Send Money to the Philippines

Money being sent home by millions of Filipino workers living and working abroad rose 9.4% from a year earlier to $1.4 billion dollars in March, the Bangko Sentral ng Pilipinas (BSP) said in a recent interview; also noting this was the highest monthly level to date. This brings the inflows for the first three months of the year to $4.0 billion, 13.2 percent higher than the year-ago level.

The higher inflows “reflected the rising number of Filipino workers abroad, the shifts in skill composition as well as the growing efficiency of banks and other financial institutions as remittance channels,” said BSP.

According to the BSP, more than eight million Filipinos, out of the national population of 90 million, work abroad. The United States, Britain, Saudi Arabia, United Arad Emirates, Italy, Canada, Japan, Singapore, and Hong Kong were the major sources of remittances.

Moody’s Investors Service, said significant remittance inflows from overseas Filipino workers have been a stable source of banks’ income. In a Global Banking report, the credit rating company said banks produced $185 million to $380 million in gross revenues from remittances last year mainly through delivery charges and the spread charged on foreign exchange rates.

It has been noted that overseas Filipino workers sent home on average $350 million, while the average remittance cost stood at $8 per transaction. The average transaction fee reached $3.50 and foreign exchange revenues, $144.50.

The BSP expects remittances to grow to $15.7 billion this year from $14.449 billion last year as more professional Filipinos go abroad to work in higher paying jobs such as medical workers, engineers, and marine officers and crew.

”In addition, the combination of rising remittance flows and the renewed interest of banks in building consumer financial services has helped revive domestically retail banking products, which have grown faster than other types of loans,” Lung said.

The sharp rise in housing and auto loans over the past four years has been driven by the rising demand from overseas Filipino workers and their beneficiaries, he added.

Lung said the Philippine banks face the difficult task of following their clients overseas as it entails possible higher compliance costs as regulatory requirements can differ in each jurisdiction. “Regulatory barriers as well as differing business environments in the past have limited the ability of some Philippine banks to offer full services to OFWs in their host countries,” he said.

Moody’s estimates that banks account for 79 percent of remittance transmissions. However, new entrants and new technology will erode banks’ dominance and the profits they derive directly from the remittance business. Wireless phone service providers have launched lower-cost remittance services via text messaging through mobile phones.  However with an increasing number of online choices for sending money to the Philippines Filipino workers abroad now have more and better options for sending money home.

Moody’s said that if governments allow temporary Filipino workers to become more permanent residents, such a development could impact the flow of remittances as earnings directed to purchasing durables in the Philippines could be increasingly spent in host countries.

REMITTANCES

Definition: Remittances are the money that immigrants send to their home country while working abroad. There are 2 types of remittances:

1. Family Remittances: This is money sent by individual immigrants to family and friends back home. These remittances are often used to meet their most basic needs. Family remittances dwarf development aid and foreign investment. They are said to be the single most important factor fighting poverty in the world today.

2. Community Remittances: This is money sent by individual immigrants and by hometown associations to communities in their home country. This money has traditionally been used for infrastructure, like parks, roads and churches. Increasingly, it is destined for government coffers. Mexico has a ‘Tres por uno’ program, which matches 3 tax dollars for every 1 dollar donated to a regional government.

Remittances Worldwide:

-          1 in 10 people around the globe is directly involved with remittances.

-          The U.S. is the largest source country, with $42 billion of remittance outflows annually.

-          Latin America is the region with the largest and fastest growing remittance flow. It received nearly 40% of the $126 billion in remittance sent to developing countries in 2004.

-          Remittance to Latin America exceeds foreign investment and development aid.

-          Were remittances to stop flowing, Latin America’s economies would collapse in an estimated three months.

-          This rapid growth in remittances is slowing as more Latin American immigrants blend into U.S. society and send less money home.

-          Remitters come disproportionately from the working poor and many times are in the United States illegally.

-          Migrants remit on average 12.6 times a year, typically $150/200/250 each time. These remittances constitute approximately 10% of their household income.

-          A quarter of remitters send money home first, even before paying their own bills.

-          Remittance rates increase every year despite drops in the U.S. economy.

-          Remittances tend to increase when the home country’s economy slows, making it a particularly effective anti-poverty tool.

-          Remittances promote economic growth, increased investment and community development.

-          Remittances can also result in higher interest rates and inflation.

Remittance Statistics:

-          46% of all Hispanics born outside the U.S. regularly send money to their country of origin.

-          57% of immigrants from El Salvador send remittances

-          60% of U.S. remittance senders are male

-          63% are under the age of 40

-          59% are married

-          59% have not completed high school

-          57% make less than $30,000 a year

-          64% of those who are employed are unskilled laborers

-          45% say they plan to move back to their home country

-          55% do not have credit cards

-          43% do not have bank accounts

Currency Rules and Regulations part 2

When traveling there are many options for transferring currency from one country to another.  One of the easiest and safest ways of traveling with currency is to use a prepaid debit card.  Prepaid debit cards can be used at ATM’s almost anywhere in the world and also help travelers to secure the most favorable exchange rate.

France

The Euro is now the official currency of France. France’s prior currency, the Franc, is no longer accepted.
It is illegal in France for retailers and hotels to accept foreign currency as payment.

Import/Export restrictions: The import and export of local and foreign currency is unrestricted. Amounts over €7600 must be declared.

Hong Kong

Hong Kong Dollars = 100 cents. Denominations: HKD1000, 500, 100, 50, 20, 10

Import/Export Restrictions: There is no fee for importing and exporting of local and foreign currencies.

Currency Exchange: Foreign currency and travelers checks can be exchanged at banks and major post offices, as well as many hotels and travel agents. A commission is charged at all hotels, banks and bureaus that provide exchange services.

Israel

Israel New Sheqel (Sheqalim) = 100 New agora (agorot). Denominations: ILS200, 100, 50, 20

Import/Export Restrictions: There are no fees for importing and exporting of currencies; however, you must declare amounts over ILS 80,000.

Currency Exchange: There are small exchange bureaus found on main streets and within some hotels and banks that will exchange money for you. ATM machines can also be used in areas throughout Israel to obtain local currency using a credit or debit card. However, commission is very high if you exchange money or travelers checks anywhere within Israel.

Mexico

Mexico Peso = 100 centavo(s) Denominations:  MXN1000, 500, 200, 100, 50, 20

Currency Import/Export Restrictions: It is free to import and export currencies; however, amounts exceeding USD10,000 or equivalent in cash or checks must be declared to customs.

Currency Exchange: Most exchange houses and banks do not charge additional fees to cash traveler’s checks or exchange foreign currency, but be careful as many will attempt to charge a commission. Many banks will only exchange money if you have a bank account in Mexico. Many of the bigger cities and towns and the ‘border’ towns will accept US dollars as a method of payment.

United States of America

US Dollar (US$) = 100 cents. Denominations: USD $100, 50, 20, 10, 5, 2, 1

The US Dollar is widely accepted in as alternative currency in many countries.

Import/Export Restrictions: The Import or export of US $ 10,000 or equivalent must be registered with customs on Form 4790. Failure to do so may result in civil and criminal prosecution, including seizure of the money. There is also a restriction on transactions with Cuba, Iran, Iraq, Libya and North Korea.

Before sending money to another country make sure you are dealing with a reputable company who does not charge hidden fees. It is also important to be aware of the rates charged on the recipient’s end.