By Sam delos Santos, Special to Arab News
Sunday 22 December 2002
Last Update 22 December 2002 12:00 am
JEDDAH, 22 December 2002 — Should the Philippine government push for the issuance of $100 million OFW Bonds at $100 denomination, it would be an opportunity to all OFW to invest in a “risk free” security instrument with a guaranteed return.
The benefits would be far reaching. Other than being a safe investment, OFWs would be supporting the ailing economy of the country. Moreover, OFWs could be protected from opportunist groups selling shares of stocks of newly formed companies promising vague re-integration programs and/or presenting dubious scheme.
OFW bonds are certificates of indebtedness issued and to be paid by the government. Unlike shares of stocks, the value and maturity date of bonds are fixed. Hence, it will not be subject to price fluctuation. The price/value of shares of stocks fluctuates for many reasons and could be a high-risk investment, especially for OFWs who normally do not have the expertise and control of the business.
Investing in government bonds could be a tool in capital formation for a business that is thoroughly studied. OFW Bond holders could organize themselves, prepare and/or carefully analyze business proposition without the risk of losing their money before the business could start operations. They could pledge the bonds to their group for the capital of the business to be established. There are many options to convert bonds into cash like selling/discounting in the secondary market and pledging the bonds for bank loans.
On the economy, other than helping the government on its present fiscal requirements, it would relieve the government of the future foreign exchange requirements. Though the obligation at maturity of these bonds is in US dollars, we have to accept the fact that the holders are Filipinos and definitely they will convert it to Philippine pesos. But there should be an assurance that OFWs would be given priority in its subscription because there could be a danger that the “rich and powerful” would again take advantage of this opportunity. OFWs should therefore advocate the issuance of these bonds strictly for OFWs and the mechanism should be clear and simple. For now, OFWs should organize for this advocacy.
• Sam delos Santos, president of the group Alyansa ng mga Samahang Pilipino sa Ibayong Dagat, works with a bank in Jeddah.