IN a post-pandemic world, the country’s first National Economic and Development Authority (NEDA) chief said the domestic economy may benefit more if overseas Filipino workers (OFWs) will stay in the country to live and work.
In the Annual Public Policy Conference (APPC) of the Philippine Institute for Development Studies (PIDS), former Socioeconomic Planning Secretary Gerardo Sicat said strategies such as sending Filipinos abroad to work may have prevented the country from developing local industries.
Sicat said the Marcos administration’s strategy of sending Filipinos abroad in the 1970s was only a temporary measure implemented because of the weakness of the domestic economy and “the high rate of protection” locally against foreign investments.
“What happened was that the country developed a model by which we just try to support the growth of a strong export sector which was designed mainly to export to foreign countries, but they were not integrated to the domestic economy,” Sicat explained.
“As a result what we had was a situation in which the domestic economy became relatively isolated from the more efficient export-oriented economy of the world. Now these things are still a problem,” he added.
Sicat said that while OFWs were sent abroad to work where capital is abundant, the Philippines failed to work toward siphoning some of the abundant capital abroad into the domestic economy.
He said, however, it’s not too late to help the domestic economy. Sicat said the government should work on measures to attract “some useful and more important FDIs” which will help local industries and give employment to millions of Filipinos.
This, Sicat said, was what happened to countries abroad which became investment destinations. These countries were able to generate jobs and help workers with their immediate needs.
“They don’t have to go abroad to feed their families at home because if they are here, they would really be able to contribute towards the stabilization of a productive home base which supports domestic needs but also the needs of the world as we are able to raise our capacities towards that,” Sicat said.
Pandemic remittances
The pandemic has wreaked havoc on the jobs and ability of thousands of OFWs abroad to provide for their families. Many lost their jobs and around 200,431 OFWs have been repatriated from various parts of the world.
While Central Bank data showed remittances continued to improve in July, experts believe it is still too early to celebrate.
Data showed remittances from overseas Filipinos (OFs) grew 7.6 percent year-on-year to $3.085 billion in July 2020 from $2.867 billion in July 2019.
Data from the Bangko Sentral ng Pilipinas (BSP) showed total remittances for the first seven months of 2020 at $18.658 billion, 2.4 percent lower than the $19.119 billion posted a year ago.
For one, the Department of Labor and Employment (DOLE) earlier said another 200,000 OFWs will likely lose their jobs in the coming months due to the pandemic.
This means, DOLE said, that by the end of the year a total of 700,000 OFWs will lose their jobs abroad. To date, around 500,000 OFWs have lost their jobs, data showed.
“Is this news on June-to-July remittance upticks the ‘awaited turnaround’ for the rejuvenated resurgence of overseas Filipinos’ remittances? Let us not get too excited. Take note: economic recoveries of countries are not automatic,” Ateneo Center for Economic Research and Development Director Alvin Ang and Institute for Migration and Development Issues Head Jeremaiah Opiniano told this newspaper in an e-mail.
“The real economic impacts of stimulus packages are not immediate. Bringing down unemployment rates in destination countries is largely a function of how quick the private sector recovers and business cycles get running again. Global trade remains slow,” they added.
Ang and Opiniano said one possible reason for improving remittances is the strong peso, which has been appreciating in the past few months.
As the Philippine peso strengthened against the US dollar—the peso is currently the best performing currency in the region—OFWs were prompted to send more remittances.
They noted that last May, the average peso-dollar exchange rate was P50.09 to the dollar. However, the peso appreciated to P49.47 to the dollar in June and P48.84 in July.
“With families at home needing more money, Filipinos abroad had no choice but to send higher amounts to meet the usual Philippine peso value of household expenses. Of course, overseas Filipinos are among the ‘losers’ when the Philippine peso appreciates versus the US dollar,” they said.
Ang and Opiniano said remittances are bound to recover under the new normal when vaccines are made to all or majority of the world’s population.
This will also go hand in hand with the opening up of economies and the time when billions worth of stimulus packages have begun boosting the economies of OFW destination countries.
Recovering
Ultimately, Acting Neda Secretary Karl Kendrick T. Chua said in his speech at the APPC on Tuesday that the country’s new normal will be defined by efforts to make the economy resilient.
“The task ahead requires innovative and creative solutions that can effectively balance both our Covid and other objectives. That is why the government’s response is a phased and adaptive recovery approach that prioritizes health, as well as the recovery of consumer confidence towards opening up the economy,” Chua said.
These efforts include passing key legislation such as the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE), Financial Institutions Strategic Transfer (FIST), and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bills, to aid in the recovery of the country.
Chua said the national budget for 2021 aims to create some 1.6 million jobs as the infrastructure budget is increased to P1.12 trillion.
Chua said economic recovery will rely on how much the country would be able to keep the economy open, while practicing appropriate social distancing and proper health protocols.
He said GDP is projected to contract by 5.5 percent in 2020 with a band of -4.5 to -6.6 percent before recovering to around 6.5 to 7.5 percent in 2021 and 2022.
‘PHL economy may benefit more if OFWs stay after pandemic’
