BSP downplays Saudi ban on workers' remittances

By Lawrence Agcaoili, The Philippine Star

Posted at Jul 04 2011 07:07 AM | Updated as of Jul 04 2011 06:41 PM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has downplayed the impact of Saudi Arabia’s decision to stop granting work permits to domestic workers from the Philippines on the total amount of money sent home by Filipinos working abroad.

BSP Deputy Governor Diwa Guinigundo said in an interview with reporters that displacements arising from the decision of Saudi Arabia to stop hiring domestic helpers from the Philippines and Indonesia would only be temporary.

“Initially there will be displacements but it will only be temporary,” Guinigundo stressed.

He pointed out that the number of domestic helpers from the Philippines in Saudi Arabia has gone down significantly over the past five to 10 years while more and more skilled Filipino workers are being hired in that country.

“But remember in the last five years to 10 years, the number of Filipino domestic helpers in Saudi Arabia has gone down as more professional and skilled Filipino workers are getting hired,” he said.

Furthermore, he added that Filipino domestic helpers who would be displaced would likely be hired in other Middle East destinations such as Bahrain or Abu Dhabi, just like the war in Iran wherein Filipino workers merely transferred to Iraq.

“We had two Gulf wars but there was no dislocation of Filipino workers,” Guinigundo said.

There are about 1.3 million Filipinos working in Saudi Arabia. Of the total number, about 120,000 to 150,000 are employed as domestic workers.

The BSP official also cited tensions in strife-torn Libya wherein authorities expected the displacement of at least 10,000 overseas Filipino workers, prompting the central bank to open a currency exchange facility for Libyan dinars.

The central bank expected to book huge losses as it expected to exchange P50 million worth of Libyan dinars to Philippine pesos at the current exchange rate.

However, only 1,575 OFWs availed of the facility as they exchanged P12.31 million worth of Libyan dinar under the facility that was made available last March.

Prior to the launch of the Libyan dinar currency exchange facility, the local currency in the war-torn country was not convertible to Philippine pesos.

The central bank had previously established a currency exchange facility during similar emergency situations in the Middle East. The first was in the 1990s during the Kuwait-Iraq war, the second in 2003 in connection with the US-Iraq conflict, and the third in 2006 over the Israel-Hezbollah conflict.

OFW remittances grew 8.2% to a record $18.76 billion last year from $17.35 billion in 2009 due to the continued demand for skilled Filipino workers abroad, as well as the expansion of remittance centers abroad that gave OFWs more options to send money to their loved ones in the Philippines.

Data showed that the Middle East accounted for about 16% of total OFW remittances last year. Remittances from the Middle East posted a double-digit growth of 11.2% to $2.96 billion last year from $2.66 billion in 2009.

More than half or $1.644 billion came from Saudi Arabia, followed by the United Arab Emirates with $776.3 million, Qatar with $248.8 million, Bahrain with $167.28 million, Kuwait with $106.5 million, Israel with $67.3 million, Oman with $66.76 million, and others.

The conflict in the Middle East and North African (MENA) states as well as the disaster in Japan has prompted the BSP to slash the projected growth in OFW remittances to 7% or $20.1 billion, instead of 8% or $20.2 billion this year, and to 5% or $21.1 billion next year.