BSP: Fewer households allot remittances for savings

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The proportion of Filipino households that set aside remittances for savings and investments dropped in the fourth quarter from a year ago, highlighting the need to provide financial education to more people in the country.

The Bangko Sentral ng Pilipinas said that households dependent on remittances would need to learn how to save and invest the money they receive to secure their future and stimulate growth of the economy.

Results of the latest quarterly BSP survey showed that only 39.5 percent of respondents said they used a portion of their money for savings. This marked a drop from the 42.6 percent recorded in the same period last year.

Still, the fourth-quarter figure was better than the 36.8 percent recorded in the previous survey three months ago.

Results also showed that respondents who said they used a portion of their money for investments settled at just 3.1 percent. This represented a decline from the 6.4 percent registered a year ago, and the 4.9 percent of the previous quarter.

The survey was conducted in the first two weeks of October and had a sample of size of 478 households that regularly receive money from abroad.

The drop in the number of households that save up and invest the money received coincided with the current low-interest-rate environment, which led to shrinking yields on bank deposits and portfolio investments.

Economists said that in times of low interest rates, people tend to spend more of their money rather than save up or invest in fixed-income securities.

BSP Deputy Governor Diwa Guinigundo earlier said that if OFW households were to use their money to put up their own businesses, the multiplier effect of remittances on the economy would be much bigger. This is because, when one puts up a business, even a small one, he or she will create jobs.

At least 10 million Filipinos are estimated to be working overseas. Their remittances amounted to $20.1 billion last year. The World Bank expects remittances to the Philippines to rise to $24 billion this year, making it the third-biggest recipient next to India and China, with $70 billion and $66 billion, respectively.

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  • carl son

    It’s better to keep your savings inside your vault rather than deposit or invest it in banks.  Philippine banks nowadays are not stable with bank closures here and there.  This is compounded by BSP’s and PDIC’s ineptness in monitoring and regulating banks.  These government institutions are actually protecting the banks rather than the depositors because of their code of silence even if they know that certain banks are falling.  The government should immediately takeover an ailing bank rather than wait it to be closed.  Depositors are the real victims and suffers much in case of bank closures.  If the government cannot protect the innocent depositors, so what’s the reason for paying your taxes?  Isn’t it that our government is obligated to protect its citizens in exchange for taxes paid?  So, if you are already a victim of closed banks, better not pay your taxes so that you can recoup or recover what has been lost.  Keep your money inside your vault so that you will not be victimized by these banks.  Remember, big banks with big assets have also big liabilities.  It is not a guarantee that you are safe in big banks.  You cannot be sure of their stability because most of them are diversifying their operations.  BSP and PDIC have no capabilities in monitoring their transactions.  They only rely on what is fed to them via Financial Statements that are commonly manipulated or “doctored” by accountants to suit their mutual needs.  So better keep your money inside your vault, anyway, with a very low interest nowadays, as if you are just placing your money in banks for safekeeping not for investing.  So, why let others do the safekeeping for you?  Why not do it yourself?  

  • http://pulse.yahoo.com/_VFI4M3AMO5BIB4EZAD6W2UCIIQ Rastaman

    A couple of reasons for the drop, the way I see it:

    1- the weakening green back.  Usually, remittances are based on how much the payables are in a month plus a little extra for savings.  But since the peso has been kicking up its value, the dollar remittances are now not that much when converted.

    2- it’s the 4th qtr!  Since it’ the holidays, a lot of our OFWs are coming home.  And since they are, they are not remitting the money, but rather hand carrying it save on the charges.  Another thing is, since it is the holidays, people spend more than usual for gifts, new clothes, noche buena, among others.

    I think it’s not a question of financial literacy, but rather look at the time you made your survey or study…

  • http://pulse.yahoo.com/_D37WZ2JMEQUZR4QG74FRVXUJFQ John

    Only drawback of business is the redtape. But Financial independence should be taught in elementary and high school coz, this kind of things are not 2nd nature to us Filipinos.

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