If not for more foreign loans, where else can the government turn to for huge funds needed in its fight against COVID-19 and to mend the country’s battered economy?
Unknown to many, overseas Filipinos (OFs) hold a strategically vital key.
How so? Fairly simple, easy – but highly innovative.
The government should simply design high-interest bearing retail bonds or savings program and market this investment instrument intelligently and aggressively to OFs – and voila! P500 million to P1 billion can easily be raised in just a matter of months for use in fighting COVID-19 and funding the recovery of the country’s badly battered economy!
Sleight of hand? Or the latest scam?
Of course not. Let’s start with some basic facts. In 2020, overseas Filipinos or OFs sent home US$33.2 billion, according to Bangko Sentral ng Pilipinas data. There are over 10.2 million OFs spread across more than 200 countries and territories, according to the Commission on Filipinos Overseas (CFO), an office under the Office of the President. Imagine tapping even just a very tiny fraction of this huge number of OFs. How difficult can this be?
Now, let’s work out some numbers. If each one of just 20,000 overseas Pinoys invests P50,000 of his or her accumulated savings in a government-guaranteed and issued retail bond issue or savings program then a cool P1 billion can be raised in no time!
Will our OFs respond favorably to this type of investment program? Most certainly!
Several very basic but critically important factors point to the likely success of this OFW-focused government-sponsored retail fund raising program.
First, legions of OFs – including this writer – have long been deprived access (until today) to trustworthy and legitimate investments where portions or even the bulk of their accumulated savings can be parked and where they can receive or generate returns or interest earnings that are higher and far more decent than the negligible interest earning often offered by stingy banks. Due to lack of access to legitimate and trustworthy investments, many OFs are left with little choice but patronize a wide array of fly-by-night pyramid scheme operators which often present their dubious investment offerings as legitimate multi-level marketing schemes that are legal under Philippine laws as their operators cleverly secure Securities and Exchange Commission (SEC) registration of their corporate entities. Sadly, far too many overseas Filipinos, even those with college or university education, are not aware that SEC-registered corporations need a secondary license from the commission before they can offer for sale an investment product. Sadly, pyramid scheme operators continue to dupe and scam thousands of overseas Pinoys by simply showing their SEC registration and claiming legitimacy of their investment products even if they are often packaged as highly-alluring, high-yielding investments but upon scrutiny are simply thrash or scams.
For decades until today, the country’s banks and other financial institutions have not found ways to offer to overseas Filipinos investment or wealth management products. While the government has come up with several retail bond issues in the past, it has conveniently focused on corporate investors and confined their distribution and offer in the Philippines. Glaringly and blatantly, overseas Filipinos have been kept out.
Second, if an OFW-focused investment program is meticulously and intelligently structured, there is no reason why overseas Filipinos won’t go for it if they see more than ample value and benefits in parking part or even the bulk of their accumulated savings in a government-initiated investment program. To attract and induce investors among overseas Filipinos, this investment program has to have the following critically important elements:
a) Aggressive but highly-attractive interest or returns of at least 5% every six months
b) Aggressive flexibility in investment’s maturity. To make the program a lot more attractive, investors ought to be given the option to withdraw or recover their investment after an initial lock-in period of 6 months. Why so? In case of emergency need in the family, investors need not wait long to gain access to their funds. Since many OFs function as head of extended families, they are often called upon for help in times of emergency funding needs. The program can run for 2 years, with rollover option every six months. But offering an option to withdraw investment after a minimum 6-month lock-in period can go a long way in bolstering its allure.
c) Extensive sales distribution across the Philippines and overseas.
d) Extensive and intelligent marketing campaign, ideally with inputs or advice from an overseas Filipino with deep finance background.
To grab the attention and interest of many OFs right from the get go, this overseas Filipinos-focused investment program can be aptly called OFW Sagip COVID Retail Bond [or Savings] Program.
With the timeframe for a global resolution of COVID-19 still very much uncertain with threats from virus mutants or variants, it is critically important for the government to establish solid and reliable funding sources in the short, medium and long term.
E-mail: [email protected]
(The author is a journalist working in Hong Kong)