DUBAI: Overseas Filipino workers (OFWs) in the UAE are bracing themselves for the effects of a reported increase in the cost of sending money to loved ones back home.
“The increases might be coming from the front-end fees of the remittance partners from the originating countries most probably due to implementation of VAT per item/amount of remittances,” said Edwin Punzalan, Assistant Vice President for BDO Remittance and Marketing Officer for Remittance International Operations at BDO Unibank.
He said that with this increase “our OFWs will definitely find ways to minimize the cost most especially by sending remittances online where some are offering free charges and fees.”
Another knowledgeable industry source said the increase, which according to local media is being monitored by the World Bank, “is mainly VAT-related” and has actually not been implemented across all remittance centers.
“I don’t think we have encountered that (increase). We monitor the rates every day,” the official said on condition of anonymity.
News of an increase in remittance fee is feared to cost further decline in the remittance market, which according to the same industry source, has been experiencing a slump in the past 11 months mainly due to the employment situation in the country.
Punzalan said an option for OFWs is to find channels offering online, fast, reliable services that are free of charges to minimize the cost of sending money.
Remittance fees are imposed to cover the cost by the remitting company of transferring the money to the home country.
The World Bank has been tracking remittance fee increases following global efforts to reduce the cost of sending money by foreign workers to their families in their home countries.
Punzalan said the Philippine Central Bank has taken on a direction to reduce back-end charges.
To this end, legislation – House Bill 9032 principally authored by Rep. Aurelio Gonzales Jr. – has been approved on second reading in the lower house of the Philippine Congress that would grant mandatory discounts of up to 50% in fees that OFWs pay banks and non-bank financial intermediaries when sending money home.
As of press time the peso-dirham exchange rate is at Php14.20.