By Tony Maghirang
“WHERE has all my money gone?”
The typical working stiff usually asks this question after finding himself broke just days after payday. Policy-makers pose a similar question when trying to understand the state of the country's economy. Part of the answer lies in accounting for the inflow and outflow of money within the system: Where is our money coming from? How are we spending it?
The answers are especially significant at this time, since the last quarter of the year always means a spike in the volume of money coming in, says Dr. Ponciano Intal, Ph.D., executive director of De La Salle University's Angelo King Institute for Economic and Business Studies (AKI).
Much of the inflow comes from overseas Filipino workers (OFWs), whose remittances are estimated at US$12B this year. Most of this amount ends up in personal consumption, housing, and children's education instead of domestic investments that, economists say, could have had a more positive impact on money supply.
Intal notes, however, that in the case of housing, OFW earnings are invested in durables - appliances, furniture and sports equipment. Another positive development is how Filipinos have learned to save whatever is left of their fixed and often skimpy salaries. Still, the overall gain in savings has been a low 35 percent compared to much higher rates in other developing countries.
Besides personal consumption, much of the money sent in by OFWs is spent on livelihood investments like passenger jeepneys and FX taxis, Intal observes. “OFWs must be making some form of investments, but there is no information on their magnitude,” he adds. “There is a need for government to keep track of how OFWs’ remittances are being used. It should be important enough to merit the attention of the national leadership.”
With OFW remittances playing a vital role in the inflow of money into the economy, there are fears that decreased overseas work would lead to less money circulating in the system. Intal remains unfazed. “I suspect this scenario may take another decade to actually happen.
There’s a construction boom in the Gulf States. Japan and other industrialized countries have graying populations that could spur increased demand for caregivers. There are also growing opportunities for Filipino IT professionals.” He adds that Filipinos are also the preferred worker overseas. “We adapt easily and are naturally gregarious. And we’re good at what we do.”
But even this anxiety over the decline in OFW placements could be a good thing if it leads to an improved business climate in the Philippines, contends Intal. Given a resurgent economy at home, prospective OFWs will choose to stay and find work here, he adds.
This has happened to South Korea, he notes. In the late ’70s and most of the ’80s, the South Koreans were a force to contend with in construction projects in the Middle East. After their economy heated up during the ’90s, it became increasingly difficult for the Gulf oil-producing states to import South Korean manpower.
Intal, however, cautions against putting the nation’s economy solely in the hands of OFWs. All that hue and cry about the valuable contribution of overseas workers to the economy should not diminish several developments in diverse local fronts, he says.
He describes the tourism industry to be “at the cusp of a major breakthrough the way Thailand was in 1984.” Tourism is a vital cog in national development since the industry is labor intensive and has multiple trickle-down effects on other sectors, from farming to handicrafts, Intal explains.
Just as promising is the agriculture sector on the rebound after years of neglect and low productivity. The AKI executive notes the improvement in the price of copra in the international market and the recent push for alternative energy sources like biofuels, which could energize the rural economy. The best performing jatropa seeds come from development-challenged regions like Maguindanao, he adds.
Intal also points to a massive ship-building project in Subic by South Korea’s Hanjin that could lead to potential employment opportunities especially for high-skilled laborers.
All told, there’s money going around, sums up Intal. And the immediate prospect is for more money coming in that would trickle down to all sectors in the near future, hopefully.