In the World Bank’s 2019 Migration and Development Brief, the Philippines ranked as the world’s fourth-largest remittance destination after India, China, and Mexico, while among the top originating countries of senders were the US, Singapore, and Hong Kong.

Our economy is being propped up partly by overseas Filipino workers (OFWs) who contribute about 10% of the annual gross national income. According to the latest statistics from the Bangko Sentral ng Pilipinas (BSP), personal remittances from OFWs amounted to $8.2 billion in the first quarter of 2020, 1.5% higher than the year-ago level. This was on top of the $33.5-billion all-time high recorded in 2019, up by 3.9% from the previous year.

BSP Governor Benjamin E. Diokno expects OFW remittances to grow by 2% in 2020 despite the impact of the COVID-19 pandemic on the global labor market. BSP’s original growth forecast of 3% has been tempered though, due to the repatriation of OFWs from host countries highly affected by the coronavirus.

This is validated by a study conducted by international payments company UniTeller that showed remittances remaining resilient, being a vital lifeline for many low-income families back home. “Recent government subsidies and lifting of lockdowns have eased the impact of the pandemic,” UniTeller CEO Alberto Guerra said during a Zoom webinar.

The study titled “Both Sides of the Coin” looked into the behavior of regular low-income remittance recipients in the Philippines, India, Vietnam, and Indonesia. Findings revealed that half of OFW remittances received by Filipino households were used for day-to-day family needs combined with bill payments and loan repayments.

Nearly 20% of these recipients admitted they regularly ran out of money before the next anticipated date of remittance. Noel Cristal, UniTeller’s business development head for Asia, lamented that those remitted funds are not being used efficiently. The average monthly remittance value of $446 per OFW sender exceeded by two and a half times the average household income of recipients in the Philippines per month.

The report uncovered the Asian remittance trail from Singapore, Hong Kong, and America that found its way mostly to the sender’s spouse, parents, and children across the markets studied. One out of every three senders expressed misgivings about remittance payments causing them emotional stress, especially with regard to the expectations generated among the recipients. Indeed, the globalization of work has affected family ties — with main senders still wanting to live overseas even if they did not really need the money themselves.

Messrs. Guerra and Cristal highlighted the importance of embracing the digitalization of remittances. They noted that digital channels for international money transfers are becoming more popular, with 97% of Filipino respondents disclosing they own smartphones and 78% have mobile wallet accounts.

As the reliance on remittances increases, a key challenge is ensuring this income translates to building sustainable growth. After all, remittances can alleviate poverty and would become more efficient when migrant workers and their families are educated on digital remittance solutions that could bolster financial literacy and economic inclusion.

COVID-19 may have had a negative impact on the global remittance industry, but for a recipient nation like the Philippines, the so-called “padala” from abroad will continue to be a major driver and significant pillar of the economy in the coming years.


J. Albert Gamboa is the CFO of Asian Center for Legal Excellence and chairman of FINEX Publications.