More OFW households using remittances for investments – survey

MANILA, Philippines —  More households are investing the money sent home by Filipinos working abroad as global financial markets stabilized, results of a quarterly survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

BSP officer-in-charge Diwa Guinigundo said the percentage of OFW households using remittances to invest as of the third quarter of the year almost doubled to 8.5 percent from 4.4 percent in the second quarter.

Guinigundo pointed out the level of OFW households using remittances for investments was almost four times the 2.3 percent recorded in the first quarter of 2007 when the Consumer Expectation Survey (CES) was launched.

Investors are returning to the financial markets with the clearer picture on the normalization path taken by the US Federal Reserve after two rate hikes undertaken last March and June.

The results of the CES survey for the third quarter showed the percentage of OFW households saving remittances slipped to 42.1 percent from 45.9 percent in the second quarter of the year.

The percentage of OFW households using remittances to save as of the third quarter of the year was almost six times the 7.2 percent recorded when the CES was launched 10 years ago.

Guinigundo explained some of the expenditures of households have shifted to investments. Latest data showed personal remittances climbed 5.5 percent to $15.36 billion while cash remittances grew 4.7 percent to $13.81 billion in the first half of the year.

He said the percentage of Filipino families using remittances for medical expenses dropped to 52.5 percent in the third quarter from 60.8 percent in the second quarter as well as that for debt payments to 40.2 percent from 43.1 percent.

Guinigundo noted that OFW households have also put on hold major purchases.

The BSP official explained the percentage of households using remittances for the purchase of appliances or consumer durables slipped to 24.5 percent from 25.3 percent and for the purchase of house declined to 14.5 percent from 16.4 percent.

He said the percentage using remittances for the purchase of cars went down to 6.2 percent from 7.4 percent but is expected to increase with the impending increase in excise tax slapped to motor vehicles under the comprehensive tax reform program being pushed by the Department of Finance.

Majority at 98.1 percent allocate remittances for food and other household needs while 70.3 percent utilize the amount of money sent home by OFWs for education.

The survey for the third quarter was conducted between July 1 and 15, covering 5,430 respondents. Close to 10 percent of the total respondents or 504 households received remittances from abroad.

Rosabel Guerrero, director of the BSP’s Department of Economic Statistics (DES), said the percentage of all households with savings went up to 35.6 percent in the third quarter from 34.4 percent the previous quarter.

She said households save money for emergencies, education, retirement, health and hospitalization, business capital and investment as well as for the purchase of real estate.

Guerrero pointed out almost two-thirds or 65.8 percent of household savers had bank deposit accounts while 42.4 percent kept their savings at home.

On the other hand, 28.7 percent of the household savers put their money in cooperatives, ‘paluwagan,’ other credit or loan associations as well as investments in stocks and insurance.