Debate Rages Over Remittances of Filipino Overseas Workers

RIYADH, 24 May 2005 — Should Filipino overseas workers be made to remit their earnings home through legal banking channels only?

Suggestions to make that a requirement has sparked a debate among Filipinos abroad amid reports that at least two gambling lords in the Philippines were using the OFWs, as Filipino overseas contract workers are officially known, to launder ill-gotten money.

Malaca?ang Palace, the presidential office in Manila, wanted the investigation into illegal gambling activities across the country widened to include remittances of OFWs after a labor official warned that the new mone laundering scheme could kill the Philippine economy.

Last year, overseas Filipinos remitted a total of $8.5 million through banks, making them the third biggest sender to their country after India and Mexico.

According to a report of the Philippine Daily Inquirer, quoting unnamed sources from the illegal gambling world and police, at least two of the country’s bigtime gambling lords have set up door-to-door remittance centers to launder their money from the popular numbers game called “jueteng.”

OFWs are attracted into cooperating because they are not charged a cent for the money they send home via “door-to-door” services, said the report.

While the workers’ families are able to get the money sent to them on time, the foreign currency from the worker is actually diverted to the bank accounts of the gambling lords abroad, thus keeping these out of the reach of Philippine authorities.

Acting Labor Secretary Manuel Imson had been quoted saying that OFWs are “clearly misled and made to believe that their remittances are directly sent to their families in the Philippines where in fact their money are kept by jueteng lords in foreign banks through their point man.”

Imson has said that Philippine labor officers abroad would be directed to warn OFWs about the scheme.

“If you are asked not to pay any service fee for the remittance, that is already something extraordinary,” Imson said.

Fronts

Community leaders in the Kingdom said the issue of using pseudo cargo and freight forwarders companies abroad as “fronts” have been in practice since Marcos time.

In Saudi Arabia, there are said to be some 400 groups engaged in underground “door-to-door” remittance services, and most of them accept remittances at lower exchange rates and higher service charge.

The only advantage is that the equivalent peso lands in the recipient's doorstep from 12 to 24 hours time in Manila and 3 days in the provinces.

Some members of the Filipino community in Saudi Arabia have raised the possibility of making it compulsory for OFWs to remit their earnings home through banks by way of a provision in their employment contract.

It can be implemented by the employer and monitored by the embassy in times of renewing their contracts, they said.

Others noted, however, that many Filipinos have stopped patronizing underground door-to-door remittance services either because of bad experience or because the legal channels have reduced their rates. Remittance through the bigger bank-based remittance centers have also been made more attractive because of the shorter waiting time. Bank-to-bank remittances, for instance, could reach the beneficiary in Metro Manila in just 24 hours and up to 48 hours in the provinces.

Too Late the Hero

Mike Bolos, a finance executive of a health care company in Riyadh, said that the Philippine government is “kind of late in the game in this regard and they are just wasting their time.”

“The situation is correcting itself and in due time will no longer be a matter of concern,” he said.

Bolos said the 16.6 percent increase in remittances by overseas Filipinos during the first quarter of 2005 from a year ago is not hing new.

"There was also a significant increase last year and this is not because we are getting better paid or that we are deploying more professionals and highly paid workers as the government claims,” he said.

Bolos analyzed that the steady increase in remittances through legal channels is an effect of tough anti-money laundering laws being enforced in many countries after the Sept. 11, 2001 terror attacks in the US.

“The tough laws and close scrutiny by financial institutions of big amount of remittances have forced a lot of informal financial channels to close shop. And as a consequence, many OFWs have been left with no choice but to course their remittances through the official channels,” he added.

Julianito Gregorio, who has been working as a farmer in Al-Kharj, has switched his remittances through banks after using the door-to-door services for the first four years of his employment.

He said that he’s been discouraging his friends and co-workers from remitting through door-to-door services not only because “it’s a lot safer in banks” but “to help our economy.”

The group seeking compulsory remittance through legal channels said the objective of its proposal is to save those hooked with the underground services from themselves.

It said: “As long as OFWs continue to patronize the pseudo remittance centers, their operations and services will continue to thrive, and this is not good for the health of our national economy. It will be beneficial to only a few and the OFWs will be at the losing end as years go by.”