DUBAI: There is growing dependence on remittances in the major labor-sending countries of India and the Philippines, with households in those countries receiving more than double their average monthly income, a study from US-based payments company UniTeller said.
UniTeller’s inaugural report, Both Sides of the Coin: The Receiver’s Story, looked at the behaviors and attitudes of low-income remittance recipients in India, Indonesia, the Philippines and Vietnam and senders from Hong Kong, Singapore, and the United States.
“The philosophy around remittances has evolved significantly from being just supplementary income for families and relatives to a valuable lifeblood and source of funds for improving socio-economic standing,” the US company said in its report.
“This is highly evident in countries such as India, the Philippines and Vietnam where the average monthly remittance value far outstrips the monthly incomes for low-income households.”
In the Philippines, the $446 average monthly remittance of is two-and-a-half times that of the $175 average monthly household income while in India the $1,011 average monthly remittance was 2.6 times higher than the $380 household income.
The World Bank report last year said that India was the world’s top remittance receiver with $79 billion on inflows, sent by its 17 million citizens overseas, while about $34 billion was remitted by the 2.3 million Filipinos abroad.
Over a third of remittances to the Philippines come from the US followed by Saudi Arabia, Singapore, Japan, United Arab Emirates, the United Kingdom, Canada, Germany, Hong Kong and Kuwait.
The Philippine government earlier said remittances are among the factors making the Southeast Asian country one of the ‘world’s fastest-growing economies.’
“While what each sender sends back home might be generally similar in approximate dollar value terms, how the receiver spends the money is very personalized. The money received could be used to pay for a child’s schooling fees, a parent’s medical bills or even to save for a new home with a spouse,” UniTeller said.
“The end-users of these funds trust remittance providers to safely, securely and speedily transfer their hard-earned money back home.”
UniTeller also discovered that poor financial planning and rising overdependence on remittances was a common phenomenon with over a quarter of recipients running out of remittance money regularly.
The payments company said that almost half of remittances received by Indian and Filipino households are used for day-to-day family needs, bill and loan payments, and even non-essential luxury items, thus leaving only small amounts for education or savings, that could improve their economic standing.
“While remittances can provide a financial lifeline for families back home, there can be issues where recipients can become overly reliant on this source of income as a means of sustaining their livelihoods and not as a means of furthering their wealth,” UniTeller said.