FINANCIAL CAPABILITY AS A 21 ST CENTURY LIFE SKILL: Channeling Remittance Flows into Increased Financial Stability FINANCIAL CAPABILITY AS A 21 ST CENTURY LIFE SKILL: Channeling Remittance Flows into Increased Financial Stability Delivered by Secretary Imelda M. Nicolas Chairperson, Commission on Filipinos Overseas (CFO) Office of the President of the Philippines CITI-FT FINANCIAL EDUCATION SUMMIT December 2012, Makati Shangri-La Hotel, Manila

OVERVIEW OF PHILIPPINE MIGRATION Permanent Migrants 4.42M (47%) Overseas Filipino Workers (OFW) 4.32M (45%) Irregular Migrants 0.70M (8%) Total: 9,452,984

PRESIDENT AQUINO’S SOCIAL CONTRACT W/ THE PEOPLE: MIGRATION-RELATED POLICY “From a government that treats its people as an export commodity and a means to earn foreign exchange, disregarding the social cost to Filipino families…to a government that creates jobs at home, so that working abroad will be a choice rather than a necessity, and when its citizens do choose to become Overseas Filipino Workers, their welfare and protection will still be the government’s priority.”

TOP 10 COUNTRIES OF DESTINATION ( ) for Permanent Migrants CANADA JAPAN AUSTRALIA UNITED KINGDOM GERMANY UNITED STATES SPAIN ITALY NEW ZEALAND SOUTH KOREA

TOP 10 COUNTRIES OF DESTINATION FOR OFWS (JANUARY-JUNE 2012 POEA) UAE SINGAPORE HONGKONG ITALY TAIWAN SAUDI ARABIA CANADA QATAR KUWAIT BAHRAIN

REMITTANCES

TOP SOURCES OF REMITTANCES (AS OF NOV BSP) CANADA SAUDI ARABIA JAPAN SINGAPORE UNITED STATES UNITED KINGDOM UAE

Food (97.2%) Education (69.4%) Medical expenses (59.6%) Debt payments (46.4%) Savings (44.0%) Purchase of appliances and consumer durables (33.9%) Housing (15.2%) Investments (6.8%) Purchase of cars and motor vehicles (10.5%) Remittances are usually used for:*/ */ Consumer Expectations Survey, Q2 2011

PHILIPPINE DEVELOPMENT PLAN Provision on Remittance: “Policy makers will need to focus on leveraging remittances as a tool for economic development. While remittances are private transfers, the government can ensure that the policy environment is conducive to the use of remittances for investment in well- considered financial products, ……… improving the financial education of the overseas Filipino community and implementing measures to further promote the flow of remittances through the financial system that would help catalyze the development role of remittances.”

REMITTANCE FOR DEVELOPMENT COUNCIL (RED C) CFO organized a multi ‐ stakeholder Remittance for Development Council (or ReDC), with the full support of the Central Bank of the Philippines. It is an advisory and policy-recommending body and consultative forum for issues and concerns related to remittances for development. The sectors are from: government, banks, remittance agents, the migrants themselves represented by csos, academe and multi-lateral agencies.

REMITTANCE FOR DEVELOPMENT COUNCIL (RED C) Functions of ReDC: 1)Collaboration with other groups for collection of data and research vis-à-vis remittances 2)Advocacies to help further reduce cost of remittances 3)Cooperation with those who provide financial education 4)Dissemination of information on models and conduits to channel remittances for local development 5)Recommendations to improve business environment to attract overseas Filipinos’ investment, savings, entrepreneurship.

PHILIPPINE DEVELOPMENT PLAN Provision on Financial Literacy: “The DFA, DOLE, DOF, the Commission on Filipinos Overseas and the Bangko Sentral ng Pilipinas…..to conduct financial literacy campaign overseas to educate and orient Overseas Filipinos regarding their investment and remittance option……”

FINANCIAL LITERACY CAMPAIGNS/ EDUCATION Recommendations re Financial Literacy campaigns 1)Expand beyond PDOS 2)Map out areas already covered to identify unserved or underserved areas 3)Training of trainors is key to reaching out to unserved or underserved areas 4)Incorporate financial literacy in school curricula

In partnership with NEDA, spearheaded by UNDP sponsored by Western Union Foundation The Project aims to harness the potential of overseas remittances for local economic development. It aims to come up with policies and programs in the local level channel overseas remittances to savings, investment, and entrepreneurship. 14

Channels for Investment Banks, microfinance institutions, cooperatives, rural banks, social enterprisess Communications Channels Downloadable AVP, LGU website, Provincial overseas missions or road shows, Local campaigns, Fiestas, alumni homecoming, Christmas and other social gatherings, Brochure, Training on financial literacy/education 15

Information Constraints Lack of information about which projects to invest in Lack of information about how to manage their investments Capacity Constraints Lack of know-how to save and invest Lack of know-how to identify projects to invest in Lack of know-how to monitor investments Lack of know-how to productively use funds remitted for investment Institutional Constraints Lack of suitable investment vehicles Lack of effective risk-mitigation mechanisms for investments 16

FINANCIAL LITERACY PROGRAM –PDOS MCEP This program aims to educate the overseas Filipinos and their family on the proper management of their finances through savings, investments, financial planning, budgeting, etc.

2013 FINANCIAL LITERACY PROGRAM – CFO, UNDP, WU The CFO in partnership with Western Union and UNDP has verbally agreed in implementing a Financial Education project using the emerging technology: web based and mobile phone technology for remittances

COMMISSION ON FILIPINOS OVERSEAS COMMISSION ON FILIPINOS OVERSEAS Citigold Center, 1345 Quirino Avenue corner Pres. Osmeña Highway, Paco, Manila 1007, Philippines Tel. nos. (632) local 401; (632) Fax no. (632) Website: