Asian economies gain as worker remittances surge
A busy Sunday afternoon on Singapore's Orchard Road and Christmas shopping is in full swing, but for the migrant workers filling the remittance centres in the Lucky Plaza mall the priority is sending money home.
"I send half my salary home every month, but at Christmas I will send almost all of it," says Annie, a 35-year old Filipina working as a maid in the prosperous city-state.
It is money sent home by overseas workers like her that help drive consumption in the Philippines and, despite high oil prices, will allow the country to post a balance of payments surplus of about $2.0 billion this year.
According to the World Bank, the Asia-Pacific region saw the biggest jump in remittances received by developing countries during 2001-2005, with remittances to East Asia and the Pacific more than doubling to an estimated $43.1 billion this year.
In South Asia, remittances are estimated to reach $32 billion this year, up 67 per cent from 2001.
Analysts say this money is having a growing impact on regional economies-boosting external finances and raising domestic consumption and investment in local markets.
India and China were the world's two biggest receivers of remittances last year. Remittances are larger than tea exports in Sri Lanka, quadrupled in Pakistan between 2001-2003 and are expected to hit a record high in the Philippines this year.
Increased migration and a drive to encourage workers to send money home using formal channels help explain a rising trend in remittances.
An Asian Development Bank (ADB) study found nearly two million immigrants, mostly women, from the Philippines, Indonesia and Malaysia send home more than 30 per cent of their earnings in Japan, Hong Kong, Singapore and Malaysia.
World Bank (WB) figures show the Philippines and France both received around $12 billion in remittances last year-but remittances are far more important to the Philippines, where they are equal to more than 10 per cent of the value of gross domestic product compared to less than 1.0 per cent in France.
The Philippine balance of payments surplus could hit about $2.0 billion this year due to robust growth in remittances and investment, a central bank official said last month. This is higher than a previous forecast of a surplus of $853 million.
Not all remittances in Asia are from low-paid workers. India's growing number of white-collar expatriates, many employed in the technology sector, have been targeted with attractive deposit schemes and bonds offered by India's government.
ICICI Bank, India's second largest lender, lets non-resident Indians remit money through its Money India Web site, which has been running for about three years.
But many low-skilled foreign workers do not have access to online banking. A subsidiary of Globe Telecom, one of the leading mobile phone operators in the Philippines, allows Filipinos to send remittances using text messaging.
The advantage of this is that while few Filipinos have bank accounts or credit cards, over 40 per cent have a mobile phone, said Joey Mendoza, president of the Globe subsidiary.
Mendoza also noted an emerging trend-overseas Filipino workers are starting to ask how they can invest their remittance money in stocks and funds in the Philippines.
Remittances to China were $21.3 billion in 2004, second only to India's $21.7 billion, and a sharp rise in remittances was partly because of money invested due to speculation about a strengthening in the yuan currency, the World Bank says.
Analysts add that while the economic boost from remittances is evident, there is a human cost.
"Remittances have a very healthy effect on economies, but for every person that is abroad sending remittances home, that is a person that is away from their family," said one analyst who tracks remittances closely but who asked not to be named.
"This is the back story to the numbers that are increasing every year."