Seafarers’ REMITTANCE: Savior of Philippine economy

In overseas employment the discussion of wages does not end in questions like how much or when one will be entitled to it or how much deductions there should be. The issue of wages in overseas employment is more extensive than those questions and the word “remittance” always comes into the picture. Remittance is the amount or portion of the foreign exchange earnings sent by the worker to the Philippines. 

In the Philippines, everyone knows that OFW remittances, including those of Filipino seafarers,  have become the lifeblood of the economy, allowing the country to survive through prolonged political crises and instability. Simply put the country’s economy is saved from eventual collapse by the remittances of Filipinos working and residing overseas. This is a stark reality that all Presidents and their different sets of economic managers know for a fact, and take pains to hide from the general public. The Philippine government, since the time labor export was institutionalized in the Marcos years to the present, cannot do without the remittances of migrant Filipinos and the revenues it derives from the fees that it gets from them before they leave the country.

Comparative Total OFW, Land-Based and Sea- Based Remittances From 2003 to 2010 (In Thousand US$)

	Total OFW	Land-based	Sea-based	Sea-based %
2003	7,578,458	6,280,235	1,298,223	17.13 %
2004	8,550,371	7,085,441	1,464,930	17.13 %
2005	10,689,005	9,019,647	1,669,358	15.61%
2006	12,761,308	10,812,018	1,949,290	15.27 %
2007	14,449,928	12,213,565	2,236,363	15.47%
2008	16,426,854	13,392,301	3,034,553	18.47%
2009	17,348.052	13,947,640	3,400,412	19.60%
2010	18,762,989	14,956,881	3,806,108	20.28%
Source: BSP

                  The Philippines is considered as the major supplier of maritime labor globally. Per Philippine Overseas Employment Administration (POEA) data, there were 330,424 Filipino seafarers deployed abroad in 2009 comprising almost 30 percent of the global maritime labor force. Although the number of deployed Filipino seafarers has decreased from 2006 (274,497), 2007 (266,553) to 2008 (261,614), the dollar remittances have been constantly  increasing from US$1.9B in 2006, US$2.2B in 2007 , US$3B in 2008, US$3.4B in 2009 to US$3.8B in 2010. As of 2010, the seabased sector’s remittance comprise at least 20% of the total dollar remittances of OFWs. No specific reason can be identified in the increase in dollar remittance despite the drop of supply globally in 2007 and 2008. But perhaps it is a result of increase in the salaries of the seafarers, on one hand, or the more aggressive “remittance” attitude of the Filipino seafarers, on the other hand.

Comparative Total Seafarer s Deployment and Sea- Based Remittances

From 2003 to 2009 (In Thousand US$)

	Total Seafarers Deployment	Sea-based Remittances	Growth Rate Sea-based
2003	216,031	1,298,223	8.26%
2004	229,002	1,464,930	12.84%
2005	247,983	1,669,358	13.95%
2006	274,497	1,949,290	16.77%
2007	266,553	2,236,363	14.73%
2008	261,614	3,034,553	35.7%
2009	330,424	3,400,412	11.04%
Source: BSP

Under the revised POEA Standard Employment,  the seafarer is required to make an allotment which shall be payable once a month to his designated allottee in the Philippines through any authorized Philippine bank..The agency shall provide the seafarer with facilities to do so at no expense to the seafarer. The allotments shall be paid to the designated allottee in Philippine currency at the rate of exchange indicated in the credit advice of the local authorized Philippine bank. Their “allotments” do not go directly to their beneficiaries but are coursed through their manning agencies as middlemen, who disburse in pesos the seafarer’s monthly earnings to the allottee-family.

The allotment shall be at least eighty percent (80%) of the seafarer’s monthly basic salary. Generally, there are two modes of sending remittances available to seafarers, through formal (banking)  and informal (door-to-door) channels.

a.  Through formal (banking) channels, the seafarer  would bring his/her hard-earned wages in whatever currency to the bank which shall transmit it its branch in the Philippines specified by the seafarer. The inflow of remittances through formal channels are reported by all banks to the Central Bank, that in turn tallies this as part of the country dollar reserves, the same reserves that are used to show the IMF, World Bank and other international funding agencies the country’s capacity to pay its debts

b. On the other hand,  through informal channels (door-to-door) mode  is actually an increasingly extensive network of informal money remitters that is also called the padala system. This system is based on personal couriers (usually friends and relatives) who deliver money door-to-door. In many cases, this mode is faster, cheaper and is more flexible with regard to time and proximity to seafarers  and their dependents, especially in the urbanized areas of the
Philippines.

Efforts to improve on the types and coverage of global remittance networks are giving more overseas Filipinos more opportunities for money transfers using innovative financial services including web-based systems, automated teller machines (ATMs), and reloadable or reusable cash cards. Increased capture of money transfers has also been made possible with the expanded offering of financial products and services to overseas Filipinos by banks and other financial institutions that have established more tie-ups with foreign service providers.

In a sense, the greater proportion of remittances recipients for  saving and investing is good for the economy because the multiplier effects can be significant in the future.  Savings and investments increase the pool of resources available to both households and corporate borrowers for their credit needs. That helps sustain economic activity in the country

A significant new provision in the Migrant and Overseas Filipinos Act of 1995, R.A. 8042 ( as amended by R.A. 10022)   is its provision stating that the remittances of  Filpino seafarers  , shall be exempt from the payment of documentary stamp tax. The removal of the documentary stamp tax or DST on all funds wired home by seafarers would help drive down money transfer charges, and put more cash in the pockets of those receiving remittance.

 

A common problem in connection with remittance is the issue on who will be his allottee. An allottee  is any person named or designated by the  seafarer as the recipient of his/her remittances to the Philippines

A wife of a contract worker cannot force the agency to remit to her account more than what is allowed by the worker. What is required by law is to implement and enforce the required inward remittance of the workers’ salaries to the Philippines and not to see whether or not the full amount of the remittance is received by the dependents of its workers. The mandatory remittance required by law does not divest the right of an overseas worker over his hard earned money or earnings. A worker earned salary or wage is his exclusive property; the matter of its disposition is his alone and his employer cannot interfere on how salary should be divided and to whom the salary should go.  The employment contract is the bilateral agreement between the seafarer and his principal, as represented by the manning agency Like any personal property he can freely dispose or give to anybody without other limitations than those provided by law. The law requires the inward remittance of the 80 % of his basic salary to the country, for it contribute to the economy. But not the manner or as to how he will divide nor dispose it. His right to dispose his wage remains in his discretion. 

            One legal recourse of the wife is the filing of a civil case for support. Once the court grants the petition, the said court order should be given to the manning agency and attached to each POEA standard employment contract.  This will serve as a notice to the seafarer that failure to comply will have legal consequence. The manning agency is likewise bound to abide by said order for the allocation in favor of the wife. 

Nevertheless, a Filipino seafarer can be  held criminally liable and be subjected to sanctions due to the act of abandoning his  financial obligation to persons to which he is  obliged by law to support. Under the Anti-Violence Against Women and Their Children Act , which was promulgated March 08, 2004, “economic abuse”  can be committed against a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate, within or without the family abode.” 

Popularly known as VAW, the said law defined "Economic abuse" as any act that makes or attempts to make a woman financially dependent which includes, but is not limited to the following:

1. withdrawal of financial support or preventing the victim from engaging in any legitimate profession, occupation, business or activity, except in cases wherein the other spouse/partner objects on valid, serious and moral grounds as defined in

2. deprivation or threat of deprivation of financial resources and the right to the use and enjoyment of the conjugal, community or property owned in common;

If convicted under this law, the seafarer shall be punished by prision mayor, or imprisonment of a minimum of  six years  and one day to a maximum of twelve years.  He shall also shall pay a fine in the amount of not less than One hundred thousand pesos (P100,000.00) but not more than three hundred thousand pesos (300,000.00).   The court may likewise  expedite the process of issuance of a hold departure order once the case is filed.