Cash remittances sent by overseas Filipinos via the banking system declined to $19.285 billion as of end-August, 2.6 percent lower than same period last year of $19.808 billion, the Bangko Sentral ng Pilipinas (BSP) reported Thursday.
For the month of August only, bank-channeled remittances were down by 4.1 percent to $2.483 billion from $2.589 billion same time in 2019.
The BSP attributed the lower remittances from the decline in both land-based and sea-based workers’ fund transfers. Land-based remittances fell by 1.9 percent to $15.183 billion end-August from $15.476 billion. Remittances sent home by sea-based workers decreased by 5.3 percent to $4.101 billion from $4.332 billion.
Personal remittances, previously referred to as remittances through the “padala” system, amounted to $21.414 billion, also 2.6 percent lower from same period last year of $21.995 billion. For the month of August only, personal remittances went down by 4.2 percent to $2.756 from $2.875 billion.
According to the BSP, personal remittances from land-based workers with work contracts of one year decreased by 4.6 percent during the eight-month period to $2.118 billion from $2.221 billion. Both land-based and sea-based workers with work contracts of less than one year sent home $580 million which was 2.2 percent lower than $593 million last year.
The BSP said the decreases in August were noted in countries such as Saudi Arabia, Japan and the United Arab Emirates. “These were partly offset by observed remittance growth from the US, Singapore, and Malaysia,” it added.
The BSP also said that in terms of cumulative share, the US registered the highest share of cash remittances at 40.2 percent, however the US will naturally emerge as a large source of remittances because remittance centers in various cities abroad transact with correspondent banks that are based in the US.
Other countries such as Singapore, the United Kingdom, Japan, Saudi Arabia, UAE, Canada, Hong Kong, Taiwan, and Qatar – all combined — accounted for 78.9 percent of total cash remittances.
The BSP on October 8 and announced just this week revised its remittances outlook for 2020, that instead of declining by five percent, they now forecast a two percent drop in cash remittances after it bounced back in June and July. For 2021, the BSP expects remittances to return to an annual growth rate of four percent.
ING Bank economist Nicholas Mapa said the return to lower remittances went against market expectations after two months of positive numbers, and he thinks remittances will contract worse than two percent but actually go down by five to 10 percent for 2020.
“In the coming months, we expect remittance flows to see directional trading but end of the year down by 5-10 percent with overseas Filipinos abroad still facing challenging labor markets in their jurisdictions (COVID-19 cases are on the rise in Europe and the US) while the stock of overseas Filipinos abroad falls by roughly 300,000 after the wide-scale repatriations,” said Mapa. “The loss of remittance support to household consumption will likely be felt well into 2021, weighing on growth rebound prospects.”
Bank of the Philippine Islands (BPI), in the meantime, said that during the lockdown months particularly its strictest period in March to May, it was difficult for overseas Filipinos to send home cash because of limited operations.
“During the earlier period of the ECQ (enhanced community quarantine) there were also lockdowns in several countries. Remittance was affected since our tie-ups with brick and mortar branches were closed. Hence, sending money to the Philippines became a challenge for our overseas Filipino clients,” said Reggie Cariaso, BPI head of corporate banking strategy, products and support.
Cariaso said BPI has strengthened their remittance tie-ups for the “convenience and safety of digital banking services” and this also included the waiving of fees for online and mobile banking to “make it easy for our clients to send money to the Philippines.”
BPI has nine remittance partners that waived fees and also offered discounts and preferential rates for foreign currency exchange “whenever possible,” said Cariaso. For overseas Filipinos, BPI also offers BPI PamanaPadala and BPI PadalaMoneyger.