Sea-based OFWs remit $593.2 million in Dec 2020, up 0.8 percent

Remittances dip 0.8% in 2020 at $29.9 B
Lee C. Chipongian 15 FEb 2021 https://mb.com.ph/2021/02/15/remittances-dip-0-8-in-2020-at-29-9-b/amp/

The pandemic-affected cash remittances fell by 0.8 percent year-on-year to $29.903 billion in 2020 from $30.133 billion which was lower than what the Bangko Sentral ng Pilipinas (BSP) estimated was a two percent contraction for the year.

“Despite the global slump due to the pandemic, full-year 2020 remittances (was) lower by only 0.8 percent,” said BSP Governor Benjamin E. Diokno.

For 2020, the central bank had originally predicted that remittances will contract by five percent and then resume its four-percent a year growth this year. The BSP revised the remittances forecast from five percent to two percent contraction in November following assessments that remittances would not decrease as much as expected as economies where overseas Filipinos are located have started to reopen business and financial activity.

The BSP said that cash remittances which are remittances that are sent via banks and it is therefore data that is easily captured by the BSP, mostly came from these countries: Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Germany, and Kuwait. Fund transfers from these countries were down compared to what was recorded previously.

Bank-channeled remittances from the US, Singapore, Canada, Hong Kong, Qatar, South Korea, and Taiwan however continued to increase.

“The US posted the highest share of the total remittances at 39.9 percent, followed by Singapore, Saudi Arabia, Japan, the UK, the UAE, Canada, Hong Kong, Qatar, and South Korea. The combined remittances from these countries accounted for 78.6 percent of the total cash remittances,” according to the BSP. The US would naturally emerge as a top remittance source because correspondent banks tapped by remitters are located in the US.

For the month December 2020, overseas Filipinos’ cash remittances dropped by 0.4 percent to $2.89 billion from $2.902 billion in December 2019. The BSP said cash remittances from land-based workers decreased by 0.7 percent to $2.297 billion during the month, while sea-based workers increased by 0.8 percent to $593.2 million.

The BSP said personal remittances slightly fell by 0.3 percent year-on-year to $3.205 billion in December from $3.216 billion same time in 2019.

The central bank said there was a 0.7 percent decrease in remittances from land-based workers with work contracts of one year or more to $2.494 billion from $2.512 billion same time in 2019. Remittances from sea-based workers and land-based workers with work contracts of less than one year rose slightly by 0.8 percent to $647 million in December 2020 from $642 million, said the BSP.

From January to December, personal remittances reached $33.194 billion, also down by 0.8 percent from $33.467 billion in 2019.

The BSP noted that personal remittances “remained a major source of the country’s foreign exchange inflows, with the 2020 level representing 9.2 percent of the gross domestic product and 8.5 percent of the gross national income.”

Personal remittances, based on BSP definition, is the sum of net compensation of employees, personal and capital transfers.

Overseas Filipinos’ net compensation are computed from gross earnings of workers with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries, said the BSP. Personal transfers are “all current transfers in cash or in kind by overseas Filipino workers with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines” while capital transfers between households are described as “the provision of resources for capital formation purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return.”