Home Banking & Finance Remittance outlook remains bleak amid pandemic
Remittance outlook remains bleak amid pandemic
REMITTANCE PLAYERS in the country remain pessimistic on the growth of transactions due to the continued impact of the coronavirus disease 2019 (COVID-19) on the incomes of overseas Filipino workers (OFWs), a study by the Bangko Sentral ng Pilipinas (BSP) showed.
“The industry’s prospect for international remittance is largely not favorable, with 54% expecting a decline in both volume and value of transactions, while 43% of them are forecasting a decline of more than 20% percent,” the BSP’s Report on the Financial System for the First Semester 2020 said.
The central bank conducted an impact survey in May with respondents from selected firms involved in the business, including remittance and transfer companies, banks, and electronic money issuers, among others.
“Preliminary results showed that the COVID-19 pandemic has greatly affected the remittance channels, with approximately 75% of the respondents reporting decline in the volume and value of both international and domestic remittances based on their transactions for the month of April 2020,” the BSP said.
Money sent home by OFWs declined 2.6% year on year to $19.285 billion in the first eight months of the year. The BSP expects inflows to drop by 2% this year before bouncing back and growing by 4% next year.
More than 237,000 OFWs have already been repatriated as of Nov. 3, latest data from the Department of Foreign Affairs showed.
Firms attributed the drop in remittances mainly to the pandemic, which took its toll on the incomes of overseas workers.
“As a net receiver of international remittances, the effects of the pandemic are seen as profound on the Philippine remittance market as the crisis affected the OFWs capacity to send remittances back home,” the BSP said.
During the lockdown, 93% of remittance channels were able to continue their operations on the back of the authority provided by the government for remittance services to continue their services, business continuity plans deployed in line with BSP regulation, and relief measures from the side of the central bank.
Meanwhile, in terms of accessibility, pawnshops and money service providers had a wider reach as they made up 85% of the total physical remittance touch points as of June. On the other hand, big banks had a 15% share.
“Remittance flows can take place through various channels. These include formal or regulated channels such as banks and money transfer operators or money service businesses, which include pawnshops with corollary remittance activity, and informal channels such as sending via bus/courier companies, friends or relatives,” the BSP said.
Among these modes of transfer, the BSP said pawnshops that also have remittance services and money service businesses remain as major access points for remittance transactions on the back of their wider reach across the Philippines.
“As of end-May 2020, there were 505 BSP-supervised financial institutions with a total of 45,182 remittance access points,” the BSP said. — L.W.T. Noble