COUNTRIES that depend on remittances such as the Philippines need to simplify their money transfer rules and embrace innovation to ease the burden on migrant workers trying to send money home during a crisis, experts at the Asian Development Bank (ADB) said.
In a blog post, economists Aiko Kikkawa Takenaka, Kijin Kim and Raymond Gaspar at the ADB’s Economic Research and Regional Cooperation Department said the resiliency of remittance inflows in the last year demonstrated how key policy interventions and digital solutions helped ease the transfer of money during the pandemic.
Migrant workers still managed to send money back home when lockdowns made it difficult to carry money home when borders closed.
“The diversion of remittance money from informal channels may have led to the surge in recorded remittances, and could possibly be covering a fall in total remittances,” according to the blog, published under the title “Despite the pandemic, remittances have kept flowing home to Asia’s families.”
However, the analysts said systems need to be improved further.
“The pandemic has underscored the key role of policy and regulatory frameworks in the functioning of remittance markets in times of crisis. Rules and procedures for remittance transfer could be simplified and made less costly for low-risk accounts,” they said.
“New business models and partnerships could foster mobile money and other branchless banking, lowering capital and bond requirements as well as full banking licenses for money transfer operators,” they added.
They noted that the countercyclical nature of remittances also kept funds flows strong last year, particularly in host-country markets that reopened their economies.
In the Philippines, the analysts cited a survey by WorldRemit which found that 84% of a sample of over 3,000 overseas workers expressed their intent to send the usual amount or even more during the 2020 holiday season. The survey queried workers in the UK, US, Canada and Australia.
Cash remittances dropped 0.8% to $27.013 billion in the first 11 months of 2020, according to central bank data.
Remittances remained strong in other recipient countries as well last year, with the economists tracing the resilience to policies and social assistance enacted by both host and origin countries during the crisis. — Beatrice M. Laforga