Finance, welfare programs for OFWs pushed
Filipino domestic workers in Central
THE year 2017 is shaping up to be a good year especially for overseas Filipino workers. With the recent weakening of the Philippine peso, allowing OFWs to earn and remit more from the favorable exchange rate, and the implementation of savings and investment options, OFWs are given more choices on how to better use their money.
Here in Hong Kong, Philippine officials will continue to seek measures to protect the welfare of the 200,000 Filipinos living and working in the city, most of whom are domestic workers.
Peso to hit P50-P52 to a dollar
The Philippine peso, which was South-east Asia’s worst-performing currency in 2016, appears to be in for another tough year with forecasters saying it could weaken by more than 4 percent.
Private financial institutions said the peso may weaken to a range of P50-P52 to a US dollar toward the end of the year, with the most pessimistic view seeing a scenario of worsening risk sentiment in case of a hardline trade stance between China and the United States.
The peso closed at P49.72 against the greenback at the end of last year. For the entire 2016, the peso depreciated by 5.35 percent from the year earlier.
Among the four institutions that provided the forecasts, Fitch-owned BMI Research placed the peso at its strongest position at P50:$1 by end-2017.
But ING Bank Manila said it expects the peso to trade on the weak side for most of 2017, finishing the year at P52:$1.
“A hardline trade stance between China and the US is not our base case. But if such a hardline stance develops, risk sentiment would worsen, leading to an even weaker Philippine peso. A more difficult local political environment would also lead to a significantly weaker Philippine peso,” ING said.
“It’s a challenging situation for the peso for the next couple of years,” added ING’s Joey Cuyegkeng.
The government has an exchange rate assumption of P48 to P50 per US dollar in 2017 to 2018.
“We are comfortable with P50:$1 as an upper bound assumption for the exchange rate because we have a steady inflow of dollars. In the past, we had a crisis in our dollar reserves but that is no longer the case,” Budget Secretary Benjamin Diokno said.
Investment bank First Metro Investments Corp. (FMIC) sees the peso trading this year at P51 against the greenback, remaining under pressure amid a strengthening of the US currency.
FMIC’s forecast is in line with that of global financial firm UBS, which said in an earlier report that the peso could fall to P51 to a US dollar on the back slower economic growth, deteriorating external position and a higher inflation rate.
PERA
Meanwhile, the Bangko Sentral ng Pilipinas has officially launched the Personal Equity Retirement Account or PERA, the country’s first-ever voluntary retirement account with tax incentives, eight years after Republic Act 9505 or the PERA Act of 2008 was signed into law.
“Many Filipinos have not been accustomed to saving or investing. It’s best to start saving early on, and the PERA law gives Filipinos an incentive to do so,” said Senator Juan Edgardo Angara, who was then still a congressman when he authored the law. The counterpart measure was pushed in the Senate by his father, former Senator Edgardo Angara.
The PERA law aims to promote savings mobilization and capital market development to contribute to fiscal sustainability through the provision of long-term financing.
A national survey on financial inclusion conducted by the BSP showed that only 10.8 percent of Filipinos save for retirement or old age.
“We’re happy that the BSP finally launched this investment tool that will help and encourage Filipinos save up for their sunset years or for emergency medical situations,” Angara said.
The PERA law allows individuals to open up to five PERA accounts through accredited PERA administrators, which can be a bank or a financial company, and invest up to P100,000 annually.
Overseas Filipino workers can invest up to P200,000 annually.
Individuals who invest in PERA are entitled to a 5-percent income tax credit.
All income earned from PERA investment products—which include unit investment trust funds, share of stock of mutual funds, insurance pension products, government securities, and other financial products—upon reaching retirement or death are tax-exempt.
Payments will be made when the individual reaches the age of 55. This can be either in lump sum, a pension for a definite period, or lifetime pension.
Early withdrawals will be subject to a penalty, except in cases when the individual is totally disabled due to an accident or hospitalization.
OFW Bank
The Land Bank of the Philippines, on the other hand, will set up a lender partly-owned by overseas Filipino workers by September after it finishes its acquisition of Postal Bank.
Land Bank president Alex Buenaventura said the OFW Bank will have an authorized capital of P3 billion and a subscribed capital of P2 billion.
The bank will consult with the public on what services the OFW Bank should offer, he said.
While the OFW Bank is being established, Land Bank will set up a representative office in Saudi Arabia to serve some 800,000 Filipinos in one of the Philippines’ largest overseas labor markets, Finance Secretary Carlos Dominguez said.
Dominguez said Postal Bank is best positioned to cater to overseas Filipinos because of its ties with the postal service.
The thrift bank’s total assets stood at P12.07 billion as of March 2016, according to central bank data.
In October, President Rodrigo Duterte said creating an OFW bank, one of his campaign promises, will help make life comfortable for overseas Filipinos workers.
Programs for Hong Kong OFWs
In Hong Kong, meanwhile, the Philippine Consulate General will continue to push for measures that will protect the welfare and well-being of Filipino workers here.
Vice Consul Alex Vallespin told Hong Kong News that they will bring to the Technical Working Group, a meeting among Philippine officials and Hong Kong’s Labour and Immigration officials, the issues of food allowance and rest hours of Filipino domestic workers.
“We will have another TWG meeting this January and we will include the food allowance and the hours of rest of Filipino domestic helpers [in our agenda],” Vallespin said.
The PCG official earlier said that they have sought the inclusion of food allowance to the minimum allowable wage (MAW).
“We cited the suitability and sufficiency of the food employers provide to Filipino domestic workers.
“We told them that Filipinos love to eat rice for breakfast, lunch, and dinner, and we heard so many stories that the food the employers provide to their domestic workers were leftovers of their wards,” Vallespin earlier said.
As for the bid of migrant domestic workers to have 11 hours of continuous rest, Vallespin said that as long as there is a valid clamor and mass support for the 11 hours of uninterrupted rest for domestic workers, they could take it up with the TWG.
On December 18, the International Migrants Day, a group of migrant workers turned over to the office of Hong Kong Chief Executive C.Y. Leung a petition asking for standardized working hours, particularly “11 hours of uninterrupted rest.”
The petition, said Eman Villanueva, chair of Bayan Hong Kong and Macau, was signed by migrant workers from the Philippines, Indonesia, Thailand, and Nepal.
“We are asking the government to give us 11 hours of uninterrupted rest,” Villanueva said in an interview.
“So instead of defining our working hours, we are asking that the government should just ensure that we have several hours of uninterrupted rest. This is more workable because we live with our employers,” he added.
The PCG has also lined up “pro-active programs and projects” to help OFWs here be more prudent in handling their finances as well as take care of their health, Vallespin said.
“May mga kausap kami para sa financial, legal, and health concerns ng mga kababayan natin dito. Ang concern namin, iyong mga nagtatrabaho dito, huwag silang malubog sa utang. Paulit-ulit naming sinasabi sa kanila iyon,” he said. With Cheryl M. Arcibal