Solon urges OWWA to refund OFWs of excess fees
The Overseas Welfare Workers Administration (OWWA) should give back the extra fees it exacted from departing Filipino workers "through the wrongful use of an artificial exchange rate of US$ 1:P51," a member of Congress said.
"This is the right thing to do -- for the OWWA to determine who were overcharged, and then give back to the workers the portion of the fees that they, in effect, overpaid for their membership fees," Catanduanes Rep. Joseph Santiago said.
Senate President Manuel Villar Jr. earlier filed a resolution urging the appropriate Senate committees to inquire into the use of a fixed rate of US$ 1:P51 to peg at P1,275 the peso equivalent of the US$ 25 membership fee that the OWWA has been collecting from every Filipino who leaves for overseas employment.
The peso closed Friday at 41.21 to a dollar. At this rate, the peso equivalent of US$ 25 should be around P1,030.
In an emergency meeting, the OWWA's board of trustees decided on Dec. 13 to reduce the peso equivalent of the -fee to P1,050, effective Jan. 1, 2008. But this was after criticism, including Villar's resolution, stunned the agency.
The adjusted rate of P1,050 is based on US$ 1:P42. The amount is P225 or almost 18 percent less than the P1,275 currently being collected by the OWWA.
Santiago, however, insisted that the reduced fee should be effective right away.
He added: "Where is the spirit of burden-sharing here? Why should OWWA or other agencies get to charge fees based a preferential exchange rate? Are they now also engaged in the business of currency arbitrage?"
Currency arbitrage means taking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market. In the process, extraordinary profits are realized from the spread.
"The OWWA should be computing the US$ 25-fee based on prevailing exchange rates, in the same manner that migrant workers and their families here have to cope with market rates when they have to convert their dollars into pesos," Santiago said.
Based on the estimated one million Filipino workers departing for overseas employment every year, the OWWA collects a total of about US$ 25 million or P1.05 billion in membership fees every year.
The fees go to a welfare fund that provides benefits, including low-cost loans, to migrant workers and their families here.
Besides the US$ 25 OWWA membership fee, departing workers have to pay the P900-premium for coverage by the state-run Philippine Health Insurance Corp. as well as the P200 processing fee of the Philippine Overseas Employment Administration.
"This is the right thing to do -- for the OWWA to determine who were overcharged, and then give back to the workers the portion of the fees that they, in effect, overpaid for their membership fees," Catanduanes Rep. Joseph Santiago said.
Senate President Manuel Villar Jr. earlier filed a resolution urging the appropriate Senate committees to inquire into the use of a fixed rate of US$ 1:P51 to peg at P1,275 the peso equivalent of the US$ 25 membership fee that the OWWA has been collecting from every Filipino who leaves for overseas employment.
The peso closed Friday at 41.21 to a dollar. At this rate, the peso equivalent of US$ 25 should be around P1,030.
In an emergency meeting, the OWWA's board of trustees decided on Dec. 13 to reduce the peso equivalent of the -fee to P1,050, effective Jan. 1, 2008. But this was after criticism, including Villar's resolution, stunned the agency.
The adjusted rate of P1,050 is based on US$ 1:P42. The amount is P225 or almost 18 percent less than the P1,275 currently being collected by the OWWA.
Santiago, however, insisted that the reduced fee should be effective right away.
He added: "Where is the spirit of burden-sharing here? Why should OWWA or other agencies get to charge fees based a preferential exchange rate? Are they now also engaged in the business of currency arbitrage?"
Currency arbitrage means taking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market. In the process, extraordinary profits are realized from the spread.
"The OWWA should be computing the US$ 25-fee based on prevailing exchange rates, in the same manner that migrant workers and their families here have to cope with market rates when they have to convert their dollars into pesos," Santiago said.
Based on the estimated one million Filipino workers departing for overseas employment every year, the OWWA collects a total of about US$ 25 million or P1.05 billion in membership fees every year.
The fees go to a welfare fund that provides benefits, including low-cost loans, to migrant workers and their families here.
Besides the US$ 25 OWWA membership fee, departing workers have to pay the P900-premium for coverage by the state-run Philippine Health Insurance Corp. as well as the P200 processing fee of the Philippine Overseas Employment Administration.
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