where remittances by OFWs reached $14.4 billion or roughly 10 percent of gross domestic product. The senator, who also chairs the Committee on Trade and Commerce, added: “This is not enough and we need to strengthen the domestic economy”

He pushed for more focus on agriculture particularly in bringing down the cost of inputs, such as fertilizers, and giving access to small to medium businesses affordable credit as these make up 98 percent of businesses in the country.

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OFW remittances may not be sustainable in the long term

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