OFW remittances boost hometown development

By Doris Dumlao
Philippine Daily Inquirer
Posted date: May 29, 2009

MANILA, Philippines—Who said remittances from overseas Filipino workers would plunge drastically due to the global financial crisis?

Today, more and more OFWs, aside from regularly sending money back home to their families, tend to band together to raise funds to help develop their hometowns.

The agricultural town of Pozorrubio in Pangasinan province, for instance, was cited in a recent study commissioned by leading global money transfer company Western Union as an example of a new phenomenon called “collective remittance.”

Because of the huge development potential of such inflows, especially in the Philippines which is one of the world’s largest recipients of remittances, Western Union said it planned to pilot-test in the country a project aimed at ramping up collective remittances.

“Migrant worker remittances are mainly family to family paying for basic necessities. But if remittances are pooled and invested in creating economic opportunities for the whole community, the impact would be greater,” said Western Union vice president Angela Heng, who was in Manila Thursday to host a one-day conference on collective remittance.

Ahead of the meet, Western Union commissioned the Economist Intelligence Unit (EIU) to conduct a study on communal or collective remittances in different parts of the world, their impact, and what could be done to make them more effective.

Pozorrubio, which has about 10 percent of its population working overseas, was cited in the study for having a local government that was able to encourage its overseas residents to make collective remittances to support local public works projects.

Bright lights

Since 1986, town officials have been visiting Pozorrubians in California, Chicago, Hawaii, New York, Washington and Hong Kong to encourage them to form themselves into solidarity groups, elect officers, and identify projects and programs in their hometown that they could support monetarily.

“For example, Pozorrubio had no street lights, but after the mayor encouraged the migrant workers’ families to put up lampposts in front of their homes, the whole town lit up,” the EIU study said.

As the Pozzorubian migrants became better organized, the study said the local government began encouraging them to hand their donations directly to the beneficiaries, and invited them to return home to see for themselves the impact their remittances were having.

“Return migration was the theme of the 2002 town fiesta,” the study said.

It said Pozorrubian migrant communities were able to finance the construction of a park and library, and refurbish a high school’s English learning center.

The community hospital received an electrocardiograph, computer, stethoscopes, toilet, septic tank, window screens, electric fans, beddings and medicines.

On top of these, the hospital is visited annually by locally born doctors who perform medical missions.

Multiplier effect

“The multiplier effect of these remittances has been enormous. By 2001, this rural town of 56,000 had Internet cafés, car rental services for visiting migrants, video rental shops, and a rural bank with over $2 million in deposits and only a few borrowers,” the study said.

It also built 12 public and private irrigation facilities, 50 manufacturing establishments, six big private housing subdivisions and 32 day-care centers.

Different strokes

“This level of development is almost never seen in rural Philippines, even in the larger municipalities. Moreover, the town’s tax collection is one of the highest in the region, with most of the revenue coming from the busy public market,” the study said.

The EIU said other LGUs had taken different approaches to encourage their migrant populations to invest in local enterprises.

“The most visible example is the province of Bohol which set up an investment center and enacted a local investment code to assist investors in identifying, organizing and matching their resources with local partners,” it said.

The Island Garden City of Samal, near Davao City, passed a similar code geared toward developing local tourism, it noted.

Another area where migrants make collective remittances is charity.

Cited as an example was the Filipino community in South Puget Sound in Washington state which raised more than $200,000 that it remitted to a foundation in Bislig City in Surigao del Sur to finance rehabilitation and livelihood projects.