Exchange rates in seafarers’ remittances

Exchange rates in seafarers’ remittances
Atty. Dennis Gorecho June 6, 2025 https://businessmirror.com.ph/2025/06/06/exchange-rates-in-seafarers-rem...

IN 2024, there are 504,057 deployed sea-based workers, with corresponding remittances totaling US$6,941,085,000.

It is estimated that there is one Filipino seafarer for every four to five crew on board a vessel at any time.

In terms of 2024 total remittances amounting to $34,492,616,000, the sea-based sector sent home $6,941,085,000, or almost 20 percent, while the land-based sector sent home $27,551,532,000.

In terms of deployment, the Department of Migrant Workers (DMW) reported that the total number of Filipino seafarers deployed overseas reached 376,663 in 2017; 337,502 in 2018; 507,730 in 2019; 217,223 in 2020; 345.52 in 2021; 385,239 in 2022; 578,626 in 2023; and 504,057 in 2024.

Records from the Bangko Sentral ng Pilipinas (BSP) indicate the sea-based sector’s remittances (in thousand US dollars) for the past 20 years: $1,669,358 in 2005; $1,949,290 in 2006; $2,236,363 in 2007; US$3,034,553 in 2008; US$3,400,412 in 2009; $3,806,108 in 2010; $4,340,416 in 2011; $4,835,342 in 2012; $5,215,378 in 2013; $5,575,722 in 2014; $5,572,148 in 2015; $5,792,459 in 2016, US$6,870,827 in 2017; $6,139,512 in 2018; $6,539,246 in 2019; $6,353,522 in 2020; $6,545,002 in 2021; $6,715,880 in 2022; $6,852,362 in 2023; and $6,941,085 in 2024.

The data showed the yearly increase of remittances (in thousand US dollars) in 2006 ($279,930) 2007 ($287,073), 2008 ($798,190), 2009 ($365,859), 2010 (US$405,696), 2011 (US$534,308), 2012 ($494,926), 2013 ($380,036), 2014 ($360,344), 2015 ($220,311), 2016 (US$220,311), 2017 ($1,078, 368), 2018 (US$731,315), 2019 ($399,734), 2021 ($191,480) 2022 ($172,878), 2023 ($136,482), and 2024 ($88,723).

The remittances decreased in two years: 2015 by $3,574 and 2020 by $185,724.

Remittances provide macroeconomic benefits to the Philippine economy, where a significant portion of the population lives and works abroad.

They augment foreign currency reserves, alleviate pressure on the exchange rate, and reduce the need for foreign borrowing.

Remittances also support capital market development, enabling recipients to accumulate productive assets and invest in financial instruments, while enhancing human capital.

Unlike land-based OFWs, DMW Seafarer Employment Contract (SEC) mandates that a Filipino seafarer has to make an allotment which shall be at least 80 percent of the seafarer’s “monthly basic salary”, payable once a month to his designated allottee in the Philippines.

Under the Magna Carta for Filipino Seafarers, the allotment shall be at least 80 percent of the seafarer’s “monthly salary.” The word “basic” was omitted.

Basic wage under the DMW SEC is defined as “the salary of the seafarer exclusive of overtime, leave pay”.

Senator Ramon Tulfo said that this allotment was previously calculated only from a seafarer’s monthly basic salary. However, under the Implementing Rules and Regulations (IRR) of the law, the fixed or guaranteed overtime pay is now also included in computing the 80% allotment.

Former Kabayan Party-list Rep. Ron Salo said that the allotment will apply to 80 percent of the basic wage, plus fixed overtime, and not to the 80 percent or even a 100 percent of the total income.

The allotments shall be paid to the designated allottee/s in Philippine currency at the rate of exchange at the time of remittance indicated in the credit advice of the local authorized Philippine bank, which information shall be provided to the designated allottee/s.

Rinell Banda, founder of Buhay sa Cruise Ship Facebook community, said many seafarers prefer to save their income onboard so that they will not have to pay so much for foreign exchange differentials and remittance cost.

Blogger Fred Uno of MarineCafe.com pointed out in an article that Filipino seafarers are being shortchanged in the conversion of their dollar remittances to pesos as he described such practice as “thievery” in the maritime industry.

It is a known practice of some unscrupulous manning agencies to shave off at least one or two pesos from the foreign exchange rate, misleadingly calling the cut as “service charges.”

It is not uncommon for unscrupulous manning agents to keep part of the remittances when converting the money to pesos by using an exchange rate that is usually one or two pesos lower than the official BSP rate.

Such tampering with the dollar-to-peso rate, he added, results to the shortchanging of Filipino seafarers since their families receive less than they should in allotments.

The DMW Secretary Hans Leo Cacdac said that manning agencies must follow the bank rate during remittances (allotment) and non-compliance could result in penalties: a six-month suspension for the first offense, one year for the second, two years for the third, and license cancellation for the fourth.