Filipino expatriates working in the UAE continue to send more money home as the US dollar reigns supreme over other currencies.
According to Sudhesh Giriyan, COO of XPress Money, the company has witnessed an 8 per cent rise in remittance transactions to the Philippines in the first five months of 2018 compared to the same period last year. The Philippine peso dropped to its lowest value in 12 years in May against the US dollar, giving expats better exchange rates.
“In the first half of 2018, many Asian currencies have slumped due to the strengthening of the US dollar and the increase in global crude oil prices, resulting in a surge in remittances to many Asian countries, especially from the GCC. Despite the economic impact of a weaker currency, the situation encourages expats to benefit from it and send more money back home, which, in turn, supports the development of the local economy,” Giriyan explains.
“The Philippines is one of our most important corridors considering they constitute one of the largest expat population in the GCC countries,” says Adeeb Ahamed, MD, LuLu Financial Group.
“We have seen a steady increase in the number of remittances to the Philippines these past few years and expect it to grow over the coming years as well. With major projects coming up all over the region, the economic prospects of the GCC countries are brighter than ever. The positive economic growth would result in more jobs and opportunities for expats, which would in turn translate to better remittances to their home country.”
Data from Bangko Sentral ng Pilipinas (BSP) reveals that overseas Filipino workers (OFWs) in the UAE transferred $580.39 million (Dh2.1 billion) through banks in the first quarter of 2018, growing by 1.3 per cent compared to $572.87 posted in the same period in 2017.
Remittances help drive a country’s economic growth by fuelling domestic demand. Funds sent by overseas workers to their beneficiaries are not only utilised to address basic needs like food, housing, education and healthcare, but also for investments and entrepreneurial endeavours. BSP figures show OFWs from around the world remitted $28.1 billion in total last year, 9.1 per cent ($2.54 billion) of which came from UAE expats. These funds were channeled through banks.
However, the cumulative amount sent to the Philippines in 2017 reached $31.3 billion, making the country the third largest recipient of remittances according to a World Bank report.
BSP reveals last year’s remittances as making up 10 per cent of the Philippines’ gross domestic product and 8.3 per cent of the gross national income. A report from social news network Rappler note that money sent home by OFWs is the second largest source of foreign capital for the Philippines. It also aids in funding the country’s growing account deficit, brought about by the import of capital equipment and raw materials.
Meanwhile, modern technology has significantly changed the way people manage money, with cashless payment transactions rapidly becoming the norm.
Although cash transfer remains the most popular option for Filipino expats to send funds back home, industry experts expect a departure from this in the future as consumers increasingly use mobile phones for transactions.
“While cash transfers continue to dominate the remittance industry, we have definitely seen an uptake in account transfers and mobile wallet transfers,” Giriyan says. A mobile wallet is an app that allows individuals to pay for goods and services, or transfer money to their loved ones using their phone.
“Owing to the convenience offered by mobile wallets, it is likely that OFWs may gradually move to mobile wallet-enabled money transfers over the next few years,” Giriyan concluded.