President Duterte led the launch of the Overseas Filipino Bank (OFB) last week, a campaign promise of his and a quick three months after he signed an executive order establishing it.
In theory, the OFB will provide Filipinos working or living abroad and their families here with financial and remittance services that are better than those currently provided by private banks and remittance firms.
The OFB is actually the rebranded Philippine Postal Savings Bank, which was acquired by the state-owned Land Bank of the Philippines for conversion into a financial institution catering mainly to overseas Filipino workers.
The government saw it fit to put up a bank that would provide better services for OFWs. As of last count, there are more than 10 million Filipinos working or living abroad. They sent some $28.2 billion to their beneficiaries in the Philippines during the first 11 months of 2017 — a growth of 5.1 percent from the previous year.
Filipinos based abroad contribute substantially to the country’s foreign exchange income through billions of dollars in remittances each month.
This, in turn, helps stabilize the peso’s value against the dollar. They also are a major contributor to overall economic growth. In return, the government now wants to give them priority support for their financial needs.
How exactly can the OFB help OFWs?
One way is through low-cost financing or loans. This has long been awaited by OFWs who want to start their own small businesses here using money saved from their toiling abroad plus some bank financing.
While Landbank, with the help of the Overseas Workers Welfare Administration (Owwa), has an existing financial reintegration program, OFWs have complained of the difficulty in availing themselves of this.
There are just too many requirements for OFWs to tap this financing scheme, perhaps because it is done through conduit private banks. The OFB can hopefully be the long-awaited opportunity for returning OFWs to fulfill their dreams of becoming successful microentrepreneurs in their own country.
Another possible benefit is to grow the overseas Filipinos’ savings. As Finance Secretary Carlos Dominguez III has said, expatriate Filipino workers would soon find it easier to invest in their country’s booming capital markets through this new bank designed to cater to their needs; he has also said Landbank and the Bureau of the Treasury were already exploring ways of mobilizing the savings of overseas Filipinos for them to invest in the country’s capital markets, opening up financial opportunities previously available only to more financially savvy investors.
The government will help OFB secure licenses in other countries with large concentrations of Filipinos so they can get financial advisory services.
OFWs can also be part-owners of the bank itself. LandBank is seeking approval for an initial P1-billion authorized capital, of which P700 million will be classified as common shares and P300 million in preferred shares. These shares of stock will be offered to OFWs.
To recap, the main characteristic of the OFB is that it will provide better financial service and perhaps lower remittance fees for OFWs. It can also facilitate the participation of OFWs in putting their money in investment instruments offered by the Bureau of the Treasury, obviously at better rates.
For returning OFWs, the bank can take on the task of financing their reintegration in the local community by providing loans to help them start a small business. This will truly be a big help to the millions of Filipinos working hard abroad.
It is our hope that the Duterte administration has learned from the Philippines’ past experiences. What easily comes to mind is the Marcos-era United Coconut Planters Bank, which was put up with contributions from coconut farmers supposedly to alleviate their harsh living conditions.
We all know the sorry state that the coconut industry is in now, and how coconut farmers have remained among the marginalized sectors of society.