Reliance on remittances in India, Philippines growing: study

About $34 billion was remitted by the 2.3 million Filipinos abroad in 2018 according to the World Bank, mostly from the US, Saudi Arabia, Singapore and Japan. (AFP)
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Updated 17 December 2019

Reliance on remittances in India, Philippines growing: study

  • In India, the $1,011 average monthly remittance was 2.6 times higher than the $380 household income
  • Poor financial planning and rising overdependence on remittances was a common phenomenon

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.

Virtual oil summit planned amid ongoing market volatility

Updated 04 April 2020

Virtual oil summit planned amid ongoing market volatility

  • Meeting follows call from Saudi Arabia for urgent meeting and telephone diplomacy between Kingdom, Russia and the US

DUBAI: Leaders of the global oil industry are planning a crucial “virtual” summit next Monday amid ongoing volatility in crude prices and falling energy demand.

The meeting follows a call from Saudi Arabia on Thursday for an urgent meeting and a round of telephone diplomacy last week involving the Kingdom, Russia and the US, as well as meetings between policymakers and oil industry executives.

The summit is expected to involve the 11 members of OPEC as well as other oil producers from the OPEC+ group.

But exactly which countries will take part in the summit was still up in the air last night. 

Russian President Vladimir Putin was holding talks with executives from the country’s major oil companies before deciding whether or not to participate. The Russian leader has previously indicated his willingness to get involved in talks to help resolve the crisis in the global energy industry, but Russia was also the country that refused to take part in a round of deeper production cuts proposed by Saudi Arabia in Vienna last month, sparking the current price war.

In response to that refusal, the Kingdom increased production and lowered its selling prices. On Sunday, Saudi Aramco, which has pushed output to a record 12.3 million barrels per day, is scheduled to announce its “official selling prices” (OSP) for the month of May, expected to show a continuation of the deep levels of discount to attract customers, especially in Asia, in the battle for global market share. 

Brent crude continued its rollercoaster ride on global markets on Friday, dipping nearly 5 percent before hitting a high of 17.5 percent up at $34.91, before paring gains to about $33.

The options for the producers at Monday’s meeting are limited, in the face of an unprecedented drop in global oil demand. By some estimates, more than 20 million barrels of daily demand was lost last month, the biggest ever contraction in oil history.

Saudi Arabia and Russia, which between them produce around 23 million barrels per day, are unlikely to be willing to take all the pain of bigger cuts without an offer from the Americans.

US President Donald Trump tweeted on Thursday that he expected between 10 million and 15 million barrels of oil to be taken out of supply, but he did not specify where this would come from. Meetings were expected to take place at the White House with oil industry executives and policymakers on Friday.

Daniel Yergin, Pulitzer Prize-winning oil expert, said: “The ‘when,’ ‘how’ and ‘who’ of the potential deal remain unclear. And the larger the universe of players the more difficult it will be to implement an agreement.”

OPEC+ consists of the 11 OPEC members, led by Saudi Arabia, plus 10 non-OPEC producers, of which Russia is by far the biggest.

The involvement of the US in the Monday meeting is also unclear. America is not an OPEC member, but US oil executives have attended OPEC deliberations in the past. American participation in any new rounds of output cuts will be constrained by the fact that the US oil industry is made up of private companies — as opposed to state-directed corporations — whose interests diverge.

While big players including Exxon Mobil and Chevron might be willing to take some advice from the White House, the smaller companies in the Texas shale fields are more focused on the immediate financial repercussions of the past month’s volatility.