US crunch should not yet alarm OFWs – MBC exec
MANILA, Philippines - The continuing downturn in the US economy affecting global credit should not yet alarm overseas Filipino workers (OFW) and the government, according to a member of the influential Makati Business Club (MBC).
MBC’s Guillermo Luz, executive vice president of the Ayala Foundation, Inc, said there was no reason yet for the government to use remittance from OFWs to shield the Philippine economy from the impact of the recession in the US.
“The impact is quite minimal in the Philippines so remittance or no remittance there is nothing to shield us from anything," Luz told GMANews.TV in an interview on Tuesday.
Luz downplayed the perception of watchdog Freedom from Debt Coalition (FDC), which earlier said that OFW remittances “are being threatened" by the recession.
“The global threat is yet to be known," Luz said. “It's in a stage where it's a little to early to tell but it's no excuse not to study it now."
The FDC said OFW remittances “are being threatened" by the continuing downturn in the US economy because most Filipino migrants work in countries that are largely affected by what has been described as the worst financial crisis in decades.
Luz said any negative effects of the US recession to the local financial system would have to be felt first in the OFW remittances, the lifeblood of the Philippine economy.
Still at double-digit levels
But according to Luz, remittances from OFWs have so far remained at double-digit levels amid a growing number of Filipinos leaving for work abroad.
Remittances from Filipinos abroad surged 30 percent in June to US$1.5 billion — the highest monthly inflow since 1989.
The June figure brought the six-month remittance level to US$8.2 billion, up 17.2 percent from the same period a year ago. Central bank Gov. Amando Tetangco Jr said the sustained rise in the number of Filipinos seeking employment overseas contributed to the robust figures.
Some 8 million Filipinos — or nearly 10 percent of the population of about 90 million — work overseas. Last year, they sent home US$14.45 billion.
Preliminary data from the Philippine Overseas Employment Administration showed that the number of workers leaving for jobs overseas in the first half of the year rose 33.5 percent to 640,401.
Although Filipinos in the US might experience a ballooning of consumer goods and services brought about by the economic crunch, Luz said this did not necessarily mean that OFWs would compromise their obligations at home.
'Leaner life'
According to Luz, the Filipinos' selfless nature will ensure that their relatives in the Philippines won't not be affected by any financial difficulty in the US.
“Sometimes they would send the same amount but would live a leaner life," he said.
The business leader even said a glimpse of hope could be seen by the Philippines from the current financial crisis in the US.
If US companies are forced to cut down on labor costs due to the financial crisis they could outsource it, Luz said.
“And outsourcing of labor is always a good business to the Philippines," he added.
Financial analyst Boyet Ayes said in an earlier report that dollar-earning OFWs were even benefiting from the weakening peso brought about by the US economic slump.
From the exchange rate of P40.33 - $1 last February 27, the peso weakened to P47.20-$1 on September 16. That means a $100 bill last February was equivalent to P4, 033 as against P4, 720 on Sept. 16, or an increase of almost P700.
Ayes, however, said the peso was expected to recover against the dollar in December once the Christmas season begins and the dollar remittances of overseas Filipinos peak.
Meanwhile, according to Dr Fernando Aldaba, Economics chairperson of the Ateneo de Manila University, it is high time for OFWs to invest their money wisely in tailor-fit businesses as well as bonds to cushion the effects of any financial crisis.
"They could go into franchising since it's ready-made. But they have to choose the business wisely," Aldaba said. - GMANews.TV
MBC’s Guillermo Luz, executive vice president of the Ayala Foundation, Inc, said there was no reason yet for the government to use remittance from OFWs to shield the Philippine economy from the impact of the recession in the US.
“The impact is quite minimal in the Philippines so remittance or no remittance there is nothing to shield us from anything," Luz told GMANews.TV in an interview on Tuesday.
Luz downplayed the perception of watchdog Freedom from Debt Coalition (FDC), which earlier said that OFW remittances “are being threatened" by the recession.
“The global threat is yet to be known," Luz said. “It's in a stage where it's a little to early to tell but it's no excuse not to study it now."
The FDC said OFW remittances “are being threatened" by the continuing downturn in the US economy because most Filipino migrants work in countries that are largely affected by what has been described as the worst financial crisis in decades.
Luz said any negative effects of the US recession to the local financial system would have to be felt first in the OFW remittances, the lifeblood of the Philippine economy.
Still at double-digit levels
But according to Luz, remittances from OFWs have so far remained at double-digit levels amid a growing number of Filipinos leaving for work abroad.
Remittances from Filipinos abroad surged 30 percent in June to US$1.5 billion — the highest monthly inflow since 1989.
The June figure brought the six-month remittance level to US$8.2 billion, up 17.2 percent from the same period a year ago. Central bank Gov. Amando Tetangco Jr said the sustained rise in the number of Filipinos seeking employment overseas contributed to the robust figures.
Some 8 million Filipinos — or nearly 10 percent of the population of about 90 million — work overseas. Last year, they sent home US$14.45 billion.
Preliminary data from the Philippine Overseas Employment Administration showed that the number of workers leaving for jobs overseas in the first half of the year rose 33.5 percent to 640,401.
Although Filipinos in the US might experience a ballooning of consumer goods and services brought about by the economic crunch, Luz said this did not necessarily mean that OFWs would compromise their obligations at home.
'Leaner life'
According to Luz, the Filipinos' selfless nature will ensure that their relatives in the Philippines won't not be affected by any financial difficulty in the US.
“Sometimes they would send the same amount but would live a leaner life," he said.
The business leader even said a glimpse of hope could be seen by the Philippines from the current financial crisis in the US.
If US companies are forced to cut down on labor costs due to the financial crisis they could outsource it, Luz said.
“And outsourcing of labor is always a good business to the Philippines," he added.
Financial analyst Boyet Ayes said in an earlier report that dollar-earning OFWs were even benefiting from the weakening peso brought about by the US economic slump.
From the exchange rate of P40.33 - $1 last February 27, the peso weakened to P47.20-$1 on September 16. That means a $100 bill last February was equivalent to P4, 033 as against P4, 720 on Sept. 16, or an increase of almost P700.
Ayes, however, said the peso was expected to recover against the dollar in December once the Christmas season begins and the dollar remittances of overseas Filipinos peak.
Meanwhile, according to Dr Fernando Aldaba, Economics chairperson of the Ateneo de Manila University, it is high time for OFWs to invest their money wisely in tailor-fit businesses as well as bonds to cushion the effects of any financial crisis.
"They could go into franchising since it's ready-made. But they have to choose the business wisely," Aldaba said. - GMANews.TV
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